1933 Act File No. 2-10415
1940 Act File No. 811-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 85 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 28 X
STOCK AND BOND FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(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)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on December 31, 1994, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule
485.
If appropriate, check the following box:
This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:
X filed the Notice required by that Rule on December 15,
1994; or
intends to file the Notice required by that Rule on or
about ____________; or
during the most recent fiscal year did not sell any
securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and, pursuant to Rule 24f-2(b)(2), need
not file the Notice.
Copies to:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin, L.L.P.
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of STOCK AND
BOND FUND, INC. is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page Cover Page.
Item 2. Synopsis Not applicable.
Item 3. Condensed Financial
Information Summary of Fund Expenses;
Financial Highlights.
Item 4. General Description of
Registrant General Information; Liberty
Family Retirement Program;
Investment Information;
Investment Objectives;
Investment Policies; Investment
Limitations.
Item 5. Management of the Fund Fund Information; Management of
the Fund; Distribution of Fund
Shares; Administration of the
Fund; Brokerage Transactions;
Item 6. Capital Stock and Other
Securities Dividends; Capital Gains;
Shareholder Information; Voting
Rights; Tax Information;
Federal Income Tax;
Pennsylvania Corporate and
Personal Property Taxes;
Item 7. Purchase of Securities Being
Offered Investing in The Fund; Share
Purchases; Minimum Investment
Required; What Shares Cost;
Subaccounting Services;
Certificates and Confirmations;
Net Asset Value; Shareholder
Services Plan.
Item 8. Redemption or Repurchase Redeeming Shares; Telephone
Redemption; Accounts with Low
Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION
Item 10. Cover Page Cover Page.
Item 11. Table of Contents Table of Contents.
Item 12. General Information and
History General Information About the
Fund.
Item 13. Investment Objectives and
Policies Investment Objectives and
Policies; Investment
Limitations.
Item 14. Management of the Fund Stock and Bond Fund Management.
Item 15. Control Persons and Principal
Holders of Securities Not Applicable.
Item 16. Investment Advisory and Other
Services Investment Advisory Services;
Administrative Services,
Shareholder Services Plan.
Item 17. Brokerage Allocation Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered Purchasing Shares; Determining
Net Asset Value; Redeeming
Shares; Total Return; Yield;
Performance Comparisons.
Item 20 Tax Status Tax Status.
Item 21. Underwriters Not Applicable.
Item 22. Calculation of Performance
Data Not Applicable.
Item 23. Financial Statements Financial Statements.
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STOCK AND BOND FUND, INC.
PROSPECTUS
The shares offered by this prospectus represent interests in an
open-end, diversified management investment company (a mutual fund)
known as Stock and Bond Fund, Inc. (the "Fund").
The investment objectives of the Fund are to provide relative safety
of capital with the possibility of long-term growth of capital and
income. Consideration is also given to current income. The Fund
pursues these objectives by investing in a professionally managed,
diversified portfolio of common and preferred stocks and other equity
securities, bonds, notes, and short-term obligations.
This prospectus contains the information you should read and know
before you invest in Stock and Bond Fund, Inc. Keep this prospectus
for future reference.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
The Fund has also filed a Statement of Additional Information dated
December 31, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy
of the Statement of Additional Information free of charge by calling
1-800-235-4669. To obtain other information or to make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated December 31, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ---------------------------------------------------
GENERAL INFORMATION 3
- ---------------------------------------------------
LIBERTY FAMILY RETIREMENT PROGRAM 3
- ---------------------------------------------------
INVESTMENT INFORMATION 4
- ---------------------------------------------------
Investment Objectives 4
Investment Policies 4
Investment Limitations 7
FUND INFORMATION 8
- ---------------------------------------------------
Management of the Fund 8
Distribution of Fund Shares 9
Administration of the Fund 9
Brokerage Transactions 10
NET ASSET VALUE 10
- ---------------------------------------------------
INVESTING IN THE FUND 11
- ---------------------------------------------------
Share Purchases 11
Minimum Investment Required 11
What Shares Cost 11
Subaccounting Services 12
Certificates and Confirmations 12
Dividends 12
Capital Gains 12
Retirement Plans 12
REDEEMING SHARES 12
- ---------------------------------------------------
Telephone Redemption 13
Written Requests 13
Accounts with Low Balances 14
SHAREHOLDER INFORMATION 14
- ---------------------------------------------------
Voting Rights 14
TAX INFORMATION 14
- ---------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and Personal
Property Taxes 14
PERFORMANCE INFORMATION 15
- ---------------------------------------------------
FINANCIAL STATEMENTS 16
- ---------------------------------------------------
INDEPENDENT AUDITORS' REPORT 29
- ---------------------------------------------------
ADDRESSES 30
- ---------------------------------------------------
</TABLE>
I
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)....................... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)............ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................. 0.62%
12b-1 Fee......................................................................................... None
Total Other Expenses.............................................................................. 0.43%
Shareholder Services Fee (after waiver) (2)........................................ 0.05%
Total Operating Expenses (3).............................................................. 1.05%
<FN>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.55% of average daily net assets plus 4.5% of gross income, excluding
capital gains or losses.
(2) The maximum shareholder services fee is 0.25%.
(3) The Total Operating Expenses in the table above are based on expenses
expected during the fiscal year ending October 31, 1995. The Total
Operating Expenses were 1.06% for the fiscal year ended October 31, 1994
and would have been 1.13% absent the voluntary waiver of a portion of the
management fee.
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Trust will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Fund Information". Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period................................................. $11 $33 $58 $128
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1
STOCK AND BOND FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Independent Auditors' Report on page 29.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------
1994 1993 1992 1991 1990*
- --------------------------------------------------------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 16.87 $ 15.91 $ 15.74 $ 13.60 $ 15.11
- ---------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------
Net investment income 0.51 0.55 0.65 0.74 1.37
- ---------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.59) 1.58 0.39 2.17 (2.22)
- --------------------------------------------------------- -------- -------- -------- -------- ---------
Total from investment operations (0.08) 2.13 1.04 2.91 (0.85)
- ---------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------
Dividends to shareholders from net investment income (0.54) (0.56) (0.68) (0.77) (0.66)
- ---------------------------------------------------------
Distributions to shareholders from net realized gain on
investments -- (0.61) (0.19) -- --
- --------------------------------------------------------- -------- -------- -------- -------- ---------
Total distributions (0.54) (1.17) (0.87) (0.77) (0.66)
- --------------------------------------------------------- -------- -------- -------- -------- ---------
NET ASSET VALUE, END OF PERIOD $ 16.25 $ 16.87 $ 15.91 $ 15.74 $ 13.60
- --------------------------------------------------------- -------- -------- -------- -------- ---------
TOTAL RETURN** (0.48%) 14.10% 7.94% 21.78% (5.90%)
- ---------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------
Expenses 1.06% 1.04% 1.04% 1.01% 1.01%(a)
- ---------------------------------------------------------
Net investment income 3.23% 3.49% 4.15% 4.91% 5.77%(a)
- ---------------------------------------------------------
Expense adjustment (b) 0.07% 0.20% 0.21% 0.45% 0.54%(a)
- ---------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------
Net assets, end of period (000 omitted) $125,382 $124,583 $95,387 $88,534 $79,003
- ---------------------------------------------------------
Portfolio turnover rate*** 45% 51% 43% 72% 49%
- ---------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1989 1988 1987 1986 1985 1984
- --------------------------------------------------------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.94 $ 14.89 $ 15.34 $ 15.24 $ 13.60 $ 12.82
- ---------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------
Net investment income 0.91 0.85 0.81 0.85 0.90 0.91
- ---------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.91 0.52 (0.24) 1.17 2.18 0.77
- --------------------------------------------------------- ---------- ---------- -------- -------- -------- --------
Total from investment operations 1.82 1.37 0.57 2.02 3.08 1.68
- ---------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------
Dividends to shareholders from net investment income (0.94) (0.86) (0.79) (0.86) (0.90) (0.90)
- ---------------------------------------------------------
Distributions to shareholders from net realized gain on
investments (0.71) (0.46) (0.23) (1.06) (0.54) --
- --------------------------------------------------------- ---------- ---------- -------- -------- -------- --------
Total distributions (1.65) (1.32) (1.02) (1.92) (1.44) (0.90)
- --------------------------------------------------------- ---------- ---------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 15.11 $ 14.94 $ 14.89 $ 15.34 $ 15.24 $ 13.60
- --------------------------------------------------------- ---------- ---------- -------- -------- -------- --------
TOTAL RETURN** 12.46% 9.28% 3.58% 13.77% 24.09% 13.81%
- ---------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------
Expenses 1.01% 1.00% 1.00% 1.00% 1.30% 1.52%
- ---------------------------------------------------------
Net investment income 5.82% 5.53% 5.07% 5.43% 6.42% 7.08%
- ---------------------------------------------------------
Expense adjustment (b) 0.51% 0.39% 0.22% 0.30% 0.27% --
- ---------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------
Net assets, end of period (000 omitted) $88,367 $90,504 $92,105 $75,441 $37,792 $23,167
- ---------------------------------------------------------
Portfolio turnover rate*** 26% 131% 110% 40% 42% 49%
- ---------------------------------------------------------
<FN>
* For the ten months ended October 31, 1990.
** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
*** Represents portfolio turnover for the entire Fund.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended October 31, 1994, which can be obtained
free of charge.
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Fund was incorporated under the laws of the State of Maryland on October 31,
1934. On April 16, 1993, the Fund's Articles of Incorporation were amended by
Shareholders to permit the Fund to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one portfolio
may be offered in separate classes. During the fiscal year ended October 31,
1994, the Fund offered Class A and Class C Shares. On August 31, 1994, the Fund
was reorganized to terminate the separate classes of shares.
The Fund is designed for institutions, pension plans, and individuals as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio of common and preferred stocks and other equity
securities, bonds, notes, and short-term obligations. A minimum initial
investment of $25,000 over a 90-day period is required.
Shares are currently sold and redeemed at net asset value without a sales charge
imposed by the Fund.
LIBERTY FAMILY RETIREMENT PROGRAM
- --------------------------------------------------------------------------------
The Fund is a member of the Liberty Family Retirement Program ("Program"), an
integrated program of investment options, plan recordkeeping, and consultation
services for 401(k) and other participant-directed benefit and savings plans.
Under the Program, employers or plan trustees may select a group of investment
options to be offered in a plan which also uses the Program for recordkeeping
and administrative services. Additional fees are charged to participating plans
for these services. Plans with over $1 million invested in funds participating
in the Program may purchase shares without a sales load. As part of the Program,
exchanges may readily be made between investment options selected by the
employer or a plan trustee. The other funds participating in the Program are:
AMERICAN LEADERS FUND, INC., providing growth of capital and income through
high-quality stocks;
CAPITAL GROWTH FUND (CLASS A SHARES AND CLASS C SHARES), providing appreciation
of capital primarily through equity securities;
CAPITAL PRESERVATION FUND, providing high current income and stability of
principal by investing in a portfolio consisting primarily of guaranteed
investment contracts.
STRATEGIC INCOME FUND, providing high current income through a professionally
managed, diversified portfolio investing primarily in domestic corporate debt
obligations, U.S. government securities, and foreign government and corporate
debt obligations.
FUND FOR U.S. GOVERNMENT SECURITIES, INC., providing current income through
long-term U.S. government securities;
INTERNATIONAL EQUITY FUND, providing long-term capital growth and income through
international securities;
3
INTERNATIONAL INCOME FUND, providing a high level of current income consistent
with prudent investment risk through high-quality debt securities denominated
primarily in foreign currencies;
LIBERTY EQUITY INCOME FUND, INC., providing above-average income and capital
appreciation through income-producing equity securities;
LIBERTY HIGH INCOME BOND FUND, INC., providing high current income through
high-yielding, lower-rated, corporate bonds;
LIBERTY UTILITY FUND, INC., providing current income and long-term growth of
income, primarily through electric, gas, and communication utilities; and
PRIME CASH SERIES, providing current income consistent with stability of
principal and liquidity through money market instruments maturing in thirteen
months or less.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
The investment objectives of the Fund are to provide relative safety of capital
with the possibility of long-term growth of capital and income. Consideration is
also given to current income. The Fund pursues these investment objectives by
investing in a professionally managed, diversified portfolio of common and
preferred stocks and other equity securities, bonds, notes, and short-term
obligations. While there is no assurance that the Fund will achieve its
investment objectives, it endeavors to do so by following the investment
policies described in this prospectus. The investment objectives and the
policies and limitations described below cannot be changed without approval of
shareholders, unless otherwise noted.
INVESTMENT POLICIES
As a matter of investment policy, which may be changed without shareholder
approval, under normal circumstances, the Fund will invest at least 65% of its
total assets in stocks and bonds.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in a diversified portfolio
of common stocks, bonds, convertible securities, and preferred stocks which
provide characteristics of stability and relative safety, and marketable
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The Fund anticipates that it will experience characteristics
of stability and relative safety by investing primarily in securities of larger,
well-established companies which have a history of lower volatility in earnings
and price fluctuations.
COMMON STOCKS. The common stocks in which the Fund invests are selected by
the Fund's investment adviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth, prospects
and of the risk and volatility of the company's
4
industry. However, other factors, such as product position, market share, or
profitability, will also be considered by the Fund's investment adviser.
CONVERTIBLE SECURITIES. Convertible securities are fixed income securities
which may be exchanged or converted into a predetermined number of the
issuer's underlying common stock at the option of the holder during a
specified time period. Convertible securities may take the form of
convertible preferred stock, convertible bonds or debentures, units
consisting of "usable" bonds and warrants, or a combination of the features
of several of these securities. The investment characteristics of each
convertible security vary widely, which allows convertible securities to be
employed for different investment objectives. In selecting convertible
securities for the Fund, the Fund's investment adviser evaluates the
investment potential of the underlying security for capital appreciation.
The convertible securities in which the Fund invests will be rated
"investment grade" or of comparable quality at the time of purchase. See
"Investment-Grade Bonds."
INVESTMENT-GRADE BONDS. The bonds in which the Fund invests will be rated
investment grade (i.e., rated Baa or better by Moody's Investors Service, Inc.,
("Moody's"), BBB or better by Standard & Poor's Ratings Group ("S&P"), Fitch
Investors Service, Inc. ("Fitch"), or, if unrated, deemed to be of comparable
quality by the Fund's investment adviser). Bonds rated BBB by S&P or Fitch or
Baa 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 higher rated bonds. If a security's rating
is reduced below the required minimum after the Fund has purchased it, the Fund
is not required to sell the security but may consider doing so. A description of
the rating categories is contained in the Appendix to the Statement of
Additional Information. (The Fund intends to restrict investments to securities
rated investment grade in the current fiscal year. However, the Fund reserves
the right to, in the future, invest in securities rated below investment grade.
The Fund will notify shareholders of such a change in investment policy prior to
its implementation.)
U.S. GOVERNMENT SECURITIES. The U.S. government securities in which the Fund
invests are either issued or guaranteed by the U.S. government, its agencies or
instrumentalities. These securities include, but are not limited to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities such as Federal Home Loan Banks, Federal National
Mortgage Association, Government National Mortgage Association, Banks for
Cooperatives (including Central Bank for Cooperatives), Federal Land
Banks, Federal Intermediate Credit Banks, Tennessee Valley Authority,
Export-Import Bank of the United States, Commodity Credit Corporation,
Federal Financing Bank, Student Loan Marketing Association, Federal Home
Loan Mortgage Corporation, or National Credit Union Administration.
The prices of fixed income securities fluctuate inversely to the direction of
interest rates.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury.
Others for which no assurances can be given that the U.S. government
5
will provide financial support to the agencies or instrumentalities, since it is
not obligated to do so, are supported by:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
FOREIGN ISSUERS. The Fund may invest in the securities of foreign issuers which
are freely traded on United States securities exchanges or in the
over-the-counter market in the form of depositary receipts. The Fund will limit
its investments in non-ADR foreign obligations to less than 5% of its assets.
Securities of a foreign issuer may present greater risks in the form of
nationalization, confiscation, domestic marketability, or other national or
international restrictions. As a matter of practice, the Fund will not invest in
the securities of a foreign issuer if any such risk appears to the investment
adviser to be substantial.
TEMPORARY INVESTMENTS. In such proportions as, in the judgment of its
investment adviser, prevailing market conditions warrant, the Fund may, for
temporary defensive purposes, invest in:
- short-term money market instruments;
- securities issued and/or guaranteed as to payment of principal and
interest by the U.S. government, its agencies or instrumentalities; and
- repurchase agreements.
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 Fund and agree at the
time of sale to repurchase them at a mutually agreed upon time and price.
The Fund 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 Fund, the Fund 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
Fund might be delayed pending court action. The Fund believes that under the
regular procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial institutions, such as
broker/dealers, which are found by the Fund's adviser to be creditworthy.
RESTRICTED AND ILLIQUID SECURITIES. As a matter of investment policy, which may
be changed without shareholder approval, the Fund may invest up to 10% of its
total assets in restricted securities. This restriction is not applicable to
commercial paper issued under Section 4(2) of the Securities Act of 1933.
Restricted securities are any securities in which the Fund may otherwise invest
pursuant to its investment objectives and policies, but which are subject to
restriction on resale under federal
6
securities law. The Fund will limit investments in illiquid securities,
including certain restricted securities not determined by the Directors to be
liquid, 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
Fund may lend portfolio securities on a short-term or a long-term basis to
broker/dealers, banks, or other institutional borrowers of securities. The Fund
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 Fund's Directors 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.
There is the risk that when lending portfolio securities, the securities may not
be available to the Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund 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.
Accordingly, the Fund may pay more/less than the market value of the securities
on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund 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 Fund may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for at least
a percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Fund may borrow up to
one-third of the value of its net assets;
- invest more than 5% of its total assets in securities of one issuer
(except U.S. government securities);
- invest in more than 10% of the voting securities of one issuer;
- invest in more than 10% of any class of securities of one issuer;
- invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations; or
- invest more than 5% of its assets in warrants, except under certain
circumstances.
7
FUND INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS. The Fund is managed by a Board of Directors. The Directors
are responsible for managing the Fund's business affairs and for exercising all
the Fund's powers except those reserved for the shareholders. An Executive
Committee of the Board of Directors handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the
Directors. The adviser continually conducts investment research and supervision
for the Fund and is responsible for the purchase or sale of portfolio
instruments, for which it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to 0.55 of 1% of the Fund's average daily net assets, plus 4.5% of
the Fund's annual gross income, excluding any capital gains or losses. Gross
income includes interest accrued, including discount earned on U.S. Treasury
bills and agency discount notes, interest received or receivable on all
interest-bearing obligations, and dividend income. The adviser may
voluntarily choose to waive a portion of its fee or reimburse the Fund for
certain operating expenses. The adviser can terminate this voluntary waiver
of its advisory fee at any time at its sole discretion. This does not
include reimbursement to the Fund of any expenses incurred by shareholders
who use the transfer agent's subaccounting facilities. The adviser has also
undertaken to reimburse the Fund for operating expenses in excess of
limitations established by certain states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, 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 Management 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. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial services industry. Federated Investors' track record of
competitive performance and its disciplined, risk-averse investment
philosophy serve approximately 3,500 client institutions nationwide. Through
these same client institutions, individual shareholders also have access to
this same level of investment expertise.
Joseph M. Balestrino has been the Fund's co-portfolio manager since October
1, 1994. Mr. Balestrino joined Federated Investors in 1986 and has been an
Assistant Vice President of the Fund's investment adviser since 1991. Mr.
Balestrino served as an Investment Analyst of the
8
investment adviser from 1989 until 1991, and from 1986 until 1989 he acted
as Project Manager in the Product Development Department. Mr. Balestrino is
a Chartered Financial Analyst and received his M.A. in Urban and Regional
Planning from the University of Pittsburgh.
Frederick L. Plautz has been the Fund's co-portfolio manager since December
1, 1994. Mr. Plautz joined Federated Investors in 1990 and has been a Vice
President of the Fund's investment adviser since October, 1994. Prior to
this, Mr. Plautz served as an Assistant Vice President of the investment
adviser. Mr. Plautz was a portfolio manager at Banc One Asset Management
Corp. from 1986 until 1990. Mr. Plautz received his M.S. in Finance from the
University of Wisconsin.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares. Federated
Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS OF
ADMINISTRATIVE FEE THE FEDERATED FUNDS
- -------------------- ----------------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Directors
will consider appropriate changes in the services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from the interpretations
given to the Glass-Steagall Act and, therefore, banks and financial institutions
may be required to register as dealers pursuant to state laws.
9
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the Fund to obtain certain personal services
for shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Fund and Federated Shareholder
Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to periodic payments to
financial institutions under the Shareholder Services Plan, certain financial
institutions may be compensated by the adviser or its affiliates for the
continuing investment of customers' assets in certain funds, including the Fund,
advised by those entities. These payments will be made directly by the
distributor or adviser from their assets, and will not be made from the assets
of the Fund or by the assessment of a sales charge on shares.
CUSTODIAN. State Street Bank and Trust Company, P. O. Box 8604, Boston,
Massachusetts 02266-8604, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania 15222-3779, is transfer agent and dividend disbursing
agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly, 2510
Centre City Tower, Pittsburgh, Pennsylvania 15222, and Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, D.C. 20037.
INDEPENDENT AUDITORS. The independent auditors for the Fund are Deloitte &
Touche LLP, 125 Summer Street, Boston, Massachusetts 02110-1617.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Directors.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets of the Fund, less
liabilities, by the number of shares outstanding.
10
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold on days on which the New York Stock Exchange is open. Shares may
be purchased either by wire or mail.
To purchase shares, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken over the telephone.
The Fund reserves the right to reject any purchase request.
Participants in plans under the Liberty Family Retirement Program shall purchase
shares in accordance with the requirements of their respective plans.
BY WIRE. To purchase shares by Federal Reserve Wire, call the Fund to place an
order. The order is considered received immediately. Payment by federal funds
must be received before 3:00 p.m. (Eastern time) on the next business day
following the order. Federal funds should be wired as follows: Federated
Services Company c/o State Street Bank and Trust Company, Boston, Massachusetts;
Attention: EDGEWIRE; For Credit to: Stock and Bond Fund, Inc.; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA #011000028. Shares
cannot be purchased by wire on Columbus Day, Veterans' Day, or Martin Luther
King Day.
BY MAIL. To purchase shares by mail, send a check made payable to Stock and
Bond Fund, Inc. to: Federated Services Company, P.O. Box 8604, Boston,
Massachusetts 02266-8604. Orders by mail are considered received after payment
by check is converted by the transfer agent's bank, State Street Bank and Trust
Company ("State Street Bank") into federal funds. This is generally the next
business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $25,000 plus any non-affiliated
bank or broker's fee, if applicable. However, an account may be opened with a
smaller amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Fund. Accounts established through a non-
affiliated bank or broker may be subject to a smaller minimum investment. (Other
minimum investment requirements may apply to investments through the Liberty
Family Retirement Program.)
WHAT SHARES COST
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund. Investors who purchase
shares through a non-affiliated bank or broker may be charged an additional
service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; and (iii) the
following holidays: New
11
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
shares in a fiduciary, agency, custodial, or similar capacity may charge or pass
through subaccounting fees as part of or in addition to normal trust or agency
account fees. They may also charge fees for other services provided which may be
related to the ownership of shares. This prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fees charged for those services, and any
restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the transfer agent.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Quarterly confirmations are sent to report dividends paid during
that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date. Unless shareholders request cash payments by writing to
the Fund, dividends are automatically reinvested in additional shares on payment
dates at the ex-dividend date net asset value without a sales charge. All
shareholders on the record date are entitled to the dividend. If shares are
redeemed or exchanged prior to the record date or purchased after the record
date, those shares are not entitled to that quarter's dividend.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every twelve months.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for retirement plans or for
IRA accounts. For further details, contact Federated Securities Corp., and
consult a tax adviser.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or by written request.
Redemptions of shares held through the Liberty Family Retirement Program will be
governed by the requirements of the respective plans.
12
TELEPHONE REDEMPTION
Shareholders may redeem their shares by telephoning the Fund before 4:00 p.m.
(Eastern time). The proceeds will normally be wired the following business day,
but in no event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time,
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the transfer agent or the Fund to accept
telephone requests must first be completed. Authorization forms and information
on this service are available from Federated Securities Corp. Telephone
redemption instructions may be recorded. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Shares may also be redeemed by sending a written request to the Fund. Call the
Fund for specific instructions before redeeming by letter. The shareholder will
be asked to provide in the request his name, the Fund name, the account number,
and the share or dollar amount requested. If Share certificates have been
issued, they must be properly endorsed and should be sent by registered or
certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request.
13
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $250 due to shareholder
redemptions. This requirement does not apply, however, if the balance falls
below $250 because of changes in the Fund's net asset value. Before shares are
redeemed to close an account, the shareholder is notified in writing and allowed
30 days to purchase additional shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share gives the shareholder one vote in Director elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in the Fund have equal voting rights, except that only shares of that
particular portfolio or class are entitled to vote in matters affecting that
portfolio or class.
As a Maryland corporation, the Fund is not required to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Fund's operation and for the election of Directors under certain circumstances.
Directors may be removed by a majority vote of the shareholders at a special
meeting. A special meeting of shareholders shall be called by the Directors upon
the written request of shareholders owning at least 25% of the Fund's
outstanding shares of all series entitled to vote.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held the shares. No federal income tax is due on any
dividends earned in an IRA or qualified retirement plan until distributed.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
- the Fund is subject to the Pennsylvania corporate franchise tax; and
14
- Fund shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises the total return and yield for shares.
Total return represents the change, over a specific period of time, in the value
of an investment in shares after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by shares
over a thirty-day period by the maximum offering price per share of shares on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
shares and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.
The Fund is sold without a sales load or other similar non-recurring charges.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
15
STOCK AND BOND FUND, INC.
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--47.3%
- --------------------------------------------------------------------------------
BASIC INDUSTRY--3.2%
-------------------------------------------------------------------
10,500 Aluminum Co. of America $ 895,125
-------------------------------------------------------------------
22,000 Lubrizol Corp. 709,500
-------------------------------------------------------------------
20,000 Phelps Dodge Corp. 1,227,500
-------------------------------------------------------------------
53,000 Praxair, Inc. 1,225,625
------------------------------------------------------------------- --------------
Total 4,057,750
------------------------------------------------------------------- --------------
CONSUMER DURABLES--3.7%
-------------------------------------------------------------------
10,100 Chrysler Corp. 492,375
-------------------------------------------------------------------
26,000 Eastman Kodak Co. 1,251,250
-------------------------------------------------------------------
22,800 General Motors Corp. 900,600
-------------------------------------------------------------------
66,250 Mattel, Inc. 1,937,812
------------------------------------------------------------------- --------------
Total 4,582,037
------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--2.4%
-------------------------------------------------------------------
27,000 Philip Morris 1,653,750
-------------------------------------------------------------------
35,000 Reebok International Ltd. 1,395,625
------------------------------------------------------------------- --------------
Total 3,049,375
------------------------------------------------------------------- --------------
CONSUMER SERVICES--4.9%
-------------------------------------------------------------------
52,000 American Stores Co. 1,410,500
-------------------------------------------------------------------
12,000 Dun & Bradstreet Corp. 703,500
-------------------------------------------------------------------
37,700 Sears, Roebuck & Co. 1,866,150
-------------------------------------------------------------------
26,000 Tandy Corp. 1,150,500
-------------------------------------------------------------------
45,000+ Tele-Communiciations, Inc., Class A 1,018,125
------------------------------------------------------------------- --------------
Total 6,148,775
------------------------------------------------------------------- --------------
ENERGY--4.5%
-------------------------------------------------------------------
38,500 Baker Hughes, Inc. 789,250
-------------------------------------------------------------------
36,000 Chevron Corp. 1,620,000
-------------------------------------------------------------------
</TABLE>
16
STOCK AND BOND FUND, INC.
- ---------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------
ENERGY--CONTINUED
-------------------------------------------------------------------
14,000 Exxon Corp. $ 880,250
-------------------------------------------------------------------
20,000 Mapco, Inc. 1,092,500
-------------------------------------------------------------------
20,000 Texaco, Inc. 1,307,500
------------------------------------------------------------------- --------------
Total 5,689,500
------------------------------------------------------------------- --------------
FINANCE--8.5%
-------------------------------------------------------------------
30,000 Bank of Boston Corp. 862,500
-------------------------------------------------------------------
32,000 Citicorp 1,528,000
-------------------------------------------------------------------
23,714 Dean Witter, Discover & Co. 915,953
-------------------------------------------------------------------
8,700 Federal National Mortgage Association 661,200
-------------------------------------------------------------------
9,900 First Interstate Bancorp 792,000
-------------------------------------------------------------------
24,322 Mellon Bank Corp. 1,352,911
-------------------------------------------------------------------
14,300 Nationsbank Corp. 707,850
-------------------------------------------------------------------
34,700 PNC Financial Corp. 815,450
-------------------------------------------------------------------
44,000 Ryder Systems, Inc. 1,034,000
-------------------------------------------------------------------
22,000 Transamerica Corp. 1,080,750
-------------------------------------------------------------------
26,866 Travelers, Inc. 933,594
------------------------------------------------------------------- --------------
Total 10,684,208
------------------------------------------------------------------- --------------
HEALTHCARE--4.5%
-------------------------------------------------------------------
25,300 American Home Products Corp. 1,606,550
-------------------------------------------------------------------
24,000 Becton, Dickinson & Co. 1,134,000
-------------------------------------------------------------------
22,500 Bristol-Myers Squibb Co. 1,313,437
-------------------------------------------------------------------
33,000 U.S. Healthcare, Inc. 1,559,250
------------------------------------------------------------------- --------------
Total 5,613,237
------------------------------------------------------------------- --------------
INDUSTRIAL/MANUFACTURING--6.0%
-------------------------------------------------------------------
8,800 Deere & Co. 631,400
-------------------------------------------------------------------
27,000+ FMC Corp. 1,647,000
-------------------------------------------------------------------
19,600 General Electric Co. 957,950
-------------------------------------------------------------------
</TABLE>
17
STOCK AND BOND FUND, INC.
- ---------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------
INDUSTRIAL/MANUFACTURING--CONTINUED
-------------------------------------------------------------------
14,000 ITT Corp. $ 1,235,500
-------------------------------------------------------------------
8,200+ Litton Industries, Inc. 301,350
-------------------------------------------------------------------
13,600 Loews Corp. 1,200,200
-------------------------------------------------------------------
31,000 Textron, Inc. 1,581,000
------------------------------------------------------------------- --------------
Total 7,554,400
------------------------------------------------------------------- --------------
TECHNOLOGY--5.6%
-------------------------------------------------------------------
27,000+ Computer Sciences Corp. 1,255,500
-------------------------------------------------------------------
17,000 E Systems, Inc. 705,500
-------------------------------------------------------------------
10,000 General Dynamics Corp. 423,750
-------------------------------------------------------------------
44,000 General Motors Corp., Class E 1,611,500
-------------------------------------------------------------------
25,000 Harris Corp. 1,071,875
-------------------------------------------------------------------
3,000 International Business Machines Corp. 223,500
-------------------------------------------------------------------
26,000 Raytheon Co. 1,657,500
------------------------------------------------------------------- --------------
Total 6,949,125
------------------------------------------------------------------- --------------
UTILITIES--4.0%
-------------------------------------------------------------------
28,900 AT&T Corp. 1,589,500
-------------------------------------------------------------------
18,000 Duke Power Co. 713,250
-------------------------------------------------------------------
40,000 MCI Communications Corp. 920,000
-------------------------------------------------------------------
33,000 NIPSCO Industries, Inc. 919,875
-------------------------------------------------------------------
50,000 Portland General Corp. 868,750
------------------------------------------------------------------- --------------
Total 5,011,375
------------------------------------------------------------------- --------------
TOTAL COMMON STOCK (IDENTIFIED COST, $49,156,457) 59,339,782
------------------------------------------------------------------- --------------
</TABLE>
18
STOCK AND BOND FUND, INC.
- ---------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ------------------------------------------------------------------- --------------
<C> <S> <C>
PREFERRED STOCKS--2.6%
- --------------------------------------------------------------------------------
CONSUMER DURABLE--1.1%
-------------------------------------------------------------------
14,000 Ford Motor Co., Conv. Pfd., Series A, $4.20 $ 1,354,500
------------------------------------------------------------------- --------------
CONSUMER NON-DURABLE--0.7%
-------------------------------------------------------------------
122,000 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $.60 838,750
------------------------------------------------------------------- --------------
CONSUMER SERVICES--0.4%
-------------------------------------------------------------------
13,000 Tandy Corp., PERCS, Series C, $2.14 481,000
------------------------------------------------------------------- --------------
UTILITIES--0.4%
-------------------------------------------------------------------
10,000 Nacional Financiera, SNC, PRIDES, $6.79 580,000
------------------------------------------------------------------- --------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST, $2,770,894) 3,254,250
------------------------------------------------------------------- --------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
-------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS--2.7%
- --------------------------------------------------------------------------------
ENERGY--0.8%
-------------------------------------------------------------------
$ 1,000,000 Exxon Capital Corp, Deb., 7.875%, 4/15/96 1,015,880
------------------------------------------------------------------- --------------
INDUSTRIAL/MANUFACTURING--0.8%
-------------------------------------------------------------------
1,000,000 General Electric Co., Deb., 7.875%, 5/1/96 1,018,090
------------------------------------------------------------------- --------------
UTILITIES--1.1%
-------------------------------------------------------------------
500,000 Chesapeake & Potomac Telephone Co. of VA, Deb., 7.875%, 1/15/2022 462,070
-------------------------------------------------------------------
1,000,000 Michigan Bell Telephone, Deb., 7.85%, 1/15/2022 928,400
------------------------------------------------------------------- --------------
Total 1,390,470
------------------------------------------------------------------- --------------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $3,479,595) 3,424,440
------------------------------------------------------------------- --------------
GOVERNMENT OBLIGATIONS--44.4%
- --------------------------------------------------------------------------------
GOVERNMENT AGENCIES SECURITIES--1.9%
-------------------------------------------------------------------
500,000 Federal Home Loan Bank, Deb., 5.23%, 1/15/98 498,020
-------------------------------------------------------------------
1,500,000 Federal Home Loan Mortgage Corp., Deb., 5.31%, 3/25/96 1,480,995
-------------------------------------------------------------------
350,000 Federal National Mortgage Association, 5.86%, 6/1/98 330,827
------------------------------------------------------------------- --------------
Total 2,309,842
------------------------------------------------------------------- --------------
</TABLE>
19
STOCK AND BOND FUND, INC.
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ----------- -------------------------------------------------------------------
<C> <S> <C>
GOVERNMENT OBLIGATIONS--CONTINUED
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES--5.7%
-------------------------------------------------------------------
$ 769,994 Federal National Mortgage Association Pool #124009 9.00%, 11/1/2021 $ 785,863
-------------------------------------------------------------------
1,454,905 Federal National Mortgage Association Pool #271756 8.50%, 5/1/2022 1,444,429
-------------------------------------------------------------------
1,476,226 Federal National Mortgage Association Pool #C00092 8.00%, 1/1/2022 1,426,374
-------------------------------------------------------------------
39,600 Federal National Mortgage Association Pool #50796 7.50%, 9/1/2023 37,161
-------------------------------------------------------------------
1,011,908 Federal National Mortgage Association Pool #50659 7.00%, 11/1/2007 921,140
-------------------------------------------------------------------
593,247 Government National Mortgage Association Pool #299165, 9.50%,
12/15/2020 620,121
-------------------------------------------------------------------
1,111,324 Government National Mortgage Association Pool #354686, 7.50%,
11/15/2023 1,031,776
-------------------------------------------------------------------
1,014,730 Government National Mortgage Association Pool #385622, 6.50%,
5/15/2024 875,824
------------------------------------------------------------------- --------------
Total 7,142,688
------------------------------------------------------------------- --------------
TREASURY SECURITIES--36.8%
-------------------------------------------------------------------
18,320,000 United States Treasury Bonds, 7.25%-11.625%, 11/15/2004-2/15/2019 19,757,825
-------------------------------------------------------------------
26,530,000 United States Treasury Notes, 3.875%-7.875%, 1/31/95-8/15/2001 26,404,836
------------------------------------------------------------------- --------------
Total 46,162,661
------------------------------------------------------------------- --------------
TOTAL GOVERNMENT OBLIGATIONS (IDENTIFIED COST, $56,691,015) 55,615,191
------------------------------------------------------------------- --------------
</TABLE>
20
STOCK AND BOND FUND, INC.
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ----------- -------------------------------------------------------------------
<C> <S> <C>
*REPURCHASE AGREEMENT--2.9%
- --------------------------------------------------------------------------------
3,585,000 J.P. Morgan Securities, Inc., 4.82%, dated 10/31/94, due 11/1/94
(at amortized cost) 3,585,000
------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST, $115,682,961) $ 125,218,663++
------------------------------------------------------------------- --------------
<FN>
+ Non-income producing
++ The cost of federal income tax purposes amounts to $115,682,961. The net
unrealized appreciation of investments on a federal income tax basis amounts
to $9,535,702, which is comprised of $11,765,241 appreciation and $2,229,539
depreciation at October 31, 1994.
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
Note: The categories of investments are shown as a percentage of net assets
($125,381,864) at October 31, 1994.
</TABLE>
The following abbreviations are used in this portfolio:
PERCS--Preferred Equity Redeemable Preferred Stock
PRIDES--Preferred Redeemable Increased Dividend Equity Securities
(See Notes which are an integral part of the Financial Statements)
21
STOCK AND BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Investments in securities, at value (identified cost and tax cost, $115,682,961) $125,218,663
- -----------------------------------------------------------------------------------
Dividends and interest receivable 1,093,578
- -----------------------------------------------------------------------------------
Receivable for investments sold 457,225
- -----------------------------------------------------------------------------------
Receivable for capital stock sold 144,356
- ----------------------------------------------------------------------------------- ------------
Total assets 126,913,822
- -----------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Payable for investments purchased $1,078,415
- ----------------------------------------------------------------------
Payable for capital stock redeemed 426,843
- ----------------------------------------------------------------------
Payable to bank 1,718
- ----------------------------------------------------------------------
Accrued expenses 24,982
- ---------------------------------------------------------------------- ----------
Total liabilities 1,531,958
- ----------------------------------------------------------------------------------- ------------
NET ASSETS for 7,718,077 shares of capital stock outstanding $125,381,864
- ----------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------
Paid-in capital $112,589,757
- -----------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 9,535,702
- -----------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 700,358
- -----------------------------------------------------------------------------------
Undistributed net investment income 2,556,047
- ----------------------------------------------------------------------------------- ------------
Total $125,381,864
- ----------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($125,381,864 DIVIDED BY 7,718,077 shares of capital stock
outstanding) $ 16.25
- ----------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
22
STOCK AND BOND FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------
Interest $ 3,625,220
- -------------------------------------------------------------------------
Dividends 1,712,412
- ------------------------------------------------------------------------- -----------
Total investment income 5,337,632
- -------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------
Investment advisory fee $ 945,715
- ------------------------------------------------------------
Directors' fees 7,994
- ------------------------------------------------------------
Administrative personnel and services fees 207,503
- ------------------------------------------------------------
Custodian and portfolio accounting fees and expenses 83,852
- ------------------------------------------------------------
Capital stock registration fees 42,041
- ------------------------------------------------------------
Auditing fees 19,104
- ------------------------------------------------------------
Legal fees 12,405
- ------------------------------------------------------------
Insurance 7,355
- ------------------------------------------------------------
Printing and postage 25,589
- ------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 62,941
- ------------------------------------------------------------
Shareholder services fees 11,298
- ------------------------------------------------------------
Distribution services fees--Class C Shares 3,830
- ------------------------------------------------------------
Taxes 15,511
- ------------------------------------------------------------
Miscellaneous 2,697
- ------------------------------------------------------------ ----------
Total expenses 1,447,835
- ------------------------------------------------------------
Deduct--Waiver of investment advisory fee 98,828
- ------------------------------------------------------------ ----------
Net expenses 1,349,007
- ------------------------------------------------------------------------- -----------
Net investment income 3,988,625
- ------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) 1,349,184
- -------------------------------------------------------------------------
Net change in unrealized (appreciation) depreciation on investments (5,913,664)
- ------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments (4,564,480)
- ------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ (575,855)
- ------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
23
STOCK AND BOND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 3,988,625 $ 3,867,816
- ---------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($1,349,184 net gain,
and $648,826 net loss, respectively, as computed for federal tax purposes) 1,349,184 (648,826)
- ---------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (5,913,664) 11,161,979
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets from operations (575,855) 14,380,969
- --------------------------------------------------------------------------- ------------- -------------
NET EQUALIZATION CREDITS-- 26,597 129,581
- --------------------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- ---------------------------------------------------------------------------
Class A Shares (4,128,685) (3,755,624)
- ---------------------------------------------------------------------------
Class C Shares (13,593) (38)
- ---------------------------------------------------------------------------
Distribution to shareholders from net realized gain on investment
transactions:
- ---------------------------------------------------------------------------
Class A Shares -- (3,675,092)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from distributions to shareholders (4,142,278) (7,430,754)
- --------------------------------------------------------------------------- ------------- -------------
CAPITAL STOCK TRANSACTIONS
(EXCLUSIVE OF AMOUNTS ALLOCATED TO NET INVESTMENT INCOME)--
- ---------------------------------------------------------------------------
Net proceeds from sale of shares 38,530,728 38,398,216
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 2,833,419 5,226,747
- ---------------------------------------------------------------------------
Cost of shares redeemed (35,969,675) (21,412,900)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets from capital stock transactions 5,394,472 22,212,063
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets 702,936 29,291,859
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 124,678,928 95,387,069
- --------------------------------------------------------------------------- ------------- -------------
End of period (including undistributed net investment income of $2,556,047
and $2,683,103 respectively) $ 125,381,864 $ 124,678,928
- --------------------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
24
STOCK AND BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Stock and Bond Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, open-end,
no-load, management investment company. Previously, the Fund provided two
classes of shares ("Class A Shares" and "Class C Shares"). On May 19, 1994, the
Board of Directors (the "Directors") authorized the combination of Class C
Shares with Class A Shares, the termination of all contracts entered into by the
Fund on behalf of Class C Shares, and the amendment of the Articles of
Incorporation to reclassify Class A Shares and Class C Shares as unclassified
shares. In connection with these actions, as of August 31, 1994, the "Class C
Shares" were no longer offered.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Listed equity securities, corporate bonds and other
fixed income securities are valued at the last sales price reported on
national securities exchanges. Unlisted securities and bonds are generally
valued at the price provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less may be stated at
amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying collateral to ensure that the value of collateral at least equals
the principal amount of the repurchase agreement, including accrued
interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Directors. Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income and expenses are accrued
25
STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
daily. Bond premium and discount, if applicable, are amortized as required
by the Internal Revenue Code, as amended (the "Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income. Accordingly,
no provisions for federal tax are necessary.
E. EQUALIZATION--The Fund follows the accounting practice known as equalization
by which a portion of the proceeds from sales and costs of redemptions of
capital stock equivalent, on a per share basis to the amount of
undistributed and net investment income on the date of the transaction, is
credited or charged to undistributed net investment income. As a result,
undistributed net investment income per share is unaffected by sales or
redemptions of capital stock.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At October 31, 1994, there were 2,000,000,000 shares of $0.001 par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED 10/31/94 YEAR ENDED 10/31/93
-------------------------- --------------------------
CLASS A SHARES SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 2,338,641 $ 37,487,658 2,386,696 $ 38,303,285
- --------------------------------------------
Shares issued to shareholders in payment of
dividends declared 174,458 2,825,356 334,836 5,226,710
- --------------------------------------------
Shares redeemed (2,181,393) (34,829,553) (1,331,495) (21,412,848)
- -------------------------------------------- ----------- ------------ ----------- ------------
Net change resulting from Class A share
transactions 331,706 $ 5,483,461 1,390,037 $ 22,117,147
- -------------------------------------------- ----------- ------------ ----------- ------------
</TABLE>
26
STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED 10/31/94 YEAR ENDED 10/31/93**
-------------------------- --------------------------
CLASS C SHARES SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 64,355 $ 1,043,070 5,711 $ 94,931
- --------------------------------------------
Shares issued to shareholders in payment of
dividends declared 497 8,063 2 37
- --------------------------------------------
Shares redeemed (70,562) (1,140,122) (3) (52)
- -------------------------------------------- ----------- ------------ ----------- ------------
Net change resulting from Class C share
transactions (5,710) ($ 88,989) 5,710 $ 94,916
- -------------------------------------------- ----------- ------------ ----------- ------------
Net change resulting from Fund share
transactions 325,996 5,394,472 1,395,747 $ 22,212,063
- -------------------------------------------- ----------- ------------ ----------- ------------
<FN>
** For the period from April 17, 1993 (date of initial public offering) to
October 31, 1993.
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .55 of 1% of the Fund's average daily net assets, plus 4.5% of the
Fund's gross income, excluding capital gains or losses. The Adviser may
voluntarily choose to waive its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
DISTRIBUTION PLAN--The Fund had adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund
compensated Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Class C Shares. The Plan provided that the Fund may have incurred
distribution expenses up to .75 of 1% of the average daily net assets of the
Class C Shares, annually, to compensate FSC. The Plan was terminated in 1994
(See Note 1).
SHAREHOLDER SERVICES PLAN--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Class A Shares for the period. This fee is
to obtain certain personal services for shareholders and to maintain the
shareholder accounts.
27
STOCK AND BOND FUND, INC.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Fund. The FServ fee is based on the size,
type, and number of accounts and transactions made by shareholders.
Certain of the Officers and Directors of the Fund are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 1994 were as follows:
<TABLE>
<S> <C>
PURCHASES $61,390,120
- -------------------------------------------------------------------------------- -----------
SALES $54,623,633
- -------------------------------------------------------------------------------- -----------
</TABLE>
28
INDEPENDENT AUDITORS' REPORT
- ---------------------------------------------------------
To the Board of Directors and Shareholders of
STOCK AND BOND FUND, INC.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Stock and Bond Fund, Inc., as of October 31,
1994, the related statement of operations for the year then ended, the statement
of changes in net assets for the years ended October 31, 1994 and 1993, and the
financial highlights (see page 2 of the prospectus) for each of the years in the
four year period ended October 31, 1994, the ten month period ended October 31,
1990 and each of the years in the six-year period ended December 31, 1989. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Stock and Bond Fund,
Inc. as of October 31, 1994, the results of its operations, the changes in its
net assets, and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 14, 1994
29
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Stock and Bond Fund, Inc. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8604
Boston, Massachusetts 02266-8604
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Auditors
Deloitte & Touche LLP 125 Summer Street
Boston, Massachusetts 02110-1617
- -------------------------------------------------------------------------------------------
</TABLE>
30
- --------------------------------------------------------------------------------
STOCK AND BOND FUND, INC.
PROSPECTUS
An Open-End, Diversified
Management Investment Company
December 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
86101A104
80112905A-A (12/94) [RECYCLED PAPER SYMBOL]
Stock and Bond Fund, Inc.
Statement of Additional Information
This Statement of Additional Information should be read
with the prospectus of Stock and Bond Fund, Inc., (the
"Fund"), dated December 31, 1994. This Statement is not
a prospectus itself. To receive a copy of the prospectus,
write or call the Fund.
<R/>
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated December 31, 1994
FEDERATED SECURITIES
CORP.
Distributor
A subsidiary of FEDERATED
INVESTORS
General Information About
the Fund 1
Investment Objectives and
Policies 1
Types of Investments 1
Obligations of Foreign
Issuers 1
Temporary Investments 1
When-Issued and Delayed
Delivery Transactions 1
Lending Portfolio
Securities 2
Reverse Repurchase
Agreements 2
Restricted and Illiquid
Securities 2
Portfolio Turnover 2
Investment Limitations 3
Stock and Bond Fund, Inc.
Management 4
The Funds 7
Fund Ownership 8
Investment Advisory Services 8
Adviser to the Fund 8
Advisory Fees 8
Other Related Services 8
Administrative Services 8
Shareholder Services Plan 9
Transfer Agent and Dividend
Disbursing Agent 9
Brokerage Transactions 9
Purchasing Shares 9
Conversion to Federal
Funds 10
Determining Net Asset Value 10
Determining Market Value
of Securities 10
Redeeming Shares 10
Redemption in Kind 10
Tax Status 10
The Fund's Tax Status 10
Shareholders' Tax Status 11
Total Return 11
Yield 11
Performance Comparisons 11
Duration 12
Appendix 13
General Information About the Fund
Stock and Bond Fund ("the Fund") was incorporated under the
laws of the State of Maryland on October 31, 1934. The name of
the Fund was Boston Foundation Fund Incorporated prior to
January 11, 1985 . On April 16, 1993, the shareholders voted
to permit the Fund to offer separate series and classes of
shares. During the fiscal year ended October 31, 1994, the
Fund offered Class A Shares and Class C Shares. On August 31,
1994, a reorganization of the Fund was completed to eliminate
the separate classes of shares.
Investment Objectives and Policies
The Fund's investment objectives are to provide relative
safety of capital with the possibility of long-term growth of
capital and income. Consideration is also given to current
income. The investment objectives cannot be changed without
approval of shareholders.
As a matter of investment policy, under normal circumstances,
the Fund will invest at least 65% of its total assets in
stocks and bonds.
Types of Investments
The Fund invests primarily in a diversified portfolio of
common and preferred stocks and other equity securities,
bonds, notes, U.S. government securities, repurchase
agreements, short-term obligations and instruments secured by
any of these obligations.
Obligations of Foreign Issuers
Obligations of a foreign issuer may present greater risks than
investments in U.S. securities, including higher transaction
costs as well as the imposition of additional taxes by foreign
governments. In addition, investments in foreign issuers may
include additional risks associated with less complete
financial information about the issuers, less market
liquidity, and political instability. Future political and
economic developments, the possible imposition of withholding
taxes on interest income, the possible seizure or
nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other
governmental restrictions might adversely affect the payment
of principal and interest on obligations of foreign issuers.
As a matter of practice, the Fund will not invest in the
obligations of a foreign issuer if any such risk appears to
the Fund's adviser to be substantial.
Temporary Investments
The Fund may also invest in temporary investments from time to
time for defensive purposes.
Money Market Instruments
The Fund may invest in money market instruments such as:
oinstruments 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 federally insured; or
ocommercial paper rated A-1 by Standard and Poor's Ratings
Group, Prime-1 by Moody's Investors Service, Inc., or F-1
by Fitch Investors Service, Inc.
When-Issued and Delayed Delivery Transactions
The Fund engages in when-issued and delayed delivery
transactions only for the purpose of acquiring portfolio
securities consistent with the Fund's objectives and policies,
not for investment leverage. These transactions are made to
secure what is considered to be an advantageous price or yield
for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of
the Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade
date. These assets are marked to market daily and are
maintained until the transaction has been settled. As a
matter of operating policy, which may be changed without
shareholder approval, the Fund 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 Portfolio Securities
The collateral received when the Fund 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 Fund. During the time portfolio
securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities. Loans are
subject to termination at the option of the Fund or the
borrower. The Fund 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
equivalent collateral to the borrower or placing broker. The
Fund 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.
Reverse Repurchase Agreements
The Fund may also enter into reverse repurchase agreements
under certain circumstances. This transaction is similar to
borrowing cash. In a reverse repurchase agreement, the Fund
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
Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund
to avoid selling portfolio instruments at a time when a sale
may be deemed to be disadvantageous, but the ability to enter
into reverse repurchase agreements does not ensure that the
Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of
the Fund, 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 are
maintained until the transaction is settled.
Restricted and Illiquid Securities
The Fund may invest in commercial paper issued in reliance on
the exemption from registration afforded by Section 4(2) of
the Securities Act of 1933. Section 4(2) commercial paper is
restricted as to disposition under federal securities law and
is generally sold to institutional investors, such as the
Fund, who agree that they are purchasing the paper for
investment purposes and not with a view to public
distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold
to other institutional investors like the Fund through or with
the assistance of the issuer or investment dealers who make a
market in Section 4(2) commercial paper, thus providing
liquidity.
The ability of the Directors to determine the liquidity of
certain restricted securities is permitted under a Securities
and Exchange Commission ("SEC") Staff position set forth in
the adopting release for Rule 144A under the Securities Act of
1933 (the "Rule"). The Rule is a non-exclusive safe-harbor for
certain secondary market transactions involving securities
subject to restrictions on resale under federal securities
laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified
institutional buyers. The Rule was expected to further enhance
the liquidity of the secondary market for securities eligible
for resale under the Rule. The Fund believes that the Staff of
the SEC has left the question of determining the liquidity of
all restricted securities to the Directors. The Directors may
consider the following criteria in determining the liquidity
of certain restricted securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the
security and the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe nature of the security and the nature of the
marketplace trades.
Portfolio Turnover
The Fund normally holds or disposes of portfolio securities in
order to work toward its investment objectives. Securities
held by the Fund are selected because they are considered to
represent real value and will be held or disposed of
accordingly. The Fund's investment adviser will not generally
seek profits through short-term trading.
The Fund will not attempt to set or meet a portfolio turnover
rate since any turnover would be incidental to transactions
undertaken in an attempt to achieve the Fund's investment
objectives. For the fiscal years ended October 31, 1994, and
1993, the portfolio turnover rates were 45% and 51%,
respectively.
Investment Limitations
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase
any securities on margin.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities, except as
permitted by its investment objectives and policies, and
except that the Fund may enter into reverse repurchase
agreements and otherwise borrow up to one-third of the
value of its net assets including the amount borrowed, as
a temporary, extraordinary or emergency measure or to
facilitate management of the portfolio by enabling the
Fund to meet redemption requests when the liquidation of
portfolio instruments would be inconvenient or
disadvantageous. This practice is not for investment
leverage. The Fund will not purchase any portfolio
instruments while any borrowings (including reverse
repurchase agreements) are outstanding.
Diversification of Investments
The Fund will not invest more than 5% of the value of its
total assets in the securities of any one issuer, except
U.S. government securities; invest in more than 10% of
the voting securities of one issuer; or invest in more
than 10% of any class of securities of one issuer.
Acquiring Securities
The Fund will not invest in securities issued by any
other investment company or investment trust except in
regular open-market transactions or as part of a plan of
merger or consolidation. It will not invest in securities
of a company for the purpose of exercising control or
management.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its
total assets in securities of issuers which have records
of less than three years of continuous operations.
Investing in Issuers Whose Securities are Owned by Officers
and Directors of the Fund
The Fund will not purchase or retain the securities of
any issuer in which the officers and Directors of the
Fund or its investment adviser own a substantial
financial interest.
Investing in Commodities, Commodity Contracts, or Real
Estate
The Fund will not invest in commodities, commodity
contracts, or real estate.
Underwriting
The Fund will not engage in underwriting or agency
distribution of securities issued by others.
Lending Cash or Securities
The Fund will not lend any assets except portfolio
securities. The purchase of corporate or government
bonds, debentures, notes or other evidences of
indebtedness shall not be considered a loan for purposes
of this limitation.
Concentration of Investments
The Fund will not invest more than 25% of the value of
its total assets in securities of companies in any one
industry.
Investing in Warrants
The Fund will not invest more than 5% of its assets in
warrants, including those acquired in units or attached
to other securities. To comply with certain state
restrictions, the Fund will limit its investment in such
warrants not listed on recognized stock exchanges to 2%
of its total assets. (If state restrictions change, this
latter restriction may be revised without notice to
shareholders.) For purposes of this investment
restriction, warrants acquired by the Fund in units or
attached to securities may be deemed to be without value.
The above limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed
by the Directors without shareholder approval. Shareholders
will be notified before any material change in these
limitations becomes effective.
Investing in Restricted Securities
The Fund will not invest more than 10% of its total
assets in securities subject to restrictions on resale
under the Securities Act of 1933, except for commercial
paper issued under Section 4(2) of the Securities Act of
1933 and certain other restricted securities which meet
the criteria for liquidity as established by the
Directors. To comply with certain state restrictions, the
Fund will limit these transactions to 5% of its total
assets. (If state restrictions change, this latter
restriction may be revised without shareholder approval
or notification.)
Investing in Illiquid Securities
The Fund will not invest more than 15% of its net assets
in illiquid securities, including repurchase agreements
providing for settlement more than seven days after
notice and certain restricted securities not determined
by the Directors to be liquid. To comply with certain
state restrictions, the Fund will limit these
transactions to 10% of its net assets. (If state
restrictions change, this latter restriction may be
revised without shareholder approval or notification.)
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 or net assets will not
result in a violation of such restriction.
The Fund did not borrow money or lend portfolio securities in
excess of 5% of the value of its net assets during the last
fiscal year and has no present intent to do so in the coming
fiscal year.
In addition, to comply with certain state restrictions, the
Fund will not invest in oil, gas, or other mineral leases, nor
will it invest in real estate limited partnerships. If state
restrictions change, these limitations may be revised without
notice to shareholders.
Stock and Bond Fund, Inc. Management
Officers and Directors are listed with their addresses,
present positions with Stock and Bond Fund, Inc., and
principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
President and Director
Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and
Director, Federated Research Corp.; Chairman, Passport
Research, Ltd.; Director, AEtna Life and Casualty Company;
Chief Executive Officer and Director, Trustee, or Managing
General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue , Vice President and Director.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Director
President, Investment Properties Corporation; Senior Vice-
President, John R. Wood and Associates, Inc., Realtors;
President, Northgate Village Development Corporation; Partner
or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the
Funds; formerly, President, Naples Property Management, Inc.
Thomas G. Bigley
28th Floor
One Oxford Center
Pittsburgh, PA 15219
Director
Director, Oberg Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh; Director, Trustee or
Managing General Partner of the Funds: formerly, Senior
Partner, Ernst & Young LLP.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Director
Director and Member of the Executive Committee, Michael Baker,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman and Director, PNC Bank, N.A.,
and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director, Trustee, or Managing General Partner of the Funds;
formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Director
Hematologist, Oncologist, and Internist, Presbyterian and
Montefiore Hospitals; Professor of Medicine and Trustee,
University of Pittsburgh; Director of Corporate Health,
University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Two Gateway Center - Suite 674
Pittsburgh, PA
Director
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty;
Director, Eat'N Park Restaurants, Inc., and Statewide
Settlement Agency, Inc.; Director, Trustee, or Managing
General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Peter E. Madden
225 Franklin Street
Boston, MA
Director
Consultant; State Representative, Commonwealth of
Massachusetts; Director, Trustee, or Managing General Partner
of the Funds; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation and Trustee, Lahey
Clinic Foundation, Inc.
Gregor F. Meyer
Two Gateway Center - Suite 674
Pittsburgh, PA
Director
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty;
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants,
Inc.; Director, Trustee, or Managing General Partner of the
Funds; formerly, Vice Chairman, Horizon Financial, F.A.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Director
Professor, Foreign Policy and Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation,
Online Computer Library Center, Inc., and U.S. Space
Foundation; Chairman, Czecho Slovak Management Center;
Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Director
Public relations/marketing consultant; Director, Trustee, or
Managing General Partner of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research;
President and Director, Federated Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some
of the Funds. Mr. Donahue is the son of John F. Donahue,
President and Director of the Company.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors;
Director, Federated Research Corp.; Chairman and Director,
Federated Securities Corp.; President or Vice President of
some of the Funds; Director or Trustee of some of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors;
Vice President and Treasurer, Federated Advisers, Federated
Management, Federated Research, Federated Research Corp., and
Passport Research, Ltd.; Executive Vice President, Treasurer,
and Director, Federated Securities Corp.; Trustee, Federated
Services Company and Federated Shareholder Services; Chairman,
Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and
Treasurer of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated
Research; Vice President and Secretary, Federated Research
Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; Secretary and Trustee,
Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and
Secretary of the Funds.
* This Director is deemed to be an "interested person" as
defined in the Investment Company Act of 1940, as
amended.
@ Member of the Executive Committee. The Executive
Committee of the Board of Directors handles the
responsibilities of the Board of Directors between
meetings of the Board.
The Funds
"The Funds," and "Funds" mean the following investment
companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; Fixed Income Securities,
Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund,
Inc.; Fund for U.S. Government Securities, Inc.; Government
Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; The Medalist Funds: Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters
Funds; Portage Funds; RIMCO Monument Funds; The Shawmut Funds;
Short-Term Municipal Trust; Star Funds; The Starburst Funds;
The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For
Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; World
Investment Series, Inc.
Fund Ownership
Officers and Directors own less than 1% of the Fund's
outstanding shares.
As of December 12, 1994, the following shareholder of record
owned 5% or more of the outstanding shares of the Fund:
Systematics, Inc., Denver, Colorado, owned approximately
852,699 shares (11.11%).
Investment Advisory Services
Adviser to the Fund
The Fund's investment adviser is Federated Management. It is a
subsidiary of Federated Investors. All the voting securities
of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, his wife, and his son, J.
Christopher Donahue.
The adviser shall not be liable to the Fund or any shareholder
for any losses that may be sustained in the purchase, holding,
or sale of any security or for anything done or omitted by it,
except acts or omissions involving willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Fund.
Advisory Fees
For its advisory services, Federated Management receives an
annual investment advisory fee as described in the prospectus.
During the fiscal years ended October 31, 1994, 1993, and
1992, the Fund's adviser earned $945,715, $834,842 and
$726,717, respectively, of which $98,828, $222,090 and
$196,556, respectively, was voluntarily waived because of
undertakings to limit the Fund's expenses. All advisory fees
were computed on the same basis as described in the
prospectus.
State Expense Limitations
The adviser has undertaken to comply with the expense
limitations established by certain states for investment
companies whose shares are registered for sale in those
states. If the Fund's normal operating expenses
(including the investment advisory fee, but not including
brokerage commissions, interest, taxes and extraordinary
expenses) exceed 2 1/2% per year of the first $30 million
of average net assets, 2% per year of the next $70
million of average net assets, and 1 1/2% per year of the
remaining average net assets, the adviser will reimburse
the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed
this limitation, the investment advisory fee paid will be
reduced by the amount of the excess, subject to an annual
adjustment. If the expense limitation is exceeded, the
amount to be reimbursed by the adviser will be limited,
in any single fiscal year, by the amount of the
investment advisory fee.
This arrangement is not part of the advisory contract and
may be amended or rescinded in the future.
Other Related Services
Affiliates of the adviser may, from time to time, provide
certain electronic equipment and software to institutional
customers in order to facilitate the purchase of shares of
funds offered by Federated Securities Corp.
Administrative Services
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to
the Fund for a fee as described in the prospectus. Prior to
March 1, 1994, Federated Administrative Services Inc., also a
subsidiary of Federated Investors, served as the Fund's
administrator. (For purposes of this Statement of Additional
Information, Federated Administrative Services and Federated
Administrative Services, Inc., may hereinafter collectively be
referred to as the "Administrators".) For the fiscal year
ended October 31, 1994, the Administrators collectively earned
$207,503. For the fiscal years ended October 31, 1993 and
October 31, 1992, Federated Administrative Services, Inc.,
earned $291,137 and $229,879, respectively. Dr. Henry J.
Gailliot, an officer of Federated Management, the adviser to
the Fund, holds approximately 20%, of the outstanding
common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing
services to Federated Administrative Services.
Shareholder Services Plan
This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly, to financial
institutions to cause services to be provided to shareholders
by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and
services may include, but are not limited to, providing office
space, equipment, telephone facilities, and various clerical,
supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and
automatic investments of client account cash balances;
answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and
addresses.
For the fiscal period ending October 31, 1994, payments in the
amount of $11,298 were made pursuant to the Shareholder
Services Plan, all of which was paid to financial
institutions.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and
dividend disbursing agent for the Fund. The fee paid to the
transfer agent is based upon the size, type and number of
accounts and transactions made by shareholders.
Federated Services Company also maintains the Fund's
accounting records. The fee paid for this service is based
upon the level of the Fund's average net assets for the period
plus out-of-pocket expenses.
Brokerage Transactions
The adviser may select brokers and dealers who offer brokerage
and research services. These services may be furnished
directly to the Fund or to the adviser and may include:
oadvice as to the advisability of investing in securities;
osecurity analysis and reports;
oeconomic studies;
oindustry studies;
oreceipt of quotations for portfolio evaluations; and
osimilar services.
The adviser and its affiliates exercise reasonable business
judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in
good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the
adviser or by affiliates of Federated Investors in advising
Federated funds and other accounts. To the extent that receipt
of these services may supplant services for which the adviser
or its affiliates might otherwise have paid, it would tend to
reduce their expenses.
For the fiscal years ended October 31, 1994, 1993, and 1992,
the Fund paid $41,256, $69,262 and $44,963, respectively, in
brokerage commissions on brokerage transactions.
As of October 31, 1994, the Fund owned $883,000 of securities
of Travelers Inc. (Smith Barney) and $893,000 of securities of
Dean Witter, two of its regular brokers that derive more than
15% of gross revenues from securities-related activities.
Purchasing Shares
Shares are sold at their net asset value without a sales
charge on days the New York Stock Exchange is open for
business. The procedure for purchasing shares is explained in
the respective prospectus under "Investing in the Fund."
Conversion to Federal Funds
The Fund's transfer agent acts as the shareholder's agent in
depositing checks and converting them to federal funds.
Determining Net Asset Value
Net asset value generally changes each day. The days on which
net asset value is calculated by the Fund are described in the
prospectus.
Determining Market Value of Securities
Market values of the Fund's portfolio securities are
determined as follows:
ofor equity securities, according to the last sale price
on a national securities exchange, if available;
oin the absence of recorded sales for equity securities,
according to the mean between the last closing bid and
asked prices;
ofor bonds and other fixed income securities, at the last
sale price on a national securities exchange if
available, otherwise as determined by an independent
pricing service;
ofor short-term obligations, according to the mean between
the bid and asked prices as furnished by an independent
pricing service; or
ofor all other securities, at fair value as determined in
good faith by the Board of Directors.
Prices provided by independent pricing services may be
determined without relying exclusively on quoted prices and
may reflect institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data.
Redeeming Shares
The Fund redeems shares at the next computed net asset value
after the Fund receives the redemption request. Redemption
procedures and any fees are explained in the respective
prospectus under "Redeeming Shares." Although the Fund's
transfer agent does not charge for telephone redemptions, it
reserves the right to charge a fee for the cost of wire-
transferred redemptions of less than $5,000.
Redemption in Kind
The Fund is obligated to redeem shares solely in cash up to
$250,000 or 1% of the Fund's net asset value, whichever is
less, for any one shareholder within a 90-day period.
Any redemption beyond this amount will also be in cash unless
the Board of Directors determines that payments should be in
kind. In such a case, the Fund will pay all or a portion of
the remainder of the redemption in portfolio instruments,
valued in the same way that net asset value is determined. The
portfolio instruments will be selected in a manner that the
Board of Directors deems fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders receiving their
securities and selling them before their maturity could
receive less than the redemption value of their securities and
could incur transaction costs.
Tax Status
The Fund's Tax Status
The Fund will pay no federal income tax because it expects to
meet the requirements of Subchapter M of the Internal Revenue
Code, as amended, applicable to regulated investment companies
and to receive the special tax treatment afforded to such
companies. To qualify for this treatment, the Fund must, among
other requirements:
oderive at least 90% of its gross income from dividends,
interest, and gains from the sale of securities;
oderive less than 30% of its gross income from the sale of
securities held less than three months;
oinvest in securities within certain statutory limits; and
odistribute to its shareholders at least 90% of its net
income earned during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends
and capital gains received as cash or additional shares. The
dividends received deduction for corporations will apply to
ordinary income distributions to the extent the distribution
represents amounts that would qualify for the dividends
received deduction to the Fund if the Fund were a regular
corporation and to the extent designated by the Fund as so
qualifying. These dividends and any short-term capital gains
are taxable as ordinary income.
Capital Gains
Long-term capital gains distributed to shareholders will
be treated as long-term capital gains regardless of how
long shareholders have held the shares.
Total Return
The Fund's average annual total returns for the one-year, five-
year, and ten-year periods ended October 31, 1994, were
(0.48%), 7.17% and 10.05%, respectively.
The average annual total return for the Fund is the average
compounded rate of return for a given period that would equate
a $1,000 initial investment to the ending redeemable value of
that investment. The ending redeemable value is computed by
multiplying the number of shares owned at the end of the
period by the maximum offering price per share at the end of
the period. The number of shares owned at the end of the
period is based on the number of shares purchased at the
beginning of the period with $1,000, adjusted over the period
by any additional shares, assuming the quarterly reinvestment
of all dividends and distributions.
Yield
The Fund's SEC yield for the thirty-day period ended October
31, 1994, was 3.98%.
The yield for the Fund is determined by dividing the net
investment income per share (as defined by the Securities and
Exchange Commission) earned by the Fund over a thirty-day
period by the maximum offering price per share of the Fund on
the last day of the period. This value is then annualized
using semi-annual compounding. This means that the amount of
income generated during the thirty-day period is assumed to be
generated each month over a twelve-month period and is
reinvested every six months. The yield does not necessarily
reflect income actually earned by the Fund because of certain
adjustments required by the Securities and Exchange Commission
and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in
conjunction with an investment in the Fund, performance will
be reduced for those shareholders paying those fees.
Performance Comparisons
The Fund's performance depends upon such variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio
securities;
ochanges in the Fund's expenses; and
ovarious other factors.
The Fund's performance fluctuates on a daily basis largely
because net earnings and offering price per share fluctuate
daily. Both net earnings and offering price per share are
factors in the computation of yield and total return.
Investors may use financial publications and/or indices to
obtain a more complete view of the Fund's performance. When
comparing performance, investors should consider all relevant
factor such as the composition of any index used, prevailing
market conditions, portfolio compositions of other funds, and
methods used to value portfolio securities and compute
offering price. The financial publications and/or indices
which the Fund uses in advertising may include:
oStandard & Poor's Daily Stock Price Index of 500 Common
Stocks is a composite index of common stocks in industry,
transportation, and financial and public utility companies,
compares total returns of funds whose portfolios are
invested primarily in common stocks. In addition, Standard
and Poor's index assumes reinvestment of all dividends paid
by stocks listed on its index. Taxes due on any of these
distributions are not included nor are brokerage or other
fees calculated in Standard & Poor's figures.
oSalomon Brothers AAA-AA Corporates calculates total returns
of approximately 775 issues, which include long-term, high-
grade domestic corporate taxable bonds, rated AAA-AA, with
maturities of twelve years or more. It also includes
companies in industry, public utilities, and finance.
oLipper Analytical Services, Inc., ranks funds in various
categories by making comparative calculations using total
return. Total return assumes the reinvestment of all capital
gains distributions and income dividends and takes into
account any change in net asset value over a specific period
of time. From time to time, the Fund will quote its Lipper
ranking in advertising and sales literature.
oLehman Brothers Government/Corporate (Total) is comprised of
approximately 5,000 issues which include non-convertible
bonds publicly issued by the U.S. government or its
agencies; corporate bonds guaranteed by the U.S. government
and quasi-federal corporations; and publicly issued, fixed
rate, non-convertible domestic bonds of companies in
industry, public utilities, and finance. The average
maturity of these bonds approximates nine years. Tracked by
Lehman Brothers, Inc., the index calculates total returns
for one-month, three-month, twelve-month, and ten-year
periods and year-to-date.
oS&P 500/Lehman Brothers Government/Corporate (Weighted
Index) and the S&P 500/ Lehman Brothers Government (Weighted
Index) combine the components of a stock-oriented index and
a bond-oriented index to obtain results which can be
compared to the performance of a managed fund. The indices'
total returns will be assigned various weights depending
upon the Fund's current asset allocation.
oMorningstar, Inc., an independent rating service, is the
publisher of the bi-weekly Mutual Fund Values. Mutual Fund
Values rates more than 1,000 NASDAQ-listed mutual funds of
all types, according to their risk-adjusted returns. The
maximum rating is five stars, and ratings are effective for
two weeks.
Investors may also consult the fund evaluation consulting
universe listed below. Consulting universes may be composed of
pension, profit-sharing, commingled, endowment/foundation and
mutual funds.
oSEI Balanced Universe is composed of 916 portfolios managed
by 390 managers representing $86 billion in assets. To be
included in the universe, a portfolio must contain a 5%
minimum commitment in both equity and fixedincome
securities.
Advertisements and other sales literature for the Fund may
quote total returns which are calculated on non-standardized
base periods. These total returns also represent the historic
change in the value of an investment in the Fund based on
quarterly reinvestment of dividends over a specified period of
time.
Duration
Duration is a commonly used measure of the potential
volatility in the price of a bond, other fixed income
security, or in a portfolio of fixed income securities, prior
to maturity. Volatility is the magnitude of the change in the
price of a bond relative to a given change in the market rate
of interest. A bond's price volatility depends on three
primary variables: the bond's coupon rate; maturity date; and
the level of market yields of similar fixed-income securities.
Generally, bonds with lower coupons or longer maturities will
be more volatile than bonds with higher coupons or shorter
maturities. Duration combines these variables into a single
measure.
Duration is calculated by dividing the sum of the time-
weighted values of the cash flows of a bond or bonds,
including interest and principal payments, by the sum of the
present values of the cash flows.
When the Fund invests in mortgage pass-through securities, its
duration will be calculated in a manner which requires
assumptions to be made regarding future capital prepayments. A
more complete description of this calculation is available
upon request from the Fund.
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.
NR--NR indicates that no public rating has been requested,
that there is insufficient information on which to base a
rating, or that S&P does not rate a particular type of
obligation as a matter of policy.
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.
NR--Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2, and 3 in each
generic rating classification from Aa through B in corporate
bond rating system. The modifier 1 indicates that the security
ranks in the higher end of its generic ranking category; the
modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic
rating category.
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 conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of
satisfactory credit quality. The obligor'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.
NR--NR indicates that Fitch does not rate the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a
rating symbol to indicate the relative position of a credit
within the rating category. Plus and minus signs, however, are
not used in the AAA category.
Standard and Poor's Ratings Group Commercial Paper Ratings
A-1--This designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted
with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated A-1.
Moody's Investors Service, Inc., Commercial Paper Ratings
Prime-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.
- Well-established access to a range of financial markets
and assured sources of alternate liquidity.
Prime-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 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 an assurance 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, but the
margin of safety is not as great as the F-1+ and F-1
categories.
86101A104
8012905B (12/94)
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A);
(b) Exhibits:
(1) Paper Copy of the Charter of the Registrant as
amended (1);
(2) Paper copies of the By-Laws of the Registrant
as amended (1),(4),(5),(6),(8),(9);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant (1);
(5) Conformed copy of the Investment Advisory
Contract of the Registrant +;
(6) Conformed Copy of Distributors Contract (12)
(7) Not applicable;
(8) (i) Conformed copy of the Custodian Contract
+;
(ii) Conformed copy of Transfer Agency and
Service Agreement +;
(9) (i) Conformed copy of Administrative Services
Agreement+
(ii) Conformed copy of Shareholder Services
Agreement+
(iii) Conformed copy of Shareholder Services
Plan +
(iv) Conformed copy of Shareholder Services
Sub-Contract+
(10) Not applicable;
(11) Copy of the Consent of Independent
Auditors;+
(12) Not applicable;
(13) Not applicable;
(14) Not applicable;
(15) Not applicable;
(16) Copy of Schedule for Computation of Fund
Performance Data (7);
_______________________
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 49 filed on Form N-1A December 21,
1979.(File Nos. 2-10415 and 811-1)
4. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 63 filed on Form N-1A February 28,
1985. (File Nos. 2-10415 and 811-1)
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 68 filed on Form N-1A February 18,
1987. (File Nos. 2-10415 and 811-1)
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 69 filedon Form N-1A February 22,
1988. (File Nos. 2-10415 and 811-1)
7. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 71 filed on Form N-1A February 23,
1989. (File Nos. 2-10415 and 811-1)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 72 filed on Form N-1A December 22,
1989. (File Nos. 2-10415 and 811-1)
9. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 74 filed on on Form N-1A February 23,
1990. (File Nos. 2-10415 and 811-1)
12. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 83 filed on Form N-1A December 28,
1993.(File Nos. 2-10415 and 811-1)
(17) Copy of Financial Data Schedule +
(18) Opinion and Consent of Counsel as to
Availability of Rule 485(b);+
(19) Power of Attorney (10);
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 12, 1994
Class A Shares 3,486
Shares of Capital Stock
($0.001 per share par value)
Item 27. Indemnification:
Indemnification is provided to Officers and Directors of
the Registrant pursuant to Section (f) of the Eighth
paragraph of Registrant's Articles of Incorporation.
The Investment Advisory Contract between the Registrant
and Federated Management ("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 Directors 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
Directors, Officers, and controlling persons of the
Registrant by the Registrant pursuant to the Articles of
Incorporation 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 Directors, Officers, or controlling persons of the
Registrant in connection with the successful defense of
any act, suit, or proceeding) is asserted by such
Directors, 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.
_______________________
+ All exhibits have been filed electronically.
10. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 78 on Form N-1A filed December 23,
1991. (File Nos. 2-10415 and 811-1)
Insofar as indemnification for liabilities may be
permitted pursuant to Section 17 of the Investment
Company Act of 1940 for Directors, Officers, and
controlling persons of the Registrant by the Registrant
pursuant to the Articles of Incorporation 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 Articles of
Incorporation 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 Directors 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, Director, 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
Directors 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:
For a description of the other business of Federated
Management, the investment adviser, see the section
entitled "Fund Information - Management of the Fund" in
Part A. The affiliations with the Registrant of three
of the Trustees and three of the Officers of the
investment adviser and their business addresses are
included in Part B of this Registration Statement under
"Fund Management - Officers and Directors." 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:
William D. Dawson, J. Thomas Madden, and Mark L. Mallon,
Executive Vice Presidents; Henry J. Gailliot, Senior
Vice President-Economist; Peter R. Anderson, Gary J.
Madich, and J. Alan Minteer, Senior Vice Presidents;
Jonathan C. Conley, Deborah A. Cunningham, Mark E.
Durbiano, Kathleen M. Foody-Malus, Thomas M. Franks,
Edward C. Gonzales, Jeff A. Kozemchak, John W.
McGonigle, Gregory M. Melvin, Susan M. Nason, Mary Jo
Ochson, Robert J. Ostrowski, Charles A. Ritter, and
Christopher H. Wiles, Vice Presidents; Edward C.
Gonzales, Treasurer; and John W. McGonigle, Secretary.
The business address of each of the Officers of the
investment adviser is Federated Investors Tower,
Pittsburgh, PA 15222-3779. These individuals are also
officers of a majority of the investment advisers to the
Funds listed in Part B of this Registration Statement
under "The Funds."
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for
shares of the Registrant, also acts as principal
underwriter for the following open-end investment
companies: Alexander Hamilton Funds; American
Leaders Fund, Inc.; Annuity Management Series; Arrow
Funds; Automated Cash Management Trust; Automated
Government Money Trust; BayFunds; The Biltmore
Funds; The Biltmore Municipal Funds; California
Municipal Cash Trust; Cash Trust Series, Inc.; Cash
Trust Series II; DG Investor Series; Edward D. Jones
& Co. Daily Passport Cash Trust; Federated ARMs Fund;
Federated Exchange Fund, Ltd.; Federated GNMA Trust;
Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated
Intermediate Government Trust; Federated Master
Trust; Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-Term
U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; First Union Funds;
Fixed Income Securities, Inc.; Fortress Adjustable
Rate U.S. Government Fund, Inc.; Fortress Municipal
Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain Square Funds; Fund for U.S. Government
Securities, Inc.; Government Income Securities, Inc.;
High Yield Cash Trust; Independence One Mutual Funds;
Insight Institutional Series, Inc.; Insurance
Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Managed Series Trust;
Marshall Funds, Inc.; Money Market Management, Inc.;
The Medalist Funds; Money Market Obligations Trust;
Money Market Trust; The Monitor Funds; Municipal
Securities Income Trust; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; Portage Funds; RIMCO Monument Funds;
The Shawmut Funds; Short-Term Municipal Trust;
SouthTrust Vulcan Funds; Star Funds; The Starburst
Funds; The Starburst Funds II; Stock and Bond Fund,
Inc.; Sunburst Funds; Targeted Duration Trust; Tax-
Free Instruments Trust; Tower Mutual Funds; Trademark
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 Fiduciary Funds, Inc.; 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.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice President and
Federated Investors Tower President, and Treasurer, Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
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 Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Recordkeeper")
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8604
("Custodian") Boston, MA 02266-8604
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 Directors and the calling of special
shareholder meetings by shareholders.
Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant, STOCK
AND BOND FUND, INC., has duly caused this Amendment to its
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 29th day
of December, 1994.
STOCK AND BOND FUND, INC.
BY: /s/ Melissa A. Moore
Melissa A. Moore, Assistant Secretary
Attorney in Fact for John F. Donahue
December 29, 1994
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to its Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE
DATE
By: /s/ Melissa A. Moore
Melissa A. Moore Attorney In Fact December 29, 1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Director
(Chief Executive Officer)
Glen R. Johnson* President
Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)
John T. Conroy, Jr.* Director
William J. Copeland* Director
James E. Dowd* Director
Lawrence D. Ellis, M.D.* Director
Edward L. Flaherty, Jr.* Director
Peter E. Madden* Director
Gregor F. Meyer* Director
Wesley W. Posvar* Director
Marjorie P. Smuts* Director
* By Power of Attorney
Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
INDEPENDENT AUDITORS CONSENT
We consent to the use in this Post-Effective Amendment
No. 85 to Registration Statement No. 2-10415 of Stock and
Bond Fund, Inc., of our report dated December 14, 1994,
appearing in the Prospectus, which is a part of such
Registration Statement, and to the reference to us under the
heading "Financial Highlights" in such Prospectus.
By: /S/DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Boston, Massachusetts
December 27, 1994
Exhibit 18 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTON PITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
December 29, 1994
Stock and Bond Fund, Inc.
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
As counsel to Stock and Bond Fund, Inc. ("Fund") we have
reviewed Post-effective Amendment No. 85 to the Fund's
Registration Statement to be filed with the Securities and
Exchange Commission under the Securities Act of 1933 (File No. 2-
10415). The subject Post-effective Amendment will be filed
pursuant to Paragraph (b) of Rule 485 and become effective
pursuant to said Rule on December 31, 1994.
Our review also included an examination of other relevant
portions of the amended 1933 Act Registration Statement of the
Fund and such other documents and records deemed appropriate. On
the basis of this review we are of the opinion that Post-
effective Amendment No. 85 does not contain disclosures which
would render it ineligible to become effective pursuant to
Paragraph (b) of Rule 485.
We hereby consent to the filing of this representation
letter as a part of the Fund's Registration Statement filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and as part of any application or registration statement
filed under the Securities Laws of the States of the United
States.
Very truly yours,
Houston, Houston & Donnelly
By: /s/ Thomas J. Donnelly
TJD:heh
Exhibit 5 under
Form N-1A
Exhibit 10 under Item
601/Reg. S-K
FEDERATED STOCK AND BOND FUND, INC.
INVESTMENT ADVISORY CONTRACT
This Contract is made between FEDERATED MANAGEMENT, a
Delaware business
trust having its principal place of business in Pittsburgh,
Pennsylvania
(hereinafter referred to as 'Adviser'), and FEDERATED STOCK AND
BOND FUND,
INC., a Maryland corporation having its principal place of
business in
Pittsburgh, Pennsylvania (hereinafter referred to as the
'Fund'), and is
based on the following premises:
(a) That the Fund is an open-end management investment
company as that
term is defined in the Investment Company Act of 1940
and is
registered as such with the Securities and Exchange
Commission;
(b) That 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 Fund hereby appoints Adviser as investment adviser
and Adviser
accepts the appointment. Subject to the direction of the
Directors of the
Fund, Adviser shall provide investment research and supervision
of the
investments of the Fund and conduct a continuous program of
investment,
evaluation and of appropriate sale or other disposition and
reinvestment of
the Fund's portfolio.
2. Adviser, in its supervision of the investments of the
Fund will be
guided by the Fund's fundamental investment policies and the
provisions and
restrictions contained in the Charter and By-Laws of the Fund
and as set
forth in the Registration Statements and exhibits as may be on
file with the
Securities and Exchange Commission.
3. The Fund shall pay or cause to be paid all of its
expenses,
including, without limitation, the expenses of continuing the
Fund's
existence; fees and expenses of officers and Directors of the
Fund; fees for
investment advisory services and administrative personnel and
services; fees
and expenses of preparing and printing amendments to its
Registration
Statements under the Securities Act of 1933 and the Investment
Company Act
of 1940; expenses of continuing the registration of the Fund and
its Shares
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 Directors 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 Fund. The Fund will also pay such
extraordinary expenses as may arise including expenses incurred
in
connection with litigation, proceedings and claims and the legal
obligations
of the Fund to indemnify its officers and Directors and agents
with respect
thereto.
4. For all services rendered by Adviser hereunder, the Fund
shall pay to Adviser and Adviser agrees to accept as full
compensation for all services
rendered hereunder, an annual investment advisory fee equal to
0.55% of the
average daily net assets of the Fund, plus 4.5% of the gross
income of the
Fund. Gross income includes, in general, discount earned on U.S.
Treasury
bills and agency discount notes, interest received or receivable
on all
interest-bearing obligations and dividend income recorded on the
ex-dividend
date, but does not include capital gains or losses or a
reduction for
expenses.
The portion of the fee based upon the average daily net
assets of the
Fund shall be accrued daily at the rate of 1/365th of 0.55%
applied to the
daily net assets of the Fund.
The portion of the fee based upon gross income shall be
accrued daily at
the rate of 4.5% of the gross income of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
5. The net asset value of Fund Shares as used herein will
be calculated
to the nearest 1/10th of one cent.
6. Adviser may from time to time and for such periods as it
deems
appropriate reduce its compensation (and, if appropriate, assume
expenses of
the Fund) to the extent that the Fund's expenses exceed such
lower expense
limitation as Adviser may, by notice to the Fund, voluntarily
declare to be
effective.
7. The term of this Contract shall continue in effect for
two years from
the date of its execution and from year to year thereafter,
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 Directors of the Fund,
including a majority
of the Directors who are not parties to this Contract or
interested persons
of any such party (other than as Directors of the Fund) cast in
person at a
meeting called for that purpose; and (b) Adviser shall not have
notified the
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.
8. Notwithstanding any provision in this Contract, it may
be terminated
at any time, without the payment of any penalty, by the
Directors of the
Fund or by a vote of the Shareholders of the 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 obligations or duties under this
Contract on the
part of Adviser, Adviser shall not be liable to the Fund or 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 Directors of the Fund, including a majority of Directors
who are not
parties to this Contract or interested persons of any such party
to this
Contract (other than as Directors of the Fund) cast in person at
a meeting
called for that purpose, and by the holders of a majority of the
outstanding
voting securities of the Fund.
12. The Fund is hereby expressly put on notice of the
limitation of
liability as set forth in the Declaration of Trust of the
Adviser and agrees
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, the Fund
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.
13. The parties hereto acknowledge 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 adviser,
distributor or other business enterprise, and to withdraw from
the Fund the
use of the name 'Federated.' The name 'Federated' will continue
to be used
by the Fund so long as such use is mutually agreeable to
Federated Investors
and the Fund.
14. This Contract shall be construed in accordance with and
governed by
the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this 1st day of August,
1989.
Attest: FEDERATED MANAGEMENT
By:/s/ John W. McGonigle /s/ Mark L. Mallon
Secretary Vice President
Attest: FEDERATED STOCK AND BOND
FUND, INC.
By:/s/ John W. McGonigle /s/ Edward C. Gonzales
Secretary Vice President
Exhibit 8 (i) 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
2.10Payments for Repurchases or Redemptions
of Shares of a Fund 9
2.11Appointment of Agents 10
2.12Deposit of Fund Assets in Securities System 10
2.13Segregated Account 12
2.14Joint Repurchase Agreements 13
2.15Ownership Certificates for Tax Purposes 13
2.16Proxies 13
2.17Communications Relating to Fund Portfolio
Securities 13
2.18Proper Instructions 14
2.19Actions Permitted Without Express Authority 14
2.20Evidence of Authority 15
2.21Notice 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
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 a
nd 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
2.1Holding 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.
2.2Delivery of Securities. The Custodian shall release a
nd 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.
2.5Payments 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.
2.6Availability 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 when
ever 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.
2.8Payment 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.
2.9Liability 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.
2.10Payments 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.
2.11Appointment 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.
2.12Deposit 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.
2.13Segregated 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.
2.14Joint 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.
2.15Ownership 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.
2.16Proxies. 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.
2.17Communications 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.
2.18Proper 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.
2.19Actions 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.
2.20Evidence 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.
2.21Notice 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 (Except those
listed below)
/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 COMPANIY
/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan________________
Jeannette Fisher-Garber James J. Dolan
Secretary President
Exhibit 1
Stock and Bond Fund, Inc.
Exhibit 8 (ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of the 1st day of Dec., 1994, 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 "Trust"), on behalf of the
portfolios (individually referred to herein as a "Fund" and
collectively as "Funds") of the Trust, and FEDERATED
SERVICES COMPANY, a Delaware business trust, having its
principal office and place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779 (the
"Company").
WHEREAS, the Trust 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");
and
WHEREAS, the Trust may desire to retain the Company to
provide 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 is willing to furnish such
services; and
WHEREAS, the Trust may desire to appoint the Company as
its transfer agent, dividend disbursing agent 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 Trust 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
WHEREAS, from time to time the Trust may desire and may
instruct the Company to subcontract for the performance of
certain of its duties and responsibilities hereunder to
State Street Bank and Trust Company or another agent (the
"Agent"); and
WHEREAS, the words Trust and Fund may be used
interchangeably for those investment companies consisting of
only one portfolio;
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 Trust 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 Trust's
Board of Trustees or Directors ("Board"), the Company will
assist the Trust with regard to fund accounting for the
Trust, 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 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 Trust, 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
Trust are the property of the Trust and further agrees
to surrender promptly to the Trust such records upon
the Trust's request;
G. At the request of the Trust, prepare various reports
or other financial documents required by federal,
state and other applicable laws and regulations; and
H. Such other similar services as may be reasonably
requested by the Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services
rendered pursuant to Section One of this Agreement 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 upon receipt of
a separate invoice. 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 Trust; independent
auditors expenses; Federated Administrative Services
and/or Federated Administrative Services, Inc. legal
and audit department expenses billed to Federated
Services Company for work performed related to the
Trust, the Funds, or the Classes; law firm 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 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 Trust
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
services under this Section One. Such person or
persons may be third-party service providers, or they
may be officers and employees who are employed by both
the Company and the Funds. The compensation of such
person or persons shall be paid by the Company and no
obligation shall be incurred on behalf of the Trust,
the Funds, or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this
Agreement, the Trust 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.
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 Trust, 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 Trust, 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 5. 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 Trust 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 Trust, 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 Trust 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.
Article 6. Duties of the Trust.
A. Compliance
The Trust 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 Trust 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 Trust and shall bear the seal of the
Trust or facsimile thereof; and notwithstanding the
death, resignation or removal of any officer of the
Trust 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 Trust.
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 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two
of this Agreement, the Trust 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 Trust 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 Trust 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 Trust 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 Trust
and/or the Funds and a duly authorized officer of the
Company.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under
this Section Two 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. The Company may without further consent on the part of
the Trust subcontract for the performance hereof with
(A) State Street Bank and its subsidiary, Boston
Financial Data Services, Inc., a Massachusetts Trust
("BFDS"), 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 (B) a BFDS
subsidiary duly registered as a transfer agent
pursuant to Section 17A(c)(1), or (C) a BFDS
affiliate, or (D) such other provider of services duly
registered as a transfer agent under Section 17A(c)(1)
as Company shall select; provided, however, that the
Company shall be as fully responsible to the Trust for
the acts and omissions of any subcontractor as it is
for its own acts and omissions; or
C. The Company shall upon instruction from the Trust
subcontract for the performance hereof with an Agent
selected by the Trust, other than BFDS or a provider
of services selected by Company, as described in (2)
above; provided, however, that the Company shall in no
way be responsible to the Trust for the acts and
omissions of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust 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 10. The Company and Its Duties.
Subject to the review, supervision and control of the
Board, the Company shall:
A. evaluate the nature and the quality of the custodial
services provided by the Eligible Custodian;
B. employ the Eligible Custodian to serve on behalf of
the Trust as Custodian of the Trust's assets
substantially on the terms set forth as the form of
agreement in Exhibit 2;
C. negotiate and enter into agreements with the
Custodians for the benefit of the Trust, with the
Trust as a party to each such agreement. The Company
shall not be a party to any agreement with any such
Custodian;
D. establish procedures to monitor the nature and the
quality of the services provided by the Custodians;
E. continuously monitor the nature and the quality of
services provided by the Custodians; and
F. periodically provide to the Trust (i) written reports
on the activities and services of the Custodians; (ii)
the nature and amount of disbursement made on account
of the Trust 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.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section
Three of this Agreement, the Trust and/or the Fund
agree to pay the Company an annual fee as agreed upon
between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A above,
the Trust 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 Trust 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 Trust
and/or the Funds and a duly authorized officer of the
Company.
Article 12. 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 Three of this
Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company
under this Agreement, the Trust shall file with the
Company the following documents:
(1) A copy of the Charter and By-Laws of the Trust
and all amendments thereto;
(2) A copy of the resolution of the Board of the
Trust authorizing this Agreement;
(3) Specimens of all forms of outstanding Share
certificates of the Trust or the Funds in the
forms approved by the Board of the Trust with a
certificate of the Secretary of the Trust 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 Trust
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 Trust;
(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 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and
existing and in good standing under the laws of
the State of Delaware.
(2) It is duly qualified to carry on its business in
the State of Delaware.
(3) It is empowered under applicable laws and by its
charter 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 a transfer
agent.
B. Representations and Warranties of the Trust
The Trust 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 Trust 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 15. Standard of Care and Indemnification.
A. Standard of Care
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
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.
B. Indemnification by Trust
The Company shall not be responsible for and the Trust
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 Trust 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 Trust 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 Trust.
(3) The reliance on, or the carrying out by the
Company or its agents or subcontractors of Proper
Instructions of the Trust 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 15.A. from liability
for any act or omission resulting from the
Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties of
failure to meet the standard of care set forth in
15.A. above.
C. Reliance
At any time the Company may apply to any officer of
the Trust 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 Trust 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 Trust 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 15 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 16. Termination of Agreement.
This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.
Should the Trust exercise its rights to terminate, all out-
of-pocket expenses associated with the movement of records
and materials will be borne by the Trust or the appropriate
Fund. Additionally, the Company reserves the right to
charge for any other reasonable expenses associated with
such termination. The provisions of Article 15 shall
survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written
agreement executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the
Company and the Trust 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 19. 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 20. 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 Company at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to
such other address as the Trust or the Company may hereafter
specify, shall be deemed to have been properly delivered or
given hereunder to the respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original.
Article 22. Limitations of Liability of Trustees and
Shareholders of the Trust.
The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an
authorized officer of the Trust, 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 Trust, but bind only the appropriate
property of the Fund, or Class, as provided in the
Declaration of Trust.
Article 23. 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 property of
the Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall
not be assignable with respect to the Trust or the Funds by
either of the parties hereto except by the specific written
consent of the other party.
Article 25. 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 26. Successor Agent.
If a successor agent for the Trust shall be appointed by
the Trust, the Company shall upon termination of this
Agreement deliver to such successor agent at the office of
the Company all properties of the Trust 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 27. 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 28. 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 to a successor all of or a
substantial portion of its business, or to a party
controlling, controlled by, or under common control with
such party. Nothing in this Article 28 shall prevent the
Company from delegating its responsibilities to another
entity to the extent provided herein
.
Article 29. Severability.
In the event any provision of this Agreement is held
illegal, void or unenforceable, the balance shall remain in
effect.
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.
ATTEST: INVESTMENT COMPANIES (listed on Exhibit 1)
/s/ S Elliott Cohan By: /s/ John F. Donahue
S. Elliott Cohan John F. Donahue
Assistant Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By: James J. Dolan
Jeannette Fisher-Garber James J. Dolan
Secretary President
Exhibit 1
Stock and Bond Fund, Inc.
Exhibit 9 (i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this
first day of March, 1994, 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 (individually
referred to herein as "Fund" and collectively referred to as
"Funds), on behalf of the portfolios of the Funds, and Federated
Administrative Services, a Delaware business trust (herein
called "FAS").
WHEREAS, the Funds desire to retain FAS as their
Administrator to provide them with Administrative Services (as
herein defined), and FAS is willing to render such services;
WHEREAS, the Funds are registered as open-end management
investment companies under the Investment Company Act of 1940,
as amended (the "1940 Act"), with authorized and issued shares
of capital stock or beneficial interest ("Shares"); and
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Funds hereby
appoint FAS as Administrator of the Funds on the terms and
conditions set forth in this Agreement; and FAS hereby accepts
such appointment and agrees to perform the services and duties
set forth in Section 2 of this Agreement in consideration of the
compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to
the supervision and control of the Funds' Boards of Trustees or
Directors, as applicable (the "Boards"), FAS will provide
facilities, equipment, and personnel to carry out the following
administrative services for operation of the business and
affairs of the Funds and each of their portfolios:
(a) prepare, file, and maintain the
Funds' governing documents and any amendments
thereto, including the Declaration of Trust or
Articles of Incorporation, as appropriate,(which has
already been prepared and filed), the By-laws and
minutes of meetings of their Boards, Committees, and
shareholders;
(b) prepare and file with the
Securities and Exchange Commission and the
appropriate state securities authorities the
registration statements for the Funds and the Funds'
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 Funds
to make continuous offerings of their shares, as
applicable;
(c) prepare, negotiate, and
administer contracts on behalf of the Funds with,
among others, each Fund's investment adviser,
distributor, custodian, and transfer agent, subject
to any applicable restrictions of the Boards or the
1940 Act;
(d) supervise the Funds' custodians
in the maintenance of the Funds' general ledgers and
in the preparation of the Funds' financial
statements, including oversight of expense accruals
and payments, the determination of the net asset
value of the Funds and the declaration and payment of
dividends and other distributions to shareholders;
(e) calculate performance data of
the Funds for dissemination to information services
covering the investment company industry;
(f) prepare and file the Funds' tax
returns;
(g) examine and review the
operations of the Funds' custodians and transfer
agents;
(h) coordinate the layout and
printing of publicly disseminated prospectuses and
reports;
(i) perform internal audit
examinations in accordance with a charter to be
adopted by FAS and the Funds;
(j) assist with the design,
development, and operation of the Funds;
(k) provide individuals reasonably
acceptable to the Funds' Boards for nomination,
appointment, or election as officers of the Funds,
who will be responsible for the management of certain
of the Funds' affairs as determined by the Funds'
Boards; and
(l) consult with the Funds and their
Boards of Trustees or Directors, as appropriate, on
matters concerning the Funds and their affairs.
The foregoing, along with any additional services that FAS
shall agree in writing to perform for the Funds hereunder, shall
hereafter be referred to as "Administrative Services."
Administrative Services shall not include any duties, functions,
or services to be performed for any Fund by such Fund's
investment adviser, distributor, custodian, transfer agent, or
shareholder service agent, pursuant to their respective
agreements with such Fund.
3. Expenses. FAS 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 Fund, including the compensation of FAS
employees who serve on the Funds' Boards, or as officers of the
Funds. Each Fund shall be responsible for all other expenses
incurred by FAS on behalf of such Fund, including without
limitation postage and courier expenses, printing expenses,
travel expenses, registration fees, filing fees, fees of outside
counsel and independent auditors, insurance premiums, fees
payable to members of such Fund's Board who are not FAS
employees, and trade association dues.
4. Compensation. For the Administrative Services
provided, each Fund hereby agrees to pay and FAS hereby agrees
to accept as full compensation for its services rendered
hereunder an administrative fee at an annual rate, payable
daily, as specified below, based upon the total assets of all of
the Funds:
Maximum Administrative 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
However, in no event shall the administrative fee received
during any year of this Agreement be less than, or be paid at a
rate less than would aggregate, $125,000, per individual Fund,
with an additional $30,000 for each class of shares added to any
such Fund after the date hereof.
5. Standard of Care.
(a) FAS shall not be liable for any
error of judgment or mistake of law or for any loss
suffered by any Fund 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. FAS
shall be entitled to rely on and may act upon advice
of counsel (who may be counsel for such Fund) 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,
trustee, partner, employee or agent of FAS, who may
be or become a member of such Fund's Board, officer,
employee or agent of any Fund, shall be deemed, when
rendering services to such Fund or acting on any
business of such Fund (other than services or
business in connection with the duties of FAS
hereunder) to be rendering such services to or acting
solely for such Fund and not as an officer, trustee,
partner, employee or agent or one under the control
or direction of FAS even though paid by FAS.
(b) This Section 5 shall survive
termination of this Agreement.
6. Duration and Termination. The initial term of this
Agreement with respect to each Fund shall commence on the date
hereof, and extend for a period of one year, renewable annually
by the approval of the Board of Directors/Trustees of each Fund.
7. Amendment. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which an
enforcement of the change, waiver, discharge or termination is
sought.
8. Limitations of Liability of Trustees or Officers,
Employees, Agents and Shareholders of the Funds. FAS is
expressly put on notice of the limitation of liability as set
forth in the Declaration of Trust of each Fund that is a
Massachusetts business trust and agrees that the obligations
assumed by each such Fund pursuant to this Agreement shall be
limited in any case to such Fund and its assets and that FAS
shall not seek satisfaction of any such obligations from the
shareholders of such Fund, the Trustees, Officers, Employees or
Agents of such Fund, or any of them.
9. Limitations of Liability of Trustees and Shareholders
of FAS. The execution and delivery of this Agreement have been
authorized by the Trustees of FAS and signed by an authorized
officer of FAS, 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 FAS, but bind only the trust
property of FAS as provided in the Declaration of Trust of FAS.
10. Notices. Notices of any kind to be given hereunder
shall be in writing (including facsimile communication) and
shall be duly given if delivered to any Fund at the following
address: Federated Investors Tower, Pittsburgh, PA 15222-3779,
Attention: President and if delivered to FAS at Federated
Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
11. Miscellaneous. 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. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement
shall be held or made invalid by a court or regulatory agency
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the
provisions of Section 5, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein shall
be construed in a manner inconsistent with the Investment
Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.
12. Counterparts. This Agreement may be executed by
different parties on separate counterparts, each of which, when
so executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
13. Assignment; Successors. This Agreement shall not be
assigned by any party without the prior written consent of FAS,
in the case of assignment by any Fund, or of the Funds, in the
case of assignment by FAS, except that any party may assign to a
successor all of or a substantial portion of its business to a
party controlling, controlled by, or under common control with
such party. Nothing in this Section 14 shall prevent FAS from
delegating its responsibilities to another entity to the extent
provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the day and year first above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Administrative Services
By: /s/ Edward C. Gonzales
Edward C. Gonzales
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
Stock and Bond Fund, Inc.
Exhibit 9 (ii) under Form N-1A
Exhibit 10 under Item 601 Reg. S-K
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of the first day of March, 1994, 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 and who have
approved a Shareholder Services Plan (the "Plan") and this form of
Agreement (individually referred to herein as a "Fund" and collectively
as "Funds") and Federated Shareholder Services, a Delaware business
trust, having its principal office and place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779 ("FSS").
1. The Funds hereby appoint FSS to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). In addition to
providing Services directly to shareholders of the Funds, FSS is hereby
appointed the Funds' agent to select, negotiate and subcontract for the
performance of Services. FSS hereby accepts such appointments. FSS
agrees to provide or cause to be provided Services which, in its best
judgment (subject to supervision and control of the Funds' Boards of
Trustees or Directors, as applicable), are necessary or desirable for
shareholders of the Funds. FSS further agrees to provide the Funds, upon
request, a written description of the Services which FSS is providing
hereunder.
2. During the term of this Agreement, each Fund will pay FSS and
FSS agrees to accept as full compensation for its services rendered
hereunder a fee at an annual rate, calculated daily and payable monthly,
up to 0.25% of 1% of average net assets of each Fund.
For the payment period in which this Agreement becomes effective or
terminates with respect to any Fund, there shall be an appropriate
proration of the monthly fee on the basis of the number of days that this
Agreement is in effect with respect to such Fund during the month. To
enable the Funds to comply with an applicable exemptive order, FSS
represents that the fees received pursuant to this Agreement will be
disclosed to and authorized by any person or entity receiving Services,
and will not result in an excessive fee to FSS.
3. This Agreement shall continue in effect for one year from the
date of its execution, and thereafter for successive periods of one year
only if the form of this Agreement is approved at least annually by the
Board of each Fund, including a majority of the members of the Board of
the Fund who are not interested persons of the Fund and have no direct or
indirect financial interest in the operation of the Funds' Plan or in any
related documents to the Plan ("Independent Board Members") cast in
person at a meeting called for that purpose.
4. Notwithstanding paragraph 3, this Agreement may be terminated
as follows:
(a)at any time, without the payment of any penalty, by the vote
of a majority of the Independent Board Members of any Fund or
by a vote of a majority of the outstanding voting securities
of any Fund as defined in the Investment Company Act of 1940
on sixty (60) days' written notice to the parties to this
Agreement;
(b)automatically in the event of the Agreement's assignment as
defined in the Investment Company Act of 1940; and
(c)by any party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its
intention to terminate.
5. FSS agrees to obtain any taxpayer identification number
certification from each shareholder of the Funds to which it provides
Services that is required under Section 3406 of the Internal Revenue
Code, and any applicable Treasury regulations, and to provide each Fund
or its designee with timely written notice of any failure to obtain such
taxpayer identification number certification in order to enable the
implementation of any required backup withholding.
6. FSS shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund 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. FSS shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for such Fund) 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, trustee, partner, employee or agent of FSS, who may be or become
a member of such Fund's Board, officer, employee or agent of any Fund,
shall be deemed, when rendering services to such Fund or acting on any
business of such Fund (other than services or business in connection with
the duties of FSS hereunder) to be rendering such services to or acting
solely for such Fund and not as an officer, trustee, partner, employee or
agent or one under the control or direction of FSS even though paid by
FSS.
This Section 6 shall survive termination of this Agreement.
7. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
8. FSS is expressly put on notice of the limitation of liability
as set forth in the Declaration of Trust of each Fund that is a
Massachusetts business trust and agrees that the obligations assumed by
each such Fund pursuant to this Agreement shall be limited in any case to
such Fund and its assets and that FSS shall not seek satisfaction of any
such obligations from the shareholders of such Fund, the Trustees,
Officers, Employees or Agents of such Fund, or any of them.
9. The execution and delivery of this Agreement have been
authorized by the Trustees of FSS and signed by an authorized officer of
FSS, 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 FSS, but bind only the trust
property of FSS as provided in the Declaration of Trust of FSS.
10. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered
to any Fund and to such Fund at the following address: Federated
Investors Tower, Pittsburgh, PA 15222-3779, Attention: President and if
delivered to FSS at Federated Investors Tower, Pittsburgh, PA 15222-
3779, Attention: President.
11. 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. If any provision of this
Agreement shall be held or made invalid by a court or regulatory agency
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of Sections 3
and 4, hereof, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
shall be governed by Pennsylvania law; provided, however, that nothing
herein shall be construed in a manner inconsistent with the Investment
Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.
12. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one
and the same instrument.
13. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by any Fund, or of
the Funds in the case of assignment by FSS, except that any party may
assign to a successor all of or a substantial portion of its business to
a party controlling, controlled by, or under common control with such
party. Nothing in this Section 14 shall prevent FSS from delegating its
responsibilities to another entity to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year
first above written.
Investment Companies (listedon Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
Shareholder Services Agreement
Stock and Bond Fund, Inc.
Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as of this 1st
day of March, 1994, by the Boards of Directors or Trustees, as applicable
(the "Boards"), of those investment companies listed on Exhibit 1 hereto
as may be amended from time to time, having their principal office and
place of business at Federated Investors Tower, Pittsburgh, PA 15222-
3779 (individually referred to herein as a "Fund" and collectively as
"Funds").
1. This Plan is adopted to allow the Funds to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate Federated Shareholder
Services ("FSS") for providing personal services and/or the maintenance
of shareholder accounts to the Funds and their shareholders. In
compensation for the services provided pursuant to this Plan, FSS may be
paid a monthly fee computed at the annual rate not to exceed .25 of 1% of
the average aggregate net asset value of the shares of each Fund held
during the month.
3. Any payments made by the Funds to FSS pursuant to this Plan
will be made pursuant to a "Shareholder Services Agreement" between FSS
and each of the Funds.
4. Quarterly in each year that this Plan remains in effect, FSS
shall prepare and furnish to the Boards of the Funds, and the Boards
shall review, a written report of the amounts expended under the Plan.
5. This Plan shall become effective with regard to each Fund
(i) after approval by majority votes of: (a) such Fund's Board; and (b)
the members of the Board of such Fund who are not interested persons of
such Fund and have no direct or indirect financial interest in the
operation of such Fund's Plan or in any related documents to the Plan
("Independent Trustees or Directors"), cast in person at a meeting called
for the purpose of voting on the Plan.
6. This Plan shall remain in effect with respect to each Fund
presently set forth on an exhibit and any subsequent Fund added pursuant
to an exhibit during the initial year of this Plan for the period of one
year from the date set forth above and may be continued thereafter if
this Plan is approved with respect to each Fund at least annually by a
majority of the relevant Fund's Board and a majority of the Independent
Trustees or
Directors, of such Fund as applicable, cast in person at a meeting
called for the purpose of voting on the renewal of such Plan. If this
Plan is adopted with respect to a fund after the first annual approval by
the Trustees or Directors as described above, this Plan will be effective
as to that Fund at such time as Exhibit 1 hereto is amended to add such
Fund and will continue in effect until the next annual approval of this
Plan by the Funds' Boards and thereafter for successive periods of one
year subject to approval as described above.
7. All material amendments to this Plan must be approved by a vote
of the Board of each Fund and of the Independent Directors or Trustees of
such Fund, cast in person at a meeting called for such purpose.
8. This Plan may be terminated as follows:
(a) at any time, without the payment of any penalty, by the vote
of a majority of the Independent Board Members of any Fund
or by a vote of a majority of the outstanding voting
securities of any Fund as defined in the Investment Company
Act of 1940 on sixty (60) days' written notice to the
parties to this Agreement; or
(b) by any party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its
intention to terminate.
9. While this Plan shall be in effect, the selection and
nomination of Independent Directors or Trustees of each Fund shall be
committed to the discretion of the Independent Directors or Trustees then
in office.
10. All agreements with any person relating to the implementation
of this Plan shall be in writing and any agreement related to this Plan
shall be subject to termination, without penalty, pursuant to the
provisions of Paragraph 8 herein.
11. This Plan shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this as of the date set forth
above.
Investment Companies (listed on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
Shareholder Services Plan
Stock and Bond Fund, Inc.
Exhibit 9 (iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES SUB-CONTRACT
This Agreement is made between the Financial
Institution executing this Agreement ("Provider") and
Federated Shareholder Services ("FSS") on behalf of the
investment companies listed in Exhibit A hereto (the
"Funds"), for whom FSS administers the Shareholder Services
Plan ("Plan") and who have approved this form of Agreement.
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties
hereto as follows:
1. FSS hereby appoints Provider to render or cause to
be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the
Funds ("Services"). Provider agrees to provide Services
which, in its best judgment, are necessary or desirable for
its customers who are investors in the Funds. Provider
further agrees to provide FSS, upon request, a written
description of the Services which Provider is providing
hereunder.
2. During the term of this Agreement, the Funds will
pay the Provider fees as set forth in a written schedule
delivered to the Provider pursuant to this Agreement. The
fee schedule for Provider may be changed by FSS sending a
new fee schedule to Provider pursuant to Paragraph 9 of this
Agreement. For the payment period in which this Agreement
becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number
of days that this Agreement is in effect during the quarter.
To enable the Funds to comply with an applicable exemptive
order, Provider represents that the fees received pursuant
to this Agreement will be disclosed to its customers, will
be authorized by its customers, and will not result in an
excessive fee to the Provider.
3. The Provider understands that the Department of
Labor views ERISA as prohibiting fiduciaries of
discretionary ERISA assets from receiving shareholder
service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To
date, the Department of Labor has not issued any exemptive
order or advisory opinion that would exempt fiduciaries from
this interpretation. Without specific authorization from
the Department of Labor, fiduciaries should carefully avoid
investing discretionary assets in any fund pursuant to an
arrangement where the fiduciary is to be compensated by the
fund for such investment. Receipt of such compensation
could violate ERISA provisions against fiduciary self-
dealing and conflict of interest and could subject the
fiduciary to substantial penalties.
4. The Provider agrees not to solicit or cause to be
solicited directly, or indirectly at any time in the future,
any proxies from the shareholders of a Fund in opposition to
proxies solicited by management of the Fund, unless a court
of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees or Directors
of the Fund constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties.
This paragraph 4 will survive the term of this Agreement.
5. This Agreement shall continue in effect for one
year from the date of its execution, and thereafter for
successive periods of one year if the form of this Agreement
is approved at least annually by the Board of each Fund,
including a majority of the members of the Board of the Fund
who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of
the Fund's Plan or in any related documents to the Plan
("Disinterested Board Members") cast in person at a meeting
called for that purpose.
6. Notwithstanding paragraph 5, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any
penalty, by the vote of a majority of the
Disinterested Board Members of the Fund or by a vote
of a majority of the outstanding voting securities of
the Fund as defined in the Investment Company Act of
1940 on not more than sixty (60) days' written notice
to the parties to this Agreement;
(b) automatically in the event of the
Agreement's assignment as defined in the Investment
Company Act of 1940; and
(c) by either party to the Agreement without
cause by giving the other party at least sixty (60)
days' written notice of its intention to terminate.
7. The Provider agrees to obtain any taxpayer
identification number certification from its customers
required under Section 3406 of the Internal Revenue Code,
and any applicable Treasury regulations, and to provide the
Fund or its designee with timely written notice of any
failure to obtain such taxpayer identification number
certification in order to enable the implementation of any
required backup withholding.
8. The execution and delivery of this Agreement have
been authorized by the Trustees of FSS and signed by an
authorized officer of FSS, 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 FSS, but bind only the trust property of FSS
as provided in the Declaration of Trust of FSS.
9. Notices of any kind to be given hereunder shall be
in writing (including facsimile communication) and shall be
duly given if delivered to Provider at the address set forth
below and if delivered to FSS at Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President.
10. 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. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of
Sections 5 and 6, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the
Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission
thereunder.
11. This Agreement may be executed by different
parties on separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
12. This Agreement shall not be assigned by any party
without the prior written consent of FSS in the case of
assignment by Provider, or of Provider in the case of
assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to
a party controlling, controlled by, or under common control
with such party.
13. This Agreement may be amended by FSS from time to
time by the following procedure. FSS will mail a copy of
the amendment to the Provider's address, as shown below. If
the Provider does not object to the amendment within thirty
(30) days after its receipt, the amendment will become part
of the Agreement. The Provider's objection must be in
writing and be received by FSS within such thirty days.
14. This Agreement may be terminated with regard to a
particular Fund or Class at any time, without the payment of
any penalty, by FSS or by the vote of a majority of the
Disinterested Trustees or Directors, as applicable, or by a
majority of the outstanding voting securities of the
particular Fund or Class on not more than sixty (60) days'
written notice to the Provider. This Agreement may be
terminated by Provider on sixty (60) days' written notice
to FSS.
15. The Provider acknowledges and agrees that FSS has
entered into this Agreement solely in the capacity of agent
for the Funds and administrator of the Plan. The Provider
agrees not to claim that FSS is liable for any
responsibilities or amounts due by the Funds hereunder.
[Provider]
Address
City State Zip Code
Dated: By:
Authorized Signature
Title
Print Name of Authorized
Signature
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By:
Vice President
EXHIBIT A to Shareholder Services Sub-Contract with
Funds covered by this Agreement:
Shareholder Service Fees
1. During the term of this Agreement, FSS will pay
Provider a quarterly fee. This fee will be computed at the
annual rate of ______ of the average net asset value of
shares of the Funds held during the quarter in accounts for
which the Provider provides Services under this Agreement,
so long as the average net asset value of Shares in the
Funds during the quarter equals or exceeds such minimum
amount as FSS shall from time to time determine and
communicate in writing to the Provider.
2. For the quarterly period in which the Agreement
becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the
number of days that the Agreement is in effect during the
quarter.
<TABLE> <S> <C>
<S> <C>
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<NUMBER> 1
<NAME> STOCK AND BOND FUND, INC.-CLASS A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 115,682,961
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<APPREC-INCREASE-CURRENT> (5,913,665)
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<PER-SHARE-NAV-BEGIN> 16.870
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</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> STOCK AND BOND FUND, INC.-CLASS C
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 115,682,961
<INVESTMENTS-AT-VALUE> 125,218,663
<RECEIVABLES> 1,685,303
<ASSETS-OTHER> 9,856
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 126,913,822
<PAYABLE-FOR-SECURITIES> 1,078,415
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 453,543
<TOTAL-LIABILITIES> 1,531,958
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 112,666,383
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 5,710
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-INCOME> 13,593
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<NUMBER-OF-SHARES-SOLD> 64,355
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<SHARES-REINVESTED> 497
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<PER-SHARE-NAV-BEGIN> 16.840
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</TABLE>
