SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
Federated High Income Bond Fund, Inc.
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PRELIMINARY PROXY
FEDERATED HIGH INCOME BOND FUND, INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD , 1996
A Special Meeting of the shareholders of Federated High Income Bond
Fund, Inc. (the `Fund'') will be held at the Fund's principal offices on
the 19th Floor of the Federated Investors Tower, Grant Street and Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3779, at 2:00 p.m. , 1996,
for the following purposes:
(1) To approve or disapprove the removal of the Fund's fundamental
investment limitation restricting the Fund's investment in restricted
securities to 10% of is total assets; and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed , 1996 as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Directors
John W. McGonigle
Secretary
July , 1996
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SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY TO AVOID ADDITIONAL EXPENSE
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF
YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN
THE ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
SPECIAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
FEDERATED HIGH INCOME BOND FUND, INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
the Fund. The proxy is revocable at any time before it is voted by sending
written notice of the revocation to the Fund or by appearing personally on
, 1996, at the special meeting of shareholders (`Special
Meeting'). The cost of preparing and mailing the notice of meeting, this
proxy statement, proxy card and any additional proxy material has been or
is to be borne by the Fund. Proxy solicitations will be made primarily by
mail, but may also be made by telephone, telegraph, or personal interview
conducted by certain officers or employees of the Fund or of Federated
Shareholder Services Company (the Fund's transfer agent) or Federated
Services Company (the Fund's administrator). In the event that a
shareholder does not indicate a choice as to any of the items on the proxy
ballot, the Fund will vote those shares in favor of such proposal(s).
On , 1996 the Fund had outstanding shares of beneficial
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interest, each whole share being entitled to one vote and fractional shares
being entitled to fractional votes. Only shareholders of record at the
close of business on that date will be entitled to notice of and vote at
the Special Meeting. Holders of one-fourth of the total number of shares
of the Fund then outstanding, represented in person or by proxy, shall be
required to constitute a quorum at the Special Meeting for the purpose of
transacting any business. For purposes of determining the presence of a
quorum and counting votes on the matters presented, shares represented by
abstentions and `broker non-votes'' will be counted as present, but not as
votes cast, at the Special Meeting. This would have the effect of treating
abstentions and non-votes as if they were votes against the proposal.
The Fund will furnish, without charge, a copy of the annual report and
most recent semi-annual report succeeding the annual report, if any, to any
shareholder of record of the Fund upon request. To request an annual
and/or semi-annual report, call 1-800-235-4669, or send a written request
to Betsy Hamilton at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779.
Federated Advisers, the Fund's adviser, is a Delaware Business Trust
organized on April 11, 1989, and is a registered investment adviser under
the Investment Advisers Act of 1940. Federated Securities Corp., the
Fund's distributor, is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment
companies. Federated Services Company is a Pennsylvania Corporation
organized on May 10, 1991, and provides the Fund's administrative personnel
and services (including certain legal and financial reporting services).
Federated Advisers, Federated Securities Corp., and Federated Services
Company are all wholly-owned subsidiaries of Federated Investors, and they
are all located at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779.
APPROVAL OR DISAPPROVAL OF THE REMOVAL OF THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATION RESTRICTING THE FUND'S INVESTMENT IN RESTRICTED SECURITIES TO
10% OF IS TOTAL ASSETS
One of the Fund's fundamental investment limitations currently provides
that the Fund will not `invest more than 10% of its total assets in
securities subject to restrictions on resale under the federal securities
law.'' This limitation impedes the Fund's ability to participate in new
offerings of high yield securities. In recent years, more of these
offerings have been made without initial registration under the Securities
Act of 1933 (the `Securities Act''). Most of these securities are
exchanged at a later date for securities that have been registered under
the Securities Act. However, until the exchange, these securities are
subject to restrictions on resale and are therefore subject to the
fundamental limitation on restricted securities. This has prevented the
Fund from participating in some offerings during periods when the volume of
new offerings is high. The Directors believe that the Fund's participation
in these offerings would have been advantageous to its performance.
The Fund adopted this fundamental policy to reflect the Securities and
Exchange Commission (the `Commission'') interpretive position that, in
order to maintain sufficient liquidity to meet shareholder redemptions,
mutual funds such as the Fund should limit their investments in illiquid
securities and that restricted securities are generally illiquid. When the
Fund adopted this limitation, the Commission required mutual funds to limit
illiquid securities to not more than 10% of total assets. The Securities
Act did not provide an exemption for secondary trading in restricted
securities, which impeded the development of a liquid secondary market.
The market for high yield securities has changed markedly since the
adoption of the Fund's limitation. On April 23, 1990, the Commission
promulgated Rule 144A under the Securities Act. Rule 144A provides a safe
harbor for the resale of certain restricted securities to `qualified
institutional buyers''without compliance with the registration
requirements of the Securities Act of 1933. A `qualified institutional
buyer''is generally defined as a broker/dealer which owns and manages $10
million or more of securities and any other entity that owns and manages
$100 million or more of securities.
In its release adopting Rule 144A, the Commission noted that it was
modifying its position as to mutual funds with respect to securities
eligible for resale under Rule 144A (`Rule 144A Securities''). The
Commission stated that `[t]he determination of the liquidity of Rule 144A
Securities in the portfolio of [a mutual fund] is a question of fact for
the directors to determine, based upon the trading markets for the specific
security.''Under the Commission's modified position, the investment
adviser may determine, in accordance with guidelines established and
monitored by the Directors of the Fund, that a Rule 144A security is
liquid, that the security will not count toward the Fund's limitation on
illiquid securities.
In accordance with the Commission's modified position, the Directors have
adopted the guidelines under which the investment adviser may determine the
liquidity of Rule 144A Securities. The guidelines require the investment
adviser to consider the following factors in making this determination:
1. The frequency of trades and quotes for the security;
2. The volatility of quotations and trade prices for the security;
3. The number of dealers willing to purchase or sell the security and
the number of potential purchasers;
4. Dealer undertakings to make a market in the security;
5. The nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer);
6. The rating of the security and the financial condition and
prospects of the issuer of the security; and
7. Such other factors as may be relevant to the Fund's ability to
dispose of the security.
The Fund currently relies on Rule 144A to trade unregistered high yield
securities and, in accordance with the Director's guidelines, has
determined that some of these securities are liquid. This includes many
securities acquired in unregistered offerings that have not yet been
exchanged for securities registered under the Securities Act. However, the
Fund's current investment limitation restricts the acquisition of any
restricted security, regardless of its eligibility for resale under Rule
144A or its liquidity. Consequently, the limitation may prevent the Fund
from acquiring a liquid high yield security, simply because it has not yet
been registered under the Securities Act.
The Commission has also modified its position regarding the amount that a
mutual fund may invest in illiquid securities, increasing the amount from
10% to 15% of total assets. Many state securities regulators have also
modified their policies in response to the Commission's changes. In order
to comply with the Commission's current position, the Directors have
adopted a policy limiting the Fund to investing not more than 15% of its
total assets in illiquid securities. Restricted securities are subject to
this limitation unless they have been determined to be liquid in accordance
with the Director's guidelines. The Directors may change this policy on
illiquid securities, or the guidelines and factors for determining the
liquidity of restricted securities without the approval of, or any notice
to, the Fund's shareholders. This will allow the Fund the flexibility to
respond quickly to developments in the market and regulations for high
yield securities.
Therefore, if the proposal is approved, the Fund will remain subject to a
limitation on investments in unregistered high yield securities that do not
meet the Directors' guidelines for liquidity. However, the limitation will
increase to 15% from 10% of the Fund's total assets. This could adversely
affect the Fund's liquidity during periods of heavy redemptions.
At a meeting held on the Directors, therefore, have ,
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unanimously approved, subject to shareholder approval, `the removal of the
Fund's fundamental investment limitation restricting the Fund's investment
in restricted securities to 10% of is total assets.'' Approval of this
change in the Fund's investment limitation requires the affirmative vote
of: (a) 67% or more of the shares of the Fund present at the Special
Meeting, if the holders of more than 50% of the outstanding shares are
present or represented by proxy; or (b) more than 50% of the outstanding
shares of the Fund, whichever is less. If the shareholders fail to approve
the change in this limitation, the Fund will continue to invest no more
than 10% of the value of its total assets in restricted securities of any
kind.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE REMOVAL OF THE FUND'S
FUNDAMENTAL INVESTMENT LIMITATION RESTRICTING THE FUND'S INVESTMENT IN
RESTRICTED SECURITIES TO 10% OF IS TOTAL ASSETS
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
While the Special Meeting is called to act upon any other business
that may properly come before it, at the date of this proxy statement the
only business which the Board of Directors intends to present or knows that
others will present is the business mentioned in the notice of meeting. If
any other matters lawfully come before the Special Meeting, and as to all
procedural matters at the meeting, it is the intention that the enclosed
proxy shall be voted in accordance with the best judgment of the attorneys
named therein, or their substitutes, present and acting at the Special
Meeting.
If at the time any session of the Special Meeting is called to order a
quorum is not present in person or by proxy, the persons named as proxies
may vote those proxies which have been received to adjourn the Special
Meeting to a later date. In the event that a quorum is present but
sufficient votes in favor of one or more of the proposals have not been
received, the persons named as proxies may propose one or more adjournments
of the Special Meeting to permit further solicitation of proxies with
respect to any such proposal. All such adjournments will require the
affirmative vote of a majority of the shares present in person or by proxy
at the session of the Special Meeting to be adjourned. The persons named
as proxies will vote those proxies which they are entitled to vote in favor
of the proposal, in favor of such an adjournment and will vote those
proxies required to be voted against the proposal, against any such
adjournment. A vote may be taken on one or more of the proposals in this
proxy statement prior to any such adjournment if sufficient votes for its
approval have been received and it is otherwise appropriate.
The following list indicates the beneficial ownership of shareholders
who, to the best knowledge of the Fund, are the record/beneficial owners of
more than 5% of the outstanding shares of the Fund as of , 19 :
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If you do not expect to attend the Special Meeting, please sign your
proxy and return it in the enclosed envelope to avoid necessary expense and
delay. No postage is necessary.
By Order of the Directors
John W. McGonigle
Secretary
June 27, 1996
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FEDERATED HIGH INCOME BOND FUND, INC. SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 20, 1996
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
FEDERATED HIGH INCOME BOND FUND, INC. hereby appoint S. Elliott Cohan,
Suzanne W. Land, Carole Webber, Patricia F. Conner and Max F. Miller, or
any one of them, true and lawful attorneys, with the power of substitution
of each, to vote all Shares of FEDERATED HIGH INCOME BOND FUND, INC. which
the undersigned is entitled to vote at the Special Meeting of Shareholders
to be held on September 20, 1996, at Federated Investors Tower, Pittsburgh,
Pennsylvania, at 2:00 p.m., and at any adjournment thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
PROPOSAL(S)
1) TO APPROVE OR DISAPPROVE THE REMOVAL OF THE FUND'S FUNDAMENTAL
INVESTMENT LIMITATION RESTRICTING THE FUND'S INVESTMENT IN RESTRICTED
SECURITIES TO 10% OF IS TOTAL ASSETS.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The attorneys
named will vote the Shares represented by this proxy in accordance with the
choices made on this ballot. IF NO CHOICE IS INDICATED AS TO ANY ITEM,
THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THAT MATTER.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND
RETAIN THE TOP PORTION. PLACE THE MAIL-IN STUB SO THAT THE RETURN ADDRESS,
LOCATED ON THE REVERSE SIDE OF THE BALLOT, APPEARS THROUGH THE WINDOW OF
THE ENVELOPE.
FEDERATED HIGH INCOME BOND FUND, INC. PROXY VOTING MAIL-IN STUB
RECORD DATE SHARES
Please sign EXACTLY as your name(s) appear below. When signing as
attorney, executor, administrator, guardian, trustee, custodian, etc.,
please give your full title as such. If a corporation or partnership,
please sign the full name by an authorized officer or partner. If stock is
owned jointly, all parties should sign.
PROXY VOTING MAIL-IN-STUB
PROPOSAL 1
FOR AGAINST ABSTAIN
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Dated: , 19
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Signature(s) of Shareholder(s)
