SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 MASTER TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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FEDERATED MASTER TRUST
PROXY STATEMENT - PLEASE VOTE!
TIME IS OF THE ESSENCE...VOTING ONLY TAKES A FEW MINUTES AND YOUR PARTICIPATION
IS IMPORTANT! BE SURE TO COMPLETE AND RETURN YOUR PROXY CARD PROMPTLY TO AVOID
ADDITIONAL EXPENSE TO THE FUND.
Federated Master Trust will hold a special meeting of shareholders on March 29,
1999. It is important for you to vote on the issues described in this Proxy
Statement. We recommend that you read the Proxy Statement in its entirety; the
explanations will help you to decide on the issues.
Following is an introduction to the proposals and the process.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like those included in this Proxy Statement. You have a right to vote
on these changes.
WHAT ISSUES AM I BEING ASKED TO VOTE ON?
The proposals include:
o the election of Trustees,
o ratification of independent auditors,
o changes to the Trust's fundamental investment policies,
o a proposed reorganization of Federated Master Trust (the "Trust") into
a newly created portfolio (the "New Trust") of Money Market Obligations Trust,
and
o an amendment to the Declaration of Trust that will be adopted by the New
Trust upon approval of the Reorganization.
WHY ARE INDIVIDUALS RECOMMENDED FOR ELECTION TO THE BOARD OF TRUSTEES?
The Trust is devoted to serving the needs of its shareholders, and the
Board is responsible for managing the Trust's business affairs to meet those
needs. The Board represents the shareholders and can exercise all of the Trust's
powers, except those reserved only for shareholders.
Trustees are selected on the basis of their education and professional
experience. Candidates are chosen based on their distinct interest in, and
capacity for understanding the complexities of, the operation of a mutual fund.
These individuals bring considerable experience to the impartial oversight of a
fund's operation.
The Proxy Statement includes a brief description of each nominee's history
and current position with the Trust, if applicable.
WHY AM I BEING ASKED TO VOTE ON THE RATIFICATION OF INDEPENDENT AUDITORS?
The independent auditors conduct a professional examination of accounting
documents and supporting data to render an opinion on the material fairness of
the information. Because financial reporting involves discretionary decision
making, the auditor's opinion is an important assurance to both the Trust and
its investors.
The Board of Trustees approved the selection of Deloitte & Touche LLP,
long-time auditors of the Trust, for the current fiscal year and believes that
the continued employment of this firm is in the Trust's best interests.
WHY ARE THE TRUST'S "FUNDAMENTAL POLICIES" BEING CHANGED OR REMOVED?
Every mutual fund has certain investment policies that can be changed only
with the approval of its shareholders. These are referred to as "fundamental"
investment policies.
In some cases, these policies were adopted to reflect regulatory, business,
or industry conditions that no longer exist or no longer are necessary. In other
cases, advances in the securities markets and the economy have created different
procedures and techniques that affect the Trust's operations.
By reducing the number of "fundamental policies," the Trust may be able to
minimize the costs and delays associated with frequent shareholder meetings.
Also, the investment adviser's ability to manage the Trust's assets may be
enhanced and investment opportunities increased.
The proposed amendments will:
o reclassify as operating policies those fundamental policies that are
not required to be fundamental by the Investment Company Act of 1940,
("1940 Act");
o simplify and modernize the policies that are required to be
"fundamental" by the 1940 Act, as amended; and
o remove fundamental policies that are no longer required by the
securities laws of individual states.
Federated Research Corp., the Trust's adviser, is a conservative money
manager. Its highly trained professionals are dedicated to making investment
decisions in the best interest of the Trust and its shareholders. The Board
believes that the proposed changes can be applied responsibly by the Trust's
adviser.
WHY ARE SOME "FUNDAMENTAL POLICIES" BEING RECLASSIFIED AS "OPERATING POLICIES?"
As noted above, some "fundamental policies" have been redefined as
"operating policies" by changes made to the 1940 Act. Operating policies do not
require shareholder approval to be changed. This gives the Trust's Board
additional flexibility to determine whether to participate in new investment
opportunities and to meet industry changes promptly.
WHY ARE THE TRUSTEES RECOMMENDING AN AMENDMENT TO THE DECLARATION OF TRUST?
The Declaration organizing the Trust was prepared almost twenty years ago.
Since then, developments in the investment company industry and changes in the
law resulted in many improvements. The Board is recommending a change to the
Declaration of Trust that permits the Trust to benefit from these developments.
WHY IS THE REORGANIZATION BEING PROPOSED?
Federated Master Trust's Board of Trustees and investment adviser believe
that the Trust's management structure can be simplified by reorganizing as a
portfolio of Money Market Obligations Trust ("MMOT"), another money market
mutual fund. After the Reorganization, the original Trust will be dissolved.
MMOT offers a variety of portfolios investing in money market securities, each
with its own investment objective.
HOW WILL THE REORGANIZATION AFFECT MY INVESTMENT?
o The shares you own and the value of your investment will not change.
o The Reorganization will be a tax-free event.
o There will not be sales loads, commissions, or transaction charges with
the Reorganization.
o The investment objective will remain the same.
o There will be no increases in the fees payable to the Trust's adviser
because of the Reorganization.
HOW DO I VOTE MY SHARES?
You may vote in person at the annual meeting of shareholders or simply sign
and return the enclosed Proxy Card. IF YOU SIGN AND RETURN THE PROXY CARD
WITHOUT INDICATING A PREFERENCE, YOUR VOTE WILL BE CAST "FOR" ALL THE PROPOSALS.
You may also vote by telephone at 1-800-690-6903, or through the Internet
at PROXYVOTE.COM. If you choose to help save the Trust time and postage costs by
voting through the Internet or by telephone, please don't return your Proxy
Card. If you do not respond at all, we may contact you by telephone to request
that you cast your vote.
WHO DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?
Call your Investment Professional or a Federated Client Service
Representative. Federated's toll-free number is 1-800-341-7400.
After careful consideration, the Board of Trustees has unanimously approved
these proposals. The Board recommends that you read the enclosed materials
carefully and vote FOR all proposals.
<PAGE>
Doc. #156612 v.05
1
PRELIMINARY
FEDERATED MASTER TRUST
NOTICE OF SPECIAL MEETING
IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 29, 1999
A Special Meeting in lieu of Annual Meeting of the shareholders of
Federated Master Trust (the "Trust") will be held at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, at 12:00 Noon (Eastern time), on March 29,
1999 to consider proposals:
(1) To elect nine Trustees.
(2) To ratify the selection of the Trust's independent auditors.
(3) To make changes to the Trust's fundamental investment policies:
(a) To amend the Trust's fundamental investment policy on diversification
of its investments;
(b) To make non-fundamental, and to amend, the Trust's fundamental
investment policy regarding maturity of money market instruments;
(c) To make non-fundamental the Trust's fundamental investment policy
prohibiting investment in securities to exercise control of an issuer;
(d) To make non-fundamental, and to amend, the Trust's ability to invest
in the securities of other investment companies;
(e) To make non-fundamental the Trust's fundamental investment policy
regarding the types of money market instruments which the Trust is
permitted to purchase;
(f) To make non-fundamental the Trust's ability to invest in unrated
securities;
(g) To make non-fundamental the Trust's fundamental investment policy
regarding the description of bank instruments that the Trust may
purchase;
(h) To make non-fundamental the Trust's fundamental investment policy
regarding the description of commercial paper that the Trust may
purchase; and
(i) To make non-fundamental, and to amend, the Trust's fundamental
investment policy regarding pledging assets to secure permitted
borrowings.
(4) To eliminate the Trust's fundamental investment policy on
concentration and to reserve freedom to concentrate investments in the
domestic banking industry.
(5) To approve an amendment and restatement to the Trust's Declaration of
Trust to require the approval of a "1940 Act" majority of shareholders
in the event of the sale and conveyance of the assets of the Trust to
another trust or corporation.
(6) To approve a proposed Agreement and Plan of Reorganization between the
Trust and Money Market Obligations Trust, on behalf of its series,
Federated Master Trust (the "New Fund"), whereby the New Fund would
acquire all of the assets of the Trust in exchange for shares of the
New Fund to be distributed PRO RATA by the Trust to its shareholders
in complete liquidation and termination of the Trust.
To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Trustees has fixed January 21, 1999, as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Board of Trustees,
John W. McGonigle
Secretary
February 2, 1999
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND 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 IN LIEU OF ANNUAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
TABLE OF CONTENTS
ABOUT THE PROXY SOLICITATION AND THE MEETING....................................
ELECTION OF NINE TRUSTEES.......................................................
ABOUT THE ELECTION OF TRUSTEES .................................................
TRUSTEES STANDING FOR ELECTION..................................................
NOMINEES NOT PRESENTLY SERVING AS TRUSTEES......................................
RATIFICATION OF THE SELECTION OF THE INDEPENDENT AUDITORS.......................
APPROVAL OF CHANGES TO THE TRUST'S FUNDAMENTAL INVESTMENT
POLICIES....................................................................
APPROVAL OF THE ELIMINATION OF A FUNDAMENTAL INVESTMENT POLICY OF THE
TRUST.......................................................................
APPROVAL OF AN AMENDMENT AND RESTATEMENT TO THE TRUST'S
DECLARATION OF TRUST........................................................
APPROVAL OF THE PROPOSED AGREEMENT AND PLAN
OF REORGANIZATION...........................................................
INFORMATION ABOUT THE TRUST.....................................................
PROXIES, QUORUM AND VOTING AT THE MEETING.......................................
SHARE OWNERSHIP OF THE TRUSTEES.................................................
TRUSTEE COMPENSATION............................................................
OFFICERS OF THE TRUST...........................................................
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY....................
APPENDIX I: AGREEMENT AND PLAN OF REORGANIZATION...............................
<PAGE>
PRELIMINARY
PROXY STATEMENT
FEDERATED MASTER TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
ABOUT THE PROXY SOLICITATION AND THE MEETING
The enclosed proxy is solicited on behalf of the Board of Trustees of the
Trust (the "Board" or "Trustees"). The proxies will be voted at the special
meeting in lieu of annual meeting of shareholders of the Trust to be held on
March 29, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at
12:00 Noon (such special meeting in lieu of annual meeting and any adjournment
or postponement thereof are referred to as the "Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Trust. In addition to solicitations through the
mails, proxies may be solicited by officers, employees, and agents of the Trust
or, if necessary, a communications firm retained for this purpose. Such
solicitations may be by telephone, telegraph, through the Internet or otherwise.
Any telephonic solicitations will follow procedures designed to ensure accuracy
and prevent fraud, including requiring identifying shareholder information,
recording the shareholder's instructions, and confirming to the shareholder
after the fact. Shareholders who communicate proxies by telephone or by other
electronic means have the same power and authority to issue, revoke, or
otherwise change their voting instruction as shareholders submitting proxies in
written form. The Trust will reimburse custodians, nominees, and fiduciaries for
the reasonable costs incurred by them in connection with forwarding solicitation
materials to the beneficial owners of shares held of record by such persons.
At its meeting on November 17, 1998, the Board reviewed both the proposed
Amended and Restated Declaration of Trust and the changes recommended in the
investment policies of the Trust and approved them subject to shareholder
approval. At that meeting, the Board also considered the proposed reorganization
of the Trust, and approved it, subject to shareholder approval. The purposes of
the Meeting are set forth in the accompanying Notice. The Trustees know of no
business other than that mentioned in the Notice that will be presented for
consideration at the Meeting. Should other business properly be brought before
the Meeting, proxies will be voted in accordance with the best judgment of the
persons named as proxies. This proxy statement and the enclosed proxy card are
expected to be mailed on or about February 2, 1999, to shareholders of record at
the close of business on January 21, 1999 (the "Record Date"). On the Record
Date, the Trust had outstanding _________ shares of beneficial interest.
The Trust's annual report, which includes audited financial statements for
the fiscal year ended November 30, 1998, was previously mailed to shareholders.
The Trust's principal executive offices are located at Federated Investors
Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The Trust's
toll-free telephone number is 1-800-341-7400.
PROPOSAL #1: ELECTION OF NINE TRUSTEES
The persons named as proxies intend to vote in favor of the election of
Thomas G. Bigley, John T. Conroy, Jr., Nicholas P. Constantakis, John F.
Cunningham, J. Christopher Donahue, Peter E. Madden, Charles F. Mansfield, Jr.,
John E. Murray, Jr. and John S. Walsh (collectively, the "Nominees") as Trustees
of the Trust. Messrs. Bigley, Conroy, Madden and Murray are presently serving as
Trustees. If elected by shareholders, Messrs. Constantakis, Cunningham, Donahue,
Mansfield and Walsh are expected to assume their responsibilities as Trustees
effective April 1, 1999. Please see "About the Election of Trustees" below for
current information about the Nominees.
Messrs. Conroy and Madden were appointed Trustees on November 13, 1991, to
fill vacancies created by the resignation of Mr. Joseph Maloney and the decision
to expand the size of the Board. Messrs. Bigley and Murray were appointed
Trustees on November 15, 1994 and February 14, 1995, respectively, also to fill
vacancies resulting from the decision to expand the size of the Board. Messrs.
Cunningham, Mansfield and Walsh are being proposed for election as Trustees to
fill vacancies anticipated to result from the resignation of three current
Trustees. The anticipated resignations will not occur if Messrs. Cunningham,
Mansfield and Walsh are not elected as Trustees.
All Nominees have consented to serve if elected. If elected, the Trustees
will hold office without limit in time until death, resignation, retirement, or
removal or until the next meeting of shareholders to elect Trustees and the
election and qualification of their successors. Election of a Trustee is by a
plurality vote, which means that the nine individuals receiving the greatest
number of votes at the Meeting will be deemed to be elected.
If any Nominee for election as a Trustee named above shall by reason of
death or for any other reason become unavailable as a candidate at the Meeting,
votes pursuant to the enclosed proxy will be cast for a substitute candidate by
the proxies named on the proxy card, or their substitutes, present and acting at
the Meeting. Any such substitute candidate for election as a Trustee who is an
"interested person" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Trust shall be nominated by the Executive
Committee. The selection of any substitute candidate for election as a Trustee
who is not an "interested person" shall be made by a majority of the Trustees
who are not "interested persons" of the Trust. The Board has no reason to
believe that any Nominee will become unavailable for election as a Trustee.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE TO ELECT AS TRUSTEES THE NOMINEES FOR
ELECTION TO THE BOARD OF TRUSTEES OF THE TRUST
ABOUT THE ELECTION OF TRUSTEES
When elected, the Trustees will hold office during the lifetime of the
Trust except that: (a) any Trustee may resign; (b) any Trustee may be removed by
written instrument signed by at least two-thirds of the number of Trustees prior
to such removal; (c) any Trustee who requests to be retired or who has become
mentally or physically incapacitated may be retired by written instrument signed
by a majority of the other Trustees; and (d) a Trustee may be removed at any
special meeting of the shareholders by a vote of two-thirds of the outstanding
shares of the Trust. In case a vacancy shall exist for any reason, the remaining
Trustees will fill such vacancy by appointment of another Trustee. The Trustees
will not fill any vacancy by appointment if, immediately after filling such
vacancy, less than two-thirds of the Trustees then holding office would have
been elected by the shareholders. If, at any time, less than a majority of the
Trustees holding office have been elected by the shareholders, the Trustees then
in office will call a shareholders' meeting for the purpose of electing Trustees
to fill vacancies. Otherwise, there will normally be no meeting of shareholders
called for the purpose of electing Trustees.
Set forth below is a listing of: (i) Trustees standing for election, and
(ii) Nominees standing for election who are not presently serving as Trustees,
along with their addresses, birthdates, present positions with the Trust, if
applicable, and principal occupations during the past five years:
TRUSTEES STANDING FOR ELECTION
THOMAS G. BIGLEY
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member of
Executive Committee, University of Pittsburgh; Director or Trustee of the Funds.
JOHN T. CONROY, JR.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real estate
ventures in Southwest Florida; formerly, President, Naples Property Management,
Inc. and Northgate Village Development Corporation; Director or Trustee of the
Funds.
PETER E. MADDEN
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
JOHN E. MURRAY, JR., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
NOMINEES NOT PRESENTLY SERVING AS TRUSTEES
NICHOLAS P. CONSTANTAKIS
175 Woodshire Drive
Pittsburgh, PA
Birthdate: September 3, 1938
Formerly, Partner, Andersen Worldwide SC; Director or Trustee of the Funds.
JOHN F. CUNNINGHAM
353 El Brillo Way
Palm Beach, FL
Birthdate: March 5, 1943
Chairman, President and Chief Executive Officer, Cunningham & Co., Inc.
(consulting organization to high technology and computer companies in the
financial community); Director, EMC Corporation.
J. CHRISTOPHER DONAHUE
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Trust.
CHARLES F. MANSFIELD, JR.
54 Pine Street
Garden City, NY
Birthdate: April 10, 1945
Management consultant.
JOHN S. WALSH
2007 Sherwood Drive
Valparaiso, IN
Birthdate: November 28, 1957
President, Heat Wagon, Inc., Manufacturers Products, Inc. ("MPI") and the
Portable Heater Parts division of MPI (engineering, manufacturing and
distribution of portable, temporary heating equipment) (1996-present); Director,
Walsh & Kelly, Inc., asphalt road construction business; formerly, Vice
President, Walsh & Kelly, Inc. (1984-1996).
PROPOSAL #2: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The 1940 Act requires that the Trust's independent auditors be selected by
the Board, including a majority of those Board members who are not "interested
persons" (as defined in the 1940 Act) of the Trust, and submitted for
ratification or rejection at the next succeeding meeting of shareholders. The
Board of Trustees of the Trust, including a majority of its members who are not
"interested persons" of the Trust, approved the selection of Deloitte & Touche
LLP (the "Auditors") for the current fiscal year at a Board meeting held on
February 23, 1998.
The selection by the Board of the Auditors as independent auditors for the
current fiscal year is submitted to the shareholders for ratification. Apart
from their fees as independent auditors and certain consulting fees, neither the
Auditors nor any of their partners have a direct, or material indirect,
financial interest in the Trust or its investment adviser. The Auditors are a
major international independent accounting firm. The Board believes that the
continued employment of the services of the Auditors for the current fiscal year
would be in the Trust's best interests.
Representatives of the Auditors are not expected to be present at the
Meeting. If a representative is present, he or she will have the opportunity to
make a statement and would be available to respond to appropriate questions. The
ratification of the selection of the Auditors will require the affirmative vote
of a majority of the shares present and voting on the proposal at the Meeting.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE TO RATIFY THE SELECTION OF THE INDEPENDENT AUDITORS
PROPOSAL #3: APPROVAL OF CHANGES TO THE TRUST'S
FUNDAMENTAL INVESTMENT POLICIES
The 1940 Act requires investment companies such as the Trust to adopt
certain specific investment policies that can be changed only by shareholder
vote. An investment company may also elect to designate other policies that may
be changed only by shareholder vote. Both types of policies are often referred
to as "fundamental policies." Certain of the Trust's fundamental policies had
been adopted in the past to reflect regulatory, business or industry conditions
that are no longer in effect. Accordingly, the Trustees have authorized the
submission to the Trust's shareholders for their approval, and recommended that
shareholders approve, the removal, amendment and/or reclassification of certain
of the Trust's fundamental policies.
The proposed amendments would:
(i) simplify and modernize the fundamental policies that are required to be
stated under the 1940 Act;
(ii) reclassify as operating policies those fundamental policies that are
not required to be fundamental under the 1940 Act; and
(iii) remove those fundamental policies which are no longer required by the
securities laws of individual states as a result of the National Securities
Markets Improvement Act ("NSMIA"), dated October 11, 1996.
By reducing to a minimum those policies that can be changed only by
shareholder vote, the Trustees believe that the Trust would be able to minimize
the costs and delay associated with holding future shareholder meetings to
revise fundamental policies that become outdated or inappropriate. The Trustees
also believe that the investment adviser's ability to manage the Trust's assets
in a changing investment environment will be enhanced and that investment
management opportunities will be increased by these changes. The recommended
changes are specified below. Each sub-item will be voted on separately, and the
approval of any sub-item will require the approval of a majority of the
outstanding voting shares of the Trust as defined in the 1940 Act. (See
"PROXIES, QUORUM AND VOTING AT THE MEETING" below.)
PROPOSAL #3(A): TO AMEND THE TRUST'S FUNDAMENTAL INVESTMENT POLICY ON
DIVERSIFICATION OF ITS INVESTMENTS
The Trust's current fundamental investment policy regarding diversification
of its investments states:
"The Trust will not invest more than 5% of its assets in the securities of
any one issuer (except cash or cash items, repurchase agreements, and securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities)."
When the current policy was adopted, the Trust was subject to the laws of
certain states which required this specific policy on investments despite the
fact that the 1940 Act had a less restrictive standard. Since the enactment of
NSMIA, the states no longer have jurisdiction over the operating policies of
investment companies, including diversification policies.
However, the Trust operates in compliance with 1940 Act Rule 2a-7, which
was adopted by the U.S. Securities and Exchange Commission (the "SEC" or the
"Commission") to govern the operations of money market funds. Rule 2a-7 provides
specific diversification requirements for money market funds, and these
requirements are more restrictive than the Trust's current diversification
policy. Therefore, the Trustees propose to remove the Trust's current
diversification policy, while confirming that the Trust will comply with Rule
2a-7.
In order to afford the Trust's investment adviser maximum flexibility in
managing the Trust's assets, the Trustees propose to restate the Trust's
diversification policy to be consistent with the definition of a diversified
investment company under the 1940 Act. While less restrictive than the
limitations under Rule 2a-7, the restated policy complies with the Commission's
general definition of diversification. The new policy would specifically: (i)
add securities of other investment companies to the list of issuers which are
excluded from the 5% limitation, and (ii) make clear that the diversification
test is applied to 75% of the Trust's total assets, rather than 100% of its
total assets.
Upon approval of the Trust's shareholders, the fundamental investment
policy governing diversification will be amended to read as follows:
"With respect to securities comprising 75% of the value of its total
assets, the Trust will not purchase securities of any one issuer (other than
cash, cash items, securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities, and securities of other
investment companies) if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer, or it would own more
than 10% of the outstanding voting securities of that issuer."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(B): TO MAKE NON-FUNDAMENTAL AND TO AMEND THE TRUST'S
FUNDAMENTAL POLICY REGARDING MATURITY OF MONEY MARKET INSTRUMENTS
The investment objective of the Trust is current income consistent with
stability of principal. One of the Trust's current investment policies, to which
it adheres when pursuing its objective, is that it may not invest in a security
having a remaining maturity of more than one year (365 days). This policy was
adopted to comply with the provisions that, at the time, governed the maximum
maturity of portfolio securities under Rule 2a-7 of the 1940 Act. The purpose of
this provision of Rule 2a-7 is to limit the Trust's exposure to interest rate
and credit risks associated with long maturity periods. Money market funds that
use amortized cost pricing, to attempt to maintain a $1.00 net asset value, such
as the Trust, must comply with Rule 2a-7.
Amendments to Rule 2a-7, adopted by the Commission after the Trust adopted
its policy, extended the maximum maturity period for any portfolio security from
one year (365 days) to thirteen months (397 days). The Commission adopted the
change in order to accommodate money market mutual funds, such as the Trust,
that purchase annual tender bonds, and securities on a when-issued or delayed
delivery basis. These securities often are not delivered for a period of up to
one month after the Trust has made a commitment to purchase them. Since the
Trust "books" the securities on the day the Trust agrees to purchase the
securities, the maturity period begins on that day.
The Board is recommending to shareholders that the Trust's investment
policy be made non-fundamental. The Trust's new policy would mirror the language
of Rule 2a-7, and extend the maximum maturity period of any portfolio security
from one year (365 days) to thirteen months (397 days). The Trustees believe
that this will benefit the Trust and is in the best interests of shareholders.
In approving the proposed change, the Trustees evaluated: (i) compliance with
Rule 2a-7, as amended; (ii) the positive effect on the Trust's ability to enter
into when-issued and delayed delivery transactions and to purchase annual tender
bonds; and (iii) the benefits of enhancing the Trust's yield versus the
potential of increasing the Trust's exposure to both credit risk and interest
rate risk. This change will in no way affect the Trust's investment policy with
respect to the portfolio's average maturity, which, on a dollar-weighted basis,
is ninety (90) days or less.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(C): TO MAKE NON-FUNDAMENTAL THE PROHIBITION ON TRUST INVESTMENTS
IN SECURITIES TO EXERCISE CONTROL OF AN ISSUER
The Trust's current policies prohibit the acquisition of the securities of
any issuer for the purpose of exercising control over, or management of, any
company, and also provide that the Trust will not acquire voting securities
except as part of a merger, consolidation, reorganization or acquisition of
assets. "Control" is defined under the 1940 Act as owning 25% or more of the
voting securities of an issuer. A controlling ownership is likely to have an
effect on the outcome of any shareholder voting on changes related to the
operation of the issuing company.
When the Trust adopted these investment policies, they were required to be
fundamental by certain state securities regulators. Since NSMIA, those
requirements no longer apply. By making the policies non-fundamental operating
policies, the Trustees will have maximum flexibility to make changes in the
policies to benefit the Trust and its shareholders without the expense and delay
of holding a shareholder meeting. The Board does not expect to change these
operating policies at this time, and the policies would continue to prohibit the
Trust from investing in an issuer for the purpose of exercising control. The
Trust does not currently anticipate that it would employ investment techniques
the objective of which will be to exercise control over, or management of, any
company.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(D): TO MAKE NON-FUNDAMENTAL AND TO AMEND THE TRUST'S POLICY TO
PERMIT THE TRUST TO INVEST IN THE SECURITIES OF OTHER INVESTMENT COMPANIES
The Trust currently has a fundamental investment policy that prohibits the
purchase of shares of any other investment company. The Trust's investment
adviser believes, and the Board has concluded, that this prohibition
unnecessarily limits the Trust's investments. Amending this policy would expand
the investment opportunities available to the Trust by allowing the Trust to
invest in other investment companies. Investments in other investment companies
are limited under the 1940 Act and, in the case of the Trust, by an exemptive
order issued by the Commission (the "Order"). The 1940 Act and the Order limit
both the portion of the Trust's assets that may be so invested in a particular
fund, and the portion of such a fund which may be owned by the Trust. Normally,
each investment company in which the Trust invests will have its own operating
expenses, including advisory fees; however, the Trust's adviser will waive the
portion of its advisory fee attributable to assets invested in other investment
companies. It is expected that the other duplicative expenses are justified by
the benefit of having access to the markets in which such a fund invests, or in
the investment techniques or advisers of such funds.
At the present time, the Board expects to utilize the authority provided by
this proposal to invest the Trust's temporary cash reserves in shares of other
money market funds. These cash reserves typically arise from the receipt of
dividend and interest income from portfolio securities, the receipt of payment
for sale of portfolio securities, defensive cash positions and the decision to
hold cash to meet redemptions or make anticipated dividend payments. Further, by
changing the policy from fundamental to an operating policy, the Trustees
believe that maximum flexibility will be afforded to the Trust to amend the
policy as appropriate in the future without the burden and delay to the Trust
and its shareholders of holding a special meeting.
The ability to purchase shares of money market funds would be beneficial
because it would provide the Trust additional investment opportunities late in
each business day, when opportunities to acquire money market instruments are
limited. Otherwise, the Trust would be forced to hold some of its cash
uninvested, resulting in little or no investment income.
If shareholders approve this item, the new operating policy will read as
follows in: (a) the Prospectus, and (b) the Statement of Additional Information:
(a)...."INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Trust may invest its assets in securities of other investment companies
as an efficient means of carrying out its investment policies. It should be
noted that investment companies incur certain expenses, such as management fees,
and, therefore, any investment by the Trust in shares of other investment
companies may be subject to such duplicate expenses. At the present time, the
Trust expects that its investments in other investment companies will be limited
to shares of money market funds, including funds affiliated with the Trust's
investment adviser."
(b)...."INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Trust may invest in the securities of affiliated money market funds as
an efficient means of managing the Trust's uninvested cash."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(E): TO MAKE NON-FUNDAMENTAL THE TRUST'S
FUNDAMENTAL INVESTMENT POLICY REGARDING
THE TYPES OF MONEY MARKET INSTRUMENTS THAT THE TRUST IS
PERMITTED TO PURCHASE
The Trust's current fundamental investment policy regarding the types of
money market investments that the Trust is permitted to purchase states that:
"The Trust invests in high quality money market instruments that are either
rated in the highest short-term rating category by one or more
nationally-recognized statistical rating organizations ("NRSROs") or are of
comparable quality to such ratings."
This policy is more restrictive than the requirements of Rule 2a-7 under
the 1940 Act, which allow a money market fund, such as the Trust, to invest in
money market instruments rated in the second highest short-term rating category
of an NRSRO, subject to specific percentage limitations. The Trust's investment
adviser believes, and the Board has concluded, that this investment policy
unnecessarily constrains the Trust's investments. By making the policy
non-fundamental, the Trust will be able to invest in a broader array of
attractive investments that nevertheless comply with the requirements of Rule
2a-7 under the 1940 Act.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(F): TO MAKE NON-FUNDAMENTAL THE TRUST'S FUNDAMENTAL INVESTMENT
POLICY REGARDING THE ABILITY TO INVEST IN UNRATED SECURITIES
As a matter of fundamental investment policy, the Trust is presently
limited to investing in unrated securities that are of a quality comparable to
securities that are rated in the highest short-term rating category of an NRSRO.
As with the policy described in proposal #3(e) above, this policy is more
restrictive than the requirements of Rule 2a-7, which permit a money market fund
to invest in unrated securities of a comparable quality to securities rated in
the second highest rating category of an NRSRO, subject to specific percentage
limitations. The Trust's investment adviser believes, and the Board has agreed,
that this investment policy unnecessarily limits the Trust's investments and
prevents the Trust from acquiring securities that may present investment
opportunities. By making this policy non-fundamental, the Trust's investment
adviser would be permitted to invest the Trust's assets in a wider range of
attractive money market instruments that nevertheless comply with the
requirements of Rule 2a-7 under the 1940 Act.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(G): TO MAKE NON-FUNDAMENTAL THE TRUST'S FUNDAMENTAL INVESTMENT
POLICY REGARDING THE DESCRIPTION OF BANK INSTRUMENTS THAT THE TRUST MAY PURCHASE
The Trust is presently subject to a fundamental investment policy pertinent
to investing in bank instruments that provides:
"The Trust only invests in Bank Instruments either issued by an institution
having capital, surplus and undivided profits over $100 million, or insured by
the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"). Bank Instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), Canadian Time Deposits,
and Eurodollar Time Deposits ("ETDs"). The Trust will treat securities credit
enhanced with a bank's letter of credit as Bank Instruments."
The Trust's investment adviser believes, and the Board has concluded, that
this fundamental investment policy unnecessarily limits the Trust's investments.
By making this policy non-fundamental, the Trust may be able to purchase a
broader range of bank instruments with higher yields, thereby expanding the
investment opportunities available to the Trust. If approved by shareholders,
the Trust's investments in bank instruments will continue to be subject to the
quality standards of Rule 2a-7 under the 1940 Act, and the credit standards
governing the Trust's investment portfolio.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(H): TO MAKE NON-FUNDAMENTAL THE TRUST'S FUNDAMENTAL
INVESTMENT POLICY REGARDING THE DESCRIPTION OF COMMERCIAL PAPER
THAT THE TRUST MAY PURCHASE
The Trust is presently subject to a fundamental investment policy regarding
investing in commercial paper that states:
"[T]he Trust will invest 25% or more of its total assets in commercial
paper issued by finance companies. The finance companies in which the Trust
intends to invest can be divided into two categories, commercial finance
companies and consumer finance companies. Commercial finance companies are
principally engaged in lending to corporations or other businesses. Consumer
finance companies are primarily engaged in lending to individuals. Captive
finance companies or finance subsidiaries which exist to facilitate the
marketing and financial activities of their parent will, for purposes of
industry concentration, be classified in the industry of their parent's
corporation."
The Trust's investment adviser believes, and the Board has concluded, that
this fundamental investment policy unnecessarily limits the Trust's permissible
investments in commercial paper that present investment opportunities. By making
this policy non-fundamental, the Trust will be able to invest in other types of
commercial paper. If approved by shareholders, the Trust's investments in
commercial paper will continue to be subject to the quality standards of Rule
2a-7 under the 1940 Act, and the credit analysis of the Trust's investment
adviser.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(I): TO MAKE NON-FUNDAMENTAL, AND TO AMEND,
THE TRUST'S FUNDAMENTAL INVESTMENT
POLICY REGARDING PLEDGING SECURITIES TO PERMIT THE TRUST
TO PLEDGE ASSETS TO SECURE PERMITTED BORROWINGS
The Trust's current fundamental investment policy regarding pledging assets
states that "[T]he Trust will not pledge securities," and the Trust's current
fundamental investment policy regarding borrowing states that:
"The Trust will not borrow money except as a temporary measure for
extraordinary or emergency purposes, and then (a) only in amounts not in excess
of 5% of the value of its total assets or (b) in an amount up to one-third of
the value of its total assets, including the amount borrowed, in order to meet
redemption requests without immediately selling any portfolio securities (any
such borrowings would not be collateralized)."
In practical effect, these policies operate to prevent the Trust from
engaging in certain borrowing transactions, where industry practice is for a
borrower, such as a mutual fund, to pledge assets as security for the fund's
borrowings from a lender. In order to afford the Trust's investment adviser with
maximum flexibility in managing the Trust's assets and portfolio, the Trustees
propose to amend the Trust's fundamental investment policy on pledging
securities to allow the Trust to engage in borrowing transactions in the same
manner as other investment companies, and in accordance with the provisions of
the 1940 Act and the SEC's regulatory requirements.
Upon approval of the Trust's shareholders, the Trust's fundamental
investment policy governing the pledging of assets will be amended to read as
follows:
"The Trust will not mortgage, pledge or hypothecate assets except as
necessary to secure permitted borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts borrowed or
10% of the value of the total assets at the time of the pledge."
If approved by shareholders, the Trust would continue to be subject to the
same percentage limitation on its borrowings - 5% of the value of the Trust's
total assets.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #4: TO REMOVE THE TRUST'S FUNDAMENTAL INVESTMENT
POLICY ON CONCENTRATION AND TO RESERVE FREEDOM TO CONCENTRATE INVESTMENTS IN THE
DOMESTIC BANKING INDUSTRY
The 1940 Act requires every investment company to state a fundamental
policy regarding its intention to concentrate portfolio investments in one
industry. Investments of more than 25% of the value of an investment company's
assets in any one industry represent a "concentration" in that particular
industry. However, if an investment company does not intend to concentrate its
investments, this must also be stated.
The Trust's current concentration policy states that:
"[A]s a matter of fundamental [investment] policy, which cannot be changed
without shareholder approval, the Trust will invest 25% or more of its total
assets in commercial paper issued by finance companies.... In addition, the
Trust may invest 25% or more of the value of its total assets in instruments
issued by a U.S. branch of a domestic bank or savings association having
capital, surplus, and undivided profits in excess of $100,000,000 at the time of
investment."
Since the Trust adopted its concentration policy, the investment focus of
the Trust's investment adviser and the types of securities in which it would
like to invest the Trust's assets have changed. Therefore, the Trust's
investment adviser has proposed to amend the concentration policy to eliminate
the policy discussed above, and would like to reserve the freedom to concentrate
the Trust's investments in instruments and obligations of U.S. banks and bank
holding companies, without specifying a minimum level of capital, surplus or
profits for such banks. By modifying this policy, the Trust's investment adviser
believes the Trust will have greater flexibility to invest in a broader array of
securities which are acceptable investments for the Trust in seeking to achieve
its investment objective of providing current income consistent with stability
of principal.
Therefore, the Trustees have recommended that the Trust's fundamental
investment policy on concentration be eliminated, and that it be replaced with
the following operating policy:
"The Trust will not invest 25% or more of its total assets in any one
industry. However, investing in U.S. government securities and domestic bank
instruments shall not be considered investments in any one industry."
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE PROPOSAL
PROPOSAL #5: TO APPROVE AN AMENDMENT AND RESTATEMENT TO THE TRUST'S DECLARATION
OF TRUST TO REQUIRE THE APPROVAL OF A "1940 ACT" MAJORITY OF SHAREHOLDERS IN THE
EVENT OF THE SALE AND CONVEYANCE OF THE ASSETS OF THE TRUST TO ANOTHER TRUST OR
CORPORATION
Mutual funds, such as the Trust, are required to organize under the laws of
a state and to create and be bound by organizational documents outlining how
they will operate. In the case of the Trust, these organizational documents are
the Declaration of Trust and the By-Laws. Since the adoption of the Trust's
current Declaration of Trust, the market for mutual funds has evolved, requiring
mutual funds to be more flexible in their operation to respond quickly to
changes in the market. A specific item in the current Declaration of Trust
prohibits the Trust from responding quickly and favorably to changing markets
without going to the expense and delay of holding a shareholder meeting.
Accordingly, the Trustees have approved, and have authorized the submission
to the Trust's shareholders for their approval, an amendment to the Trust's
Declaration of Trust. The approval of the amendment will require the affirmative
vote of a majority of the outstanding voting securities of the Trust as defined
in the Declaration of Trust. (See "PROXIES, QUORUM AND VOTING AT THE MEETING"
below.) If the Reorganization recommended in proposal #6 is approved and
completed, the Trust will become a series of MMOT, which will have the authority
requested here.
Article XII, Section 4(b) of the Declaration of Trust currently requires
the approval of the holders of at least two-thirds of all of the outstanding
shares of the Trust to approve any sale and conveyance of the assets of the
Trust to another open-end management investment company. To reduce the
likelihood of greater expenses in a proposed solicitation for the approval of
any sale and conveyance (including a proposal in this Proxy Statement), the
Trustees have adopted an amendment that would permit a majority vote to approve
such a transaction. A majority vote means the affirmative vote of: (a) 67% or
more of the voting securities present at the meeting if the holders of more than
50% of the outstanding voting securities are present or represented by proxy; or
(b) more than 50% of the outstanding voting securities, whichever is less. The
amendment would provide the Trust with greater flexibility, and in the event
circumstances warrant the approval of the Board, the Trustees could determine
that a sale and conveyance of assets would be in the best interest of the Trust.
The Trustees are recommending that shareholders approve the adoption of this
proposed amendment to the Declaration of Trust.
Proposal #6 on the agenda of the Meeting is a recommendation by the Board
that the shareholders of the Trust approve a proposed Reorganization of the
Trust with and into an affiliated open-end management investment company. If
this proposal #5 is approved by the shareholders at the Meeting, it will become
effective immediately, and will be deemed to govern the approval of proposal #6.
If approved by shareholders, Article XII, Section 4(b) of the Declaration
of Trust would be amended to read as follows:
"(b) The Trustees, with the approval of a Majority Shareholder Vote, may by
unanimous action sell and convey the assets of the Trust, or a class or series
of the Trust, to another trust or corporation organized under the laws of any
state of the United States, which is a diversified open-end management
investment company as defined in the 1940 Act, for an adequate consideration
which may include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust, or a class or series of the
Trust, and which may include shares of beneficial interest or stock of such
trust or corporation. Upon making provision for the payment of all such
liabilities, by such assumption or otherwise, the Trustees shall distribute the
remaining proceeds ratably among the holders of the Shares of the Trust, or a
class or series of the Trust, then outstanding. For the purposes of this
provision, a "Majority Shareholder Vote" means the affirmative vote of the
lesser of: (a) more than 50% of the outstanding voting securities entitled to
vote upon the matter, or (b) 67% or more of the voting securities present at the
meeting if the holders of 50% or more of the outstanding voting securities
entitled to vote on the matter are present at the meeting in person or by
proxy."
In the event that the amendment to Article XII, Section 4(b) is not
approved by shareholders, this section of the Declaration of Trust will remain
as it currently exists, and the Board of Trustees will consider what action, if
any, should be taken. The approval of proposal #6 will then require the
affirmative vote of two-thirds of the shares of the Trust entitled to be voted
upon that matter.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #6: TO APPROVE THE PROPOSED REORGANIZATION
The Board of Trustees of the Trust has voted to recommend to shareholders
of the Trust the approval of an Agreement and Plan of Reorganization (the
"Reorganization Agreement") whereby Money Market Obligations Trust, a
Massachusetts business trust ("MMOT"), on behalf of its portfolio, Federated
Master Trust (the "New Fund"), would acquire all of the assets (subject to the
liabilities) of the Trust in exchange for shares of beneficial interest of the
New Fund to be distributed pro rata by the Trust to its shareholders in complete
liquidation and dissolution of the Trust (the "Reorganization"). As a result of
the Reorganization, each shareholder of the Trust will become the owner of New
Fund shares having a total net asset value equal to the total net asset value of
his or her holdings in the Trust on the date of the Reorganization.
MMOT is an open-end management investment company which currently includes
thirteen portfolios, each of which has its own investment objective. The New
Fund is a newly-organized portfolio of MMOT, whose investment objective is
current income consistent with stability of principal. The New Fund pursues this
investment objective by investing in a portfolio of money market instruments
maturing in 13 months or less. The average maturity of money market instruments
in the New Fund's portfolio, computed on a dollar weighted basis, will be 90
days or less. The Trust has an identical investment objective. Subject to
shareholder approval of proposal #3(b), the Trust pursues its investment
objective by investing in a portfolio of money market instruments maturing in
thirteen months or less. The average maturity of money market instruments in the
Trust's portfolio, computed on a dollar weighted basis, will be 90 days or less.
Both the Trust and the New Fund are money market mutual funds which seek to
stabilize their offering and redemption prices at $1.00 per share, although
there can be no assurance that either the Trust or the New Fund will be able to
do so. (See "Comparison of Investment Policies and Risk Factors" below.) An
investment in the Trust or the New Fund is neither insured nor guaranteed by the
U.S. government.
As a condition to the Reorganization transactions, the Trust and MMOT will
receive an opinion of counsel that the Reorganization will be considered a
tax-free "reorganization" under applicable provisions of the Internal Revenue
Code, so that no gain or loss for federal income tax purposes will be recognized
by either the Trust or MMOT or the shareholders of the Trust and the New Fund.
The tax basis of the New Fund shares received by Trust shareholders will be the
same as the tax basis of their shares in the Trust.
Significant components of the Reorganization and provisions of the
Reorganization Agreement are summarized below; however, this summary of the
Reorganization Agreement is qualified in its entirety by reference to the full
text of the Reorganization Agreement between the Trust and MMOT, a copy of which
is attached as Appendix I to this Proxy Statement.
DESCRIPTION OF THE REORGANIZATION AGREEMENT
The Reorganization Agreement provides that all of the assets of the Trust
will be transferred to the New Fund, subject to the liabilities of the Trust.
Each holder of shares of the Trust will receive the same number (with the same
aggregate value) of shares of the New Fund as the shareholder had in the Trust
immediately prior to the Reorganization. The Trust's shareholders will not pay a
sales charge, commission or other transaction cost in connection with their
receipt of the shares of the New Fund.
Following the transfer of assets and assumption of liabilities of the Trust
to and by the New Fund, and the issuance of shares by the New Fund to the Trust,
the Trust will distribute the shares of the New Fund received by the Trust among
the shareholders of the Trust in proportion to the number of shares each such
shareholder holds in the Trust. In addition to receiving the shares of the New
Fund, each shareholder of the Trust will have a right to receive any declared
and unpaid dividends or other distributions of the Trust. Following the
Reorganization, shareholders of the Trust will be shareholders of the New Fund.
Upon the completion of the Reorganization, the Trust will be deregistered as an
investment company under the 1940 Act and its existence terminated under state
law. The stock transfer books of the Trust will be permanently closed after the
Reorganization. MMOT will not issue share certificates with respect to shares of
the New Fund issued in connection with the Reorganization.
The Reorganization is subject to certain conditions, including: approval of
the Reorganization Agreement and the transactions and exchange contemplated
thereby as described in this Proxy Statement by the shareholders of the Trust;
the receipt of a legal opinion described in the Reorganization Agreement
regarding tax matters; the receipt of certain certificates from the parties
concerning the continuing accuracy of the representations and warranties in the
Reorganization Agreement and other matters; and the parties' performance, in all
material respects, of the agreements and undertakings in the Reorganization
Agreement. Assuming satisfaction of the conditions in the Reorganization
Agreement, the Reorganization is expected to occur on or after April 23, 1999.
The Trust's investment adviser is responsible for the payment of all
expenses of the Reorganization incurred by either party, whether or not the
Reorganization is consummated. Such expenses include, but are not limited to,
legal fees, registration fees, transfer taxes (if any), the fees of banks and
transfer agents and the costs of preparing, printing, copying and mailing proxy
solicitation materials to the Trust's shareholders.
The Reorganization may be terminated at any time prior to its consummation
by either the Trust or MMOT if circumstances should develop that, in the opinion
of either the Board of the Trust or the Board of Trustees of MMOT, make
proceeding with the Reorganization inadvisable. The Reorganization Agreement
provides further that at any time prior to the consummation of the
Reorganization: (i) the parties thereto may amend or modify any of the
provisions of the Reorganization Agreement, provided that such amendment or
modification would not have a material adverse effect upon the benefits intended
under the Reorganization Agreement and it would be consistent with the best
interests of shareholders of the Trust and the New Fund; and (ii) either party
may waive any of the conditions set forth in the Reorganization Agreement if, in
the judgment of the waiving party, such waiver will not have a material adverse
effect on the benefits intended under the Reorganization Agreement to the
shareholders of the Trust or the shareholders of the New Fund, as the case may
be.
REASONS FOR THE PROPOSED REORGANIZATION
The Trust was established as a Massachusetts business trust in 1977.
Although the Board has been satisfied with the Trust's performance, it, and the
Trust's investment adviser, believe that certain operating efficiencies can be
achieved by reorganizing the Trust as a portfolio of MMOT rather than remaining
as a separate entity. Accordingly, the Trust's investment adviser has
recommended to the Board of Trustees of MMOT that the New Fund be organized for
the purpose of acquiring the Trust's assets and thereby reorganizing the Trust
as a portfolio of MMOT. The Trust's investment adviser similarly recommended to
the Trustees of the Trust that the Trust's assets be transferred to MMOT, on
behalf of the New Fund, in order to reorganize it as a separate portfolio of
MMOT. In connection with this proposal, the Trust's investment adviser
emphasized the comparable advisory services provided to the Trust and the New
Fund, the identical investment objectives and investment policies of the Trust
and the New Fund, and the administrative convenience and simplification of
management achievable by operating the Trust as a portfolio of MMOT.
BOARD OF TRUSTEES' CONSIDERATIONS AND RECOMMENDATIONS
The Trust's Board of Trustees, at its meeting on November 17, 1998,
concluded that the reorganization of the Trust as a portfolio of MMOT could
provide for operating efficiencies. The Trust's Trustees also noted that Trust
shareholders would continue to receive the same quality of investment management
services from the New Fund's investment adviser, which is also the Trust's
investment adviser. The Trust's Board of Trustees, including a majority of the
Trustees who are not "interested persons," additionally determined that
participation in the Reorganization is in the best interests of the Trust and
that the interests of the Trust shareholders would not be diluted as a result of
its effecting the Reorganization. Based upon the foregoing considerations, and
the fact that shareholders of the Trust will not suffer any adverse federal
income tax consequences as a result of the Reorganization, the Board of Trustees
of the Trust unanimously voted to approve, and recommended to Trust shareholders
the approval of, the Reorganization.
The Board of Trustees of MMOT, including the Trustees who are not
"interested persons," at the Board's meeting on November 17, 1998, unanimously
concluded that consummation of the Reorganization is in the best interests of
MMOT and the shareholders of the New Fund, and that the interests of New Fund
shareholders would not be diluted as a result of effecting the Reorganization.
As a consequence, the Board of Trustees of MMOT unanimously approved the
Reorganization Agreement. Under the terms of the Declaration of Trust, the
approval of the Reorganization requires the affirmative vote of two-thirds of
the outstanding voting securities of the Trust. If proposal #5 is approved, that
amendment to the Declaration of Trust will become effective immediately, and
this proposal #6 to approve the Reorganization will require the affirmative vote
of a majority of the outstanding voting shares of the Trust as defined under the
Declaration of Trust. (See "PROXIES, QUORUM AND VOTING AT THE MEETING" below.)
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization transactions, the Trust and MMOT, on
behalf of the New Fund, will receive an opinion from Dickstein Shapiro Morin &
Oshinsky LLP, special counsel to the Trust and MMOT, to the effect that, on the
basis of the existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), current administrative rules and court decisions, for
federal income tax purposes: (1) the Reorganization as set forth in the
Reorganization Agreement will constitute a tax-free reorganization under section
368(a)(1)(F) of the Code; (2) no gain or loss will be recognized by the New Fund
upon its receipt of the Trust's assets in exchange for New Fund shares; (3) no
gain or loss will be recognized by the Trust upon the transfer of its assets to
the New Fund in exchange for New Fund shares or upon the distribution (whether
actual or constructive) of the New Fund shares to the Trust shareholders in
exchange for their shares of the Trust; (4) no gain or loss will be recognized
by shareholders of the Trust upon exchange of the Trust shares for New Fund
shares; (5) the holding period and tax basis for the Trust's assets acquired by
the New Fund will be the same as the holding period and the tax basis to the
Trust immediately prior to the Reorganization; (6) the holding period of New
Fund shares received by shareholders of the Trust pursuant to the Reorganization
Agreement will be the same as the holding period of Trust shares held by such
shareholders immediately prior to the Reorganization, provided the Trust shares
were held as capital assets on the date of the Reorganization; and (7) the tax
basis of New Fund shares received by shareholders of the Trust pursuant to the
Reorganization Agreement will be the same as the tax basis of Trust shares held
by such shareholders immediately prior to the Reorganization.
The Trust and MMOT have not sought a tax ruling from the Internal Revenue
Service ("IRS"), but are acting in reliance upon the opinion of counsel
discussed in the previous paragraph. That opinion is not binding on the IRS and
does not preclude the IRS from adopting a contrary position. Shareholders should
consult their own advisers concerning the potential tax consequences to them,
including state and local income taxes.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The investment objective of the Trust is identical to the investment
objective of the New Fund. Investments in the Trust and the New Fund are not
insured or guaranteed by the U.S. Government. Since the Trust and the New Fund
are managed to maintain a constant net asset value, the Trust and the New Fund
have little risk of principal loss. However, investments in the Trust and the
New Fund are subject to certain risks, which include, but are not limited to,
the following: the possibility that issuers of securities owned by the Trust and
the New Fund will have their credit ratings downgraded; the ability of the
issuers of securities owned by the Trust and the New Fund to meet their
obligations for payment of principal and interest when due or to repurchase such
securities as previously agreed; interest rate or market risk, which is the
potential for fluctuations in the prices of debt securities owned by the Trust
and the New Fund, due to changing interest rates (e.g., when interest rates
rise, bond prices generally decline); prepayment or call risk, which is the
likelihood that, during periods of falling interest rates, debt securities will
be prepaid (or "called") prior to maturity, requiring the proceeds to be
invested by the Trust and the New Fund at a generally lower interest rate; and
international economic and political developments, which may have an impact on
issuers of securities owned by the Trust and the New Fund.
The investment policies of the New Fund have been established to mirror the
present policies and restrictions of the Trust. If the Reorganization is
approved by shareholders of the Trust, prior to the issuance of any shares of
the New Fund, and in accordance with the governing instruments of the New Fund,
the Trustees of the New Fund will make changes to the policies and restrictions
of the New Fund that parallel any changes approved by the shareholders at the
Meeting. As a result, at the effective time of the Reorganization, the
investment policies and restrictions of the Trust and the New Fund will be
identical.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
Each of the Trust and MMOT is organized as a business trust pursuant to a
Declaration of Trust under the laws of the Commonwealth of Massachusetts. The
rights of shareholders of the Trust and of shareholders of MMOT relating to
voting, distributions and redemptions, as set forth in the applicable
Declaration of Trust and By-Laws, are substantively identical. Set forth below
is a brief summary of the significant rights of shareholders of the Trust and of
MMOT.
Neither the Trust nor MMOT are required to hold annual meetings of
shareholders. Shareholder approval is necessary only for certain changes in
operations or the election of Trustees under certain circumstances. A special
meeting of shareholders of either the Trust or MMOT for any permissible purpose
shall be called by the Trustees upon the written request of the holders of at
least 10% of the outstanding shares of the Trust or MMOT, as the case may be.
Each share of the Trust and MMOT is entitled to one vote. All shares of MMOT
have equal voting rights, except that only shares of the New Fund are entitled
to vote on matters only affecting the New Fund.
Under certain circumstances, shareholders of the Trust and shareholders of
the New Fund may be held personally liable as partners under Massachusetts law
for obligations of the Trust or of MMOT, respectively. To protect their
shareholders, the Trust and MMOT have filed legal documents with the
Commonwealth of Massachusetts that expressly disclaim the liability of their
shareholders for such acts or obligations of the Trust or MMOT. These documents
require that notice of this disclaimer be given in each agreement, obligation or
instrument that the Trust or MMOT or their Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's or the New Fund's obligations, each of the Trust and the New Fund is
required to use its property to protect or compensate the shareholder. On
request, the Trust or the New Fund will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the New Fund.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust or MMOT cannot meet its obligations to indemnify shareholders
and pay judgments against them from the assets of the Trust or MMOT.
PURCHASE AND REDEMPTION INFORMATION, EXCHANGE PRIVILEGES, DISTRIBUTION AND
PRICING
The purchase, redemption, exchange privileges and distribution policies of
the Trust and the New Fund are identical.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE TRUST
VOTE "FOR" APPROVAL OF THE REORGANIZATION AGREEMENT
INFORMATION ABOUT THE TRUST
PROXIES, QUORUM AND VOTING AT THE MEETING
Only shareholders of record on the Record Date will be entitled to vote at
the Meeting. Each share of the Trust is entitled to one vote. Fractional shares
are entitled to proportionate shares of one vote. Under both the Investment
Company Act of 1940 and the Declaration of Trust, the favorable vote of a
"majority of the outstanding voting shares" of the Trust means: (a) the holders
of 67% or more of the outstanding voting securities present at the Meeting, if
the holders of 50% or more of the outstanding voting securities of the Trust are
present or represented by proxy; or (b) the vote of the holders of more than 50%
of the outstanding voting securities, whichever is less.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Trust. In addition, although mere attendance
at the Meeting will not revoke a proxy, a shareholder present at the Meeting may
withdraw his or her proxy and vote in person. All properly executed and
unrevoked proxies received in time for the Meeting will be voted in accordance
with the instructions contained in the proxies. IF NO INSTRUCTION IS GIVEN ON
THE PROXY, THE PERSONS NAMED AS PROXIES WILL VOTE THE SHARES REPRESENTED THEREBY
IN FAVOR OF THE MATTERS SET FORTH IN THE ATTACHED NOTICE.
In order to hold the Meeting, a "quorum" of shareholders must be present.
Holders of one-fourth of the total number of outstanding shares of the Trust,
present in person or by proxy, shall be required to constitute a quorum for the
purpose of voting on the proposals made.
For purposes of determining a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are PRESENT but which have not been VOTED. For
this reason, abstentions and broker non-votes will have the effect of a "no"
vote for purposes of obtaining the requisite approval of the proposals.
If a quorum is not present, the persons named as proxies may vote those
proxies which have been received to adjourn the 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 Meeting to permit further solicitations of
proxies with respect to such proposal(s). 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 Meeting to be adjourned. The persons named as proxies will
vote against any such adjournment those proxies which they are required to vote
AGAINST the proposal and will vote in favor of the adjournment other proxies
which they are entitled to vote. A shareholder vote may be taken on other
proposals in this proxy statement prior to any such adjournment if sufficient
votes have been received for approval.
As referred to in this Proxy Statement, "The Funds" or "Funds" include the
following investment companies: Automated Government Money Trust; Cash Trust
Series II; Cash Trust Series, Inc.; CCB Funds; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government
Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund;
Federated Core Trust; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Insurance Series; Federated Master
Trust; Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and Bond
Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Liberty Term Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust;
Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; Regions Funds; RIGGS Funds;
Tax-Free Instruments Trust; The Planters Funds; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; WesMark Funds; WCT Funds; World Investment Series, Inc.;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; High Yield Cash Trust;
Investment Series Trust; Targeted Duration Trust; The Virtus Funds, and Trust
for Financial Institutions.
SHARE OWNERSHIP OF THE TRUSTEES
Officers and Trustees of the Trust own less than 1% of the Trust's
outstanding shares.
At the close of business on the Record Date, the following persons owned,
to the knowledge of management, more than 5% of the outstanding shares of the
Trust: [INSERT 5% HOLDERS]
<TABLE>
<CAPTION>
<S> <C> <C>
TRUSTEE COMPENSATION
NAME, AGGREGATE COMPENSATION TOTAL COMPENSATION PAID
POSITION WITH TRUST FROM TRUST FROM FUND COMPLEX+
- ---------------------------- ----------------------- --------------------------------------------
John F. Donahue $0 $-0- for the Trust and
Chairman and Trustee 56 other investment companies in the Fund
Complex
Thomas G. Bigley $___
Trustee $______ for the Trust and
56 other investment companies in the Fund
John T. Conroy, Jr. $___ Complex
Trustee
$______ for the Trust and
William J. Copeland $___ 56 other investment companies in the Fund
Trustee Complex
James E. Dowd $___ $______ for the Trust and
Trustee 56 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $___
Trustee $______ for the Trust and
56 other investment companies in the Fund
Edward L. Flaherty, Jr. $___ Complex
Trustee
$______ for the Trust and
Peter E. Madden $___ 56 other investment companies in the Fund
Trustee Complex
John E. Murray, Jr. $___ $______ for the Trust and
Trustee 56 other investment companies in the Fund
Complex
Wesley W. Posvar $___
Trustee $______ for the Trust and
56 other investment companies in the Fund
Marjorie P. Smuts $___ Complex
Trustee
$______ for the Trust and
56 other investment companies in the Fund
Complex
$______ for the Trust and
56 other investment companies in the Fund
Complex
$______ for the Trust and
56 other investment companies in the Fund
Complex
</TABLE>
* Information is furnished for the fiscal year ended November 30, 1998.
# The aggregate compensation is provided for the Trust which is comprised
of one portfolio.
+The information is provided for the last calendar year.
During the fiscal year ended November 30, 1998, there were four meetings of
the Board of Trustees. The interested Trustees, other than Dr. Ellis, do not
receive fees from the Trust. Dr. Ellis is an interested person by reason of the
employment of his son-in-law by Federated Securities Corp. All Trustees were
reimbursed for expenses for attendance at Board of Trustees meetings.
Other than its Executive Committee, the Trust has one Board committee, the
Audit Committee. Generally, the function of the Audit Committee is to assist the
Board of Trustees in fulfilling its duties relating to the Trust's accounting
and financial reporting practices and to serve as a direct line of communication
between the Board of Trustees and the independent auditors. The specific
functions of the Audit Committee include recommending the engagement or
retention of the independent auditors, reviewing with the independent auditors
the plan and the results of the auditing engagement, approving professional
services provided by the independent auditors prior to the performance of such
services, considering the range of audit and non-audit fees, reviewing the
independence of the independent auditors, reviewing the scope and results of the
Trust's procedures for internal auditing, and reviewing the Trust's system of
internal accounting controls.
Messrs. Flaherty, Conroy, Copeland, and Dowd serve on the Audit Committee.
These Trustees are not interested Trustees of the Trust. During the fiscal year
ended November 30, 1998, there were four meetings of the Audit Committee. All of
the members of the Audit Committee were present for each meeting. Each member of
the Audit Committee receives an annual fee of $100 plus $25 for attendance at
each meeting and is reimbursed for expenses of attendance.
OFFICERS OF THE TRUST
The executive officers of the Trust are elected annually by the Board of
Trustees. Each officer holds the office until qualification of his successor.
The names and birthdates of the executive officers of the Trust and their
principal occupations during the last five years are as follows:
John F. Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director or Trustee of the Funds. Mr. Donahue is the
father of J. Christopher Donahue, Executive Vice President of the Trust and
Nominee for Trustee.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Trust.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Shareholder Services Company; Director, Federated Services Company;
President and Trustee, Federated Shareholder Services; Director, Federated
Securities Corp.; Executive Vice President and Secretary of the Funds; Treasurer
of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
None of the Trustees of the Trust received salaries from the Trust during
the fiscal year ended November 30, 1998.
Federated Securities Corp., a subsidiary of Federated Investors, Inc., is
the principal distributor of the Trust's shares. Federated Securities Corp.
receives no compensation from the Trust for its services.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Trust is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to Federated Master Trust,
Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000, so that they are received within a reasonable time before any such
meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Trust.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN
THE UNITED STATES.
By Order of the Board of Trustees,
John W. McGonigle
Secretary
February 2, 1999
<PAGE>
FEDERATED MASTER TRUST
INVESTMENT ADVISER
FEDERATED RESEARCH
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
DISTRIBUTOR
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
ADMINISTRATOR
FEDERATED SERVICES COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Cusip
(_____/99)
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Federated Master Trust (the "Trust") hereby appoint Patricia F. Conner, Gail
Cagney, Susan M. Jones and Ann M. Scanlon, or any one of them, true and lawful
attorneys, with the power of substitution of each, to vote all shares of the
Trust which the undersigned is entitled to vote at the Special Meeting in lieu
of Annual Meeting of Shareholders (the "Meeting") to be held on March 29, 1999,
at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 12:00 Noon, and at any
adjournment thereof.
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 the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF FEDERATED MASTER
TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSALS.
BY CHECKING THE BOX "FOR" BELOW, YOU WILL VOTE TO APPROVE EACH OF THE PROPOSED
ITEMS IN THIS PROXY, AND TO ELECT EACH OF THE NOMINEES AS TRUSTEES OF THE TRUST
FOR [ ]
PROPOSAL 1 TO ELECT THOMAS G. BIGLEY, JOHN T. CONROY, JR.,
NICHOLAS P. CONSTANTAKIS, JOHN F. CUNNINGHAM,
J. CHRISTOPHER DONAHUE, PETER E. MADDEN, CHARLES F. MANSFIELD,
JR., JOHN E. MURRAY, JR. AND JOHN S. WALSH AS TRUSTEES OF THE
TRUST
FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR" a particular
nominee, mark the "For All Except" box and strike a line through
the name of each nominee for whom you are NOT voting. Your shares
will be voted for the remaining nominees.
PROPOSAL 2 TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS THE TRUST'S
INDEPENDENT AUDITORS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 3 TO MAKE CHANGES TO THE TRUST'S FUNDAMENTAL INVESTMENT POLICIES:
3(A) TO APPROVE A REVISION IN THE TRUST'S FUNDAMENTAL
INVESTMENT POLICY WITH REGARD TO DIVERSIFICATION OF ITS
INVESTMENTS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(B) TO APPROVE MAKING NON-FUNDAMENTAL, AND AMENDING, THE
TRUST'S FUNDAMENTAL INVESTMENT POLICY REGARDING MATURITY
OF MONEY MARKET INSTRUMENTS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(C) TO APPROVE MAKING NON-FUNDAMENTAL, AND AMENDING, THE
TRUST'S POLICY PROHIBITING INVESTMENT IN SECURITIES TO
EXERCISE CONTROL OF AN ISSUER
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(D) TO APPROVE MAKING NON-FUNDAMENTAL, AND AMENDING, THE
TRUST'S ABILITY TO INVEST IN THE SECURITIES OF OTHER
INVESTMENT COMPANIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(E) TO APPROVE MAKING NON-FUNDAMENTAL THE TRUST'S POLICY REGARDING
THE TYPES OF MONEY MARKET INSTRUMENTS WHICH THE TRUST IS
PERMITTED TO PURCHASE
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(F) TO APPROVE MAKING NON-FUNDAMENTAL THE TRUST'S ABILITY TO INVEST
IN UNRATED SECURITIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(G) TO APPROVE MAKING NON-FUNDAMENTAL THE TRUST'S POLICY REGARDING
THE DESCRIPTION OF BANK INSTRUMENTS THAT THE TRUST MAY PURCHASE
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(H) TO APPROVE MAKING NON-FUNDAMENTAL THE TRUST'S POLICY REGARDING
THE DESCRIPTION OF COMMERCIAL PAPER THAT THE TRUST MAY PURCHASE
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(I) TO APPROVE MAKING NON-FUNDAMENTAL, AND AMENDING, THE TRUST'S
POLICY REGARDING PLEDGING ASSETS TO SECURE PERMITTED BORROWINGS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 4 TO ELIMINATE THE TRUST'S FUNDAMENTAL INVESTMENT POLICY ON
CONCENTRATION AND TO RESERVE FREEDOM TO CONCENTRATE INVESTMENTS
IN THE DOMESTIC BANKING INDUSTRY
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 5 TO APPROVE AN AMENDMENT AND RESTATEMENT TO THE TRUST'S DECLARATION OF
TRUST TO REQUIRE THE APPROVAL BY A "1940 ACT" MAJORITY OF SHAREHOLDERS IN
THE EVENT OF THE SALE OR CONVEYANCE OF THE ASSETS OF THE TRUST TO ANOTHER
TRUST OR CORPORATION
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 6 TO APPROVE A PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN THE TRUST AND MONEY MARKET OBLIGATIONS TRUST, ON BEHALF
OF ITS SERIES, FEDERATED MASTER
TRUST (THE "NEW FUND"), WHEREBY THE NEW FUND WOULD ACQUIRE ALL
OF THE ASSETS OF THE TRUST IN EXCHANGE FOR SHARES OF THE NEW FUND
TO BE DISTRIBUTED PRO RATA
BY THE TRUST TO ITS SHAREHOLDERS IN COMPLETE LIQUIDATION AND
TERMINATION OF THE TRUST
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT
Please complete, sign and return
this card as soon as possible
mark with an X in the box.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the
Trust. Joint owners should each sign personally. Directors and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or her title.
YOU MAY ALSO VOTE YOUR SHARES BY TOUCHTONE PHONE BY CALLING 1-800-890-8903
OR THROUGH THE INTERNET AT WWW.PROXYVOTE.COM
<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of January __, 1999 (the
"Agreement") between Federated Master Trust, a Massachusetts business trust (the
"Fund"), with its principal place of business at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, and Money Market Obligations Trust , a
Massachusetts business trust (the "Trust"), with its principal place of business
located at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000 on behalf
of its newly-organized portfolio Federated Master Trust (the "Successor Fund").
WHEREAS, the Board of Trustees of the Fund and the Board of Trustees of the
Trust have determined that it is in the best interests of the Fund and the
Trust, respectively, that the assets of the Fund be acquired by the Successor
Fund pursuant to this Agreement; and
WHEREAS, the parties desire to enter into a plan of exchange which would
constitute a reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the "Code"):
NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. PLAN OF EXCHANGE.
(a) Subject to the terms and conditions set forth herein, on the Exchange
Date (as defined herein) the Fund shall assign, transfer and convey its assets,
including all securities and cash held by the Fund (subject to the liabilities
of the Fund) to the Successor Fund, and the Successor Fund shall acquire all of
the assets of the Fund (subject to the liabilities of the Fund) in exchange for
full and fractional shares of beneficial interest of the Successor Fund (the
"Successor Fund Shares"), to be issued by the Trust, having an aggregate net
asset value equal to the value of the net assets of the Fund. The value of the
assets of the Fund and the net asset value per share of the Successor Fund
Shares shall be determined as of the Valuation Date (as defined herein) in
accordance with the procedures for determining the value of the Successor Fund's
assets set forth in the Successor Fund's organizational documents and the
then-current prospectus and statement of additional information for the
Successor Fund that forms a part of the Successor Fund's Registration Statement
on Form N-1A (the "Registration Statement"). In lieu of delivering certificates
for the Successor Fund Shares, the Trust shall credit the Successor Fund Shares
to the Fund's account on the share record books of the Trust and shall deliver a
confirmation thereof to the Fund. The Fund shall then deliver written
instructions to the Trust's transfer agent to establish accounts for the
shareholders on the share record books relating to the Successor Fund.
(b) Delivery of the assets of the Fund to be transferred shall be made not
later than the next business day following the Valuation Date (the "Exchange
Date"). Assets transferred shall be delivered to State Street Bank and Trust
Company, the Trust's custodian (the "Custodian"), for the account of the Trust
and the Successor Fund with all securities not in bearer or book entry form duly
endorsed, or accompanied by duly executed separate assignments or stock powers,
in proper form for transfer, with signatures guaranteed, and with all necessary
stock transfer stamps, sufficient to transfer good and marketable title thereto
(including all accrued interest and dividends and rights pertaining thereto) to
the Custodian for the account of the Trust and the Successor Fund free and clear
of all liens, encumbrances, rights, restrictions and claims. All cash delivered
shall be in the form of immediately available funds payable to the order of the
Custodian for the account of the Trust and the Successor Fund.
(c) The Fund will pay or cause to be paid to the Trust any interest
received on or after the Exchange Date with respect to assets transferred from
the Fund to the Successor Fund hereunder and to the Trust and any distributions,
rights or other assets received by the Fund after the Exchange Date as
distributions on or with respect to the securities transferred from the Fund to
the Successor Fund hereunder. All such assets shall be deemed included in assets
transferred to the Successor Fund on the Exchange Date and shall not be
separately valued.
(d) The Valuation Date shall be March __, 1999, or such earlier or later
date as may be mutually agreed upon by the parties.
(e) As soon as practicable after the Exchange Date, the Fund shall
distribute all of the Successor Fund Shares received by it among the
shareholders of the Fund in proportion to the number of shares each such
shareholder holds in the Fund and shall take all other steps necessary to effect
its dissolution and termination. After the Exchange Date, the Fund shall not
conduct any business except in connection with its dissolution and termination.
2. THE FUND'S REPRESENTATIONS AND WARRANTIES.
The Fund represents and warrants to and agrees with the Trust on behalf of
the Successor Fund as follows:
(a) The Fund is a business trust duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has power
to own all of its properties and assets and, subject to the approval of its
shareholders as contemplated hereby, to carry out this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by the
Fund and is valid and binding on the Fund, enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws of general applicability relating to or
affecting creditors' rights and to general principles of equity. The execution
and delivery of this Agreement does not and will not, and the consummation of
the transactions contemplated by this Agreement will not, violate the Fund's
Declaration of Trust or By-Laws or any agreement or arrangement to which it is a
party or by which it is bound.
(c) The Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
(d) Except as shown on the audited financial statements of the Fund for its
most recently completed fiscal period and as incurred in the ordinary course of
the Fund's business since then, the Fund has no known liabilities of a material
amount, contingent or otherwise, and there are no legal, administrative or other
proceedings pending or, to the Fund's knowledge, threatened against the Fund.
(e) On the Exchange Date, the Fund will have full right, power and
authority to sell, assign, transfer and deliver the Fund's assets to be
transferred by it hereunder.
3. THE TRUST'S REPRESENTATIONS AND WARRANTIES.
The Trust, on behalf of the Successor Fund, represents and warrants to and
agrees with the Fund as follows:
(a) The Trust is a business trust duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts and has power
to carry on its business as it is now being conducted and to carry out this
Agreement.
(b) This Agreement has been duly authorized, executed and delivered by the
Trust and is valid and binding on the Trust, enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws of general applicability relating to or
affecting creditors' rights and to general principles of equity. The execution
and delivery of this Agreement does not and will not, and the consummation of
the transactions contemplated by this Agreement will not, violate the Trust's
Declaration of Trust or By-Laws or any agreement or arrangement to which it is a
party or by which it is bound.
(c) The Trust is registered under the 1940 Act as an open-end management
investment company and such registration has not been revoked or rescinded and
is in full force and effect.
(d) The Successor Fund does not have any known liabilities of a material
amount, contingent or otherwise, and there are no legal, administrative or other
proceedings pending or, to the Trust's knowledge, threatened against the
Successor Fund. Other than organizational activities, the Successor Fund has not
engaged in any business activities.
(e) At the Exchange Date, the Successor Fund Shares to be issued to the
Fund (the only Successor Fund Shares to be issued as of the Exchange Date) will
have been duly authorized and, when issued and delivered pursuant to this
Agreement, will be legally and validly issued and will be fully paid and
non-assessable. No Trust or Successor Fund shareholder will have any preemptive
right of subscription or purchase in respect thereof.
4. THE TRUST'S CONDITIONS PRECEDENT.
The obligations of the Trust hereunder shall be subject to the following
conditions:
(a) The Fund shall have furnished to the Trust a statement of the Fund's
assets, including a list of securities owned by the Fund with their respective
tax costs and values determined as provided in Section 1 hereof, all as of the
Valuation Date.
(b) As of the Exchange Date, all representations and warranties of the Fund
made in this Agreement shall be true and correct as if made at and as of such
date, and the Fund shall have complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to such
date.
(c) A vote of the shareholders of the Fund approving this Agreement and the
transactions and exchange contemplated hereby shall have been adopted by the
vote required by applicable law.
5. THE FUND'S CONDITIONS PRECEDENT.
The obligations of the Fund hereunder with respect to the Fund shall be
subject to the condition that as of the Exchange Date all representations and
warranties of the Trust made in this Agreement shall be true and correct as if
made at and as of such date, and that the Trust shall have complied with all of
the agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such date.
6. THE TRUST'S AND THE FUND'S CONDITIONS PRECEDENT.
The obligations of both the Trust and the Fund hereunder shall be subject
to the following conditions:
(a) The post-effective amendment to the Trust's Registration Statement on
Form N-1A relating to the Successor Fund under the Securities Act of 1933, as
amended, and the 1940 Act, if applicable, shall have become effective, and any
additional post-effective amendments to such Registration Statement as are
determined by the Trustees of the Trust to be necessary and appropriate shall
have been filed with the Commission and shall have become effective.
(b) No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency which seeks to restrain or prohibit, or
obtain damages or other relief in connection with, this Agreement or the
transaction contemplated herein.
(c) Each party shall have received an opinion of Dickstein Shapiro Morin &
Oshinsky LLP to the effect that the reorganization contemplated by this
Agreement qualifies as a "reorganization" under Section 368(a)(1)(F) of the
Code.
Provided, however, that at any time prior to the Exchange Date, any of the
foregoing conditions in this Section 6 may be waived by the parties if, in the
judgment of the parties, such waiver will not have a material adverse effect on
the benefits intended under this Agreement to the shareholders of the Fund.
7. TERMINATION OF AGREEMENT.
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by resolution of the Board of Trustees of the Fund or the Board of
Trustees of the Trust at any time prior to the Exchange Date (and
notwithstanding any vote of the shareholders of the Fund) if circumstances
should develop that, in the opinion of either the Board of Trustees of the Fund
or the Board of Trustees of the Trust, make proceeding with this Agreement
inadvisable.
If this Agreement is terminated and the exchange contemplated hereby is
abandoned pursuant to the provisions of this Section 7, this Agreement shall
become void and have no effect, without any liability on the part of any party
hereto or the Trustees, officers or shareholders of the Trust or the Trustees,
officers or shareholders of the Fund, in respect of this Agreement.
8. WAIVER AND AMENDMENTS.
At any time prior to the Exchange Date, any of the conditions set forth in
Section 4 may be waived by the Board of the Trust, and any of the conditions set
forth in Section 5 may be waived by the Board of the Fund, if, in the judgment
of the waiving party, such waiver will not have a material adverse effect on the
benefits intended under this Agreement to the shareholders of the Fund or the
shareholders of the Successor Fund, as the case may be. In addition, prior to
the Exchange Date, any provision of this Agreement may be amended or modified by
the Boards of the Fund and the Trust if such amendment or modification would not
have a material adverse effect upon the benefits intended under this Agreement
and would be consistent with the best interests of shareholders of the Fund and
the Successor Fund.
9. NO SURVIVAL OF REPRESENTATIONS.
None of the representations and warranties included or provided for herein
shall survive consummation of the transactions contemplated hereby.
10. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of the Commonwealth of Pennsylvania, without giving effect to principles of
conflict of laws; provided, however, that the due authorization, execution and
delivery of this Agreement, in the case of the Fund and the Trust, shall be
governed and construed in accordance with the laws of the Commonwealth of
Massachusetts without giving effect to principles of conflict of laws.
11. CAPACITY OF TRUSTEES, ETC.
(a)(i) The names "Federated Master Trust" and "Board of Trustees of
Federated Master Trust" refer, respectively, to the trust created and the
trustees, as trustees but not individually or personally, acting from time to
time under the Fund's Declaration of Trust, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Fund. The
obligations of the Fund entered into in the name or on behalf thereof by any of
the trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of the Fund personally, but bind only the trust property, and
all persons dealing with any portfolio of shares of the Fund must look solely to
the trust property belonging to such portfolio for the enforcement of any claims
against the Fund.
(ii) Both parties specifically acknowledge and agree that any liability of
the Fund under this Agreement, or in connection with the transactions
contemplated herein, shall be discharged only out of the assets of the Fund and
that no other portfolio of the Fund shall be liable with respect thereto.
(b)(i) The names "Money Market Obligations Trust" and "Board of Trustees of
Money Market Obligations Trust" refer, respectively, to the trust created and
the trustees, as trustees but not individually or personally, acting from time
to time under the Trust's Declaration of Trust, which is hereby referred to and
a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of the Trust entered into in the name or on behalf of the Successor
Fund by any of the trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
trustees, shareholders or representatives of the Trust personally, but bind only
the Successor Fund's trust property, and all persons dealing with any portfolio
of shares of the Trust must look solely to the trust property belonging to such
portfolio for the enforcement of any claims against the Trust.
(ii) Both parties specifically acknowledge and agree that any liability of
the Trust under this Agreement, or in connection with the transactions
contemplated herein, shall be discharged only out of the assets of the Successor
Fund and that no other portfolio of the Trust shall be liable with respect
thereto.
12. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which, when
executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, the Fund and the Trust have caused this Agreement and
Plan of Reorganization to be executed as of the date above first written.
FEDERATED MASTER TRUST
ATTEST: _________________________ ______________________________
Title:
MONEY MARKET OBLIGATIONS
TRUST, on behalf of its portfolio,
Federated Master Trust
ATTEST: _________________________ ______________________________
Title:
