1933 Act File No. 2-75756
1940 Act File No. 811-
3385
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X
Pre-Effective Amendment No.
Post-Effective Amendment No. 23 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 X
Amendment No. 20 X
FEDERATED STOCK TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on December 31, 1994 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of
Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:
X filed the Notice required by that Rule on December 15,
1994; or
intends to file the Notice required by that Rule on or
about ____________; or
during the most recent fiscal year did not sell any
securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and, pursuant to Rule 24f-2(b)(2),
need not file the Notice.
Copies to:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin,
L.L.P.
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of
FEDERATED STOCK TRUST is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page Cover Page.
Item 2. Synopsis Summary of Trust Expenses.
Item 3. Condensed Financial
Information Financial Highlights.
Item 4. General Description of
Registrant Performance Information;
General Information;
Investment Information;
Investment Objective;
Investment Policies;
Investment Limitations.
Item 5. Management of the Trust Trust Information; Management
of the Trust; Distribution of
Trust Shares; Administration
of the Trust; Brokerage
Transactions.
Item 6. Capital Stock and Other
Securities Dividends; Capital Gains;
Shareholder Information;
Voting Rights; Massachusetts
Partnership Law; Tax
Information; Federal Income
Tax; Pennsylvania Corporate
and Personal Property Taxes.
Item 7. Purchase of Securities Being
Offered Investing in the Trust; Share
Purchases; Minimum Investment
Required; What Shares Cost;
Exchanging Securities for
Trust Shares; Subaccounting
Services; Certificates and
Confirmations; Retirement
Plans; Net Asset Value.
Item 8. Redemption or Repurchase Redeeming Shares; Telephone
Redemption; Written Requests;
Accounts With Low Balances.
Item 9. Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION
Item 10. Cover Page Cover Page.
Item 11. Table of Contents Table of Contents.
Item 12. General Information and
History General Information About the
Trust.
Item 13. Investment Objectives and
Policies Investment Objective and
Policies.
Item 14. Management of the Registrant Federated Stock Trust
Management.
Item 15. Control Persons and Principal
Holders of Securities Trust Ownership.
Item 16. Investment Advisory and Other
Services Investment Advisory Services;
Administrative Services;
Transfer Agent and Dividend
Disbursing Agent; Shareholder
Services Plan.
Item 17. Brokerage Allocation Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered Purchasing Shares; Exchanging
Securities for Trust Shares;
Determining Net Asset Value;
Redeeming Shares.
Item 20. Tax Status Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data Total Return; Yield;
Performance Comparisons.
Item 23. Financial Statements (Filed in Part A)
- --------------------------------------------------------------------------------
FEDERATED STOCK TRUST
PROSPECTUS
Federated Stock Trust (the "Trust") is a no-load, open-end,
diversified management investment company (a mutual fund) investing in
common stocks of high quality companies to achieve growth of income
and capital.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This prospectus contains the information you should read and know
before you invest in the Trust. Keep this prospectus for future
reference.
The Trust has also filed a Statement of Additional Information dated
December 31, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy
of the Statement of Additional Information free of charge by calling
1-800-235-4669. To obtain other information or to make inquiries about
the Trust, contact the Trust at the address listed in the back of this
prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated December 31, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF TRUST EXPENSES 1
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ---------------------------------------------------
GENERAL INFORMATION 3
- ---------------------------------------------------
INVESTMENT INFORMATION 3
- ---------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 5
TRUST INFORMATION 5
- ---------------------------------------------------
Management of the Trust 5
Distribution of Trust Shares 7
Administration of the Trust 7
Brokerage Transactions 8
NET ASSET VALUE 8
- ---------------------------------------------------
INVESTING IN THE TRUST 8
- ---------------------------------------------------
Share Purchases 8
Minimum Investment Required 9
What Shares Cost 9
Exchanging Securities for Trust Shares 9
Subaccounting Services 9
Certificates and Confirmations 10
Dividends 10
Capital Gains 10
Retirement Plans 10
REDEEMING SHARES 10
- ---------------------------------------------------
Telephone Redemption 10
Written Requests 11
Accounts With Low Balances 11
SHAREHOLDER INFORMATION 11
- ---------------------------------------------------
Voting Rights 11
Massachusetts Partnership Law 12
TAX INFORMATION 12
- ---------------------------------------------------
Federal Income Tax 12
Pennsylvania Corporate and Personal
Property Taxes 12
PERFORMANCE INFORMATION 12
- ---------------------------------------------------
FINANCIAL STATEMENTS 14
- ---------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT
AUDITORS 24
- ---------------------------------------------------
ADDRESSES 25
- ---------------------------------------------------
</TABLE>
I
SUMMARY OF TRUST EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)....................... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)............ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL TRUST OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee.................................................................................... 0.75%
12b-1 Fee......................................................................................... None
Total Other Expenses.............................................................................. 0.26%
Shareholder Services Fee (after waiver)(1)........................................... 0.10%
Total Trust Operating Expenses(2)......................................................... 1.01%
<FN>
(1) The maximum Shareholder Services Fee is 0.25%.
(2) The Total Trust Operating Expenses in the table above are based on expenses
expected during the fiscal year ending October 31, 1995. The Total Trust
Operating Expenses were 0.97% for the fiscal year ended October 31, 1994.
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Trust will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Trust Information." Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period................................................. $10 $32 $56 $124
</TABLE>
____THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1
FEDERATED STOCK TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 24.
<TABLE>
<CAPTION>
PERIOD ENDED
-----------------------------------------------------
10/94 10/93 10/92 10/91 10/90
- ----------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 26.40 $ 24.18 $ 23.99 $ 18.55 $ 25.19
- -----------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------
Net investment income 0.46 0.48 0.56 0.51 0.70
- -----------------------------------
Net realized and unrealized gain
(loss) on investments 0.68 4.27 1.79 6.23 (4.42)
- ----------------------------------- --------- --------- --------- --------- ---------
Total from investment operations 1.14 4.75 2.35 6.74 (3.72)
- -----------------------------------
LESS DISTRIBUTIONS
- -----------------------------------
Distributions from net investment
income (0.43) (0.49) (0.55) (0.56) (0.78)
- -----------------------------------
Distributions in excess of net
investment income -- (0.02)(e) -- -- --
- ----------------------------------- --------- --------- --------- --------- ---------
Total distributions from net
investment income (0.43) (0.51) (0.55) (0.56) (0.78)
- -----------------------------------
Distributions from net realized
gain on investment transactions (0.78) (2.02) (1.61) (0.74) (2.14)
- ----------------------------------- --------- --------- --------- --------- ---------
Total distributions (1.21) (2.53) (2.16) (1.30) (2.92)
- ----------------------------------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 26.33 $ 26.40 $ 24.18 $ 23.99 $ 18.55
- ----------------------------------- --------- --------- --------- --------- ---------
TOTAL RETURN(B) 4.55% 20.88% 10.78% 37.50% (16.36%)
- -----------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------
Expenses 0.97% 0.97% 0.99% 1.00% 0.98%
- -----------------------------------
Net investment income 1.81% 1.83% 2.33% 2.25% 3.03%
- -----------------------------------
Expense waiver/reimbursement -- -- -- -- --
- -----------------------------------
SUPPLEMENTAL DATA
- -----------------------------------
Net assets, end of period (000
omitted) $600,664 $554,062 $386,490 $369,505 $332,241
- -----------------------------------
Portfolio turnover 28% 26% 54% 49% 53%
- -----------------------------------
<CAPTION>
10/89 10/88(A) 01/88 01/87 01/86 01/85
- ----------------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 22.87 $ 22.10 $ 24.00 $ 20.43 $ 17.34 $ 14.84
- -----------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------
Net investment income 0.70 0.52 0.68 0.66 0.66 0.63
- -----------------------------------
Net realized and unrealized gain
(loss) on investments 2.34 1.03 (1.50) 4.99 3.48 2.77
- ----------------------------------- --------- --------- --------- --------- --------- ---------
Total from investment operations 3.04 1.55 (0.82) 5.65 4.14 3.40
- -----------------------------------
LESS DISTRIBUTIONS
- -----------------------------------
Distributions from net investment
income (0.65) (0.52) (0.64) (0.64) (0.65) (0.71)
- -----------------------------------
Distributions in excess of net
investment income -- -- -- -- -- --
- ----------------------------------- --------- --------- --------- --------- --------- ---------
Total distributions from net
investment income (0.65) (0.52) (0.64) (0.64) (0.65) (0.71)
- -----------------------------------
Distributions from net realized
gain on investment transactions (0.07) (0.26) (0.44) (1.44) (0.40) (0.19)
- ----------------------------------- --------- --------- --------- --------- --------- ---------
Total distributions (0.72) (0.78) (1.08) (2.08) (1.05) (0.90)
- ----------------------------------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 25.19 $ 22.87 $ 22.10 $ 24.00 $ 20.43 $ 17.34
- ----------------------------------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN(B) 13.48% 7.14% (3.64%) 29.02% 24.78% 24.29%
- -----------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------
Expenses 0.95% 0.94%(c) 0.89% 0.93% 1.00% 0.94%
- -----------------------------------
Net investment income 2.75% 3.08%(c) 2.82% 3.04% 3.69% 4.38%
- -----------------------------------
Expense waiver/reimbursement -- -- -- -- 0.04%(d) 0.32%(d)
- -----------------------------------
SUPPLEMENTAL DATA
- -----------------------------------
Net assets, end of period (000
omitted) $573,047 $636,426 $675,110 $611,856 $284,856 $85,816
- -----------------------------------
Portfolio turnover 35% 31% 51% 19% 35% 35%
- -----------------------------------
<FN>
(a)For the nine months ended October 31, 1988.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c)Computed on annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(e) Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
Annual Report for the fiscal year ending October 31, 1994, which can be obtained
free of charge.
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated December 30, 1981. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. As of the date of this prospectus, the Trustees
have not established separate series or classes of shares.
Trust shares are sold and redeemed at net asset value without a sales charge
imposed by the Trust.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Trust is to provide growth of income and capital
by investing principally in a professionally-managed and diversified portfolio
of common stock of high-quality companies. These companies generally are leaders
in their industries and are characterized by sound management and the ability to
finance expected growth. While there is no assurance that the Trust will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this prospectus. Unless otherwise stated, the investment
objective and the policies and limitations described below cannot be changed
without the approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Trust's investment approach is based on the
conviction that over the long term the economy will continue to expand and
develop and that this economic growth will be reflected in the growth of the
revenues and earnings of major corporations.
COMMON STOCKS. The Trust invests primarily in common stocks of companies
selected by the Trust's investment adviser on the basis of traditional
research techniques, including assessment of earnings and dividend growth
prospects and of the risk and volatility of the company's industry.
Ordinarily, these companies will be in the top 25% of their industries with
regard to revenues. However, other factors, such as product position or
market share, will be considered by the Trust's investment adviser and may
outweigh revenues.
OTHER CORPORATE SECURITIES. The Trust may invest in preferred stocks,
corporate bonds, notes, and warrants of these companies. The prices of fixed
income securities generally fluctuate inversely to the direction of interest
rates.
U.S. GOVERNMENT SECURITIES. The Trust may invest in U.S. government
securities.
REPURCHASE AGREEMENTS. The U.S. government securities in which the Trust
invests may be purchased pursuant to repurchase agreements. Repurchase
agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government securities to the
Trust and agree at the time of sale to repurchase them at a mutually agreed
upon time and price. The Trust or its custodian will take possession of the
securities subject to repurchase agreements, and these securities will be
marked to market daily. To the extent that
3
the original seller does not repurchase the securities from the Trust, the
Trust could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by the Trust might be
delayed pending court action. The Trust believes that under the regular
procedures normally in effect for custody of the Trust's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Trust and allow retention or
disposition of such securities. The Trust will only enter into repurchase
agreements with banks and other recognized financial institutions such as
broker/dealers which are found by the Trust's adviser to be creditworthy
pursuant to guidelines established by the Trustees.
MONEY MARKET INSTRUMENTS. The Trust may also invest in money market
instruments.
As a matter of investment policy, which may be changed without shareholder
approval, the Trust will not invest more than 10% of its assets in ADRs.
SECURITIES OF FOREIGN ISSUERS. The Trust may invest in the securities of
foreign issuers which are freely traded on United States securities
exchanges or in the over-the-counter market in the form of American
Depoisitary Receipts ("ADRs"). Securities of a foreign issuer may present
greater risks in the form of nationalization, confiscation, domestic
marketability, or other national or international restrictions.
As a matter of practice, the Trust will not invest in the securities of a
foreign issuer if any such risk appears to the investment adviser to be
substantial.
At least 80% of the Trust's portfolio will be invested in common stocks, unless
it is in a defensive position.
RESTRICTED AND ILLIQUID SECURITIES. The Trust intends to invest in restricted
securities up to specific limitations. These limitations are not applicable to
commercial paper issued under Section 4(2) of the Securities Act of 1933.
Restricted securities are any securities in which the Trust may otherwise invest
pursuant to the investment objective and policies but which are subject to
restriction on resale under federal securities law. As a matter of investment
practice, which may be changed without shareholder approval, the Trust will
limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, and repurchase
agreements providing for settlement in more than seven days after notice, to 10%
of net assets.
The Trust may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law and is generally sold to institutional investors, such as the
Trust, who agree that it is purchasing the paper for investment purposes and not
with a view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Trust through or with the assistance of the
issuer or the investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Trust believes that Section 4(2) commercial
paper and possibly certain other restricted securities which meet the criteria
for liquidity established by the Board of Trustees of the Trust are quite
liquid. The Trust intends, therefore, to treat the restricted securities which
meet the criteria for liquidity established by the Trustees, including Section
4(2) commercial
4
paper, as determined by the investment adviser of the Trust, as liquid and not
subject to the investment limitation applicable to illiquid securities and
restricted securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Trust purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Trust to miss a price or yield considered to be advantageous.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Trust may pay more/less than the market value of the
securities on the settlement date.
The Trust may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Trust may enter in transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Trust may realize short-term profits or losses upon the sale of such
commitments.
PORTFOLIO TURNOVER. Although the Trust does not intend to invest for the
purpose of seeking short-term profits, securities in its portfolio will be sold
whenever the Trust's investment adviser believes it is appropriate to do so in
light of the Trust's investment objective, without regard to the length of time
a particular security may have been held.
INVESTMENT LIMITATIONS
The Trust will not:
- borrow money or pledge securities except, under certain circumstances, the
Trust may borrow up to one-third of the value of its total assets and
pledge up to 10% of the value of those assets to secure such borrowings;
- invest more than 5% of its total assets in the securities of one issuer
(except cash and cash items and U.S. government securities);
- invest more than 5% of total assets in securities of issuers that have
records of less than three years of continuous operations;
- invest more than 10% of its total assets in securities subject to
restrictions on resale; or
- acquire more than 10% of the voting securities of any one issuer.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Trust's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. The Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
5
INVESTMENT ADVISER. Investment decisions for the Trust are made by Federated
Management, the Trust's investment adviser, (the "Adviser"), subject to
direction by the Trustees. The Adviser continually conducts investment research
and supervision for the Trust and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the Trust.
ADVISORY FEES. The annual investment advisory fee is based on the Trust's
average daily net assets as shown on the chart below.
<TABLE>
<CAPTION>
ADVISORY FEE AS %
AVERAGE DAILY OF AVERAGE DAILY
NET ASSETS NET ASSETS
-------------------- -------------------------
<S> <C>
First $500 million .75 of 1%
Second $500 million .675 of 1%
Third $500 million .600 of 1%
Fourth $500 million .525 of 1%
Over $2 billion .40 of 1%
</TABLE>
Under the investment advisory contract, the Adviser will reimburse the Trust
the amount, limited to the amount of the advisory fee, by which the Trust's
aggregate annual operating expenses, including its investment advisory fee
but excluding interest, taxes, brokerage commissions, expenses of
registering and qualifying the Trust and its shares under federal and state
laws, expenses of withholding taxes, and extraordinary expenses exceed 1% of
its average daily net assets. This does not include reimbursement to the
Trust of any expenses incurred by shareholders who use the transfer agent's
subaccounting facilities. The adviser has also undertaken to reimburse the
Trust for operating expenses in excess of limitations established by certain
states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy serve
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
6
Peter R. Anderson has been the Trust's senior portfolio manager since 1982.
Mr. Anderson joined Federated Investors in 1972 as, and is presently, a
Senior Vice President of the Trust's investment adviser. Mr. Anderson is a
Chartered Financial Analyst and received his M.B.A. in Finance from the
University of Wisconsin.
Frederick L. Plautz has been the Trust's co-portfolio manager since February
1994. Mr. Plautz joined Federated Investors in 1990 and has been a Vice
President of the Trust's investment adviser since October 1994. Prior to
this, Mr. Plautz served as an Assistant Vice President of the investment
adviser. Mr. Plautz was a portfolio manager at Banc One Asset Management
Corp. from 1986 until 1990. Mr. Plautz received his M.S. in Finance from the
University of Wisconsin.
DISTRIBUTION OF TRUST SHARES
Federated Securities Corp. is the principal distributor for shares of the Trust.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a wholly-owned subsidiary of Federated Investors.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Trust.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors ("Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE TRUST
-------------------- ------------------------------------
<C> <S>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES PLAN. The Trust has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the shares to obtain certain personal services
for shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Trust has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Trust and Federated Shareholder
Services.
7
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts is
custodian for the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Trust and
dividend disbursing agent for the Trust.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro and Morin, L.L.P. Washington,
D.C.
INDEPENDENT AUDITORS. The independent auditors for the Trust are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the adviser may give consideration to those
firms believed to meet these criteria, the adviser may give consideration to
those firms which have sold or are selling shares of the Trust and other funds
distributed by Federated Securities Corp. The adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Board of Trustees.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trust's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE TRUST
- --------------------------------------------------------------------------------
SHARE PURCHASES
Trust shares are sold on days on which the New York Stock Exchange is open.
Shares may be purchased either by wire or mail.
To purchase shares of the Trust, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken over the
telephone. The Trust reserves the right to reject any purchase request.
BY WIRE. To purchase shares of the Trust by Federal Reserve wire, call the
Trust before 4:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be received
before 3:00 p.m. (Eastern time) on the next business day following the
order. Federal funds should be wired as follows: Federated Services Company,
c/o State Street Bank and Trust Company, Boston, Massachusetts; Attention:
EDGEWIRE; For Credit to: Federated Stock Trust; Fund Number (this number can
be found on the account statement or by contacting the Trust); Group Number
or Order Number; Nominee or Institution Name; ABA Number 011000028.
8
BY MAIL. To purchase shares of the Trust by mail, send a check made payable
to Federated Stock Trust to: Federated Services Company, State Street Bank
and Trust Company, P.O. Box 8602, Boston, Massachusetts 02266-8602. Orders
by mail are considered received after payment by check is converted by the
transfer agent's bank State Street Bank, into federal funds. This is
generally the next business day after State Street Bank receives the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Trust is $25,000 plus any non-affiliated
bank or broker's fee, if applicable. However, an account may be opened with a
smaller amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Trust. Accounts established through a non-
affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Trust shares are sold at their net asset value, next determined after an order
is received. There is no sales charge imposed by the Trust. Investors who
purchase Trust shares through a non-affiliated bank or broker may be charged an
additional service fee by that bank or broker.
The net asset value is determined at the close of business of the New York Stock
Exchange, Monday through Friday, except on: (i) days on which there are not
sufficient changes in the value of the Trust's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or (iii)
the following holidays: New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
EXCHANGING SECURITIES FOR TRUST SHARES
Investors may exchange certain securities or a combination of securities and
cash for Trust shares. The securities and any cash must have a market value of
at least $25,000. The Trust reserves the right to determine the acceptability of
securities to be exchanged. Securities accepted by the Trust are valued in the
same manner as the Trust values its assets. Investors wishing to exchange
securities should first contact Federated Securities Corp. Shares purchased by
exchange of U.S. government securities cannot be redeemed by telephone for
fifteen business days to allow time for the transfer to settle.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Trust shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Trust shares. This prospectus should,
therefore, be read together with any agreement between the customer and the
institution with regard to the services provided, the fees charged for those
services, and any restrictions and limitations imposed.
9
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust. Detailed confirmations of each purchase or redemption
are sent to each shareholder. Quarterly confirmations are sent to report
dividends paid during that quarter.
DIVIDENDS
Dividends are declared and paid quarterly to all shareholders invested in the
Trust on the record date. Unless shareholders request cash payments by writing
to the Trust, dividends are automatically reinvested in additional shares of the
Trust on payment dates at the ex-dividend date net asset value without a sales
charge.
CAPITAL GAINS
Capital gains realized by the Trust, if any, will be distributed at least once
every 12 months.
RETIREMENT PLANS
Shares of the Trust can be purchased as an investment for retirement plans or
for IRA accounts. For further details contact Federated Securities Corp. and
consult a tax adviser.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Trust redeems shares at their net asset value next determined after the
Trust receives the redemption request. Redemptions will be made on days on which
the Trust computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or by written request.
TELEPHONE REDEMPTION
Shareholders may redeem their shares by telephoning the Trust before 4:00 p.m.
(Eastern time). The proceeds will normally be wired the following business day,
but in no event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System. If at any time,
the Trust shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the Trust to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests" should be considered.
10
WRITTEN REQUESTS
Trust shares may also be redeemed by sending a written request to the Trust.
Call the Trust for specific instructions before redeeming by letter. The
shareholder will be asked to provide in the request his name, the Trust name,
his account number, and the share or dollar amount requested. If share
certificates have been issued, they must be properly endorsed and should be sent
by registered or certified mail with the written request.
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
- a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Trust may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Trust's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. As a Massachusetts business
trust, the Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's
operation and for the election of Trustees under certain circumstances. Trustees
may be
11
removed by the Trustees or by shareholders at a special meeting. A special
meeting of the Trust shall be called by the Trustees upon the written request of
shareholders owning at least 10% of the Trust's outstanding shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. Unless otherwise
exempt, shareholders are required to pay federal income tax on any dividends and
other distributions received. This applies whether dividends and distributions
are received in cash or as additional shares. No federal income tax is due on
any dividends earned in an IRA or qualified retirement plan until distributed.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
- the Trust is not subject to Pennsylvania corporate or personal property
taxes; and
- Trust shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Trust would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Trust advertises its total return and yield.
12
Total return represents the change, over a specific period of time, in the value
of an investment in the Trust after reinvesting all income and capital gains
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Trust is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Trust
over a thirty-day period by the offering price per share of the Trust on the
last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
the Trust and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
The Trust is sold without any sales charge or other similar non-recurring
charges.
From time to time, the Trust may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
13
FEDERATED STOCK TRUST
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
EQUITIES--93.0%
- -------------------------------------------------------------------------------
BASIC INDUSTRY--8.5%
-------------------------------------------------------------------
227,000 *FMC Corp. $13,847,000
-------------------------------------------------------------------
228,600 Lubrizol Corp. 7,372,350
-------------------------------------------------------------------
306,000 Phelps Dodge Corp. 18,780,750
-------------------------------------------------------------------
480,000 Praxair, Inc. 11,100,000
------------------------------------------------------------------- -----------
Total 51,100,100
------------------------------------------------------------------- -----------
CONSUMER DURABLES--8.8%
-------------------------------------------------------------------
94,700 Chrysler Corp. 4,616,625
-------------------------------------------------------------------
241,900 Eastman Kodak Co. 11,641,438
-------------------------------------------------------------------
354,000 Ford Motor Co. 10,443,000
-------------------------------------------------------------------
199,400 General Motors Corp. 7,876,300
-------------------------------------------------------------------
613,000 Mattel, Inc. 17,930,250
------------------------------------------------------------------- -----------
Total 52,507,613
------------------------------------------------------------------- -----------
CONSUMER NON-DURABLES--6.1%
-------------------------------------------------------------------
151,200 Avon Products, Inc. 9,563,400
-------------------------------------------------------------------
246,400 Phillip Morris 15,092,000
-------------------------------------------------------------------
301,000 Reebok International Ltd. 12,002,375
------------------------------------------------------------------- -----------
Total 36,657,775
------------------------------------------------------------------- -----------
CONSUMER SERVICES--6.5%
-------------------------------------------------------------------
439,000 American Stores Co. 11,907,875
-------------------------------------------------------------------
321,500 Sears, Roebuck & Co. 15,914,250
-------------------------------------------------------------------
505,100 Tele-Communications, Inc., Class A 11,427,888
------------------------------------------------------------------- -----------
Total 39,250,013
------------------------------------------------------------------- -----------
</TABLE>
14
FEDERATED STOCK TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
EQUITIES--CONTINUED
- -------------------------------------------------------------------------------
ENERGY--10.4%
-------------------------------------------------------------------
391,000 Baker Hughes, Inc. $ 8,015,500
-------------------------------------------------------------------
320,000 Chevron Corp. 14,400,000
-------------------------------------------------------------------
172,000 Mapco, Inc. 9,395,500
-------------------------------------------------------------------
219,900 Texaco, Inc. 14,375,963
-------------------------------------------------------------------
518,700 USX Corp. 9,725,625
-------------------------------------------------------------------
140,210 *Western Atlas, Inc. 6,449,660
------------------------------------------------------------------- -----------
Total 62,362,248
------------------------------------------------------------------- -----------
FINANCE--15.3%
-------------------------------------------------------------------
169,000 Amli Residential Properties Trust 3,211,000
-------------------------------------------------------------------
276,600 Bank of Boston Corp. 7,952,250
-------------------------------------------------------------------
295,200 Citicorp 14,095,800
-------------------------------------------------------------------
200,483 Dean Witter, Discover & Co. 7,743,656
-------------------------------------------------------------------
81,400 Federal National Mortgage Association 6,186,400
-------------------------------------------------------------------
90,300 First Interstate Bancorp 7,224,000
-------------------------------------------------------------------
214,620 Mellon Bank Corp. 11,938,238
-------------------------------------------------------------------
133,400 NationsBank Corp. 6,603,300
-------------------------------------------------------------------
324,600 PNC Bank Corp. 7,628,100
-------------------------------------------------------------------
15,000 Providian Corp. 476,250
-------------------------------------------------------------------
201,900 Transamerica Corp. 9,918,338
-------------------------------------------------------------------
251,666 Travelers, Inc. 8,745,394
------------------------------------------------------------------- -----------
Total 91,722,726
------------------------------------------------------------------- -----------
HEALTHCARE--8.0%
-------------------------------------------------------------------
227,900 American Home Products Corp. 14,471,650
-------------------------------------------------------------------
202,700 Becton, Dickinson & Co. 9,577,575
-------------------------------------------------------------------
202,000 Bristol-Myers Squibb Co. 11,791,750
-------------------------------------------------------------------
</TABLE>
15
FEDERATED STOCK TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
EQUITIES--CONTINUED
- -------------------------------------------------------------------------------
HEALTHCARE--CONTINUED
-------------------------------------------------------------------
261,775 U.S. Healthcare, Inc. $12,368,869
------------------------------------------------------------------- -----------
Total 48,209,844
------------------------------------------------------------------- -----------
INDUSTRIAL/MANUFACTURING--7.6%
-------------------------------------------------------------------
80,900 Deere & Co. 5,804,575
-------------------------------------------------------------------
180,900 General Electric Co. 8,841,488
-------------------------------------------------------------------
161,910 *Litton Industries, Inc. 5,950,193
-------------------------------------------------------------------
122,100 Loews Corp. 10,775,325
-------------------------------------------------------------------
277,400 Textron, Inc. 14,147,400
------------------------------------------------------------------- -----------
Total 45,518,981
------------------------------------------------------------------- -----------
TECHNOLOGY--12.2%
-------------------------------------------------------------------
417,000 General Motors Corp., Class E 15,272,625
-------------------------------------------------------------------
164,700 Hewlett-Packard Co. 16,099,425
-------------------------------------------------------------------
29,100 International Business Machines Corp. 2,167,950
-------------------------------------------------------------------
299,000 Martin-Marietta Corp. 13,716,625
-------------------------------------------------------------------
225,100 Raytheon Co. 14,350,125
-------------------------------------------------------------------
342,200 Rockwell International Corp. 11,934,225
------------------------------------------------------------------- -----------
Total 73,540,975
------------------------------------------------------------------- -----------
TRANSPORTATION--1.4%
-------------------------------------------------------------------
364,900 Ryder Systems, Inc. 8,575,150
------------------------------------------------------------------- -----------
UTILITIES--8.2%
-------------------------------------------------------------------
252,500 AT&T Corp. 13,887,500
-------------------------------------------------------------------
70,000 British Telecommunication PLC, ADR 4,506,250
-------------------------------------------------------------------
118,350 Detroit Edison Co. 3,121,481
-------------------------------------------------------------------
164,000 Duke Power Co. 6,498,500
-------------------------------------------------------------------
169,000 Enron Corp. 5,471,371
-------------------------------------------------------------------
387,200 MCI Communications Corp. 8,905,600
-------------------------------------------------------------------
</TABLE>
16
FEDERATED STOCK TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT SECURITY NAME VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
EQUITIES--CONTINUED
- -------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------
115,000 Nacional Financiera, SNC, PRIDES, $6.79 $ 6,670,000
------------------------------------------------------------------- -----------
Total 49,060,702
------------------------------------------------------------------- -----------
TOTAL EQUITIES (IDENTIFIED COST $441,987,283) 558,506,127
------------------------------------------------------------------- -----------
CONVERTIBLE SECURITIES--2.9%
- -------------------------------------------------------------------------------
$6,575,000 General Instrument Corp., Conv. Jr. Sub. Note, 5.00%, 6/15/2000 9,734,616
-------------------------------------------------------------------
1,093,000 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $.60 7,514,375
------------------------------------------------------------------- -----------
TOTAL CONVERTIBLE SECURITIES (IDENTIFIED COST $13,760,555) 17,248,991
------------------------------------------------------------------- -----------
**REPURCHASE AGREEMENT--4.9%
- -------------------------------------------------------------------------------
29,275,000 J.P. Morgan and Co., Inc., 4.71%, dated 10/31/94, due 11/7/94 (at
amortized cost) 29,275,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $485,022,838) $605,030,118+
------------------------------------------------------------------- -----------
<FN>
+ The cost of investments for federal tax purposed amounts to $485,311,177. The
net appreciation on a federal tax basis amounts to $119,718,941, which is
comprised of $125,606,163 appreciation and $5,887,222 depreciation at October
31, 1994.
* Non-income producing.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement was through participation in a joint
account with other Federated funds.
Note: The categories of investments are shown as a percentage of net assets
($600,663,895) at October 31, 1994.
The following abbreviations are used in this portfolio:
ADR--American Depository Receipts
PLC--Public Limited Company
PRIDES--Preferred Redeemable Increased Dividend Equity Securities
(See Notes which are an integral part of the Financial Statements)
</TABLE>
17
FEDERATED STOCK TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Investments in securities, at value (identified cost, $485,022,838, and tax cost,
$485,311,177) $605,030,118
- -----------------------------------------------------------------------------------
Cash 4,653
- -----------------------------------------------------------------------------------
Income receivable 1,201,767
- -----------------------------------------------------------------------------------
Receivable for investments sold 3,988,469
- -----------------------------------------------------------------------------------
Receivable for Shares sold 914,411
- ----------------------------------------------------------------------------------- ------------
Total assets 611,139,418
- -----------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Payable for investments purchased $10,044,180
- ----------------------------------------------------------------------
Payable for Shares redeemed 383,894
- ----------------------------------------------------------------------
Accrued expenses 47,449
- ---------------------------------------------------------------------- ----------
Total liabilities 10,475,523
- ----------------------------------------------------------------------------------- ------------
NET ASSETS for 22,812,675 Shares outstanding $600,663,895
- ----------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------
Paid-in capital $464,765,262
- -----------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 120,007,280
- -----------------------------------------------------------------------------------
Accumulated undistributed net realized gain on investments 15,152,821
- -----------------------------------------------------------------------------------
Undistributed net investment income 738,532
- ----------------------------------------------------------------------------------- ------------
Total Net Assets $600,663,895
- ----------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($600,663,895 DIVIDED BY 22,812,675 Shares outstanding) $ 26.33
- ----------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
18
FEDERATED STOCK TRUST
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------
Interest $ 1,780,447
- -------------------------------------------------------------------------
Dividends 13,986,583
- ------------------------------------------------------------------------- -----------
Total income 15,767,030
- -------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------
Investment advisory fee $4,204,915
- ------------------------------------------------------------
Administrative personnel and services fee 528,231
- ------------------------------------------------------------
Custodian fees 194,966
- ------------------------------------------------------------
Transfer agent and dividend disbursing agent fees 73,281
- ------------------------------------------------------------
Trustees fees 11,407
- ------------------------------------------------------------
Auditing fees 22,006
- ------------------------------------------------------------
Legal fees 12,113
- ------------------------------------------------------------
Portfolio accounting fees 41,626
- ------------------------------------------------------------
Share registration costs 32,462
- ------------------------------------------------------------
Printing and postage 10,912
- ------------------------------------------------------------
Insurance premiums 11,949
- ------------------------------------------------------------
Taxes 12,992
- ------------------------------------------------------------
Miscellaneous 4,161
- ------------------------------------------------------------
Shareholder services fee 334,212
- ------------------------------------------------------------ ----------
Total expenses 5,495,233
- ------------------------------------------------------------------------- -----------
Net investment income 10,271,797
- ------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------
Net realized gain (loss) on investments 15,153,654
- -------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 89,647
- ------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments 15,243,301
- ------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $25,515,098
- ------------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
19
FEDERATED STOCK TRUST
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------
1994 1993
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------
Net investment income $ 10,271,797 $ 8,479,812
- ----------------------------------------------------------------
Net realized gain (loss) on investments ($15,441,993 and
$16,842,550, respectively, as computed for federal income tax
purposes) 15,153,654 16,842,550
- ----------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 89,647 58,309,454
- ---------------------------------------------------------------- ------------ ------------
Change in net assets resulting from operations 25,515,098 83,631,816
- ---------------------------------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------
Distributions from net investment income (9,572,779) (8,867,467)
- ----------------------------------------------------------------
Distributions in excess of net investment income 0 (305,905)
- ----------------------------------------------------------------
Distributions from net realized gains (16,842,679) (32,311,490)
- ---------------------------------------------------------------- ------------ ------------
Change in net assets resulting from distributions to
shareholders (26,415,458) (41,484,862)
- ---------------------------------------------------------------- ------------ ------------
SHARE TRANSACTIONS
- ----------------------------------------------------------------
Proceeds from sale of Shares 265,476,902 252,241,445
- ----------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 13,333,198 21,205,060
- ----------------------------------------------------------------
Cost of Shares redeemed (231,307,977) (148,021,556)
- ---------------------------------------------------------------- ------------ ------------
Change in net assets resulting from share transactions 47,502,123 125,424,949
- ---------------------------------------------------------------- ------------ ------------
Change in net assets 46,601,763 167,571,903
- ----------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------
Beginning of period 554,062,132 386,490,229
- ---------------------------------------------------------------- ------------ ------------
End of period (including undistributed net investment income of
$738,532 and $0, respectively) $600,663,895 $554,062,132
- ---------------------------------------------------------------- ------------ ------------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
20
FEDERATED STOCK TRUST
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Stock Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a diversified, open-end, no-load
management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities, corporate bonds and other
fixed income securities are valued at the last sale price on national
securities exchanges. Unlisted securities and bonds are generally valued at
the price provided by an independent pricing service. Short-term securities
with remaining maturities of sixty days or less may be stated at amortized
cost, which approximates value.
REPURCHASE AGREEMENTS--It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System, or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Trust to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying collateral to ensure that the value of collateral at least equals
the principal amount of the repurchase agreement, including accrued
interest.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Trust's adviser to be creditworthy pursuant to the guidelines
established by the Board of Trustees of the Trust (the "Trustees"). Risks
may arise from the potential inability of counterparties to honor the terms
of the repurchase agreement. Accordingly, the Trust could receive less than
the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all taxable income. Accordingly, no
provisions for federal tax are necessary.
21
FEDERATED STOCK TRUST
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RECLASSIFICATION--During the fiscal year ended 1994, the Trust adopted
Statement of Position 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies. Accordingly, permanent book and tax
differences have been reclassified to paid-in capital. The cumulative net
effect of such differences, totaling $10,078, was reclassified from net
realized gain and undistributed net investment income to paid-in-capital.
Net investment income and net assets were not affected by this change.
GENERAL--Investment transactions are accounted for on the trade date.
(3) CAPITAL SHARES
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------
1994 1993
------------ --------------
<S> <C> <C>
- --------------------------------------------------
Shares sold 10,334,187 9,996,402
- --------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 526,068 888,633
- --------------------------------------------------
Shares redeemed (9,032,374) (5,885,738)
- -------------------------------------------------- ------------ --------------
Net change 1,827,881 4,999,297
- -------------------------------------------------- ------------ --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment
adviser (the "Adviser"), receives for its services an annual investment
advisory fee up to a maximum of .75 of 1% of the Trust's average daily net
assets. The Adviser will waive, to the extent of its advisory fee, the
amount, if any, by which the Trust's aggregate annual operating expenses
(excluding interest, taxes, brokerage commissions, expenses of registering
and qualifying the Trust and its shares under federal and state laws,
expenses of withholding taxes, and extraordinary expenses) exceed 1% of
average daily net assets of the Trust.
22
FEDERATED STOCK TRUST
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Trust with administrative personnel and services. Prior to March 1, 1994,
these services were provided at approximate cost. Effective March 1, 1994,
the FAS fee is based on the level of average aggregate daily net assets of
all funds advised by subsidiaries of Federated Investors for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Trust will pay
FSS up to .25 of 1% of average net assets of the Trust for the period. This
fee is to obtain certain personal services for shareholders and to maintain
the shareholder accounts.
TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer
and dividend disbursing agent for the Trust. The FServ fee is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records.
The fee is based on the level of the Trust's average net assets for the
period plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1994, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------
PURCHASES $211,213,161
- -------------------------------------------------- ------------
SALES $147,428,739
- -------------------------------------------------- ------------
</TABLE>
23
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
FEDERATED STOCK TRUST:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Federated Stock Trust as of October 31, 1994,
and the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended and
the financial highlights (see page 2 of this prospectus) for each of the periods
presented therein. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated Stock Trust at October 31, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the periods
presented therein, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
December 9, 1994
24
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Federated Stock Trust Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- -------------------------------------------------------------------------------------------
</TABLE>
25
- --------------------------------------------------------------------------------
FEDERATED STOCK TRUST
PROSPECTUS
A No-Load, Open-End, Diversified
Management Investment Company
December 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
313900102
8120102A (12/94) [RECYCLED PAPER SYMBOL]
Federated Stock Trust
Statement of Additional Information
This Statement of Additional Information should be read
with the prospectus of the Federated Stock Trust (the
"Trust") dated December 31, 1994. This Statement is not
a prospectus itself. To receive a copy of the
prospectus, write or call Federated Stock Trust.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated December 31, 1994
FEDERATED SECURITIES
CORP.
Distributor
A subsidiary of
Federated Investors
General Information About
the Trust 1
Investment Objective and
Policies 1
Types of Investments 1
When-Issued And Delayed
Delivery Transactions 1
Portfolio Turnover 1
Investment Limitations 1
Federated Stock Trust
Management 3
Officers and Trustees
The Funds 6
Trust Ownership 7
Trustee Liability 7
Investment Advisory
Services 7
Adviser to the Trust 7
Advisory Fees 7
Other Related Services 8
Administrative Services 8
Transfer Agent and Dividend
Disbursing Agent 8
Shareholder Services Plan 8
Purchasing Shares 9
Conversion to Federal
Funds 9
Determining Net Asset Value 9
Determining Market Value
of Securities 9
Redeeming Shares 9
Exchanging Securities for
Trust Shares 9
Tax Consequences 10
Tax Status 10
The Trust's Tax Status 10
Shareholders' Tax Status 10
Total Return 10
Yield 10
Performance Comparisons 11
General Information About the Trust
Federated Stock Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust
dated December 30, 1981. On May 2, 1993, the shareholders of
the Trust voted to permit the Trust to offer separate series
and classes of shares.
Investment Objective and Policies
The Trust's investment objective is to provide growth of
income and capital by investing principally in a
professionally-managed and diversified portfolio of common
stocks of high quality companies.
Types of Investments
Although the Trust may invest in other securities of these
companies and in money market instruments, it is the Trust's
policy to invest at least 80% of its portfolio in common
stocks. The above investment objective and policies cannot
be changed without approval of shareholders.
U.S. Government Obligations
The types of U.S. government obligations in which the
Trust may invest generally include direct obligations
of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed
by U.S. government agencies or instrumentalities. These
securities are backed by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to
purchase certain obligations of agencies or
instrumentalities; or
othe credit of the agency or instrumentality issuing
the obligations.
Examples of agencies and instrumentalities which may
not always receive financial support from the U.S.
government are:
oFederal Land Banks;
oCentral Bank for Cooperatives;
oFederal Intermediate Credit Banks;
oFederal Home Loan Banks;
oFarmers Home Administration; and
oFederal National Mortgage Association.
When-Issued And Delayed Delivery Transactions
These transactions are made to secure what is considered to
be an advantageous price or yield for the Trust. No fees or
other expenses, other than normal transaction costs, are
incurred. However, liquid assets of the Trust sufficient to
make payment for the securities to be purchased are
segregated on the Trust's records at the trade date. These
assets are marked to market daily and are maintained until
the transaction has been settled. The Trust does not intend
to engage in when-issued and delayed delivery transactions
to an extent that would cause the segregation of more than
20% of the total value of its assets.
Portfolio Turnover
The Trust will not attempt to set or meet a portfolio
turnover rate since any turnover would be incidental to
transactions undertaken in an attempt to achieve the Trust's
investment objective. For the fiscal years ended October 31,
1994, and 1993, the portfolio turnover rates were 28% and
26%, respectively.
Investment Limitations
The Trust will not change any of the investment limitations
described below without approval of shareholders.
Selling Short and Buying on Margin
The Trust will not sell any securities short or
purchase any securities on margin, but may obtain such
short-term credits as may be necessary for clearance of
purchases and sales of portfolio securities.
Borrowing Money
The Trust will not borrow money except as a temporary
measure for extraordinary or emergency purposes and
then only in amounts not in excess of 5% of the value
of its total assets or 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 portfolio securities. This
borrowing provision is not for investment leverage but
solely to facilitate management of the portfolio by
enabling the Trust to meet redemption requests when the
liquidation of portfolio securities would be
inconvenient or disadvantageous. Interest paid on
borrowed funds will not be available for investment.
The Trust will liquidate any such borrowings as soon as
possible and may not purchase any portfolio securities
while any borrowings are outstanding.
Pledging Assets
The Trust will not mortgage, pledge, or hypothecate any
assets except to secure permitted borrowings. In those
cases, it may mortgage, pledge, or hypothecate assets
having a market value not exceeding 10% of the value of
total assets at the time of the borrowing.
Diversification of Investments
The Trust will not invest more than 5% of its total
assets in the securities of any one issuer, except in
cash or cash instruments, repurchase agreements, and
securities guaranteed by the U.S. government, its
agencies or instrumentalities.
Purchasing Securities to Exercise Control
The Trust will not purchase securities of a company for
the purpose of exercising control or management.
However, the Trust will acquire no more than 10% of the
voting securities of an issuer and may exercise its
voting power in the Trust's best interest. From time to
time, the Trust, together with other investment
companies advised by affiliates or subsidiaries of
Federated Investors, may together buy and hold
substantial amounts of a company's voting stock. All
such stock may be voted together. In some cases, the
Trust and the other investment companies might
collectively be considered to be in control of the
company in which they have invested. Officers or
affiliates of the Trust might possibly become directors
of companies in which the Trust holds stock.
Purchasing Securities of Other Issuers
The Trust will not purchase securities of other
investment companies, except:
oby purchase in the open market involving only
customary brokerage commissions; or
oas part of a merger, consolidation or other
acquisition.
Investing in New Issuers Whose Securities Are Owned by
Officers of the Trust
The Trust will not invest more than 5% of the value of
its total assets in securities of issuers with records
of less than three years of continuous operations,
including the operation of any predecessor.
Investing in Issuers
The Trust will not purchase or retain the securities
of any issuer if the officers and Board of Trustees
(the "Trustees") of the Trust or its investment adviser
owning individually more than 1/2 of 1% of the issuer's
securities together own more than 5% of the issuer's
securities.
Underwriting
The Trust will not underwrite any issue of securities,
except as it may be deemed to be an underwriter under
the Securities Act of 1933 in connection with the sale
of securities in accordance with its investment
objective, policies and limitations.
Investing in Real Estate
The Trust will not invest in real estate, although it
may invest in securities secured by real estate or
interests in real estate.
Investing in Commodities or Minerals
The Trust will not purchase or sell commodities or
commodity contracts or oil, gas, or other mineral
development programs or leases.
Lending Cash or Securities
The Trust will not lend any of its assets, except that
it may purchase or hold corporate or government bonds,
debentures, notes, certificates of indebtedness or
other debt securities permitted by its investment
objective and policies.
Concentration of Investments in One Industry
The Trust will not invest more than 25% of the value of
its total assets in one industry.
Issuing Senior Securities
The Trust will not issue senior securities except as
permitted by its investment objective and policies.
Dealing in Puts and Calls
The Trust will not write, purchase or sell puts, calls,
straddles or spreads or any combinations of them.
Restricted Securities
The Trust will not invest more than 10% of the value of
its total assets in securities subject to restrictions
on resale under federal securities laws or for other
reasons.
Except with respect to borrowing money, if a percentage
limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of
such restriction.
The Trust did not borrow money, pledge securities, or
purchase restricted securities in excess of 5% of the value
of its total assets during the last fiscal year and has no
present intent to do so in the coming fiscal year.
Federated Stock Trust Management
Officers and Trustees are listed with their addresses,
present positions with Federated Stock Trust, and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research;
Chairman and Director, Federated Research Corp.; Chairman,
Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the
father of J. Christopher Donahue , Vice President of the
Trust.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Trustee
President, Investment Properties Corporation; Senior Vice-
President, John R. Wood and Associates, Inc., Realtors;
President, Northgate Village Development Corporation;
Partner or Trustee in private real estate ventures in
Southwest Florida; Director, Trustee, or Managing General
Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Trustee
Director and Member of the Executive Committee, Michael
Baker, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Vice Chairman and Director, PNC
Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
Director, Trustee, or Managing General Partner of the Funds;
formerly, Director, Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and
Montefiore Hospitals; Professor of Medicine and Trustee,
University of Pittsburgh; Director of Corporate Health,
University of Pittsburgh Medical Center; Director, Trustee,
or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer and
Flaherty; Director, Eat'N Park Restaurants, Inc., and
Statewide Settlement Agency, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.
Peter E. Madden
225 Franklin Street
Boston, MA
Trustee
Consultant; State Representative, Commonwealth of
Massachusetts; Director, Trustee, or Managing General
Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer
Two Gateway Center-Suite 674
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer and
Flaherty; Chairman, Meritcare, Inc.; Director, Eat'N Park
Restaurants, Inc.; Director, Trustee, or Managing General
Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Trustee
Professor, Foreign Policy and Management Consultant;
Trustee, Carnegie Endowment for International Peace, RAND
Corporation, Online Computer Library Center, Inc., and U.S.
Space Foundation; Chairman, Czecho Slovak Management Center;
Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee,
or Managing General Partner of the Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
President
Trustee, Federated Investors; President and/or Trustee of
some of the Funds; staff member, Federated Securities Corp.
and Federated Administrative Services.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Vice President
President and Trustee, Federated Investors, Federated
Advisers, Federated Management, and Federated Research;
President and Director, Federated Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of
some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Vice President
Executive Vice President and Trustee, Federated Investors;
Director, Federated Research Corp.; Chairman and Director,
Federated Securities Corp.; President or Vice President of
some of the Funds; Director or Trustee of some of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors;
Vice President and Treasurer, Federated Advisers, Federated
Management, Federated Research, Federated Research Corp.,
and Passport Research, Ltd.; Executive Vice President,
Treasurer, and Director, Federated Securities Corp.;
Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee,
Federated Administrative Services; Trustee or Director of
some of the Funds; Vice President and Treasurer of the
Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated
Research; Vice President and Secretary, Federated Research
Corp. and Passport Research, Ltd.; Trustee, Federated
Services Company; Executive Vice President, Secretary, and
Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice
President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person"
as defined in the Investment Company Act of 1940, as
amended.
@ Member of the Executive Committee. The Executive
Committee of the Board of Trustees handles the
responsibilities of the Board of Trustees between
meetings of the Board.
The Funds
American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Cash Management Trust; Automated
Government Money Trust; California Municipal Cash Trust;
Cash Trust Series II; Cash Trust Series, Inc.; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust;
Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Fund; First Priority Funds; Fixed
Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fund for U.S. Government
Securities, Inc.; Government Income Securities, Inc.; High
Yield Cash Trust; Insight Institutional Series, Inc.;
Insurance Management Series; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility
Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The
Medalist Funds: Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; Portage Funds;
RIMCO Monument Funds; The Shawmut Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For
Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations;
World Investment Series, Inc.
Trust Ownership
As of December 13, 1994, no shareholder of record owned 5%
or more of the outstanding shares of the Trust.
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees
are not liable for errors of judgment or mistakes of fact or
law. However, they are not protected against any liability
to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of
their office.
Investment Advisory Services
Adviser to the Trust
The Trust's investment adviser is Federated Management (the
"Adviser"). It is a subsidiary of Federated Investors. All
of the voting securities of Federated Investors are owned by
a trust, the Trustees of which are John F. Donahue, his
wife, and his son, J. Christopher Donahue.
J. Christopher Donahue, Trustee of Federated Management, is
Vice President and Trustee of Federated Investors, President
and Director of Federated Administrative Services, Inc., and
Vice President of the Trust. John W. McGonigle, Vice
President, Secretary, and Trustee of Federated Management,
is Trustee, Vice President, Secretary, and General Counsel
of Federated Investors, Executive Vice President, Secretary,
and Director of Federated Administrative Services, Executive
Vice President and Trustee of Federated Securities Corp.,
and Vice President and Secretary of the Trust.
The adviser shall not be liable to the Trust or any
shareholder for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything
done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its
contract with the Trust.
Advisory Fees
For its advisory services, Federated Management receives an
annual investment advisory fee as described in the
prospectus. During the fiscal years ended October 31, 1994,
1993, and 1992, the Trust's adviser earned $ 4,204,915,
$3,466,826, and $2,825,878, respectively.
State Expense Limitations
The adviser has undertaken to comply with the expense
limitations established by certain states for
investment companies whose shares are registered for
sale in those states. If the Trust's normal operating
expenses (including the investment advisory fee, but
not including brokerage commissions, interest, taxes,
and extraordinary expenses) exceed 2 1/2% per year of
the first $30 million of average net assets, 2% per
year of the next $70 million of average net assets, and
1 1/2% per year of the remaining average net assets,
the adviser will reimburse the Trust for its expenses
over the limitation.
If the Trust's monthly projected operating expenses
exceed this limitation, the investment advisory fee
paid will be reduced by the amount of the excess,
subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by
the adviser will be limited, in any single fiscal year,
by the amount of the investment advisory fee.
This arrangement is not part of the advisory contract
and may be amended or rescinded in the future.
Other Related Services
Affiliates of the adviser may, from time to time, provide
certain electronic equipment and software to institutional
customers in order to facilitate the purchase of shares of
funds offered by Federated Securities Corp.
Administrative Services
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to
the Trust for a fee described in the prospectus. Prior to
March 1, 1994, Federated Administrative Services, Inc., also
a subsidiary of Federated Investors, served as the Fund's
administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services
and Federated Administrative Services, Inc., may hereinafter
collectively be referred to as, the "Administrators.") For
the fiscal year ended October 31, 1994, the Administrators
collectively earned $ 528,231. For the fiscal years ended
October 31, 1993, and 1992, the Trust incurred costs for
administrative services of $638,234 and $529,494,
respectively.
Dr. Henry J. Gailliot, an officer of Federated Management,
the adviser to the Trust, holds approximately 20% of the
outstanding common stock and serves as a director of
Commercial Data Services, Inc., a company which provides
computer processing services to Federated Administrative
Services.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and
dividend disbursing agent for the Trust. The fee paid to
the transfer agent is based upon the size, type, and number
of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's
accounting records. The fee paid for this service is based
upon the level of the Trust's average net assets for the
period plus out-of-pocket expenses.
Shareholder Services Plan
This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly, to financial
institutions to cause services to be provided to
shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These
activities and services may include, but are not limited to,
providing office space, equipment, telephone facilities, and
various clerical, supervisory, computer, and other personnel
as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client
account cash balances; answering routine client inquiries;
and assisting clients in changing dividend options, account
designations, and addresses.
For the fiscal period ending October 31, 1994, payments in
the amount of $334,212 were made pursuant to the Shareholder
Services Plan, all of which was paid to financial
institutions.
Brokerage Transactions
The adviser may select brokers and dealers who offer
brokerage and research services. These services may be
furnished directly to the Trust or to the adviser and may
include:
oadvice as to the advisability of investing in
securities;
osecurity analysis and reports;
oeconomic studies;
oindustry studies;
oreceipt of quotations for portfolio evaluations; and
osimilar services.
The adviser and its affiliates exercise reasonable business
judgment in selecting brokers who offer brokerage and
research services to execute securities transactions. They
determine in good faith that commissions charged by such
persons are reasonable in relationship to the value of the
brokerage and research services provided.
Research services provided by brokers may be used by the
adviser or by affiliates of Federated Investors in advising
Federated Funds and other accounts. To the extent that
receipt of these services may supplant services for which
the adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses.
For the fiscal years ended October 31, 1994, 1993, and 1992,
the Trust paid total brokerage commissions of $271,265,
$336,440, and $463,566, respectively.
Purchasing Shares
Shares are sold at their net asset value without a sales
charge on days the New York Stock Exchange is open for
business. The procedure for purchasing shares of the Trust
is explained in the prospectus under "Investing in the
Trust."
Conversion to Federal Funds
It is the Trust's policy to be as fully invested as possible
so that maximum interest may be earned. To this end, all
payments from shareholders must be in federal funds or be
converted into federal funds. State Street Bank acts as the
shareholder's agent in depositing checks and converting them
to federal funds.
Determining Net Asset Value
Net asset value generally changes each day. The days on
which the net asset value is calculated by the Trust are
described in the prospectus.
Determining Market Value of Securities
Market values of the Trust's portfolio securities are
determined as follows:
ofor equity securities and bonds and other fixed income
securities, according to the last sale price on a
national securities exchange, if available;
oin the absence of recorded sales for equity securities,
according to the mean between the last closing bid and
asked prices and for bonds and other fixed income
securities as determined by an independent pricing
service;
ofor unlisted equity securities, the latest bid prices;
ofor short-term obligations, according to the mean
between bid and asked prices, as furnished by an
independent pricing service or for short-term
obligations with remaining maturities of 60 days or
less at the time of purchase at amortized cost; or
ofor all other securities, at fair value as determined
in good faith by the Trustees.
Redeeming Shares
The Trust redeems shares at the next computed net asset
value after the Trust receives the redemption request.
Redemption procedures are explained in the prospectus under
"Redeeming Shares." Although State Street Bank does not
charge for telephone redemptions, it reserves the right to
charge a fee for the cost of wire-transferred redemptions of
less than $5,000.
Exchanging Securities for Trust Shares
Investors may exchange certain securities they already own
for Trust shares, or they may exchange a combination of
securities and cash for Trust shares. An investor should
forward the securities in negotiable form with an authorized
letter of transmittal to Federated Securities Corp. The
Trust will notify the investor of its acceptance and
valuation of the securities within five business days of
their receipt by State Street Bank.
The Trust values securities in the same manner as the Trust
values its assets. The basis of the exchange will depend
upon the net asset value of Trust shares on the day the
securities are valued. One share of the Trust will be issued
for each equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange
will be considered in valuing the securities. All interest,
dividends, subscription or other rights attached to the
securities become the property of the Trust, along with the
securities.
Tax Consequences
Exercise of this exchange privilege is treated as a sale for
federal income tax purposes. Depending upon the cost basis
of the securities exchanged for Trust shares, a gain or loss
may be realized by the investor.
Tax Status
The Trust's Tax Status
The Trust will pay no federal income tax because it expects
to meet the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies
and to receive the special tax treatment afforded to such
companies. To qualify for this treatment, the Trust must,
among other requirements:
oderive at least 90% of its gross income from dividends,
interest, and gain from the sale of securities;
oderive less than 30% of its gross income from the sale
of securities held less than three months;
oinvest in securities within certain statutory limits;
and
odistribute to its shareholders at least 90% of its net
income earned during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends
and capital gains received as cash or additional shares. At
least a percentage of dividends paid by the Trust will
generally qualify for the shareholder's $100 dividends
received deduction available to corporations. The percentage
is based on and equal to the proportion of the Trust's gross
income derived from dividends of domestic corporations.
These dividends, and any short-term capital gains, are
taxable as ordinary income.
Capital Gains
Shareholders will pay federal tax at capital gains
rates on long-term capital gains distributed to them
regardless of how long they have held the Trust shares.
Total Return
The Trust's average annual total returns for the one-year,
five-year and ten-year periods ended October 31, 1994, were
4.55% , 9.99%, and 12.97%, respectively. The Trust's average
annual total return since inception was 15.50%.
The average annual total return for the Trust is the average
compounded rate of return for a given period that would
equate a $1,000 initial investment to the ending redeemable
value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the
end of the period by the offering price per share at the end
of the period. The number of shares owned at the end of the
period is based on the number of shares purchased at the
beginning of the period with $1,000, adjusted over the
period by any additional shares, assuming the quarterly
reinvestment of all dividends and distributions.
Yield
The Trust's yield for the thirty-day period ended October
31, 1994, was 1.95%.
The yield for the Trust is determined by dividing the net
investment income per share (as defined by the Securities
and Exchange Commission) earned by the Trust over a thirty-
day period by the offering price per share of the Trust on
the last day of the period. This value is then annualized
using semi-annual
compounding. This means that the amount of income generated
during the thirty-day period is assumed to be generated each
month over a 12-month period and is reinvested every six
months. The yield does not necessarily reflect income
actually earned by the Trust because of certain adjustments
required by the Securities and Exchange Commission and,
therefore, may not correlate to the dividends or other
distributions paid to shareholders.
To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in
conjunction with an investment in the Trust, performance
will be reduced for those shareholders paying those fees.
Performance Comparisons
The Trust's performance depends upon such variables as:
oportfolio quality;
oaverage portfolio maturity;
otype of instruments in which the portfolio is invested;
ochanges in interest rates and market value of portfolio
securities;
ochanges in Trust expenses; and
ovarious other factors.
The Trust's performance fluctuates on a daily basis largely
because net earnings and offering price per share fluctuate
daily. Both net earnings and offering price per share are
factors in the computation of yield and total return.
Investors may use financial publications and/or indices to
obtain a more complete view of the Trust's performance.
When comparing performance, investors should consider all
relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities
and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may
include:
oLipper Analytical Services, Inc. ranks funds in various
fund categories by making comparative calculations
using total return. Total return assumes the
reinvestment of all capital gains distributions and
income dividends and takes into account any change in
net asset value over a specific period of time. From
time to time, the Trust will quote it Lipper ranking in
the "growth and income funds" category in advertising
and sales literature.
oDow Jones Industrial Average ("DJIA") represents share
prices of selected blue-chip industrial corporations as
well as public utility and transportation companies.
The DJIA indicates daily changes in the average price
of stocks in any of its categories. It also reports
total sales for each group of industries. Because it
represents the top corporations of America, the DJIA's
index movements are leading economic indicators for the
stock market as a whole.
oStandard & Poor's Daily Stock Price Index of 500 Common
Stocks, a composite index of common stocks in industry,
transportation, and financial and public utility
companies can be used to compare to the total returns
of funds whose portfolios are invested primarily in
common stocks. In addition, the Standard & Poor's index
assumes reinvestments of all dividends paid by stocks
listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or
other fees calculated in Standard & Poor's figures.
oMorningstar, Inc., an independent rating service, is
the publisher of the bi-weekly Mutual Fund Values.
Mutual Fund Values rates more than 1,000 NASDAQ-listed
mutual funds of all types, according to their risk-
adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
Investors may also consult the fund evaluation consulting
universes listed below. Consulting universes may be composed
of pension, profit sharing, commingled,
endowment/foundation, and mutual funds.
oFiduciary Consulting Grid Universe, for example, is
composed of over 1,000 funds, representing 350
different investment managers, divided into
subcategories based on asset mix. The funds are ranked
quarterly based on performance and risk
characteristics.
oSEI data base for equity funds includes approximately
900 funds, representing 361 money managers, divided
into fund types based on investor groups and asset mix.
The funds are ranked every three, six, and twelve
months.
oMercer Meidinger, Inc. compiles a universe of
approximately 600 equity funds, representing about 500
investment managers, and updates their rankings each
calendar quarter as well as on a one, three, and five
year basis.
Advertisements and other sales literature for the Trust may
quote total returns which are calculated on non-standardized
base periods. These total returns also represent the
historic change in the value of an investment in the Trust
based on quarterly reinvestment of dividends over a
specified period of time.
313900102
8120102B (12/94)
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A)
(b) Exhibits:
(1) Conformed copy of the Declaration of Trust of
the Registrant (1);
(2) Copy of the By-Laws of the Registrant as amended
(1,5);
(i) Copy of Amendment No. 2 to the By-Laws
of the Registrant dated February 2,
1987;
(ii) Copy of Amendment No. 3 to the By-Laws
of the Registrant dated August 25, 1988
(8);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant (1);
(5) Conformed copy of the new Investment Advisory
Contract of the Registrant (9.);
(6) Conformed copy of the Distributor's Contract (9);
(7) Not applicable;
(8) Conformed copy of the Custodian Agreement of the
Registrant;+
(9) (i) Conformed copy of Shareholder Services Plan of
the Registrant;+
(ii) Copy of Shareholder Services Sub-Contract of
the Registrant;+
(iii) Conformed copy of Shareholder Services
Agreement of the Registrant;+
(iv) Conformed copy of Administrative Services
Agreement of the Registrant;+
(v)Conformed Copy of Agreement for Fund
Accounting, Shareholder Recordkeeping, and
Custody Services Procurement;+
(10) Conformed copy of the Opinion and Consent of
Counsel regarding legality of securities
registered;+
(11) Conformed copy of the Consent of Independent
Auditors;+
(12) Not applicable;
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1 filed January 20,
1982. (File Nos. 2-75756 and 811-3385)
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 5 on Form N-1A filed January 30,
1985. (File Nos. 2-75756 and 811-3385)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 11 on Form N-1A filed on
December 22, 1988. (File Nos. 2-75756 and 811-3385)
9. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 12 on Form N-1A filed on October 24,
1989. (File Nos. 2-75756 and 811-3385)
+ All exhibits have been filed electronically.
(13) Initial Capital Understanding (4);
(14) Not applicable;
(15) Not applicable;
(16) Schedule for Computation of Fund Performance Data
(8);
(i) Location of Accounts and Records (8);
(17) Financial Data Schedules;+
(18) Conformed Opinion and Consent of Counsel as to
availability of Rule 485(b);+
(19) Conformed copy of Power of Attorney (11).
Item 25. Persons Controlled by or Under Common Control with
Registrant:
None.
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of December 13, l994
Shares of beneficial interest
9,347
(without par value)
Item 27. Indemnification: (8.)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the
investment adviser, see the section entitled "Trust
Information - Management of the Trust" in Part A. The
affiliations with the Registrant of four of the
Trustees and one of the Officers of the investment
adviser are included in Part B of this Registration
Statement under "Trust Management - Officers and
Trustees." The remaining Trustee of the investment
adviser, his position with the investment adviser, and,
in parentheses, his principal occupation is: Mark D.
Olson, (Partner, Wilson, Halbrook & Bayard) 107 W.
Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser
are: Mark L. Mallon, Executive Vice President; Henry J.
Gailliot, Senior Vice President-Economist; Peter R.
Anderson, Gary Madich, J. Alan Minteer, Senior Vice
Presidents; J. Scott Albrecht, Randall A. Bauer,
Jonathan C. Conley, Deborah A. Cunningham, Michael P.
Donnelly, Mark E. Durbiano, Kathleen M. Foody-Malus,
Thomas M. Franks, Edward C. Gonzales, Jeff A. Kozemchak,
Marian R. Marinack, John W. McGonigle, Gregory M. Melvin,
Susan M. Nason,
4. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1 filed January 29,
1982. (File Nos. 2-75756 and 811-3385)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 11 on Form N-1A filed on
December 22, 1988. (File Nos. 2-75756 and 811-3385)
11. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 17 on Form N-1A filed on December
23, 1991. (File Nos. 2-75756 and 811-3385)
+ All exhibits have been filed electronically.
Item 28. Continued
Mary Jo Ochson, Robert J. Ostrowski, Frederick L.
Plautz, Jr., Charles A. Ritter, James D. Roberge,
Christopher H. Wiles,
Vice Presidents; Edward C. Gonzales, Treasurer; and
John W. McGonigle, Secretary. The business address of
each of the Officers of the investment adviser is
Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779. These individuals are also officers of a
majority of the investment advisers to the Funds listed
in Part B of this Registration Statement under "The
Funds."
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor
for shares of the Registrant, also acts as
principal underwriter for the following open-end
investment companies: Alexander Hamilton Funds;
American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management
Trust; Automated Government Money Trust; BayFunds;
The Biltmore Funds; The Biltmore Municipal Funds;
California Municipal Cash Trust; Cash Trust Series,
Inc.; Cash Trust Series II; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Exchange Fund,
Ltd.; Federated GNMA Trust; Federated Government
Trust; Federated Growth Trust; Federated High Yield
Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate
Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated
Tax-Free Trust; Federated U.S. Government Bond
Fund; First Priority Funds; First Union Funds;
Fixed Income Securities, Inc.; Fortress Adjustable
Rate U.S. Government Fund, Inc.; Fortress Municipal
Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain Square Funds; Fund for U.S. Government
Securities, Inc.; Government Income Securities,
Inc.; High Yield Cash Trust; Independence One
Mutual Funds; Insight Institutional Series, Inc.;
Insurance Management Series; Intermediate Municipal
Trust; International Series Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty
Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund,
Inc.; Liberty U.S. Government Money Market Trust;
Liberty Utility Fund, Inc.; Liquid Cash Trust;
Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; The Medalist Funds; Money
Market Obligations Trust; Money Market Trust; The
Monitor Funds; Municipal Securities Income Trust;
New York Municipal Cash Trust; 111 Corcoran Funds;
Peachtree Funds; The Planters Funds; Portage Funds;
RIMCO Monument Funds; The Shawmut Funds; Short-Term
Municipal Trust; SouthTrust Vulcan Funds; Star
Funds; The Starburst Funds; The Starburst Funds II;
Stock and Bond Fund, Inc.; Sunburst Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; Tower
Mutual Funds; Trademark Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves;
Trust for Short-Term U.S. Government Securities;
Trust for U.S. Treasury Obligations; Vision
Fiduciary Funds, Inc.; Vision Group of Funds, Inc.;
and World Investment Series, Inc.
Federated Securities Corp. also acts as principal
underwriter for the following closed-end investment
company: Liberty Term Trust, Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Richard B. Fisher Director, Chairman, Chief Vice
President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice
President and Federated Investors Tower President, and
Treasurer, Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Vice
President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and
Offices
Business Address With Underwriter With
Registrant
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and
Rules 31a-1 through 31a-3 promulgated thereunder are
maintained at one of the following locations:
Registrant Federated Investors
Tower
Federated Services Company Pittsburgh, PA 15222-
3779
("Transfer Agent and Dividend
Disbursing Agent)
Federated Administrative Services
("Administrator")
Federated Management
("Advisor")
State Street Bank and Trust Company P.O. Box 8602
("Custodian") Boston, Massachusetts
02266-8602
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with
respect to the removal of Trustees and the calling of
special shareholder meeting by shareholders.
Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
FEDERATED STOCK TRUST, has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 23 day
of December, 1994.
FEDERATED STOCK TRUST
BY: /s/ Robert Rosselot
Robert Rosselot, Assistant Secretary
Attorney in Fact for John F. Donahue
December 23, 1994
Pursuant to the requirements of the Securities Act of
1933, this Amendment to its Registration Statement has been
signed below by the following person in the capacity and on
the date indicated:
NAME TITLE
DATE
By: /s/ Robert Rosselot
Robert Rosselot Attorney In Fact December 23,
1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit (11) under Form N-
1A
Exhibit 23 under Item
601/Reg SK
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Highlights" and "Independent Auditors" and to the
use of our report dated December 9, 1994, in Post-Effective
Amendment Number 23 to the Registration Statement (Form N-1A
Number 2-75756) and the related Prospectus of FEDERATED STOCK
TRUST dated December 31, 1994.
By: Ernst & Young LLP
Pittsburgh, Pennsylvania
December 23, 1994
Exhibit (18) under Form N-1A
Exhibit 99 under Item 601/Reg
SK
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTONPITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR.__________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
December 23, 1994
Federated Stock Trust
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
As counsel to Federated Stock Trust ("Trust") we have
reviewed Post-effective Amendment No. 23 to the Trust's
Registration Statement to be filed with the Securities and
Exchange Commission under the Securities Act of 1933 (File No. 2-
75756). The subject Post-effective Amendment will be filed
pursuant to Paragraph (b) of Rule 485 and become effective
pursuant to said Rule on December 23, 1994.
Our review also included an examination of other relevant
portions of the amended 1933 Act Registration Statement of the
Trust and such other documents and records deemed appropriate.
On the basis of this review we are of the opinion that Post-
effective Amendment No. 23 does not contain disclosures which
would render it ineligible to become effective pursuant to
Paragraph (b) of Rule 485.
We hereby consent to the filing of this representation
letter as a part of the Trust's Registration Statement filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and as part of any application or registration statement
filed under the Securities Laws of the States of the United
States.
Very truly yours,
Houston, Houston & Donnelly
By: /s/ Thomas J. Donnelly
TJD:heh
Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
CUSTODIAN CONTRACT
Between
FEDERATED INVESTMENT COMPANIES
and
STATE STREET BANK AND TRUST COMPANY
and
FEDERATED SERVICES COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It1
2. Duties of the Custodian With Respect to Property
of the Funds Held by the Custodian 2
2.1 Holding Securities
2
2.2 Delivery of Securities
2
2.3 Registration of Securities
5
2.4 Bank Accounts
6
2.5 Payments for Shares
7
2.6 Availability of Federal Funds
7
2.7 Collection of Income
7
2.8 Payment of Fund Moneys
8
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased. 9
2.10 Payments for Repurchases or Redemptions
of Shares of a Fund 9
2.11 Appointment of Agents
10
2.12 Deposit of Fund Assets in Securities System
10
2.13 Segregated Account
12
2.14 Joint Repurchase Agreements
13
2.15 Ownership Certificates for Tax Purposes
13
2.16 Proxies
13
2.17Communications Relating to Fund Portfolio Securit
ies13
2.18 Proper Instructions
14
2.19 Actions Permitted Without Express Authority
14
2.20 Evidence of Authority
15
2.21Notice to Trust by Custodian Regarding Cash Movem
ent. 15
3. Duties of Custodian With Respect to the Books of
Account and
Calculation of Net Asset Value and Net Income 15
4. Records 16
5. Opinion of Funds' Independent Public
Accountants/Auditors 16
6. Reports to Trust by Independent Public
Accountants/Auditors 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 17
9. Effective Period, Termination and Amendment 19
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Massachusetts Law to Apply 22
13. Notices 22
14. Counterparts 22
15. Limitations of Liability 22
CUSTODIAN CONTRACT
This Contract between those INVESTMENT COMPANIES listed on
Exhibit 1, as it may be amended from time to time, (the
"Trust"), which may be Massachusetts business trusts or
Maryland corporations or have such other form of
organization as may be indicated, on behalf of the
portfolios (hereinafter collectively called the "Funds" and
individually referred to as a "Fund") of the Trust, having
its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian", and FEDERATED SERVICES COMPANY, a
Delaware Business trust company, having its principal place
of business at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, hereinafter called ("Company").
WITNESSETH: That in consideration of the mutual covenants a
nd agreements hereinafter contained, the parties hereto
agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian
of the assets of each of the Funds of the Trust. Except
as otherwise expressly provided herein, the securities
and other assets of each of the Funds shall be segregated
from the assets of each of the other Funds and from all
other persons and entities. The Trust will deliver to
the Custodian all securities and cash owned by the Funds
and all payments of income, payments of principal or
capital distributions received by them with respect to
all securities owned by the Funds from time to time, and
the cash consideration received by them for shares
("Shares") of beneficial interest/capital stock of the
Funds as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of
the Funds held or received by the Funds and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning
of Section 2.18), the Custodian shall from time to time
employ one or more sub-custodians upon the terms
specified in the Proper Instructions, provided that the
Custodian shall have no more or less responsibility or
liability to the Trust or any of the Funds on account of
any actions or omissions of any sub-custodian so employed
than any such sub-custodian has to the Custodian.
2.Duties of the Custodian With Respect to Property of the Fu
nds Held by the Custodian
2.1Holding Securities. The Custodian shall hold and phys
ically segregate for the account of each Fund all non-
cash property, including all securities owned by each
Fund, other than securities which are maintained
pursuant to Section 2.12 in a clearing agency which
acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the
Treasury, collectively referred to herein as
"Securities System", or securities which are subject
to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall
maintain records of all receipts, deliveries and
locations of such securities, together with a current
inventory thereof, and shall conduct periodic
physical inspections of certificates representing
stocks, bonds and other securities held by it under
this Contract in such manner as the Custodian shall
determine from time to time to be advisable in order
to verify the accuracy of such inventory. With
respect to securities held by any agent appointed
pursuant to Section 2.11 hereof, and with respect to
securities held by any sub-custodian appointed
pursuant to Section 1 hereof, the Custodian may rely
upon certificates from such agent as to the holdings
of such agent and from such sub-custodian as to the
holdings of such sub-custodian, it being understood
that such reliance in no way relieves the Custodian
of its responsibilities under this Contract. The
Custodian will promptly report to the Trust the
results of such inspections, indicating any shortages
or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or
discrepancies.
2.2Delivery of Securities. The Custodian shall release a
nd deliver securities owned by a Fund held by the
Custodian or in a Securities System account of the
Custodian only upon receipt of Proper Instructions,
which may be continuing instructions when deemed
appropriate by the parties, and only in the following
cases:
(1)Upon sale of such securities for the account of a
Fund and receipt of payment therefor;
(2)Upon the receipt of payment in connection with any
repurchase agreement related to such securities
entered into by the Trust;
(3)In the case of a sale effected through a Securitie
s System, in accordance with the provisions of
Section 2.12 hereof;
(4)To the depository agent in connection with tender
or other similar offers for portfolio securities
of a Fund, in accordance with the provisions of
Section 2.17 hereof;
(5)To the issuer thereof or its agent when such secur
ities are called, redeemed, retired or otherwise
become payable; provided that, in any such case,
the cash or other consideration is to be
delivered to the Custodian;
(6)To the issuer thereof, or its agent, for transfer
into the name of a Fund or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or
nominee name of any sub-custodian appointed
pursuant to Section 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face
amount or number of units; provided that, in any
such case, the new securities are to be delivered
to the Custodian;
(7)Upon the sale of such securities for the account o
f a Fund, to the broker or its clearing agent,
against a receipt, for examination in accordance
with "street delivery custom"; provided that in
any such case, the Custodian shall have no
responsibility or liability for any loss arising
from the delivery of such securities prior to
receiving payment for such securities except as
may arise from the Custodian's own failure to act
in accordance with the standard of reasonable
care or any higher standard of care imposed upon
the Custodian by any applicable law or regulation
if such above-stated standard of reasonable care
were not part of this Contract;
(8)For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization,
reorganization or readjustment of the securities
of the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new
securities and cash, if any, are to be delivered
to the Custodian;
(9)In the case of warrants, rights or similar securit
ies, the surrender thereof in the exercise of
such warrants, rights or similar securities or
the surrender of interim receipts or temporary
securities for definitive securities; provided
that, in any such case, the new securities and
cash, if any, are to be delivered to the
Custodian;
(10)For delivery in connection with any loans of port
folio securities of a Fund, but only against
receipt of adequate collateral in the form of (a)
cash, in an amount specified by the Trust, (b)
certificated securities of a description
specified by the Trust, registered in the name of
the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in
proper form for transfer, or (c) securities of a
description specified by the Trust, transferred
through a Securities System in accordance with
Section 2.12 hereof;
(11)For delivery as security in connection with any b
orrowings requiring a pledge of assets by a Fund,
but only against receipt of amounts borrowed,
except that in cases where additional collateral
is required to secure a borrowing already made,
further securities may be released for the
purpose;
(12)For delivery in accordance with the provisions of
any agreement among the Trust or a Fund, the
Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934, as amended,
(the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The
Options Clearing Corporation and of any
registered national securities exchange, or of
any similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions for a Fund;
(13)For delivery in accordance with the provisions of
any agreement among the Trust or a Fund, the
Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or
organizations, regarding account deposits in
connection with transaction for a Fund;
(14)Upon receipt of instructions from the transfer ag
ent ("Transfer Agent") for a Fund, for delivery
to such Transfer Agent or to the holders of
shares in connection with distributions in kind,
in satisfaction of requests by holders of Shares
for repurchase or redemption; and
(15)For any other proper corporate purpose, but only
upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of
the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and
certified by its Secretary or an Assistant
Secretary, specifying the securities to be
delivered, setting forth the purpose for which
such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Securities held by the C
ustodian (other than bearer securities) shall be
registered in the name of a particular Fund or in the
name of any nominee of the Fund or of any nominee of
the Custodian which nominee shall be assigned
exclusively to the Fund, unless the Trust has
authorized in writing the appointment of a nominee to
be used in common with other registered investment
companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to
Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Section 1. All
securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain
a separate bank account or accounts in the name of
each Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received
by it from or for the account of each Fund, other
than cash maintained in a joint repurchase account
with other affiliated funds pursuant to Section 2.14
of this Contract or by a particular Fund in a bank
account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940,
as amended, (the "1940 Act"). Funds held by the
Custodian for a Fund may be deposited by it to its
credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or
trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank
or trust company and the funds to be deposited with
each such bank or trust company shall be approved by
vote of a majority of the Board of Trustees/Directors
("Board") of the Trust. Such funds shall be
deposited by the Custodian in its capacity as
Custodian for the Fund and shall be withdrawable by
the Custodian only in that capacity. If requested by
the Trust, the Custodian shall furnish the Trust, not
later than twenty (20) days after the last business
day of each month, an internal reconciliation of the
closing balance as of that day in all accounts
described in this section to the balance shown on the
daily cash report for that day rendered to the Trust.
2.5Payments for Shares. The Custodian shall make such ar
rangements with the Transfer Agent of each Fund, as
will enable the Custodian to receive the cash
consideration due to each Fund and will deposit into
each Fund's account such payments as are received
from the Transfer Agent. The Custodian will provide
timely notification to the Trust and the Transfer
Agent of any receipt by it of payments for Shares of
the respective Fund.
2.6Availability of Federal Funds. Upon mutual agreement
between the Trust and the Custodian, the Custodian
shall make federal funds available to the Funds as of
specified times agreed upon from time to time by the
Trust and the Custodian in the amount of checks,
clearing house funds, and other non-federal funds
received in payment for Shares of the Funds which are
deposited into the Funds' accounts.
2.7 Collection of Income.
(1)The Custodian shall collect on a timely basis all
income and other payments with respect to
registered securities held hereunder to which
each Fund shall be entitled either by law or
pursuant to custom in the securities business,
and shall collect on a timely basis all income
and other payments with respect to bearer
securities if, on the date of payment by the
issuer, such securities are held by the Custodian
or its agent thereof and shall credit such
income, as collected, to each Fund's custodian
account. Without limiting the generality of the
foregoing, the Custodian shall detach and present
for payment all coupons and other income items
requiring presentation as and when they become
due and shall collect interest when due on
securities held hereunder. The collection of
income due the Funds on securities loaned
pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Trust. The
Custodian will have no duty or responsibility in
connection therewith, other than to provide the
Trust with such information or data as may be
necessary to assist the Trust in arranging for
the timely delivery to the Custodian of the
income to which each Fund is properly entitled.
(2)The Custodian shall promptly notify the Trust when
ever income due on securities is not collected in
due course and will provide the Trust with
monthly reports of the status of past due income
unless the parties otherwise agree.
2.8Payment of Fund Moneys. Upon receipt of Proper Instru
ctions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian
shall pay out moneys of each Fund in the following
cases only:
(1)Upon the purchase of securities, futures contracts
or options on futures contracts for the account
of a Fund but only (a) against the delivery of
such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the
United States or abroad which is qualified under
the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in
the name of a nominee of the Custodian referred
to in Section 2.3 hereof or in proper form for
transfer, (b) in the case of a purchase effected
through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof
or (c) in the case of repurchase agreements
entered into between the Trust and any other
party, (i) against delivery of the securities
either in certificate form or through an entry
crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase for
the account of the Fund of securities owned by
the Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Fund;
(2)In connection with conversion, exchange or surrend
er of securities owned by a Fund as set forth in
Section 2.2 hereof;
(3)For the redemption or repurchase of Shares of a Fu
nd issued by the Trust as set forth in Section
2.10 hereof;
(4)For the payment of any expense or liability incurr
ed by a Fund, including but not limited to the
following payments for the account of the Fund:
interest; taxes; management, accounting, transfer
agent and legal fees; and operating expenses of
the Fund, whether or not such expenses are to be
in whole or part capitalized or treated as
deferred expenses;
(5)For the payment of any dividends on Shares of a Fu
nd declared pursuant to the governing documents
of the Trust;
(6)For payment of the amount of dividends received in
respect of securities sold short;
(7)For any other proper purpose, but only upon receip
t of, in addition to Proper Instructions, a
certified copy of a resolution of the Executive
Committee of the Trust on behalf of a Fund
signed by an officer of the Trust and certified
by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting
forth the purpose for which such payment is to be
made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom
such payment is to be made.
2.9Liability for Payment in Advance of Receipt of Securit
ies Purchased. In any and every case where payment
for purchase of securities for the account of a Fund
is made by the Custodian in advance of receipt of the
securities purchased, in the absence of specific
written instructions from the Trust to so pay in
advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if
the securities had been received by the Custodian.
2.10Payments for Repurchases or Redemptions of Shares of
a Fund. From such funds as may be available for the
purpose of repurchasing or redeeming Shares of a
Fund, but subject to the limitations of the
Declaration of Trust/Articles of Incorporation and
any applicable votes of the Board of the Trust
pursuant thereto, the Custodian shall, upon receipt
of instructions from the Transfer Agent, make funds
available for payment to holders of shares of such
Fund who have delivered to the Transfer Agent a
request for redemption or repurchase of their shares
including without limitation through bank drafts,
automated clearinghouse facilities, or by other
means. In connection with the redemption or
repurchase of Shares of the Funds, the Custodian is
authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming
shareholders.
2.11Appointment of Agents. The Custodian may at any time
or times in its discretion appoint (and may at any
time remove) any other bank or trust company which is
itself qualified under the 1940 Act and any
applicable state law or regulation, to act as a
custodian, as its agent to carry out such of the
provisions of this Section 2 as the Custodian may
from time to time direct; provided, however, that the
appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities
hereunder.
2.12Deposit of Fund Assets in Securities System. The Cus
todian may deposit and/or maintain securities owned
by the Funds in a clearing agency registered with the
Securities and Exchange Commission ("SEC") under
Section 17A of the Exchange Act, which acts as a
securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to
herein as "Securities System" in accordance with
applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following
provisions:
(1)The Custodian may keep securities of each Fund in a Securities System
provided that such securities are represented in an account
("Account")
of the Custodian in the Securities System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
(2)The records of the Custodian with respect to securities of the Funds
which are maintained in a Securities System shall identify by book-
entry those securities belonging to each Fund;
(3)The Custodian shall pay for securities purchased for the
account of each
Fund upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account, and (ii) the
making of
an entry on the records of the Custodian to reflect such payment and
transfer for the account of the Fund. The Custodian shall transfer
securities sold for the account of a Fund upon (i) receipt of advice
from the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for the
account of the Fund. Copies of all advices from the Securities
System
of transfers of securities for the account of a Fund shall
identify the
Fund, be maintained for the Fund by the Custodian and be provided to
the Trust at its request. Upon request, the Custodian shall furnish
the Trust confirmation of each transfer to or from the account of a
Fund in the form of a written advice or notice and shall furnish
to the
Trust copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of a Fund.
(4)The Custodian shall provide the Trust with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
(5)The Custodian shall have received the initial certificate, required by
Section 9 hereof;
(6)Anything to the contrary in this Contract notwithstanding, the
Custodian
shall be liable to the Trust for any loss or damage to a Fund
resulting
from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or of
any of its or their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may have against
the Securities System; at the election of the Trust, it shall be
entitled to be subrogated to the rights of the Custodian with respect
to any claim against the Securities System or any other person which
the Custodian may have as a consequence of any such loss or damage if
and to the extent that a Fund has not been made whole for any such
loss or damage.
(7)The authorization contained in this Section 2.12 shall not relieve the
Custodian from using reasonable care and diligence in making use of
any Securities System.
2.13Segregated Account. The Custodian shall upon receipt
of Proper Instructions establish and maintain a
segregated account or accounts for and on behalf of
each Fund, into which account or accounts may be
transferred cash and/or securities, including
securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance
with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the
Commodity Futures Trading Commission or any
registered contract market), or of any similar
organization or organizations, regarding escrow or
other arrangements in connection with transactions
for a Fund, (ii) for purpose of segregating cash or
government securities in connection with options
purchased, sold or written for a Fund or commodity
futures contracts or options thereon purchased or
sold for a Fund, (iii) for the purpose of compliance
by the Trust or a Fund with the procedures required
by any release or releases of the SEC relating to the
maintenance of segregated accounts by registered
investment companies and (iv) for other proper
corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the
Board or of the Executive Committee signed by an
officer of the Trust and certified by the Secretary
or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.14Joint Repurchase Agreements. Upon the receipt of Pro
per Instructions, the Custodian shall deposit and/or
maintain any assets of a Fund and any affiliated
funds which are subject to joint repurchase
transactions in an account established solely for
such transactions for the Fund and its affiliated
funds. For purposes of this Section 2.14,
"affiliated funds" shall include all investment
companies and their portfolios for which subsidiaries
or affiliates of Federated Investors serve as
investment advisers, distributors or administrators
in accordance with applicable exemptive orders from
the SEC. The requirements of segregation set forth
in Section 2.1 shall be deemed to be waived with
respect to such assets.
2.15Ownership Certificates for Tax Purposes. The Custodi
an shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments
with respect to securities of a Fund held by it and
in connection with transfers of securities.
2.16Proxies. The Custodian shall, with respect to the se
curities held hereunder, cause to be promptly
executed by the registered holder of such securities,
if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all
proxies, without indication of the manner in which
such proxies are to be voted, and shall promptly
deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.17Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Trust
all written information (including, without
limitation, pendency of calls and maturities of
securities and expirations of rights in connection
therewith and notices of exercise of call and put
options written by the Fund and the maturity of
futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the
securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall
transmit promptly to the Trust all written
information received by the Custodian from issuers of
the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or
exchange offer. If the Trust desires to take action
with respect to any tender offer, exchange offer or
any other similar transaction, the Trust shall notify
the Custodian in writing at least three business days
prior to the date on which the Custodian is to take
such action. However, the Custodian shall
nevertheless exercise its best efforts to take such
action in the event that notification is received
three business days or less prior to the date on
which action is required.
2.18Proper Instructions. Proper Instructions as used thr
oughout this Section 2 means a writing signed or
initialed by one or more person or persons as the
Board shall have from time to time authorized. Each
such writing shall set forth the specific transaction
or type of transaction involved. Oral instructions
will be deemed to be Proper Instructions if (a) the
Custodian reasonably believes them to have been given
by a person previously authorized in Proper
Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust
promptly causes such oral instructions to be
confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the
authorization by the Board of the Trust accompanied
by a detailed description of procedures approved by
the Board, Proper Instructions may include
communications effected directly between electro-
mechanical or electronic devices provided that the
Board and the Custodian are satisfied that such
procedures afford adequate safeguards for a Fund's
assets.
2.19Actions Permitted Without Express Authority. The Cus
todian may in its discretion, without express
authority from the Trust:
(1)make payments to itself or others for minor expens
es of handling securities or other similar items
relating to its duties under this Contract,
provided that all such payments shall be
accounted for to the Trust in such form that it
may be allocated to the affected Fund;
(2)surrender securities in temporary form for securit
ies in definitive form;
(3)endorse for collection, in the name of a Fund, che
cks, drafts and other negotiable instruments; and
(4)in general, attend to all non-discretionary detail
s in connection with the sale, exchange,
substitution, purchase, transfer and other
dealings with the securities and property of each
Fund except as otherwise directed by the Trust.
2.20Evidence of Authority. The Custodian shall be protec
ted in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper
reasonably believed by it to be genuine and to have
been properly executed on behalf of a Fund. The
Custodian may receive and accept a certified copy of
a vote of the Board of the Trust as conclusive
evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination
of or any action by the Board pursuant to the
Declaration of Trust/Articles of Incorporation as
described in such vote, and such vote may be
considered as in full force and effect until receipt
by the Custodian of written notice to the contrary.
2.21Notice to Trust by Custodian Regarding Cash Movement.
The Custodian will provide timely notification to the
Trust of any receipt of cash, income or payments to
the Trust and the release of cash or payment by the
Trust.
3.Duties of Custodian With Respect to the Books of Account a
nd Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary info
rmation to the entity or entities appointed by the Board
of the Trust to keep the books of account of each Fund
and/or compute the net asset value per share of the
outstanding Shares of each Fund or, if directed in
writing to do so by the Trust, shall itself keep such
books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also
calculate daily the net income of a Fund as described in
the Fund's currently effective prospectus and Statement
of Additional Information ("Prospectus") and shall advise
the Trust and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing
by an officer of the Trust to do so, shall advise the
Transfer Agent periodically of the division of such net
income among its various components. The calculations of
the net asset value per share and the daily income of a
Fund shall be made at the time or times described from
time to time in the Fund's currently effective
Prospectus.
4. Records.
The Custodian shall create and maintain all records
relating to its activities and obligations under this
Contract in such manner as will meet the obligations of
the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-
1 and 31a-2 thereunder, and specifically including
identified cost records used for tax purposes. All such
records shall be the property of the Trust and shall at
all times during the regular business hours of the
Custodian be open for inspection by duly authorized
officers, employees or agents of the Trust and employees
and agents of the SEC. In the event of termination of
this Contract, the Custodian will deliver all such
records to the Trust, to a successor Custodian, or to
such other person as the Trust may direct. The Custodian
shall supply daily to the Trust a tabulation of
securities owned by a Fund and held by the Custodian and
shall, when requested to do so by the Trust and for such
compensation as shall be agreed upon between the Trust
and the Custodian, include certificate numbers in such
tabulations.
5. Opinion of Funds' Independent Public
Accountants/Auditors.
The Custodian shall take all reasonable action, as the
Trust may from time to time request, to obtain from year
to year favorable opinions from each Fund's independent
public accountants/auditors with respect to its
activities hereunder in connection with the preparation
of the Fund's registration statement, periodic reports,
or any other reports to the SEC and with respect to any
other requirements of such Commission.
6. Reports to Trust by Independent Public
Accountants/Auditors.
The Custodian shall provide the Trust, at such times as
the Trust may reasonably require, with reports by
independent public accountants/auditors for each Fund on
the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts
and options on futures contracts, including securities
deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian for
the Fund under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may
reasonably be required by the Trust, to provide
reasonable assurance that any material inadequacies would
be disclosed by such examination and, if there are no
such inadequacies, the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian,
as agreed upon from time to time between Company and the
Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable
care in carrying out the provisions of this Contract;
provided, however, that the Custodian shall be held to
any higher standard of care which would be imposed upon
the Custodian by any applicable law or regulation if such
above stated standard of reasonable care was not part of
this Contract. The Custodian shall be entitled to rely
on and may act upon advice of counsel (who may be counsel
for the Trust) on all matters, and shall be without
liability for any action reasonably taken or omitted
pursuant to such advice, provided that such action is not
in violation of applicable federal or state laws or
regulations, and is in good faith and without negligence.
Subject to the limitations set forth in Section 15
hereof, the Custodian shall be kept indemnified by the
Trust but only from the assets of the Fund involved in
the issue at hand and be without liability for any action
taken or thing done by it in carrying out the terms and
provisions of this Contract in accordance with the above
standards.
In order that the indemnification provisions contained in
this Section 8 shall apply, however, it is understood
that if in any case the Trust may be asked to indemnify
or save the Custodian harmless, the Trust shall be fully
and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood
that the Custodian will use all reasonable care to
identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the
probability of such a claim for indemnification. The
Trust shall have the option to defend the Custodian
against any claim which may be the subject of this
indemnification, and in the event that the Trust so
elects it will so notify the Custodian and thereupon the
Trust shall take over complete defense of the claim, and
the Custodian shall in such situation initiate no further
legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall
in no case confess any claim or make any compromise in
any case in which the Trust will be asked to indemnify
the Custodian except with the Trust's prior written
consent.
Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check
shall be in accordance with a separate Agreement entered
into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action
with respect to securities, which action involves the
payment of money or which action may, in the reasonable
opinion of the Custodian, result in the Custodian or its
nominee assigned to a Fund being liable for the payment
of money or incurring liability of some other form, the
Custodian may request the Trust, as a prerequisite to
requiring the Custodian to take such action, to provide
indemnity to the Custodian in an amount and form
satisfactory to the Custodian.
Subject to the limitations set forth in Section 15
hereof, the Trust agrees to indemnify and hold harmless
the Custodian and its nominee from and against all taxes,
charges, expenses, assessments, claims and liabilities
(including counsel fees) (referred to herein as
authorized charges) incurred or assessed against it or
its nominee in connection with the performance of this
Contract, except such as may arise from it or its
nominee's own failure to act in accordance with the
standard of reasonable care or any higher standard of
care which would be imposed upon the Custodian by any
applicable law or regulation if such above-stated
standard of reasonable care were not part of this
Contract. To secure any authorized charges and any
advances of cash or securities made by the Custodian to
or for the benefit of a Fund for any purpose which
results in the Fund incurring an overdraft at the end of
any business day or for extraordinary or emergency
purposes during any business day, the Trust hereby grants
to the Custodian a security interest in and pledges to
the Custodian securities held for the Fund by the
Custodian, in an amount not to exceed 10 percent of the
Fund's gross assets, the specific securities to be
designated in writing from time to time by the Trust or
the Fund's investment adviser. Should the Trust fail to
make such designation, or should it instruct the
Custodian to make advances exceeding the percentage
amount set forth above and should the Custodian do so,
the Trust hereby agrees that the Custodian shall have a
security interest in all securities or other property
purchased for a Fund with the advances by the Custodian,
which securities or property shall be deemed to be
pledged to the Custodian, and the written instructions of
the Trust instructing their purchase shall be considered
the requisite description and designation of the property
so pledged for purposes of the requirements of the
Uniform Commercial Code. Should the Trust fail to cause
a Fund to repay promptly any authorized charges or
advances of cash or securities, subject to the provision
of the second paragraph of this Section 8 regarding
indemnification, the Custodian shall be entitled to use
available cash and to dispose of pledged securities and
property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated
as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing
delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than sixty
(60) days after the date of such delivery or mailing;
provided, however that the Custodian shall not act under
Section 2.12 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant
Secretary that the Board of the Trust has approved the
initial use of a particular Securities System as required
in each case by Rule 17f-4 under the 1940 Act; provided
further, however, that the Trust shall not amend or
terminate this Contract in contravention of any
applicable federal or state regulations, or any provision
of the Declaration of Trust/Articles of Incorporation,
and further provided, that the Trust may at any time by
action of its Board (i) substitute another bank or trust
company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the
appropriate banking regulatory agency or upon the
happening of a like event at the direction of an
appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Trust shall pay to
the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the
Custodian for its costs, expenses and disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board
of the Trust, the Custodian shall, upon termination,
deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer,
all securities then held by it hereunder for each Fund
and shall transfer to separate accounts of the successor
custodian all of each Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a
certified copy of a vote of the Board of the Trust,
deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the
Board shall have been delivered to the Custodian on or
before the date when such termination shall become
effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as
defined in the 1940 Act, (delete "doing business ...
Massachusetts" unless SSBT is the Custodian) doing
business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not
less than $100,000,000, all securities, funds and other
properties held by the Custodian and all instruments held
by the Custodian relative thereto and all other property
held by it under this Contract for each Fund and to
transfer to separate accounts of such successor
custodian all of each Fund's securities held in any
Securities System. Thereafter, such bank or trust
company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date
of termination hereof owing to failure of the Trust to
procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of
such securities, funds and other properties and the
provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force
and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the
Custodian and the Trust may from time to time agree on
such provisions interpretive of or in addition to the
provisions of this Contract as may in their joint opinion
be consistent with the general tenor of this Contract.
Any such interpretive or additional provisions shall be
in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional
provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of
Trust/Articles of Incorporation. No interpretive or
additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this
Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of
The Commonwealth of Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices
and other writings delivered or mailed postage prepaid to
the Trust at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to the Custodian at address
for SSBT only: 225 Franklin Street, Boston,
Massachusetts, 02110, or to such other address as the
Trust or the Custodian may hereafter specify, shall be
deemed to have been properly delivered or given hereunder
to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the
limitation of liability as set forth in Article XI of the
Declaration of Trust of those Trusts which are business
trusts and agrees that the obligations and liabilities
assumed by the Trust and any Fund pursuant to this
Contract, including, without limitation, any obligation
or liability to indemnify the Custodian pursuant to
Section 8 hereof, shall be limited in any case to the
relevant Fund and its assets and that the Custodian shall
not seek satisfaction of any such obligation from the
shareholders of the relevant Fund, from any other Fund or
its shareholders or from the Trustees, Officers,
employees or agents of the Trust, or any of them. In
addition, in connection with the discharge and
satisfaction of any claim made by the Custodian against
the Trust, for whatever reasons, involving more than one
Fund, the Trust shall have the exclusive right to
determine the appropriate allocations of liability for
any such claim between or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder
affixed effective as of the 1st day of December, 1993.
ATTEST: INVESTMENT COMPANIES (Except those
listed below)
/s/John G. McGonigle_________ By /s/John G. Donahue_____________
John G. McGonigle John F. Donahue
Secretary Chairman
ATTEST: STATE STREET BANK AND TRUST
COMPANY
/s/ Ed McKenzie______________ By /s/ F. J. Sidoti,
Jr._________________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President
ATTEST: FEDERATED SERVICES COMPANIY
/s/ Jeannette Fisher-Garber______ By /s/ James J.
Dolan________________
Jeannette Fisher-Garber James J. Dolan
Secretary President
Exhibit 1
Federated Stock Trust
-1-
Exhibit 9 (i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as
of this 1st day of March, 1994, by the Boards of Directors
or Trustees, as applicable (the "Boards"), of those
investment companies listed on Exhibit 1 hereto as may be
amended from time to time, having their principal office and
place of business at Federated Investors Tower, Pittsburgh,
PA 15222-3779 (individually referred to herein as a "Fund"
and collectively as "Funds").
1. This Plan is adopted to allow the Funds to
make payments as contemplated herein to obtain certain
personal services for shareholders and/or the maintenance of
shareholder accounts ("Services").
2. This Plan is designed to compensate Federated
Shareholder Services ("FSS") for providing personal services
and/or the maintenance of shareholder accounts to the Funds
and their shareholders. In compensation for the services
provided pursuant to this Plan, FSS may be paid a monthly
fee computed at the annual rate not to exceed .25 of 1% of
the average aggregate net asset value of the shares of each
Fund held during the month.
3. Any payments made by the Funds to FSS
pursuant to this Plan will be made pursuant to a
"Shareholder Services Agreement" between FSS and each of the
Funds.
4. Quarterly in each year that this Plan remains
in effect, FSS shall prepare and furnish to the Boards of
the Funds, and the Boards shall review, a written report of
the amounts expended under the Plan.
5. This Plan shall become effective with regard
to each Fund (i) after approval by majority votes of: (a)
such Fund's Board; and (b) the members of the Board of such
Fund who are not interested persons of such Fund and have no
direct or indirect financial interest in the operation of
such Fund's Plan or in any related documents to the Plan
("Independent Trustees or Directors"), cast in person at a
meeting called for the purpose of voting on the Plan.
6. This Plan shall remain in effect with respect
to each Fund presently set forth on an exhibit and any
subsequent Fund added pursuant to an exhibit during the
initial year of this Plan for the period of one year from
the date set forth above and may be continued thereafter if
this Plan is approved with respect to each Fund at least
annually by a majority of the relevant Fund's Board and a
majority of the Independent Trustees or
Directors, of such Fund as applicable, cast in person at a
meeting called for the purpose of voting on the renewal of
such Plan. If this Plan is adopted with respect to a fund
after the first annual approval by the Trustees or Directors
as described above, this Plan will be effective as to that
Fund at such time as Exhibit 1 hereto is amended to add such
Fund and will continue in effect until the next annual
approval of this Plan by the Funds' Boards and thereafter
for successive periods of one year subject to approval as
described above.
7. All material amendments to this Plan must be
approved by a vote of the Board of each Fund and of the
Independent Directors or Trustees of such Fund, cast in
person at a meeting called for such purpose.
8. This Plan may be terminated as follows:
(a) at any time, without the payment of any
penalty, by the vote of a majority of the Independent
Board Members of any Fund or by a vote of a majority
of the outstanding voting securities of any Fund as
defined in the Investment Company Act of 1940 on
sixty (60) days' written notice to the parties to
this Agreement; or
(b) by any party to the Agreement without cause
by giving the other party at least sixty (60) days'
written notice of its intention to terminate.
9. While this Plan shall be in effect, the
selection and nomination of Independent Directors or
Trustees of each Fund shall be committed to the discretion
of the Independent Directors or Trustees then in office.
10. All agreements with any person relating
to the implementation of this Plan shall be in writing and
any agreement related to this Plan shall be subject to
termination, without penalty, pursuant to the provisions of
Paragraph 8 herein.
11. This Plan shall be construed in
accordance with and governed by the laws of the Commonwealth
of Pennsylvania.
Witness the due execution hereof this as of the
date set forth above.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
Federated Stock Trust
FSS subcontract 1
Exhibit 9 (ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES SUB-CONTRACT
This Agreement is made between the Financial
Institution executing this Agreement ("Provider") and
Federated Shareholder Services ("FSS") on behalf of the
investment companies listed in Exhibit A hereto (the
"Funds"), for whom FSS administers the Shareholder Services
Plan ("Plan") and who have approved this form of Agreement.
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties
hereto as follows:
1. FSS hereby appoints Provider to render or cause to
be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the
Funds ("Services"). Provider agrees to provide Services
which, in its best judgment, are necessary or desirable for
its customers who are investors in the Funds. Provider
further agrees to provide FSS, upon request, a written
description of the Services which Provider is providing
hereunder.
2. During the term of this Agreement, the Funds will
pay the Provider fees as set forth in a written schedule
delivered to the Provider pursuant to this Agreement. The
fee schedule for Provider may be changed by FSS sending a
new fee schedule to Provider pursuant to Paragraph 9 of this
Agreement. For the payment period in which this Agreement
becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number
of days that this Agreement is in effect during the quarter.
To enable the Funds to comply with an applicable exemptive
order, Provider represents that the fees received pursuant
to this Agreement will be disclosed to its customers, will
be authorized by its customers, and will not esult in an
excessive fee to the Provider.
3. The Provider understands that the Department of
Labor views ERISA as prohibiting fiduciaries of
discretionary ERISA assets from receiving shareholder
service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To
date, the Department of Labor has not issued any exemptive
order or advisory opinion that would exempt fiduciaries from
this interpretation. Without specific authorization from
the Department of Labor, fiduciaries should carefully avoid
investing discretionary assets in any fund pursuant to an
arrangement where the fiduciary is to be compensated by the
fund for such investment. Receipt of such compensation
could violate ERISA provisions against fiduciary self-
dealing and conflict of interest and could subject the
fiduciary to substantial penalties.
4. The Provider agrees not to solicit or cause to be
solicited directly, or indirectly at any time in the future,
any proxies from the shareholders of a Fund in opposition to
proxies solicited by management of the Fund, unless a court
of competent jurisdiction shall have determined that the
conduct of a majority of the Board of Trustees or Directors
of the Fund constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties.
This paragraph 4 will survive the term of this Agreement.
5. This Agreement shall continue in effect for one
year from the date of its execution, and thereafter for
successive periods of one year if the form of this Agreement
is approved at least annually by the Board of each Fund,
including a majority of the members of the Board of the Fund
who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of
the Fund's Plan or in any related documents to the Plan
("Disinterested Board Members") cast in person at a meeting
called for that purpose.
6. Notwithstanding paragraph 5, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any
penalty, by the vote of a majority of the
Disinterested Board Members of the Fund or by a vote
of a majority of the outstanding voting securities of
the Fund as defined in the Investment Company Act of
1940 on not more than sixty (60) days' written notice
to the parties to this Agreement;
(b) automatically in the event of the
Agreement's assignment as defined in the Investment
Company Act of 1940; and
(c) by either party to the Agreement without
cause by giving the other party at least sixty (60)
days' written notice of its intention to terminate.
7. The Provider agrees to obtain any taxpayer
identification number certification from its customers
required under Section 3406 of the Internal Revenue Code,
and any applicable Treasury regulations, and to provide the
Fund or its designee with timely written notice of any
failure to obtain such taxpayer identification number
certification in order to enable the implementation of any
required backup withholding.
8. The execution and delivery of this Agreement have
been authorized by the Trustees of FSS and signed by an
authorized officer of FSS, acting as such, and neither such
authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on
any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS
as provided in the Declaration of Trust of FSS.
9. Notices of any kind to be given hereunder shall be
in writing (including facsimile communication) and shall be
duly given if delivered to Provider at the address set forth
below and if delivered to FSS at Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President.
10. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior
agreement with respect to the subject hereof whether oral or
written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of
Sections 5 and 6, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the
Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission
thereunder.
11. This Agreement may be executed by different
parties on separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
12. This Agreement shall not be assigned by any party
without the prior written consent of FSS in the case of
assignment by Provider, or of Provider in the case of
assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to
a party controlling, controlled by, or under common control
with such party.
13. This Agreement may be amended by FSS from time to
time by the following procedure. FSS will mail a copy of
the amendment to the Provider's address, as shown below. If
the Provider does not object to the amendment within thirty
(30) days after its receipt, the amendment will become part
of the Agreement. The Provider's objection must be in
writing and be received by FSS within such thirty days.
14. This Agreement may be terminated with regard to a
particular Fund or Class at any time, without the payment of
any penalty, by FSS or by the vote of a majority of the
Disinterested Trustees or Directors, as applicable, or by a
majority of the outstanding voting securities of the
particular Fund or Class on not more than sixty (60) days'
written notice to the Provider. This Agreement may be
terminated by Provider on sixty (60) days' written notice
to FSS.
15. The Provider acknowledges and agrees that FSS has
entered into this Agreement solely in the capacity of agent
for the Funds and administrator of the Plan. The Provider
agrees not to claim that FSS is liable for any
responsibilities or amounts due by the Funds hereunder.
[Provider]
Address
City State Zip Code
Dated: By:
Authoried Signature
Title
Print Name of Authorized
Signature
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By:
Vice President
EXHIBIT A to Shareholder Services Sub-Contract with
Funds covered by this Agreement:
Federated Stock Trust
Shareholder Service Fees
1. During the term of this Agreement, FSS will pay
Provider a quarterly fee. This fee will be computed at the
annual rate of ______ of the average net asset value of
shares of the Funds held during the quarter in accounts for
which the Provider provides Services under this Agreement,
so long as the average net asset value of Shares in the
Funds during the quarter equals or exceeds such minimum
amount as FSS shall from time to time determine and
communicate in writing to the Provider.
2. For the quarterly period in which the Agreement
becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the
number of days that the Agreement is in effect during the
quarter.
-1-
Exhibit 9 (iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of the first day of March, 1994, by
and between those investment companies listed on Exhibit 1,
as may be amended from time to time, having their principal
office and place of business at Federated Investors Tower,
Pittsburgh, PA 15222-3779 and who have approved a
Shareholder Services Plan (the "Plan") and this form of
Agreement (individually referred to herein as a "Fund" and
collectively as "Funds") and Federated Shareholder Services,
a Delaware business trust, having its principal office and
place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 ("FSS").
1. The Funds hereby appoint FSS to render or cause to
be rendered personal services to shareholders of the Funds
and/or the maintenance of accounts of shareholders of the
Funds ("Services"). In addition to providing Services
directly to shareholders of the Funds, FSS is hereby
appointed the Funds' agent to select, negotiate and
subcontract for the performance of Services. FSS hereby
accepts such appointments. FSS agrees to provide or cause
to be provided Services which, in its best judgment (subject
to supervision and control of the Funds' Boards of Trustees
or Directors, as applicable), are necessary or desirable for
shareholders of the Funds. FSS further agrees to provide
the Funds, upon request, a written description of the
Services which FSS is providing hereunder.
2. During the term of this Agreement, each Fund will
pay FSS and FSS agrees to accept as full compensation for
its services rendered hereunder a fee at an annual rate,
calculated daily and payable monthly, up to 0.25% of 1% of
average net assets of each Fund.
For the payment period in which this Agreement becomes
effective or terminates with respect to any Fund, there
shall be an appropriate proration of the monthly fee on the
basis of the number of days that this Agreement is in effect
with respect to such Fund during the month. To enable the
Funds to comply with an applicable exemptive order, FSS
represents that the fees received pursuant to this Agreement
will be disclosed to and authorized by any person or entity
receiving Services, and will not result in an excessive fee
to FSS.
3. This Agreement shall continue in effect for one
year from the date of its execution, and thereafter for
successive periods of one year only if the form of this
Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of
the Fund who are not interested persons of the Fund and have
no direct or indirect financial interest in the operation of
the Funds' Plan or in any related documents to the Plan
("Independent Board Members") cast in person at a meeting
called for that purpose.
4. Notwithstanding paragraph 3, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any
penalty, by the vote of a majority of the Independent
Board Members of any Fund or by a vote of a majority
of the outstanding voting securities of any Fund as
defined in the Investment Company Act of 1940 on
sixty (60) days' written notice to the parties to
this Agreement;
(b) automatically in the event of the
Agreement's assignment as defined in the Investment
Company Act of 1940; and
(c) by any party to the Agreement without cause
by giving the other party at least sixty (60) days'
written notice of its intention to terminate.
5. FSS agrees to obtain any taxpayer identification
number certification from each shareholder of the Funds to
which it provides Services that is required under Section
3406 of the Internal Revenue Code, and any applicable
Treasury regulations, and to provide each Fund or its
designee with timely written notice of any failure to obtain
such taxpayer identification number certification in order
to enable the implementation of any required backup
withholding.
6. FSS shall not be liable for any error of judgment
or mistake of law or for any loss suffered by any Fund in
connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations
and duties under this Agreement. FSS shall be entitled to
rely on and may act upon advice of counsel (who may be
counsel for such Fund) on all matters, and shall be without
liability for any action reasonably taken or omitted
pursuant to such advice. Any person, even though also an
officer, trustee, partner, employee or agent of FSS, who may
be or become a member of such Fund's Board, officer,
employee or agent of any Fund, shall be deemed, when
rendering services to such Fund or acting on any business of
such Fund (other than services or business in connection
with the duties of FSS hereunder) to be rendering such
services to or acting solely for such Fund and not as an
officer, trustee, partner, employee or agent or one under
the control or direction of FSS even though paid by FSS.
This Section 6 shall survive termination of this
Agreement.
7. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which an
enforcement of the change, waiver, discharge or termination
is sought.
8. FSS is expressly put on notice of the limitation
of liability as set forth in the Declaration of Trust of
each Fund that is a Massachusetts business trust and agrees
that the obligations assumed by each such Fund pursuant to
this Agreement shall be limited in any case to such Fund and
its assets and that FSS shall not seek satisfaction of any
such obligations from the shareholders of such Fund, the
Trustees, Officers, Employees or Agents of such Fund, or any
of them.
9. The execution and delivery of this Agreement have
been authorized by the Trustees of FSS and signed by an
authorized officer of FSS, acting as such, and neither such
authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on
any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS
as provided in the Declaration of Trust of FSS.
10. Notices of any kind to be given hereunder shall be
in writing (including facsimile communication) and shall be
duly given if delivered to any Fund and to such Fund at the
following address: Federated Investors Tower, Pittsburgh,
PA 15222-3779, Attention: President and if delivered to
FSS at Federated Investors Tower, Pittsburgh, PA 15222-
3779, Attention: President.
11. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior
agreement with respect to the subject hereof whether oral or
written. If any provision of this Agreement shall be held
or made invalid by a court or regulatory agency decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of
Sections 3 and 4, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the
Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission
thereunder.
12. This Agreement may be executed by different
parties on separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
13. This Agreement shall not be assigned by any party
without the prior written consent of FSS in the case of
assignment by any Fund, or of the Funds in the case of
assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to
a party controlling, controlled by, or under common control
with such party. Nothing in this Section 14 shall prevent
FSS from delegating its responsibilities to another entity
to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below
as of the day and year first above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
Federated Stock Trust
-1-
Exhibit 9 (iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this
first day of March, 1994, between those investment companies
listed on Exhibit 1, as may be amended from time to time, having
their principal office and place of business at Federated
Investors Tower, Pittsburgh PA 15222-3779 (individually
referred to herein as "Fund" and collectively referred to as
"Funds), on behalf of the portfolios of the Funds, and Federated
Administrative Services, a Delaware business trust (herein
called "FAS").
WHEREAS, the Funds desire to retain FAS as their
Administrator to provide them with Administrative Services (as
herein defined), and FAS is willing to render such services;
WHEREAS, the Funds are registered as open-end management
investment companies under the Investment Company Act of 1940,
as amended (the "1940 Act"), with authorized and issued shares
of capital stock or beneficial interest ("Shares"); and
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Funds hereby
appoint FAS as Administrator of the Funds on the terms and
conditions set forth in this Agreement; and FAS hereby accepts
such appointment and agrees to perform the services and duties
set forth in Section 2 of this Agreement in consideration of the
compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to
the supervision and control of the Funds' Boards of Trustees or
Directors, as applicable (the "Boards"), FAS will provide
facilities, equipment, and personnel to carry out the following
administrative services for operation of the business and
affairs of the Funds and each of their portfolios:
(a) prepare, file, and maintain the
Funds' governing documents and any amendments
thereto, including the Declaration of Trust or
Articles of Incorporation, as appropriate,(which has
already been prepared and filed), the By-laws and
minutes of meetings of their Boards, Committees, and
shareholders;
(b) prepare and file with the
Securities and Exchange Commission and the
appropriate state securities authorities the
registration statements for the Funds and the Funds'
shares and all amendments thereto, reports to
regulatory authorities and shareholders,
prospectuses, proxy statements, and such other
documents all as may be necessary to enable the Funds
to make continuous offerings of their shares, as
applicable;
(c) prepare, negotiate, and
administer contracts on behalf of the Funds with,
among others, each Fund's investment adviser,
distributor, custodian, and transfer agent, subject
to any applicable restrictions of the Boards or the
1940 Act;
(d) supervise the Funds' custodians
in the maintenance of the Funds' general ledgers and
in the preparation of the Funds' financial
statements, including oversight of expense accruals
and payments, the determination of the net asset
value of the Funds and the declaration and payment of
dividends and other distributions to shareholders;
(e) calculate performance data of
the Funds for dissemination to information services
covering the investment company industry;
(f) prepare and file the Funds' tax
returns;
(g) examine and review the
operations of the Funds' custodians and transfer
agents;
(h) coordinate the layout and
printing of publicly disseminated prospectuses and
reports;
(i) perform internal audit
examinations in accordance with a charter to be
adopted by FAS and the Funds;
(j) assist with the design,
development, and operation of the Funds;
(k) provide individuals reasonably
acceptable to the Funds' Boards for nomination,
appointment, or election as officers of the Funds,
who will be responsible for the management of certain
of the Funds' affairs as determined by the Funds'
Boards; and
(l) consult with the Funds and their
Boards of Trustees or Directors, as appropriate, on
matters concerning the Funds and their affairs.
The foregoing, along with any additional services that FAS
shall agree in writing to perform for the Funds hereunder, shall
hereafter be referred to as "Administrative Services."
Administrative Services shall not include any duties, functions,
or services to be performed for any Fund by such Fund's
investment adviser, distributor, custodian, transfer agent, or
shareholder service agent, pursuant to their respective
agreements with such Fund.
3. Expenses. FAS shall be responsible for expenses
incurred in providing office space, equipment, and personnel as
may be necessary or convenient to provide the Administrative
Services to the Fund, including the compensation of FAS
employees who serve on the Funds' Boards, or as officers of the
Funds. Each Fund shall be responsible for all other expenses
incurred by FAS on behalf of such Fund, including without
limitation postage and courier expenses, printing expenses,
travel expenses, registration fees, filing fees, fees of outside
counsel and independent auditors, insurance premiums, fees
payable to members of such Fund's Board who are not FAS
employees, and trade association dues.
4. Compensation. For the Administrative Services
provided, each Fund hereby agrees to pay and FAS hereby agrees
to accept as full compensation for its services rendered
hereunder an administrative fee at an annual rate, payable
daily, as specified below, based upon the total assets of all of
the Funds:
Maximum Administrative Average Daily Net Assets
Fee of the Funds
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250
million
.075% on assets in excess of
$750 million
However, in no event shall the administrative fee received
during any year of this Agreement be less than, or be paid at a
rate less than would aggregate, $125,000, per individual Fund,
with an additional $30,000 for each class of shares added to any
such Fund after the date hereof.
5. Standard of Care.
(a) FAS shall not be liable for any
error of judgment or mistake of law or for any loss
suffered by any Fund in connection with the matters
to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of
its duties or from reckless disregard by it of its
obligations and duties under this Agreement. FAS
shall be entitled to rely on and may act upon advice
of counsel (who may be counsel for such Fund) on all
matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such
advice. Any person, even though also an officer,
trustee, partner, employee or agent of FAS, who may
be or become a member of such Fund's Board, officer,
employee or agent of any Fund, shall be deemed, when
rendering services to such Fund or acting on any
business of such Fund (other than services or
business in connection with the duties of FAS
hereunder) to be rendering such services to or acting
solely for such Fund and not as an officer, trustee,
partner, employee or agent or one under the control
or direction of FAS even though paid by FAS.
(b) This Section 5 shall survive
termination of this Agreement.
6. Duration and Termination. The initial term of this
Agreement with respect to each Fund shall commence on the date
hereof, and extend for a period of one year, renewable annually
by the approval of the Board of Directors/Trustees of each Fund.
7. Amendment. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which an
enforcement of the change, waiver, discharge or termination is
sought.
8. Limitations of Liability of Trustees or Officers,
Employees, Agents and Shareholders of the Funds. FAS is
expressly put on notice of the limitation of liability as set
forth in the Declaration of Trust of each Fund that is a
Massachusetts business trust and agrees that the obligations
assumed by each such Fund pursuant to this Agreement shall be
limited in any case to such Fund and its assets and that FAS
shall not seek satisfaction of any such obligations from the
shareholders of such Fund, the Trustees, Officers, Employees or
Agents of such Fund, or any of them.
9. Limitations of Liability of Trustees and Shareholders
of FAS. The execution and delivery of this Agreement have been
authorized by the Trustees of FAS and signed by an authorized
officer of FAS, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the
Trustees or shareholders of FAS, but bind only the trust
property of FAS as provided in the Declaration of Trust of FAS.
10. Notices. Notices of any kind to be given hereunder
shall be in writing (including facsimile communication) and
shall be duly given if delivered to any Fund at the following
address: Federated Investors Tower, Pittsburgh, PA 15222-3779,
Attention: President and if delivered to FAS at Federated
Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
11. Miscellaneous. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement with respect to the subject hereof whether oral or
written. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement
shall be held or made invalid by a court or regulatory agency
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the
provisions of Section 5, hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein shall
be construed in a manner inconsistent with the Investment
Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.
12. Counterparts. This Agreement may be executed by
different parties on separate counterparts, each of which, when
so executed and delivered, shall be an original, and all such
counterparts shall together constitute one and the same
instrument.
13. Assignment; Successors. This Agreement shall not be
assigned by any party without the prior written consent of FAS,
in the case of assignment by any Fund, or of the Funds, in the
case of assignment by FAS, except that any party may assign to a
successor all of or a substantial portion of its business to a
party controlling, controlled by, or under common control with
such party. Nothing in this Section 14 shall prevent FAS from
delegating its responsibilities to another entity to the extent
provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as
of the day and year first above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Administrative Services
By: /s/ Edward C. Gonzales
Edward C. Gonzales
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Exhibit 1
Federated Stock Trust
Exhibit 9 (v) under
Form N-1A
Exhibit 10 under Item
601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of the 1st day of December, 1994, by and
between those investment companies listed on Exhibit 1 as
may be amended from time to time, having their principal
office and place of business at Federated Investors Tower,
Pittsburgh, PA 15222-3779 (the "Trust"), on behalf of the
portfolios (individually referred to herein as a "Fund" and
collectively as "Funds") of the Trust, and FEDERATED
SERVICES COMPANY, a Delaware business trust, having its
principal office and place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779 (the
"Company").
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), with authorized and issued
shares of capital stock or beneficial interest ("Shares");
and
WHEREAS, the Trust may desire to retain the Company to
provide certain pricing, accounting and recordkeeping
services for each of the Funds, including any classes of
shares issued by any Fund ("Classes") if so indicated on
Exhibit 1, and the Company is willing to furnish such
services; and
WHEREAS, the Trust may desire to appoint the Company as
its transfer agent, dividend disbursing agent if so
indicated on Exhibit 1, and agent in connection with certain
other activities, and the Company desires to accept such
appointment; and
WHEREAS, the Trust may desire to appoint the Company as
its agent to select, negotiate and subcontract for custodian
services from an approved list of qualified banks if so
indicated on Exhibit 1, and the Company desires to accept
such appointment; and
WHEREAS, from time to time the Trust may desire and may
instruct the Company to subcontract for the performance of
certain of its duties and responsibilities hereunder to
State Street Bank and Trust Company or another agent (the
"Agent"); and
WHEREAS, the words Trust and Fund may be used
interchangeably for those investment companies consisting of
only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained, and intending to be legally
bound hereby, the parties hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the
Classes, for the period and on the terms set forth in this
Agreement. The Company accepts such appointment and agrees
to furnish the services herein set forth in return for the
compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Trust's
Board of Trustees or Directors ("Board"), the Company will
assist the Trust with regard to fund accounting for the
Trust, and/or the Funds, and/or the Classes, and in
connection therewith undertakes to perform the following
specific services;
A. Value the assets of the Funds using: primarily, market
quotations, including the use of matrix pricing,
supplied by the independent pricing services selected
by the Company in consultation with the adviser, or
sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service
does not provide a price for a security which the
Company believes should be available by market
quotation, the Company may obtain a price by calling
brokers designated by the investment adviser of the
fund holding the security, or if the adviser does not
supply the names of such brokers, the Company will
attempt on its own to find brokers to price those
securities; thirdly, for securities for which no
market price is available, the Pricing Committee of
the Board will determine a fair value in good faith.
Consistent with Rule 2a-4 of the 40 Act, estimates may
be used where necessary or appropriate. The Company's
obligations with regard to the prices received from
outside pricing services and designated brokers or
other outside sources, is to exercise reasonable care
in the supervision of the pricing agent. The Company
is not the guarantor of the securities prices received
from such agents and the Company is not liable to the
Fund for potential errors in valuing a Fund's assets
or calculating the net asset value per share of such
Fund or Class when the calculations are based upon
such prices. All of the above sources of prices used
as described are deemed by the Company to be
authorized sources of security prices. The Company
provides daily to the adviser the securities prices
used in calculating the net asset value of the fund,
for its use in preparing exception reports for those
prices on which the adviser has comment. Further,
upon receipt of the exception reports generated by the
adviser, the Company diligently pursues communication
regarding exception reports with the designated
pricing agents.
B. Determine the net asset value per share of each Fund
and/or Class, at the time and in the manner from time
to time determined by the Board and as set forth in
the Prospectus and Statement of Additional Information
("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books
and financial records of the Trust, including for each
Fund, and/or Class, as required under Section 31(a) of
the 1940 Act and the Rules thereunder in connection
with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records to be maintained by
Rule 31a-1 under the 1940 Act in connection with the
services provided by the Company. The Company further
agrees that all such records it maintains for the
Trust are the property of the Trust and further agrees
to surrender promptly to the Trust such records upon
the Trust's request;
G. At the request of the Trust, prepare various reports
or other financial documents required by federal,
state and other applicable laws and regulations; and
H. Such other similar services as may be reasonably
requested by the Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services
rendered pursuant to Section One of this Agreement in
accordance with the fees agreed upon from time to time
between the parties hereto. Such fees do not include
out-of-pocket disbursements of the Company for which
the Funds shall reimburse the Company upon receipt of
a separate invoice. Out-of-pocket disbursements shall
include, but shall not be limited to, the items agreed
upon between the parties from time to time.
B. The Fund and/or the Class, and not the Company, shall
bear the cost of: custodial expenses; membership dues
in the Investment Company Institute or any similar
organization; transfer agency expenses; investment
advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices;
administrative expenses; interest on borrowed money;
brokerage commissions; taxes and fees payable to
federal, state and other governmental agencies; fees
of Trustees or Directors of the Trust; independent
auditors expenses; Federated Administrative Services
and/or Federated Administrative Services, Inc. legal
and audit department expenses billed to Federated
Services Company for work performed related to the
Trust, the Funds, or the Classes; law firm expenses;
or other expenses not specified in this Article 3
which may be properly payable by the Funds and/or
classes.
C. The compensation and out-of-pocket expenses shall be
accrued by the Fund and shall be paid to the Company
no less frequently than monthly, and shall be paid
daily upon request of the Company. The Company will
maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as
may be adjusted from time to time, shall be dated and
signed by a duly authorized officer of the Trust
and/or the Funds and a duly authorized officer of the
Company.
E. The fee for the period from the effective date of this
Agreement with respect to a Fund or a Class to the end
of the initial month shall be prorated according to
the proportion that such period bears to the full
month period. Upon any termination of this Agreement
before the end of any month, the fee for such period
shall be prorated according to the proportion which
such period bears to the full month period. For
purposes of determining fees payable to the Company,
the value of the Fund's net assets shall be computed
at the time and in the manner specified in the Fund's
Prospectus.
F. The Company, in its sole discretion, may from time to
time subcontract to, employ or associate with itself
such person or persons as the Company may believe to
be particularly suited to assist it in performing
services under this Section One. Such person or
persons may be third-party service providers, or they
may be officers and employees who are employed by both
the Company and the Funds. The compensation of such
person or persons shall be paid by the Company and no
obligation shall be incurred on behalf of the Trust,
the Funds, or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this
Agreement, the Trust hereby appoints the Company to act as,
and the Company agrees to act as, transfer agent and
dividend disbursing agent for each Fund's Shares, and agent
in connection with any accumulation, open-account or similar
plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any
periodic investment plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction"
means a writing signed or initialed by one or more person or
persons as the Board shall have from time to time
authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a)
the Company reasonably believes them to have been given by a
person previously authorized in Proper Instructions to give
such instructions with respect to the transaction involved,
and (b) the Trust, or the Fund, and the Company promptly
cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices
provided that the Trust, or the Fund, and the Company are
satisfied that such procedures afford adequate safeguards
for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in
accordance with Proper Instructions as may be provided from
time to time by the Trust as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for
the purchase of shares and promptly deliver
payment and appropriate documentation therefore
to the custodian of the relevant Fund, (the
"Custodian"). The Company shall notify the Fund
and the Custodian on a daily basis of the total
amount of orders and payments so delivered.
(2) Pursuant to purchase orders and in accordance
with the Fund's current Prospectus, the Company
shall compute and issue the appropriate number of
Shares of each Fund and/or Class and hold such
Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a
Shareholder or its agent requests a certificate,
the Company, as Transfer Agent, shall countersign
and mail by first class mail, a certificate to
the Shareholder at its address as set forth on
the transfer books of the Funds, and/or Classes,
subject to any Proper Instructions regarding the
delivery of certificates.
(4) In the event that any check or other order for
the purchase of Shares of the Fund and/or Class
is returned unpaid for any reason, the Company
shall debit the Share account of the Shareholder
by the number of Shares that had been credited to
its account upon receipt of the check or other
order, promptly mail a debit advice to the
Shareholder, and notify the Fund and/or Class of
its action. In the event that the amount paid
for such Shares exceeds proceeds of the
redemption of such Shares plus the amount of any
dividends paid with respect to such Shares, the
Fund and/the Class or its distributor will
reimburse the Company on the amount of such
excess.
B. Distribution
(1) Upon notification by the Funds of the declaration
of any distribution to Shareholders, the Company
shall act as Dividend Disbursing Agent for the
Funds in accordance with the provisions of its
governing document and the then-current
Prospectus of the Fund. The Company shall
prepare and mail or credit income, capital gain,
or any other payments to Shareholders. As the
Dividend Disbursing Agent, the Company shall, on
or before the payment date of any such
distribution, notify the Custodian of the
estimated amount required to pay any portion of
said distribution which is payable in cash and
request the Custodian to make available
sufficient funds for the cash amount to be paid
out. The Company shall reconcile the amounts so
requested and the amounts actually received with
the Custodian on a daily basis. If a Shareholder
is entitled to receive additional Shares by
virtue of any such distribution or dividend,
appropriate credits shall be made to the
Shareholder's account, for certificated Funds
and/or Classes, delivered where requested; and
(2) The Company shall maintain records of account for
each Fund and Class and advise the Trust, each
Fund and Class and its Shareholders as to the
foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and
redemption directions and, if such redemption
requests comply with the procedures as may be
described in the Fund Prospectus or set forth in
Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The
Company shall notify the Funds on a daily basis
of the total amount of redemption requests
processed and monies paid to the Company by the
Custodian for redemptions.
(2) At the appropriate time upon receiving redemption
proceeds from the Custodian with respect to any
redemption, the Company shall pay or cause to be
paid the redemption proceeds in the manner
instructed by the redeeming Shareholders,
pursuant to procedures described in the then-
current Prospectus of the Fund.
(3) If any certificate returned for redemption or
other request for redemption does not comply with
the procedures for redemption approved by the
Fund, the Company shall promptly notify the
Shareholder of such fact, together with the
reason therefor, and shall effect such redemption
at the price applicable to the date and time of
receipt of documents complying with said
procedures.
(4) The Company shall effect transfers of Shares by
the registered owners thereof.
(5) The Company shall identify and process abandoned
accounts and uncashed checks for state escheat
requirements on an annual basis and report such
actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares
of each Fund, and/or Class, and maintain pursuant
to applicable rules of the Securities and
Exchange Commission ("SEC") a record of the total
number of Shares of the Fund and/or Class which
are authorized, based upon data provided to it by
the Fund, and issued and outstanding. The
Company shall also provide the Fund on a regular
basis or upon reasonable request with the total
number of Shares which are authorized and issued
and outstanding, but shall have no obligation
when recording the issuance of Shares, except as
otherwise set forth herein, to monitor the
issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such
Shares, which functions shall be the sole
responsibility of the Funds.
(2) The Company shall establish and maintain records
pursuant to applicable rules of the SEC relating
to the services to be performed hereunder in the
form and manner as agreed to by the Trust or the
Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number
(and whether such number has been
certified);
(b) Number of Shares held;
(c) Historical information regarding the
account, including dividends paid and date
and price for all transactions;
(d) Any stop or restraining order placed against
the account;
(e) Information with respect to withholding in
the case of a foreign account or an account
for which withholding is required by the
Internal Revenue Code;
(f) Any dividend reinvestment order, plan
application, dividend address and
correspondence relating to the current
maintenance of the account;
(g) Certificate numbers and denominations for
any Shareholder holding certificates;
(h) Any information required in order for the
Company to perform the calculations
contemplated or required by this Agreement.
(3) The Company shall preserve any such records
required to be maintained pursuant to the rules
of the SEC for the periods prescribed in said
rules as specifically noted below. Such record
retention shall be at the expense of the Company,
and such records may be inspected by the Fund at
reasonable times. The Company may, at its option
at any time, and shall forthwith upon the Fund's
demand, turn over to the Fund and cease to retain
in the Company's files, records and documents
created and maintained by the Company pursuant to
this Agreement, which are no longer needed by the
Company in performance of its services or for its
protection. If not so turned over to the Fund,
such records and documents will be retained by
the Company for six years from the year of
creation, during the first two of which such
documents will be in readily accessible form. At
the end of the six year period, such records and
documents will either be turned over to the Fund
or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund
periodically the following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and
outstanding in each state for "blue sky"
purposes as determined according to Proper
Instructions delivered from time to time by
the Fund to the Company;
(d) Shareholder lists and statistical
information;
(e) Payments to third parties relating to
distribution agreements, allocations of
sales loads, redemption fees, or other
transaction- or sales-related payments;
(f) Such other information as may be agreed upon
from time to time.
(2) The Company shall prepare in the appropriate
form, file with the Internal Revenue Service and
appropriate state agencies, and, if required,
mail to Shareholders, such notices for reporting
dividends and distributions paid as are required
to be so filed and mailed and shall withhold such
sums as are required to be withheld under
applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services
set forth above, the Company shall:
(a) Perform all of the customary services of a
transfer agent, dividend disbursing agent
and, as relevant, agent in connection with
accumulation, open-account or similar plans
(including without limitation any periodic
investment plan or periodic withdrawal
program), including but not limited to:
maintaining all Shareholder accounts,
mailing Shareholder reports and Prospectuses
to current Shareholders, withholding taxes
on accounts subject to back-up or other
withholding (including non-resident alien
accounts), preparing and filing reports on
U.S. Treasury Department Form 1099 and other
appropriate forms required with respect to
dividends and distributions by federal
authorities for all Shareholders, preparing
and mailing confirmation forms and
statements of account to Shareholders for
all purchases and redemptions of Shares and
other conformable transactions in
Shareholder accounts, preparing and mailing
activity statements for Shareholders, and
providing Shareholder account information;
and
(b) provide a system which will enable the Fund
to monitor the total number of Shares of
each Fund and/or Class sold in each state
("blue sky reporting"). The Fund shall by
Proper Instructions (i) identify to the
Company those transactions and assets to be
treated as exempt from the blue sky
reporting for each state and (ii) verify the
classification of transactions for each
state on the system prior to activation and
thereafter monitor the daily activity for
each state. The responsibility of the
Company for each Fund's and/or Class's state
blue sky registration status is limited
solely to the recording of the initial
classification of transactions or accounts
with regard to blue sky compliance and the
reporting of such transactions and accounts
to the Fund as provided above.
F. Other Duties
(1) The Company shall answer correspondence from
Shareholders relating to their Share accounts and
such other correspondence as may from time to
time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting
lists, mail proxy cards and other material
supplied to it by the Fund in connection with
Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and
certify the vote of the Shareholders;
(3) The Company shall establish and maintain
facilities and procedures for safekeeping of
stock certificates, check forms and facsimile
signature imprinting devices, if any; and for the
preparation or use, and for keeping account of,
such certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the
preparation, contents and distribution of their own
and/or their classes' Prospectus and for complying
with all applicable requirements of the Securities Act
of 1933, as amended (the "1933 Act"), the 1940 Act and
any laws, rules and regulations of government
authorities having jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient
supply of blank Share certificates and from time to
time shall renew such supply upon request of the
Company. Such blank Share certificates shall be
properly signed, manually or by facsimile, if
authorized by the Trust and shall bear the seal of the
Trust or facsimile thereof; and notwithstanding the
death, resignation or removal of any officer of the
Trust authorized to sign certificates, the Company may
continue to countersign certificates which bear the
manual or facsimile signature of such officer until
otherwise directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the
declaration of any dividend or distribution on account
of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two
of this Agreement, the Trust and/or the Fund agree to
pay the Company an annual maintenance fee for each
Shareholder account as agreed upon between the parties
and as may be added to or amended from time to time.
Such fees may be changed from time to time subject to
written agreement between the Trust and the Company.
Pursuant to information in the Fund Prospectus or
other information or instructions from the Fund, the
Company may sub-divide any Fund into Classes or other
sub-components for recordkeeping purposes. The
Company will charge the Fund the same fees for each
such Class or sub-component the same as if each were a
Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above,
the Trust and/or Fund agree to reimburse the Company
for out-of-pocket expenses or advances incurred by the
Company for the items agreed upon between the parties,
as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company
at the request or with the consent of the Trust and/or
the Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be
accrued by the Fund and shall be paid to the Company
no less frequently than monthly, and shall be paid
daily upon request of the Company. The Company will
maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as
may be adjusted from time to time, shall be dated and
signed by a duly authorized officer of the Trust
and/or the Funds and a duly authorized officer of the
Company.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under
this Section Two may be assigned by either party without the
written consent of the other party.
A. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective
permitted successors and assigns.
B. The Company may without further consent on the part of
the Trust subcontract for the performance hereof with
(A) State Street Bank and its subsidiary, Boston
Financial Data Services, Inc., a Massachusetts Trust
("BFDS"), which is duly registered as a transfer agent
pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934, as amended, or any succeeding
statute ("Section 17A(c)(1)"), or (B) a BFDS
subsidiary duly registered as a transfer agent
pursuant to Section 17A(c)(1), or (C) a BFDS
affiliate, or (D) such other provider of services duly
registered as a transfer agent under Section 17A(c)(1)
as Company shall select; provided, however, that the
Company shall be as fully responsible to the Trust for
the acts and omissions of any subcontractor as it is
for its own acts and omissions; or
C. The Company shall upon instruction from the Trust
subcontract for the performance hereof with an Agent
selected by the Trust, other than BFDS or a provider
of services selected by Company, as described in (2)
above; provided, however, that the Company shall in no
way be responsible to the Trust for the acts and
omissions of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate
and obtain custody services from a financial institution
that (i) meets the criteria established in Section 17(f) of
the 1940 Act and (ii) has been approved by the Board as
eligible for selection by the Company as a custodian (the
"Eligible Custodian"). The Company accepts such
appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the
Board, the Company shall:
A. evaluate the nature and the quality of the custodial
services provided by the Eligible Custodian;
B. employ the Eligible Custodian to serve on behalf of
the Trust as Custodian of the Trust's assets
substantially on the terms set forth as the form of
agreement in Exhibit 2;
C. negotiate and enter into agreements with the
Custodians for the benefit of the Trust, with the
Trust as a party to each such agreement. The Company
shall not be a party to any agreement with any such
Custodian;
D. establish procedures to monitor the nature and the
quality of the services provided by the Custodians;
E. continuously monitor the nature and the quality of
services provided by the Custodians; and
F. periodically provide to the Trust (i) written reports
on the activities and services of the Custodians; (ii)
the nature and amount of disbursement made on account
of the Trust with respect to each custodial agreement;
and (iii) such other information as the Board shall
reasonably request to enable it to fulfill its duties
and obligations under Sections 17(f) and 36(b) of the
1940 Act and other duties and obligations thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section
Three of this Agreement, the Trust and/or the Fund
agree to pay the Company an annual fee as agreed upon
between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A above,
the Trust and/or Fund agree to reimburse the Company
for out-of-pocket expenses or advances incurred by the
Company for the items agreed upon between the parties,
as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company
at the request or with the consent of the Trust and/or
the Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be
accrued by the Fund and shall be paid to the Company
no less frequently than monthly, and shall be paid
daily upon request of the Company. The Company will
maintain detailed information about the compensation
and out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as
may be adjusted from time to time, shall be dated and
signed by a duly authorized officer of the Trust
and/or the Funds and a duly authorized officer of the
Company.
Article 12. Representations.
The Company represents and warrants that it has obtained
all required approvals from all government or regulatory
authorities necessary to enter into this arrangement and to
provide the services contemplated in Section Three of this
Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company
under this Agreement, the Trust shall file with the
Company the following documents:
(1) A copy of the Charter and By-Laws of the Trust
and all amendments thereto;
(2) A copy of the resolution of the Board of the
Trust authorizing this Agreement;
(3) Specimens of all forms of outstanding Share
certificates of the Trust or the Funds in the
forms approved by the Board of the Trust with a
certificate of the Secretary of the Trust as to
such approval;
(4) All account application forms and other documents
relating to Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the
following documents:
(1) Each resolution of the Board of the Trust
authorizing the original issuance of each Fund's,
and/or Class's Shares;
(2) Each Registration Statement filed with the SEC
and amendments thereof and orders relating
thereto in effect with respect to the sale of
Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the
governing document and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board
authorizing officers to give Proper Instructions
to the Custodian and agents for fund accountant,
custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates
representing Shares of any Fund, accompanied by
Board resolutions approving such forms;
(6) Such other certificates, documents or opinions
which the Company may, in its discretion, deem
necessary or appropriate in the proper
performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and
existing and in good standing under the laws of
the State of Delaware.
(2) It is duly qualified to carry on its business in
the State of Delaware.
(3) It is empowered under applicable laws and by its
charter and by-laws to enter into and perform
this Agreement.
(4) All requisite corporate proceedings have been
taken to authorize it to enter into and perform
its obligations under this Agreement.
(5) It has and will continue to have access to the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement.
(6) It is in compliance with federal securities law
requirements and in good standing as a transfer
agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and
existing and in good standing under the laws of
its state of organization;
(2) It is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform its
obligations under this Agreement;
(3) All corporate proceedings required by said
Charter and By-Laws have been taken to authorize
it to enter into and perform its obligations
under this Agreement;
(4) The Trust is an open-end investment company
registered under the 1940 Act; and
(5) A registration statement under the 1933 Act will
be effective, and appropriate state securities
law filings have been made and will continue to
be made, with respect to all Shares of each Fund
being offered for sale.
Article 15. Standard of Care and Indemnification.
A. Standard of Care
The Company shall be held to a standard of reasonable
care in carrying out the provisions of this Contract.
The Company shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the
Trust) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to
such advice, provided that such action is not in
violation of applicable federal or state laws or
regulations, and is in good faith and without
negligence.
B. Indemnification by Trust
The Company shall not be responsible for and the Trust
or Fund shall indemnify and hold the Company,
including its officers, directors, shareholders and
their agents employees and affiliates, harmless
against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities
arising out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser,
Sub-adviser or other party contracted by or
approved by the Trust or Fund,
(2) The reliance on or use by the Company or its
agents or subcontractors of information, records
and documents in proper form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on
behalf of the Fund, its Shareholders or
investors regarding the purchase, redemption
or transfer of Shares and Shareholder
account information;
(b) are received by the Company from independent
pricing services or sources for use in
valuing the assets of the Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers
or other third parties contracted by or
approved by the Trust of Fund for use in the
performance of services under this
Agreement;
(d) have been prepared and/or maintained by the
Fund or its affiliates or any other person
or firm on behalf of the Trust.
(3) The reliance on, or the carrying out by the
Company or its agents or subcontractors of Proper
Instructions of the Trust or the Fund.
(4) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations
of any state that such Shares be registered in
such state or in violation of any stop order or
other determination or ruling by any federal
agency or any state with respect to the offer or
sale of such Shares in such state.
Provided, however, that the Company shall not be
protected by this Article 15.A. from liability
for any act or omission resulting from the
Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties of
failure to meet the standard of care set forth in
15.A. above.
C. Reliance
At any time the Company may apply to any officer of
the Trust or Fund for instructions, and may consult
with legal counsel with respect to any matter arising
in connection with the services to be performed by the
Company under this Agreement, and the Company and its
agents or subcontractors shall not be liable and shall
be indemnified by the Trust or the appropriate Fund
for any action reasonably taken or omitted by it in
reliance upon such instructions or upon the opinion of
such counsel provided such action is not in violation
of applicable federal or state laws or regulations.
The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers
of the Trust or the Fund, and the proper
countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained
in this Article 15 shall apply, upon the assertion of
a claim for which either party may be required to
indemnify the other, the party seeking indemnification
shall promptly notify the other party of such
assertion, and shall keep the other party advised with
respect to all developments concerning such claim.
The party who may be required to indemnify shall have
the option to participate with the party seeking
indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess
any claim or make any compromise in any case in which
the other party may be required to indemnify it except
with the other party's prior written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.
Should the Trust exercise its rights to terminate, all out-
of-pocket expenses associated with the movement of records
and materials will be borne by the Trust or the appropriate
Fund. Additionally, the Company reserves the right to
charge for any other reasonable expenses associated with
such termination. The provisions of Article 15 shall
survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written
agreement executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the
Company and the Trust may from time to time agree on such
provisions interpretive of or in addition to the provisions
of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any
such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto,
provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations
or any provision of the Charter. No interpretive or
additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this
Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of
the Commonwealth of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices
and other writings delivered or mailed postage prepaid to
the Trust at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to the Company at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to
such other address as the Trust or the Company may hereafter
specify, shall be deemed to have been properly delivered or
given hereunder to the respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an
original.
Article 22. Limitations of Liability of Trustees and
Shareholders of the Trust.
The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on
any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or
Shareholders of the Trust, but bind only the appropriate
property of the Fund, or Class, as provided in the
Declaration of Trust.
Article 23. Limitations of Liability of Trustees and
Shareholders of the Company.
The execution and delivery of this Agreement have been
authorized by the Trustees of the Company and signed by an
authorized officer of the Company, acting as such, and
neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of
this Agreement are not binding upon any of the Trustees or
Shareholders of the Company, but bind only the property of
the Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall
not be assignable with respect to the Trust or the Funds by
either of the parties hereto except by the specific written
consent of the other party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with
respect to the subject hereof whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by
the Trust, the Company shall upon termination of this
Agreement deliver to such successor agent at the office of
the Company all properties of the Trust held by it
hereunder. If no such successor agent shall be appointed,
the Company shall at its office upon receipt of Proper
Instructions deliver such properties in accordance with such
instructions.
In the event that no written order designating a successor
agent or Proper Instructions shall have been delivered to
the Company on or before the date when such termination
shall become effective, then the Company shall have the
right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, of its own selection,
having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than
$2,000,000, all properties held by the Company under this
Agreement. Thereafter, such bank or trust company shall be
the successor of the Company under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of
services hereunder or any damages resulting therefrom to the
Fund as a result of work stoppage, power or other mechanical
failure, natural disaster, governmental action,
communication disruption or other impossibility of
performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party
without the prior written consent of the other party, except
that either party may assign to a successor all of or a
substantial portion of its business, or to a party
controlling, controlled by, or under common control with
such party. Nothing in this Article 28 shall prevent the
Company from delegating its responsibilities to another
entity to the extent provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held
illegal, void or unenforceable, the balance shall remain in
effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf
under their seals by and through their duly authorized
officers, as of the day and year first above written.
ATTEST: INVESTMENT COMPANIES (listed on Exhibit
1)
/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President
Exhibit 1
Federated Stock Trust
Exhibit (10) under Form N-1A
Exhibit 5 under Item 601/Reg
SK
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTONPITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR.__________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)
MARIO SANTILLI, JR.
THEODORE M. HAMMER
December 15, 1994
Federated Stock Trust
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
You have requested our opinion in connection with the
registration by Federated Stock Trust ("Trust") of an additional
9,032,374 Shares of Beneficial Interest ("Shares") pursuant to
Post-effective Amendment No. 22 to the Trust's registration
statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 (File No. 2-75756). The subject Post-
effective Amendment will be filed pursuant to Paragraph (b) of
Rule 485 and become effective pursuant to said Rule immediately
upon filing.
As counsel we have participated in the organization of the
Trust and its registration under the Investment Company Act. We
have also participated in the preparation and filing of the
Trust's amended registration statement under the Securities Act
of 1933 referred to above. We have examined and are familiar
with the provisions of the written Declaration of Trust dated
December 30, 1981, ("Declaration of Trust"), the Bylaws of the
Trust and such other documents and records deemed relevant. We
have also reviewed questions of law and consulted with counsel
thereon as deemed necessary or appropriate by us for the purposes
of this opinion.
On the basis of the foregoing, it is our opinion that:
1. The Trust is duly organized and validly existing
pursuant to the Declaration of Trust.
2. The Shares which are currently being registered by the
Registration Statement referred to above may be legally and
validly issued from time to time in accordance with the
Declaration of Trust upon receipt of consideration sufficient to
comply with the provisions of Article III, Section 3, of the
Declaration of Trust and subject to compliance with the
Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and applicable state laws regulating the
sale of securities. Such Shares, when so issued, will be fully
paid and non-assessable.
3. Post-effective Amendment No. 22 does not contain
disclosures which would render it ineligible to become effective
pursuant to Paragraph (b) of Rule 485.
We hereby consent to the filing of this opinion as a part of
the Trust's registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933 and as a
part of any application or registration statement filed under the
securities laws of the States of the United States. We further
consent to the reference to this opinion and the reference to us
as counsel to the Trust in the prospectus, registration
statements and applications.
Very truly yours,
Houston, Houston & Donnelly
By: /s/ Thomas J. Donnelly
TJD:heh
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