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
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Pre-Effective Amendment No. .........................
Post-Effective Amendment No. 28.........................X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 23.......................................X
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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)
on pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
X on DECEMBER 31, 1997 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.
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky, LLP
2101 L Street, N.W.
Washington, D.C. 20037
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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.
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Prospectus Heading
(RULE 404(C) CROSS REFERENCE)
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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..................................General Information; Investment
Information; Performance Information;
Investment Objective; Investment Policies;
Investment Limitations.
Item 5. Management of the Trust.....................Trust Information; Management of the Trust;
Distribution of Shares; Administration of the
Trust; Brokerage Transactions.
Item 6. Capital Stock and Other
Securities..................................Dividends; Capital Gains; Shareholder
Information; Voting Rights; Tax Information;
Federal Income Tax; Pennsylvania Corporate
and Personal Property Taxes.
Item 7. Purchase of Securities Being
Offered.....................................Net Asset Value; Investing in the Trust;
Share Purchases; Minimum Investment Required;
What Shares Cost; Exchanging Securities for Trust Shares;
Confirmations and Account Statements; Retirement Plans;.
Item 8. Redemption or Repurchase....................Redeeming Shares; Telephone Redemption;
Written Requests; Accounts With Low Balances.
Item 9. Legal Proceedings...........................None.
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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;
About Federated Investors.
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; Other Services;
Shareholder Services Agreement.
Item 17. Brokerage Allocation........................Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered.....................................Purchasing Shares; Determining Net Asset Value;
Redeeming Shares; Exchanging Securities
for Trust 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........................To be filed by amendment.
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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, 1997, with the Securities and Exchange Commission
("SEC"). 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 or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information or to make inquiries about the Trust, contact the
Trust at the address listed in the back of this prospectus. The
Statement of Additional Information, material incorporated by
reference into this document, and other information regarding the
Trust is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated December 31, 1997
<PAGE>
TABLE OF CONTENTS
<PAGE>
SUMMARY OF TRUST EXPENSES
<PAGE>
FINANCIAL HIGHLIGHTS
<PAGE>
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 Board of Trustees (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 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.
AMERICAN DEPOSITARY RECEIPTS. The Trust may invest in American
depositary receipts ("ADRs") of foreign-domiciled companies. ADRs
are trust receipts issued by U.S. banks or trust companies
representing ownership interests in the equity securities of
these companies. ADRs are U.S. dollar-denominated and traded on
U.S. securities exchanges or over-the-counter. The value of ADRs
could be affected by changes in foreign currency exchange rates.
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 Trustees 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 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.
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.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. As a matter of
non-fundamental investment policy, the Trust may invest its assets in
securities of other investment companies as an efficient means of
carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees,
and, therefore, any investment by the Trust in shares of other
investment companies may be subject to such duplicate expenses.
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:
o 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;
o invest more than 5% of its total assets in the securities of one
issuer (except cash and cash items and U.S. government
securities);
o invest more than 5% of total assets in securities of issuers that
have records of less than three years of continuous operations;
o invest more than 10% of its total assets in securities subject to
restrictions on resale; or
o 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.
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.
AVERAGE DAILY ADVISORY FEE AS % OF
NET ASSETS AVERAGE DAILY NET ASSETS
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First $500 million 0.75%
Second $500 0.675%
Third $500 million 0.600 %
Fourth $500 million 0.525%
Over $2 billion 0.40%
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 1.00% 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.
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. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide
Scott B. Schermerhorn has been a portfolio manager of the Trust
since June 1996. Mr. Schermerhorn joined Federated Investors in 1996
as a Vice President of the Trust's investment adviser. From 1990
through 1996, Mr. Schermerhorn was a Senior Vice President and Senior
Investment Officer at J W Seligman & Co., Inc. Mr. Schermerhorn
received his M.B.A. in Finance and International Business from Seton
Hall University.
Michael P. Donnelly has been a portfolio manager of the Trust
since November 1997. Mr. Donnelly joined Federated in 1989 as an
Investment Analyst and has been a Vice President of the Trust's
adviser since 1994. He served as an Assistant Vice President of the
Trust's adviser from 1992 to 1994. Mr. Donnelly is a Chartered
Financial Analyst and received his M.B.A. from the University of
Virginia.
Both the Trust and the Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Trust and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Trust's shareholders and must place the
interests of shareholders ahead of the employees' own interest. Among
other things, the codes: require preclearance and periodic reporting
of personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Trust; prohibit purchasing securities in initial
public offerings; and prohibit taking profits on securities held for
less than sixty days. Violations of the codes are subject to review by
the Trustees, and could result in severe penalties.
DISTRIBUTION OF 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 subsidiary of
Federated Investors.
SHAREHOLDER SERVICES. The Trust has entered into a Shareholder
Services Agreement with Federated Shareholder Services, a subsidiary
of Federated Investors, under which the Trust may make payments up to
0.25% of the average daily net asset value of shares, computed at an
annual rate, to obtain certain personal services for shareholders and
provide maintenance of shareholder accounts ("shareholder services").
From time to time and for such periods as deemed appropriate, the
amount stated above may be reduced voluntarily.
Under the Shareholder Services Agreement, 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.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary
to operate the Trust. Federated Services Company provides these at an
annual rate which relates to the average aggregate daily net assets of
all funds advised by subsidiaries of Federated Investors as specified
below:
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS
0.15% on the first $250 million
0.125% on the next $250 million
0.10% on the next $250 million
0.075% on assets in excess of $750 million
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 Services Company may choose voluntarily to waive
a portion of its fee.
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 use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these
criteria, the Adviser may give consideration to those firms which have
sold or are selling shares of the 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
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 Shareholder Services
Company, c/o State Street Bank and Trust Company, Boston, MA;
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. Shares cannot be
purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number
listed on your account statement.
BY MAIL. To purchase shares of the Trust by mail, send a check
made payable to Federated Stock Trust to: Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. Orders
by mail are considered received after payment by check is
converted by the transfer agent's bank, State Street Bank and
Trust Company ("State Street Bank"), into federal funds. This is
generally the next business day after State Street Bank receives
the check.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the 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 financial intermediary
may be charged a service fee by that financial intermediary.
The net asset value is determined as of the close of trading (normally
4:00 p.m., Eastern time) on 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, Martin
Luther King 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.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions. In
addition, shareholders will receive periodic statements reporting all
account activity, including dividends paid. The Trust will not issue
share certificates.
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. Investors who redeem
shares through a financial intermediary may be charged a service fee
by that financial intermediary. 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. Proceeds from
redemption requests received on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted
should be directed to your shareholder services representative at the
telephone number listed on your account statement.
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.
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. Shareholders will be asked to provide in the request their
name, the Trust name, their 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 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
their signatures guaranteed by:
o a trust company or commercial bank whose deposits are insured by
the Bank Insurance Fund which is administered by the Federal
Deposit Insurance Corporation ("FDIC");
o a member firm of the New York, American, Boston, Midwest, or
Pacific Stock Exchanges;
o a savings bank or savings association whose deposits are insured
by the Savings Association Insurance Fund, which is administered
by the FDIC; or
o 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 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.
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, Donnelly and Meck, counsel to the Trust:
o the Trust is not subject to Pennsylvania corporate or personal
property taxes; and
o 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
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 SEC) 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, advertisements for the Trust may refer to ratings,
rankings, and other information in certain financial publications
and/or compare the Trust's performance to certain indices.
<PAGE>
ADDRESSES
Federated Stock Trust Federated Investors Tower
Pittsburgh, PA 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company P.O. Box 8600
Boston, MA 02266-8600
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, PA 15219
<PAGE>
FEDERATED STOCK TRUST
PROSPECTUS
A No-Load, Open-End, Diversified
Management Investment Company
December 31, 1997
FEDERATED SECURITIES CORP. [LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 313900102
8120102A (12/97)
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, 1997. This Statement is not a prospectus itself.
You may request a copy of a prospectus or a paper copy of this
Statement, if you have received it electronically, free of
charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated December 31, 1997
[GRAPHIC OMITTED]
Cusip 313900102
8120102B (12/97)
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION ABOUT THE TRUST 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
When-Issued And Delayed
Delivery Transactions 1
Portfolio Turnover 2
INVESTMENT LIMITATIONS 2
FEDERATED STOCK TRUST MANAGEMENT 4
Trust Ownership 8
Trustees Compensation 9
Trustee Liability 10
INVESTMENT ADVISORY SERVICES 10
Adviser to the Trust 10
Advisory Fees 10
OTHER SERVICES 10
Trust Administration 10
Custodian and Portfolio Recordkeeper 10
Transfer Agent 10
Independent Auditor 10
SHAREHOLDER SERVICES AGREEMENT 11
BROKERAGE TRANSACTIONS 11
PURCHASING SHARES 11
Conversion to Federal Funds 11
DETERMINING NET ASSET VALUE 12
Determining Market Value of Securities 12
REDEEMING SHARES 12
Redemption in Kind 12
Massachusetts Partnership Law 12
EXCHANGING SECURITIES FOR TRUST SHARES 13
Tax Consequences 13
TAX STATUS 13
The Trust's Tax Status 13
Shareholders' Tax Status 13
TOTAL RETURN 13
YIELD 14
PERFORMANCE COMPARISONS 14
ABOUT FEDERATED INVESTORS 15
<PAGE>
GENERAL INFORMATION ABOUT THE TRUST
Federated Stock 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:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
o the 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:
o Federal Land Banks;
o Central 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, 1997, and 1996, the portfolio turnover rates
were xx% and 55%, respectively.
INVESTMENT LIMITATIONS
The Trust will not change any of the investment limitations described
below without approval of shareholders, unless indicated otherwise
BUYING ON MARGIN
The Trust will purchase any securities on margin, except for
such credits as are necessary for the clearance of transactions.
SELLING SHORT
The Trust will not make short sales of securities.
BORROWING MONEY
The Trust will not borrow money except as a temporary measure
for extraordinary or emergency purposes and then (a) only in
amounts not in excess of 5% of the value of its total assets or
(b) in an amount up to one-third of the value of its total
assets including the amount borrowed in order to meet redemption
requests without immediately selling 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 where the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous.)
While any such borrowings are outstanding, no purchases of
investment securities will be made by the Trust.
PLEDGING ASSETS
The Trust will not pledge, mortgage or hypothecate its assets, except
that, to secure borrowings permitted by subparagraph (3) above,
it may pledge securities having a market value at the time of
pledge not exceeding 10% of the value of the Trust's total
assets.
INVESTING IN COMMODITIES OR MINERALS
The Trust will not purchase or sell commodities, commodity
contracts, oil, gas, or other mineral exploration or development
programs.
INVESTING IN REAL ESTATE
The Trust will not purchase or sell real estate, but this shall
not prevent the Trust from investing in Municipal Bonds secured by
real estate or interest therein.
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.
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.
PURCHASING SECURITIES OF OTHER ISSUERS
The Trust will not invest in securities issued by any other
investment company or investment trust except by purchase in the
open market where no commission or profit to a sponsor or dealer
results from such purchases other than the customary broker's
commission or except when such a purchase, though not made in
open market, is part of a plan of merger or consolidation.
DIVERSIFICATION OF INVESTMENTS
The Trust will not purchase the securities of any issuer (except
cash, cash instruments and securities issued or guaranteed by
the United States government, its agencies or instrumentalities)
if as a result more than 5% of its total assets would be
invested in the securities of such issuer.
DEALING IN PUTS AND CALLS
The Trust will not write, purchase or sell puts, call,
straddles or spreads or any combinations thereof.
INVESTING IN ISSUERS
The Trust will not purchase or retain the securities of any
issuer other than the securities of the Trust, if, to the
Trust's knowledge, those officers and Trustees of the Trust, or
of the adviser, who individually own beneficially more than 1/2
of 1% of the outstanding securities of such issuer, together own
beneficially more than 5% of such outstanding securities.
CONCENTRATION OF INVESTMENTS IN ONE INDUSTRY
The Trust will not invest more than 25% of the value of its
total assets in one industry.
ACQUIRING SECURITIES
The Trust may not acquire more than 10% of the voting securities
of any one issuer.
INVESTING IN NEW ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE TRUST
The Trust may not invest more than 5% of the value of the total assets
of the Trust in securities of issuers which have a record of less than
three years of continuous operation, including the operation of any
predecessor.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Trust may not invest in 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 the adviser or its affiliated
companies, may buy and hold substantial amounts of the voting
stock of a company, and all such stock may be voted together in
regard to the company's affairs In some cases, the Trust and
other investment companies advised by the adviser or its
affiliated companies holding such stock might collectively be
considered to be in control of such a company . Officers or
affiliates of the Trust might possibly become directors of
companies in which the Trust holds stock.
ISSUING SENIOR SECURITIES
The Trust will not issue senior securities except as permitted
by its investment objective, policies and limitations.
RESTRICTED SECURITIES
The Trust will not invest more than 10% of its net assets in
securities subject to restrictions on resale under the Securities
Act of 1933, except for commercial paper issued under Section 4
(2) of the Securities Act of 1933 and certain other restricted
securities which meet the criteria for liquidity as established
by the Trustees.
Except with respect to borrowing money, if any of the percentage
limitations set forth are 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
nor will the Trust be required to make any changes in its portfolio
holdings.
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. This representation may be changed without
shareholder vote to the extent permitted by the above restrictions.
<PAGE>
FEDERATED STOCK TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthrates,
present positions with Federated Stock Trust, and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.; Chief Executive Officer and
Director or Trustee of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, Executive Vice President of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh;
formerly, Senior Partner, Ernst & Young LLP; Director, MED 3000 Group,
Inc.; Director, Member of Executive Committee, University of
Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior
Vice-President, John R. Wood and Associates, Inc., Realtors; Partner
or Trustee in private real estate ventures in Southwest Florida;
formerly, President, Naples Property Management, Inc. and Northgate
Village Development Corporation; Director or Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
<PAGE>
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N
Park Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A.,
Western Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of
the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Retired from the law firm of Miller, Ament, Henny & Kochuba; Director
or Trustee of the Funds.
<PAGE>
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica & Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University and U.S.
Space Foundation; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy
and Technology, Federal Emergency Management Advisory Board and Czech
Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp. and Federated Global Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated Shareholder
Services Company, and Federated Shareholder Services; Director,
Federated Services Company; President or Executive Vice President of
the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Company.
<PAGE>
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive
Vice President and Secretary of the Funds; Treasurer of some of the
Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman
and Director, Federated Securities Corp.; President or Vice President
of some of the Funds; Director or Trustee of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in
the Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board
between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the
following investment companies: 111 Corcoran Funds; Arrow Funds;
Automated Government Money Trust; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S.
Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust;
Federated Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund:
2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income
Securities, Inc.; High Yield Cash Trust; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; RIMCO Monument Funds; Targeted Duration Trust;
Tax-Free Instruments Trust; The Planters Funds; The Virtus Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves;
Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; WesMark Funds; and World Investment Series, Inc.
TRUST OWNERSHIP
Officers and Trustees as a group own less than 1% of the Trust's
outstanding shares.
As of October 14, 1997, the following shareholder of record owned 5% or more
of the outstanding shares of the Trust: Charles Schwab & Co., Inc.,
San Francisco, CA, as record owner holding Trust shares for its clients,
owned approximately 2,336,011 shares (8.05%).
<PAGE>
<TABLE>
<CAPTION>
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
<S> <C> <C>
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies in the Fund
Thomas G. Bigley $1,626.97 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
John T. Conroy, Jr. $1,779.57 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund
William J. Copeland $1,779.57 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund
Glen R. Johnson $0 $0 for the Trust and
President and Trustee 8 other investment companies in the Fund
James E. Dowd $1,779.57 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund
Lawrence D. Ellis, M.D. $1,626.97 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
Edward L. Flaherty, Jr. $1,779.57 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund
Peter E. Madden $1,626.97 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
Gregor F. Meyer $1,626.97 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
John E. Murray, Jr., $1,626.97 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
Wesley W. Posvar $1,626.97 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
Marjorie P. Smuts $1,626.97 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund
</TABLE>
*Information is furnished for the fiscal year ended October 31, 1997.
#The aggregate compensation is provided for the Trust.
+The information is provided for the last calendar year.
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.
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, 1997, 1996, and 1995, the Adviser
earned $xxxxxx, $5,368,592, and $4,305,810, respectively, of which $0,
$xxxxxx and $xxxxxx, respectively, were waived.
OTHER SERVICES
TRUST ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Trust for a fee
described in the prospectus. From March 1, 1994, to March 1, 1996,
Federated Administrative Services, a subsidiary of Federated
Investors, served as the Fund's administrator. For purposes of this
Statement of Additional Information, Federated Services Company and
Federated Administrative Services may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended 1997,
1996, and 1995, the Administrators earned $xxxxxx, $559,347, and
$440,833, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company ("State Street Bank"), Boston, MA,
is custodian for the securities and cash of the Trust. Federated
Services Company, Pittsburgh, PA, provides certain accounting and
recordkeeping services with respect to the Trust's portfolio
investments. The fee paid for this services is based upon the level of
the Trust's average net assets for the period plus out-of-pocket
expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records. For its services, the transfer agent receives a
fee based on size, type, and number of accounts and transactions made
by shareholders.
INDEPENDENT AUDITOR
The independent auditors for the Trust are Ernst & Young LLP,
Pittsburgh, PA.
SHAREHOLDER SERVICES AGREEMENT
This arrangement permits the payment of fees to Federated Shareholder
Services and 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.
By adopting the Shareholder Services Agreement, the Trustees expect
that the Trust will benefit by: (1) providing personal services to
shareholders; (2) investing shareholder assets with a minimum of delay
and administrative detail; (3) enhancing shareholder record keeping
systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal period ending October 31, 1997, payments in the amount
of $xxxxxx were made pursuant to the Shareholder Services Agreement,
of which $xxxxxx was waived.
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: advice as to the advisability
of investing in securities; security analysis and reports; economic
studies; industry studies; receipt of quotations for portfolio
evaluations; and similar services. Research services provided by
brokers and dealers may be used by the Adviser or its affiliates in
advising the Trust 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. 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. For the fiscal years ended October 31, 1997, 1996, and 1995,
the Trust paid total brokerage commissions of $xxxxxx, $1,132,666, and
$549,947, respectively. Although investment decisions for the Trust
are made independently from those of the other accounts managed by the
Adviser, investments of the type the Trust may make may also be made
by those other accounts. When the Trust and one or more other accounts
managed by the Adviser are prepared to invest in, or desire to dispose
of, the same security, available investments or opportunities for
sales will be allocated in a manner believed by the Adviser to be
equitable to each. In some cases, this procedure may adversely affect
the price paid or received by the Trust or the size of the position
obtained or disposed of by the Trust. In other cases, however, it is
believed that coordination and the ability to participate in volume
transactions will be to the benefit of the Trust.
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:
o for equity securities and bonds and other fixed income
securities, according to the last sale price on a national securities
exchange, if available;
o in 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;
o for unlisted equity securities, the latest bid prices;
o for 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
o for 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.
REDEMPTION IN KIND
The Trust has elected to be governed by Rule 18f-1 of the
Investment Company Act of 1940 under which the Trust is obligated to
redeem shares for any one shareholder in cash only up to the lesser of
$250,000 or 1.00% of the Fund's net asset value during any 90-day
period.
Any redemption beyond this amount will also be in cash unless the
Trustees determine that payments should be in kind. In such a case,
the Trust will pay all or a portion of the remainder of the redemption
in portfolio instruments, valued in the same way as the Trust
determines net asset value. The portfolio instruments will be selected
in a manner that the Trustees deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders receiving their securities
and selling them before their maturity could receive less than the
redemption value of their securities and could incur certain
transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for acts or obligations of
the Trust. To protect shareholders of the Trust, the Trust has filed
legal documents with Massachusetts that expressly disclaim the
liability of shareholders for such 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 on behalf of the Trust.
In the unlikely event a shareholder of the Trust is held personally
liable for the Trust's obligations, the Trust is required by the
Declaration of Trust to use its property to protect or compensate the
shareholder. On request, the Trust will defend any claim made and pay
any judgment against a shareholder for any act or obligation of the
Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its
obligations to indemnify shareholders and pay judgments against them
from its assets.
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:
o derive at least 90% of its gross income from dividends, interest,
and gain from the sale of securities;
o invest in securities within certain statutory limits; and
o distribute 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, 1997, were xxxx%, xxxx%, and
xxxx%, respectively.
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, 1997,
was xxxx%.
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:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in Trust expenses; and
o various 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 Trust uses in advertising may
include:
O LIPPER 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 offering price 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.
o DOW 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.
o STANDARD & 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.
o MORNINGSTAR, 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.
o FIDUCIARY 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.
o SEI 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.
o MERCER 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.
Advertising and other promotional literature may include charts,
graphs and other illustrations using the Trust's returns, or returns
in general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Trust can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Trust may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by Trust portfolio managers and their
views and analysis on how such developments could affect the funds. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making--structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.
The company's disciplined security selection process is firmly rooted
in sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
These traders handle trillions of dollars in annual trading g volume.
In the equity sector, Federated Investors has more than 26 years'
experience. As of December 31, 1996, Federated Investors managed 31
equity funds totaling approximately $7.6 billion in assets across
growth, value, equity income, international, index and sector (i.e.
utility) styles. Federated's value-oriented management style combines
quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the
1970s.
J. Thomas Madden, Executive Vice President, oversees Federated
Investor's equity and high yield corporate bond management while
William D. Dawson, Executive Vice President, oversees Federated
Investor's domestic fixed income management. Henry A. Frantzen,
Executive Vice President, oversees the management of Federated
Investor's international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3.5 trillion to the
more than 6,000 funds available.*
*source: Investment Company Institute
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and
mutual funds for a variety of applications, including defined benefit
and defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.
BANK MARKETING
Other institutional clients include close relationships with more than
1,600 banks and trust organizations. Virtually all of the trust
divisions of the top 100 bank holding companies use Federated funds in
their clients' portfolios. The marketing effort to trust clients is
headed by Timothy C. Pillion, Senior Vice President, Bank Marketing &
Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated mutual funds are available to consumers through major
brokerage firms nationwide--we have over 2,200 broker/dealer and bank
broker/dealer relationships across the country--supported by more
wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service quality measurement.
The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION
<S> <C> <C>
Item 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements (To be filed by amendment.)
(b) Exhibits:
(1) Conformed copy of the Declaration of Trust of the Registrant; (13)
(2) Copy of the By-Laws of the Registrant as amended; (13)
(i) Copy of Amendment No. 1 to the By-Laws of the
Registrant dated February 17, 1984; (13)
(ii) Copy of Amendment No. 2 to the By-Laws
of the Registrant dated February 2, 1987;
(13) (iii) Copy of Amendment No. 3 to the
By-Laws of the Registrant dated August 25,
1988; (13)
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial Interest of the Registrant; (13)
(5) Conformed copy of Investment Advisory Contract of the Registrant; (13)
(6) (i) Conformed copy of the Distributor's Contract; (13)
(ii) The Registrant hereby incorporates
the conformed copy of the specimen
Mutual Funds Sales and Service
Agreement; Mutual Funds Service
Agreement; and Plan Trustee/Mutual
Funds Service Agreement from Item
24(b)(6) of the Cash Trust Series
II Registration Statement on Form
N-1A, filed with the Commission on
July 24,1995. (File Number
33-38550 and 811-2669).
(7) Not applicable;
(8) (i) Conformed copy of the Custodian Agreement of the Registrant; (12)
(ii) Conformed copy of Custodian Fee Schedule; +
(9) (i) Conformed copy of Amended and Restated Shareholder Services Agreement; +
(ii) Conformed Copy of Agreement for Fund Accounting Services, Administrative Services,
Shareholder Transfer Agency Services and Custody Services Procurement; +
(iii) The Registrant hereby incorporates
by reference the conformed copy of
the Shareholder Services
Sub-Contract between Fidelity and
Federated Shareholder Services
from Item 24(b)(9)(iii) of the
Federated GNMA Trust Registration
Statement on Form N-1A, filed wit
the Commission on March 25, 1996
(File Nos. 2-75670 and 811-3375).
(iv) The response described in Item
24(b)6(ii) are hereby incorporated by reference.
(10) Conformed copy of the Opinion and Consent of Counsel
regarding legality of securities registered; (12)
(11) Conformed copy of Consent of Independent Auditors; (14)
+ All exhibits have been filed electronically.
12. Response is incorporated by reference to Registrant's
Post-Effective Amendment No 23 on Form N-1A filed on December 27,
1994. (File Nos. 2-75756 and 811-3385)
13. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 25 on Form N-1A filed on December
21, 1995. (File Nos. 2-75756 and 811-3385)
14. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 27 on Form N-1A filed on December
24, 1996. (File Nos. 2-75756 and 811-3385)
</TABLE>
<PAGE>
(12) Not applicable;
(13) Conformed Copy of the Initial Capital
Understanding; (13) (14)Not applicable; (15)Not
applicable; (16) Copy of Schedule for Computation of
Fund Performance Data; (13) (17) Financial Data
Schedules; + (18) Not applicable; (19) Conformed
copy of Power of Attorney; (13)
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 OCTOBER 14, L997
Shares of beneficial interest
12,086
(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 "Federated Stock Trust Management"
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.
+ All exhibits have been filed electronically.
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)
13. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 25 on Form N-1A filed on December
21, 1995. (File Nos. 2-75756 and 811-3385)
<PAGE>
The remaining Officers of the investment adviser
are:
Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden
Senior Vice Presidents: Peter R. Anderson
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
J. Alan Minteer
Susan M. Nason
Mary Jo Ochson
Vice Presidents: J. Scott Albrecht
Joseph M. Balestrino
Randall S. Bauer
David F. Belton
David A. Briggs
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Marian R. Marinack
Sandra L. McInerney
Robert J. Ostrowski
Charles A. Ritter
Scott B. Schermerhorn
Frank Semack
Aash M. Shah
William F. Stotz
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Assistant Vice Presidents: Todd A. Abraham
Stefanie L. Bachhuber
Arthur J. Barry
Micheal W. Casey
Robert E. Cauley
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
Robert M. Marsh
Joseph M. Natoli
Keith J. Sabol
Michael W. Sirianni
Gregg S. Tenser
Secretary: Stephen A. Keen
Treasurer: Thomas R. Donahue
<PAGE>
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. McGonigle
Assistant Treasurer: Richard B. Fisher
The business address of each of the Officers of the
investment adviser is Federated Investors Tower,
Pittsburgh, Pennsylvania 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.
Item 29. PRINCIPAL UNDERWRITERS:
(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following
open-end investment companies, including the Registrant:
111 Corcoran Funds; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II;
Cash Trust Series, Inc.; DG Investor Series; Edward
D. Jones & Co. Daily Passport Cash Trust; Federated
Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated
ARMs Fund; Federated Equity Funds; Federated Equity
Income Fund, Inc.; Federated Fund for U.S.
Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income
Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated
Institutional Trust; Federated Insurance Series;
Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust;
Federated Short-Term U.S. Government Trust;
Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3
Years; Federated U.S. Government Securities Fund:
2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.;
First Priority Funds; Fixed Income Securities, Inc.;
High Yield Cash Trust; Independence One Mutual
Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed
Series Trust; Marshall Funds, Inc.; Money Market
Management, Inc.; Money Market Obligations Trust;
Money Market Obligations Trust II; Money Market
Trust; Municipal Securities Income Trust; Newpoint
Funds; Peachtree Funds; RIMCO Monument Funds;
SouthTrust Vulcan Funds; Star Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The
Planters Funds; The Virtus Funds; The Wachovia
Funds; The Wachovia Municipal Funds; Tower Mutual
Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury
Obligations; Vision Group of Funds, Inc.; and World
Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty
Term Trust, Inc.- 1999.
<PAGE>
<TABLE>
<CAPTION>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
<S> <C> <C>
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV 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
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
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
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
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
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales 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
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy 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
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Thomas A. Peters III 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
Richard A. Recker 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
George D. Riedel 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
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith 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
John A. Staley 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
Richard Suder 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
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John F. Wallin 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
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable.
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS:
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following
locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder Services Company Federated Investors Tower
("Transfer Agent and Dividend Pittsburgh, PA 15222-3779
Disbursing Agent")
<PAGE>
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 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 meetings by
shareholders.
Registrant hereby undertakes to furnish each person
to whom a prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and without charge.
<PAGE>
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, thereunto duly authorized,
in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
24th day of October, 1997.
FEDERATED STOCK TRUST
BY: /s/ Karen M. Brownlee
Karen M. Brownlee, Assistant Secretary
Attorney in Fact for John F. Donahue
October 24, 1997
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/ Karen M. Brownlee Attorney In Fact October 24, 1997
Karen M. Brownlee For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
John W. McGonigle* Executive Vice President,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
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
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 8(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
STATE STREET
DOMESTIC CUSTODY
FEE SCHEDULE
FEDERATED FUNDS
I. Custody Services
Maintain custody of fund assets. Settle portfolio purchases and sales.
Report buy and sell fails. Determine and collect portfolio
income. Make cash disbursements and report cash transactions.
Monitor corporate actions.
ANNUAL FEES
ASSET
Per Fund .25 Basis Points
Wire Fees $3.00 per wire
Settlements:
o Each DTC Transaction $5.00
o Each Federal Reserve Book Entry Transaction $3.75
o Each Repo Transaction (All Repo) $3.75
o Each Physical Transaction (NY/Boston, Private
Placement) $15.00
o Each Option Written/Exercised/Expired $18.75
Each Book Entry Muni (Sub-custody)
Transaction $15.00
o Government Paydowns $5.00
o Maturity Collections $8.00
o PTC Transactions $6.00
II. Special Services
Fees for activities of a non-recurring nature such as fund
consolidation or reorganization, extraordinary security shipments and
the preparation of special reports will be subject to negotiation.
<PAGE>
III. Balance Credit
MUNICIPAL FUNDS
A balance credit equal to 75% of the average demand deposit account
balance in the custodian account for the month billed times the
30 day T-Bill Rate on the last Monday of the month billed, will
be applied against the month's custodian bill.
TRANSFER AGENT
A balance credit equal to 100% of the average balance in the
transfer agent demand deposit accounts, less the reserve
requirement and applicable related expenses, times 75% of the 30
average Fed Funds Rate.
IV. Payment
The above fees will be charged against the funds' custodian checking
account thirty (30) days after the invoice is mailed to the funds'offices.
V. Term of Contract
The parties agree that this fee schedule shall become
effective January 1, 1997.
FEDERATED SERVICES COMPANY STATE STREET
BY: /S/ DOUGLAS L. HEIN BY: /S/ MICHAEL E. HAGERTY
TITLE: SENIOR VICE PRESIDENT TITLE: VICE PRESIDENT
DATE: APRIL 15, 1997 DATE: APRIL 8, 1997
-------------------------------- -------------
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
TRANSFER AGENCY SERVICES
AND
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of March 1, 1996, by and between those
investment companies listed on Exhibit 1 as may be amended from time
to time, having their principal office and place of business at
Federated Investors Tower, Pittsburgh, PA 15222-3779 (the "Investment
Company"), on behalf of the portfolios (individually referred to
herein as a "Fund" and collectively as "Funds") of the Investment
Company, and FEDERATED SERVICES COMPANY, a Pennsylvania corporation,
having its principal office and place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779 on behalf of
itself and its subsidiaries (the "Company").
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares");
WHEREAS, the Investment Company may desire to retain the Company
as fund accountant to provide fund accounting services (as herein
defined) including certain pricing, accounting and recordkeeping
services for each of the Funds, including any classes of shares issued
by any Fund ("Classes") if so indicated on Exhibit 1, and the Company
desires to accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as
its administrator to provide it with administrative services
(as herein defined), if so indicated on Exhibit, and the Company desires to
accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company
as its transfer agent and dividend disbursing agent to provide it with
transfer agency services (as herein defined) if so indicated on
Exhibit 1, and agent in connection with certain other activities, and
the Company desires to accept such appointment; and
WHEREAS, the Investment Company may desire to appoint the Company as its
agent to select, negotiate and subcontract for custodian services from an
approved list of qualified banks if so indicated on Exhibit 1, and
the Company desires to accept such appointment; and
NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained, and intending to be legally bound hereby,
the parties hereto agree as follows:
<PAGE>
SECTION ONE: FUND ACCOUNTING.
ARTICLE 1. APPOINTMENT.
The Investment Company hereby appoints the Company to provide
certain pricing and accounting services to the Funds, and/or the
Classes, for the period and on the terms set forth in this Agreement.
The Company accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided
in Article 3 of this Section.
ARTICLE 2. THE COMPANY'S DUTIES.
Subject to the supervision and control of the Investment
Company's Board of Trustees or Directors ("Board"), the Company will
assist the Investment Company with regard to fund accounting for the
Investment Company, and/or the Funds, and/or the Classes, and in
connection therewith undertakes to perform the following specific
services;
A. Value the assets of the Funds using: primarily, market
quotations, including the use of matrix pricing, supplied by the
independent pricing services selected by the Company in
consultation with the adviser, or sources selected by the
adviser, and reviewed by the board; secondarily, if a designated
pricing service does not provide a price for a security which the
Company believes should be available by market quotation, the
Company may obtain a price by calling brokers designated by the
investment adviser of the fund holding the security, or if the
adviser does not supply the names of such brokers, the Company
will attempt on its own to find brokers to price those
securities; thirdly, for securities for which no market price is
available, the Pricing Committee of the Board will determine a
fair value in good faith. Consistent with Rule 2a-4 of the 40
Act, estimates may be used where necessary or appropriate. The
Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside
sources, is to exercise reasonable care in the supervision of the
pricing agent. The Company is not the guarantor of the securities
prices received from such agents and the Company is not liable to
the Fund for potential errors in valuing a Fund's assets or
calculating the net asset value per share of such Fund or Class
when the calculations are based upon such prices. All of the
above sources of prices used as described are deemed by the
Company to be authorized sources of security prices. The Company
provides daily to the adviser the securities prices used in
calculating the net asset value of the fund, for its use in
preparing exception reports for those prices on which the adviser
has comment. Further, upon receipt of the exception reports
generated by the adviser, the Company diligently pursues
communication regarding exception reports with the designated
pricing agents;
B. Determine the net asset value per share of each Fund and/or
Class, at the time and in the manner from time to time determined
by the Board and as set forth in the Prospectus and Statement of
Additional Information ("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate realized capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and
financial records of the Investment Company, including for each
Fund, and/or Class, as required under Section 31(a) of the 1940
Act and the Rules thereunder in connection with the services
provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records to be maintained by Rule 31a-1 under the 1940 Act
in connection with the services provided by the Company. The
Company further agrees that all such records it maintains for the
Investment Company are the property of the Investment Company and
further agrees to surrender promptly to the Investment Company
such records upon the Investment Company's request;
G. At the request of the Investment Company, prepare various reports
or other financial documents in accordance with generally
accepted accounting principles as required by federal, state and
other applicable laws and regulations; and
H. Such other similar services as may be reasonably requested by
the Investment Company.
The foregoing, along with any additional services that the
Company shall agree in writing to perform for the Investment Company
under this Section One, shall hereafter be referred to as "Fund
Accounting Services."
ARTICLE 3. COMPENSATION AND ALLOCATION OF EXPENSES.
A. The Funds will compensate the Company for Fund Accounting
Services in accordance with the fees agreed upon from time
to time between the parties hereto. Such fees do not
include out-of-pocket disbursements of the Company for
which the Funds shall reimburse the Company. Out-of-pocket
disbursements shall include, but shall not be limited to,
the items agreed upon between the parties from time to
time.
B. The Fund and/or the Class, and not the Company, shall bear
the cost of: custodial expenses; membership dues in the
Investment Company Institute or any similar organization;
transfer agency expenses; investment advisory expenses;
costs of printing and mailing stock certificates,
Prospectuses, reports and notices; administrative expenses;
interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental
agencies; fees of Trustees or Directors of the Investment
Company; independent auditors expenses; legal and audit
department expenses billed to the Company for work
performed related to the Investment Company, the Funds, or
the Classes; law firm expenses; organizational expenses; or
other expenses not specified in this Article 3 which may be
properly payable by the Funds and/or Classes.
C. The compensation and out-of-pocket expenses attributable to
the Fund shall be accrued by the Fund and shall be paid to
the Company no less frequently than monthly, and shall be
paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and
out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a duly
authorized officer of the Investment Company and/or the Funds and
a duly authorized officer of the Company.
<PAGE>
E. The fee for the period from the effective date of this
Agreement with respect to a Fund or a Class to the end of
the initial month shall be prorated according to the
proportion that such period bears to the full month period.
Upon any termination of this Agreement before the end of
any month, the fee for such period shall be prorated
according to the proportion which such period bears to the
full month period. For purposes of determining fees payable
to the Company, the value of the Fund's net assets shall be
computed at the time and in the manner specified in the
Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person
or persons as the Company may believe to be particularly
suited to assist it in performing Fund Accounting Services.
Such person or persons may be affiliates of the Company,
third-party service providers, or they may be officers and
employees who are employed by both the Company and the
Investment Company; provided, however, that the Company
shall be as fully responsible to each Fund for the acts and
omissions of any such subcontractor as it is for its own
acts and omissions. The compensation of such person or
persons shall be paid by the Company and no obligation
shall be incurred on behalf of the Investment Company, the
Funds, or the Classes in such respect.
SECTION TWO: ADMINISTRATIVE SERVICES.
ARTICLE 4. APPOINTMENT.
The Investment Company hereby appoints the Company as
Administrator for the period on the terms and conditions set forth in
this Agreement. The Company hereby accepts such appointment and agrees
to furnish the services set forth in Article 5 of this Agreement in
return for the compensation set forth in Article 9 of this Agreement.
ARTICLE 5. THE COMPANY'S DUTIES.
As Administrator, and subject to the supervision and control of
the Board and in accordance with Proper Instructions (as defined
hereafter) from the Investment Company, the Company will provide
facilities, equipment, and personnel to carry out the following
administrative services for operation of the business and affairs of
the Investment Company and each of its portfolios:
A. prepare, file, and maintain the Investment Company's governing
documents and any amendments thereto, including the Charter
(which has already been prepared and filed), the By-laws and
minutes of meetings of the Board and Shareholders;
B. prepare and file with the Securities and Exchange
Commission and the appropriate state securities authorities
the registration statements for the Investment Company and
the Investment Company's shares and all amendments thereto,
reports to regulatory authorities and shareholders,
prospectuses, proxy statements, and such other documents
all as may be necessary to enable the Investment Company to
make a continuous offering of its shares;
<PAGE>
C. prepare, negotiate, and administer contracts (if any) on behalf
of the Investment Company with, among others, the Investment
Company's investment advisers and distributors, subject to any
applicable restrictions of the Board or the 1940 Act;
D. calculate performance data of the Investment Company for
dissemination to information services covering the investment
company industry;
E. prepare and file the Investment Company's tax returns;
F. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
G. perform internal audit examinations in accordance with a charter
to be adopted by the Company and the Investment Company;
H. assist with the design, development, and operation of the
Investment Company and the Funds;
I. provide individuals reasonably acceptable to the Board for
nomination, appointment, or election as officers of the
Investment Company, who will be responsible for the management of
certain of the Investment Company's affairs as determined by the
Investment Company's Board; and
J. consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs.
The foregoing, along with any additional services that the Company
shall agree in writing to perform for the Investment Company
under this Section Two, shall hereafter be referred to as
"Administrative Services."
ARTICLE 6. RECORDS.
The Company shall create and maintain all necessary books and
records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the
Investment Company act of 1940 and the rules thereunder, as the same
may be amended from time to time, pertaining to the Administrative
Services performed by it and not otherwise created and maintained by
another party pursuant to contract with the Investment Company. Where
applicable, such records shall be maintained by the Company for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
The books and records pertaining to the Investment Company which are
in the possession of the Company shall be the property of the
Investment Company. The Investment Company, or the Investment
Company's authorized representatives, shall have access to such books
and records at all times during the Company's normal business hours.
Upon the reasonable request of the Investment Company, copies of any
such books and records shall be provided promptly by the Company to
the Investment Company or the Investment Company's authorized
representatives.
<PAGE>
ARTICLE 7. DUTIES OF THE FUND.
The Fund assumes full responsibility for the preparation,
contents and distribution of its own offering document and for
complying with all applicable requirements the 1940 Act, the Internal
Revenue Code, and any other laws, rules and regulations of government
authorities having jurisdiction.
ARTICLE 8. EXPENSES.
The Company shall be responsible for expenses incurred in
providing office space, equipment, and personnel as may be necessary
or convenient to provide the Administrative Services to the Investment
Company, including the compensation of the Company employees who serve
as trustees or directors or officers of the Investment Company. The
Investment Company shall be responsible for all other expenses
incurred by the Company on behalf of the Investment Company, including
without limitation postage and courier expenses, printing expenses,
travel expenses, registration fees, filing fees, fees of outside
counsel and independent auditors, or other professional services,
organizational expenses, insurance premiums, fees payable to persons
who are not the Company's employees, trade association dues, and other
expenses properly payable by the Funds and/or the Classes.
ARTICLE 9. COMPENSATION.
For the Administrative Services provided, the Investment Company
hereby agrees to pay and the Company hereby agrees to accept as full
compensation for its services rendered hereunder an administrative fee
at an annual rate per Fund, as specified below.
The compensation and out of pocket expenses attributable to the
Fund shall be accrued by the Fund and paid to the Company no less
frequently than monthly, and shall be paid daily upon request of the
Company. The Company will maintain detailed information about the
compensation and out of pocket expenses by the Fund.
MAX. ADMIN. AVERAGE DAILY NET ASSETS
FEE OF THE FUNDS
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
(Average Daily Net Asset break-points are on a complex-wide basis)
<PAGE>
However, in no event shall the administrative fee received during
any year of the Agreement be less than, or be paid at a rate less than
would aggregate $125,000 per Fund and $30,000 per Class. The minimum
fee set forth above in this Article 9 may increase annually upon each
March 1 anniversary of this Agreement over the minimum fee during the
prior 12 months, as calculated under this agreement, in an amount
equal to the increase in Pennsylvania Consumer Price Index (not to
exceed 6% annually) as last reported by the U.S. Bureau of Labor
Statistics for the twelve months immediately preceding such
anniversary.
ARTICLE 10. RESPONSIBILITY OF ADMINISTRATOR.
A. The Company shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the
Investment Company in connection with the matters to which
this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this
Agreement. The Company shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the
Investment Company) on all matters, and shall be without
liability for any action reasonably taken or omitted
pursuant to such advice. Any person, even though also an
officer, director, trustee, partner, employee or agent of
the Company, who may be or become an officer, director,
trustee, partner, employee or agent of the Investment
Company, shall be deemed, when rendering services to the
Investment Company or acting on any business of the
Investment Company (other than services or business in
connection with the duties of the Company hereunder) to be
rendering such services to or acting solely for the
Investment Company and not as an officer, director,
trustee, partner, employee or agent or one under the
control or direction of the Company even though paid by the
Company.
B. The Company shall be kept indemnified by the Investment Company
and be without liability for any action taken or thing done by it
in performing the Administrative Services in accordance with the
above standards. In order that the indemnification provisions
contained in this Article 10 shall apply, however, it is
understood that if in any case the Investment Company may be
asked to indemnify or hold the Company harmless, the Investment
Company shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further
understood that the Company will use all reasonable care to
identify and notify the Investment Company promptly concerning
any situation which presents or appears likely to present the
probability of such a claim for indemnification against the
Investment Company. The Investment Company shall have the option
to defend the Company against any claim which may be the subject
of this indemnification. In the event that the Investment Company
so elects, it will so notify the Company and thereupon the
Investment Company shall take over complete defense of the claim,
and the Company shall in such situation initiate no further legal
or other expenses for which it shall seek indemnification under
this Article. The Company shall in no case confess any claim or
make any compromise in any case in which the Investment Company
will be asked to indemnify the Company except with the Investment
Company's written consent.
SECTION THREE: TRANSFER AGENCY SERVICES.
ARTICLE 11. TERMS OF APPOINTMENT.
Subject to the terms and conditions set forth in this Agreement,
the Investment Company hereby appoints the Company to act as, and the
Company agrees to act as, transfer agent and dividend disbursing agent
for each Fund's Shares, and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic
investment plan or periodic withdrawal program.
ARTICLE 12. DUTIES OF THE COMPANY.
The Company shall perform the following services in accordance
with Proper Instructions as may be provided from time to time by the
Investment Company as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the
purchase of shares and promptly deliver payment and
appropriate documentation therefore to the custodian of the
relevant Fund, (the "Custodian"). The Company shall notify
the Fund and the Custodian on a daily basis of the total
amount of orders and payments so delivered.
(2) Pursuant to purchase orders and in accordance with the
Fund's current Prospectus, the Company shall compute and
issue the appropriate number of Shares of each Fund and/or
Class and hold such Shares in the appropriate Shareholder
accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or
its agent requests a certificate, the Company, as Transfer
Agent, shall countersign and mail by first class mail, a
certificate to the Shareholder at its address as set forth
on the transfer books of the Funds, and/or Classes, subject
to any Proper Instructions regarding the delivery of
certificates.
(4) In the event that any check or other order for the purchase
of Shares of the Fund and/or Class is returned unpaid for
any reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited
to its account upon receipt of the check or other order,
promptly mail a debit advice to the Shareholder, and notify
the Fund and/or Class of its action. In the event that the
amount paid for such Shares exceeds proceeds of the
redemption of such Shares plus the amount of any dividends
paid with respect to such Shares, the Fund and/the Class or
its distributor will reimburse the Company on the amount of
such excess.
<PAGE>
B. Distribution
(1) Upon notification by the Funds of the declaration
of any distribution to Shareholders, the Company
shall act as Dividend Disbursing Agent for the
Funds in accordance with the provisions of its
governing document and the then-current Prospectus
of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments
to Shareholders. As the Dividend Disbursing Agent,
the Company shall, on or before the payment date
of any such distribution, notify the Custodian of
the estimated amount required to pay any portion
of said distribution which is payable in cash and
request the Custodian to make available sufficient
funds for the cash amount to be paid out. The
Company shall reconcile the amounts so requested
and the amounts actually received with the
Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of
any such distribution or dividend, appropriate
credits shall be made to the Shareholder's
account, for certificated Funds and/or Classes,
delivered where requested; and
(2) The Company shall maintain records of account for each Fund
and Class and advise the Investment Company, each Fund and
Class and its Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and
redemption directions and, if such redemption
requests comply with the procedures as may be
described in the Fund Prospectus or set forth in
Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The
Company shall notify the Funds on a daily basis of
the total amount of redemption requests processed
and monies paid to the Company by the Custodian
for redemptions.
(2) At the appropriate time upon receiving redemption proceeds
from the Custodian with respect to any redemption, the
Company shall pay or cause to be paid the redemption
proceeds in the manner instructed by the redeeming
Shareholders, pursuant to procedures described in the
then-current Prospectus of the Fund.
(3) If any certificate returned for redemption or
other request for redemption does not comply with
the procedures for redemption approved by the
Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason
therefor, and shall effect such redemption at the
price applicable to the date and time of receipt
of documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the
registered owners thereof.
(5) The Company shall identify and process abandoned accounts
and uncashed checks for state escheat requirements on an
annual basis and report such actions to the Fund.
<PAGE>
D. Recordkeeping
(1) The Company shall record the issuance of Shares of
each Fund, and/or Class, and maintain pursuant to
applicable rules of the Securities and Exchange
Commission ("SEC") a record of the total number of
Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the
Fund, and issued and outstanding. The Company
shall also provide the Fund on a regular basis or
upon reasonable request with the total number of
Shares which are authorized and issued and
outstanding, but shall have no obligation when
recording the issuance of Shares, except as
otherwise set forth herein, to monitor the
issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such
Shares, which functions shall be the sole
responsibility of the Funds.
(2) The Company shall establish and maintain records
pursuant to applicable rules of the SEC relating
to the services to be performed hereunder in the
form and manner as agreed to by the Investment
Company or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and
whether such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account,
including dividends paid and date and price for all
transactions;
(d) Any stop or restraining order placed against the
account;
(e) Information with respect to withholding in the
case of a foreign account or an account for which
withholding is required by the Internal Revenue
Code;
(f) Any dividend reinvestment order, plan
application, dividend address and correspondence
relating to the current maintenance of the
account;
(g) Certificate numbers and denominations for any
Shareholder holding certificates;
(h) Any information required in order for the
Company to perform the calculations contemplated
or required by this Agreement.
(3) The Company shall preserve any such records
required to be maintained pursuant to the rules of
the SEC for the periods prescribed in said rules
as specifically noted below. Such record retention
shall be at the expense of the Company, and such
records may be inspected by the Fund at reasonable
times. The Company may, at its option at any time,
and shall forthwith upon the Fund's demand, turn
over to the Fund and cease to retain in the
Company's files, records and documents created and
maintained by the Company pursuant to this
Agreement, which are no longer needed by the
Company in performance of its services or for its
protection. If not so turned over to the Fund,
such records and documents will be retained by the
Company for six years from the year of creation,
during the first two of which such documents will
be in readily accessible form. At the end of the
six year period, such records and documents will
either be turned over to the Fund or destroyed in
accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding
in each state for "blue sky" purposes as
determined according to Proper Instructions
delivered from time to time by the Fund to the
Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to
distribution agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon
from time to time.
(2) The Company shall prepare in the appropriate form,
file with the Internal Revenue Service and
appropriate state agencies, and, if required, mail
to Shareholders, such notices for reporting
dividends and distributions paid as are required
to be so filed and mailed and shall withhold such
sums as are required to be withheld under
applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services set forth
above, the Company shall:
(a) Perform all of the customary services of
a transfer agent, dividend disbursing
agent and, as relevant, agent in
connection with accumulation,
open-account or similar plans (including
without limitation any periodic
investment plan or periodic withdrawal
program), including but not limited to:
maintaining all Shareholder accounts,
mailing Shareholder reports and
Prospectuses to current Shareholders,
withholding taxes on accounts subject to
back-up or other withholding (including
non-resident alien accounts), preparing
and filing reports on U.S. Treasury
Department Form 1099 and other
appropriate forms required with respect
to dividends and distributions by federal
authorities for all Shareholders,
preparing and mailing confirmation forms
and statements of account to Shareholders
for all purchases and redemptions of
Shares and other conformable transactions
in Shareholder accounts, preparing and
mailing activity statements for
Shareholders, and providing Shareholder
account information; and
<PAGE>
(b) provide a system which will enable the
Fund to monitor the total number of
Shares of each Fund (and/or Class) sold
in each state ("blue sky reporting"). The
Fund shall by Proper Instructions (i)
identify to the Company those
transactions and assets to be treated as
exempt from the blue sky reporting for
each state and (ii) verify the
classification of transactions for each
state on the system prior to activation
and thereafter monitor the daily activity
for each state. The responsibility of the
Company for each Fund's (and/or Class's)
state blue sky registration status is
limited solely to the recording of the
initial classification of transactions or
accounts with regard to blue sky
compliance and the reporting of such
transactions and accounts to the Fund as
provided above.
F. Other Duties
(1) The Company shall answer correspondence from
Shareholders relating to their Share accounts and
such other correspondence as may from time to time
be addressed to the Company;
(2) The Company shall prepare Shareholder meeting
lists, mail proxy cards and other material
supplied to it by the Fund in connection with
Shareholder meetings of each Fund; receive,
examine and tabulate returned proxies, and certify
the vote of the Shareholders;
(3) The Company shall establish and maintain
facilities and procedures for safekeeping of stock
certificates, check forms and facsimile signature
imprinting devices, if any; and for the
preparation or use, and for keeping account of,
such certificates, forms and devices.
The foregoing, along with any additional services that the
Company shall agree in writing to perform for the Investment Company
under this Section Three, shall hereafter be referred to as "Transfer
Agency Services."
ARTICLE 13. DUTIES OF THE INVESTMENT COMPANY.
A. Compliance
The Investment Company or Fund assume full responsibility
for the preparation, contents and distribution of their own
and/or their classes' Prospectus and for complying with all
applicable requirements of the Securities Act of 1933, as
amended (the "1933 Act"), the 1940 Act and any laws, rules
and regulations of government authorities having
jurisdiction.
B. Share Certificates
The Investment Company shall supply the Company with a
sufficient supply of blank Share certificates and from time
to time shall renew such supply upon request of the
Company. Such blank Share certificates shall be properly
signed, manually or by facsimile, if authorized by the
Investment Company and shall bear the seal of the
Investment Company or facsimile thereof; and
notwithstanding the death, resignation or removal of any
officer of the Investment Company authorized to sign
certificates, the Company may continue to countersign
certificates which bear the manual or facsimile signature
of such officer until otherwise directed by the Investment
Company.
C. Distributions
The Fund shall promptly inform the Company of the
declaration of any dividend or distribution on account of any Fund's
shares.
ARTICLE 14. COMPENSATION AND EXPENSES.
A. Annual Fee
For performance by the Company pursuant to Section Three of
this Agreement, the Investment Company and/or the Fund
agree to pay the Company an annual maintenance fee for each
Shareholder account as agreed upon between the parties and
as may be added to or amended from time to time. Such fees
may be changed from time to time subject to written
agreement between the Investment Company and the Company.
Pursuant to information in the Fund Prospectus or other
information or instructions from the Fund, the Company may
sub-divide any Fund into Classes or other sub-components
for recordkeeping purposes. The Company will charge the
Fund the same fees for each such Class or sub-component the
same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the
Investment Company and/or Fund agree to reimburse the
Company for out-of-pocket expenses or advances incurred by
the Company for the items agreed upon between the parties,
as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company
and/or the Fund, will be reimbursed by the appropriate
Fund.
C. Payment
The compensation and out-of-pocket expenses shall be
accrued by the Fund and shall be paid to the Company no
less frequently than monthly, and shall be paid daily upon
request of the Company. The Company will maintain detailed
information about the compensation and out-of-pocket
expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a
duly authorized officer of the Investment Company and/or the
Funds and a duly authorized officer of the Company.
<PAGE>
SECTION FOUR: CUSTODY SERVICES PROCUREMENT.
ARTICLE 15. APPOINTMENT. The Investment Company hereby appoints
Company as its agent to evaluate and obtain custody services from a
financial institution that (i) meets the criteria established in
Section 17(f) of the 1940 Act and (ii) has been approved by the Board
as eligible for selection by the Company as a custodian (the "Eligible
Custodian"). The Company accepts such appointment.
ARTICLE 16. THE COMPANY AND ITS DUTIES.
Subject to the review, supervision and control of the Board, the
Company shall:
A. evaluate and obtain custody services from a financial
institution that meets the criteria established in Section
17(f) of the 1940 Act and has been approved by the Board as
being eligible for selection by the Company as an Eligible
Custodian;
B. negotiate and enter into agreements with Eligible Custodians
for the benefit of the Investment Company, with the
Investment Company as a party to each such agreement. The
Company may, as paying agent, be a party to any agreement
with any such Eligible Custodian;
C. establish procedures to monitor the nature and the quality
of the services provided by Eligible Custodians;
D. monitor and evaluate the nature and the quality of services
provided by Eligible Custodians;
E. periodically provide to the Investment Company (i) written
reports on the activities and services of Eligible
Custodians; (ii) the nature and amount of disbursements made
on account of the each Fund with respect to each custodial
agreement; and (iii) such other information as the Board
shall reasonably request to enable it to fulfill its duties
and obligations under Sections 17(f) and 36(b) of the 1940
Act and other duties and obligations thereof;
F. periodically provide recommendations to the Board to enhance
Eligible Custodian's customer services capabilities and
improve upon fees being charged to the Fund by Eligible
Custodian; and
The foregoing, along with any additional services that Company
shall agree in writing to perform for the Fund under this Section
Four, shall hereafter be referred to as "Custody Services
Procurement."
ARTICLE 17. FEES AND EXPENSES.
A. Annual Fee
For the performance of Custody Services Procurement by the
Company pursuant to Section Four of this Agreement, the
Investment Company and/or the Fund agree to compensate the
Company in accordance with the fees agreed upon from time to
time.
<PAGE>
B. Reimbursements
In addition to the fee paid under Section 11A above, the
Investment Company and/or Fund agree to reimburse the
Company for out-of-pocket expenses or advances incurred by
the Company for the items agreed upon between the parties,
as may be added to or amended from time to time. In
addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company
and/or the Fund, will be reimbursed by the appropriate
Fund.
C. Payment
The compensation and out-of-pocket expenses shall be
accrued by the Fund and shall be paid to the Company no
less frequently than monthly, and shall be paid daily upon
request of the Company. The Company will maintain detailed
information about the compensation and out-of-pocket
expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a
duly authorized officer of the Investment Company and/or the
Funds and a duly authorized officer of the Company.
ARTICLE 18. REPRESENTATIONS.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter
into this arrangement and to provide the services contemplated in
Section Four of this Agreement.
SECTION FIVE: GENERAL PROVISIONS.
ARTICLE 19. PROPER INSTRUCTIONS.
As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the
Board shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved.
Oral instructions will be deemed to be Proper Instructions if (a) the
Company reasonably believes them to have been given by a person
previously authorized in Proper Instructions to give such instructions
with respect to the transaction involved, and (b) the Investment
Company, or the Fund, and the Company promptly cause such oral
instructions to be confirmed in writing. Proper Instructions may
include communications effected directly between electro-mechanical or
electronic devices provided that the Investment Company, or the Fund,
and the Company are satisfied that such procedures afford adequate
safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
ARTICLE 20. ASSIGNMENT.
Except as provided below, neither this Agreement nor any of the
rights or obligations under this Agreement may be assigned by either
party without the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns.
B. With regard to Transfer Agency Services, the Company may without
further consent on the part of the Investment Company subcontract for the
performance of Transfer Agency Services with
<PAGE>
(1) its subsidiary, Federated Shareholder Service Company, a
Delaware business trust, which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the
Securities Exchange Act of 1934, as amended, or any
succeeding statute ("Section 17A(c)(1)"); or
(2) such other provider of services duly registered as a
transfer agent under Section 17A(c)(1) as Company shall
select.
The Company shall be as fully responsible to the Investment
Company for the acts and omissions of any subcontractor as it is for
its own acts and omissions.
C. With regard to Fund Accounting Services, Administrative
Services and Custody Procurement Services, the Company may
without further consent on the part of the Investment
Company subcontract for the performance of such services
with Federated Administrative Services, a wholly-owned
subsidiary of the Company.
D. The Company shall upon instruction from the Investment
Company subcontract for the performance of services under
this Agreement with an Agent selected by the Investment
Company, other than as described in B. and C. above;
provided, however, that the Company shall in no way be
responsible to the Investment Company for the acts and
omissions of the Agent.
ARTICLE 21. DOCUMENTS.
A. In connection with the appointment of the Company under this
Agreement, the Investment Company shall file with the Company the
following documents:
(1) A copy of the Charter and By-Laws of the Investment Company
and all amendments thereto;
(2) A copy of the resolution of the Board of the Investment
Company authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of
the Investment Company or the Funds in the forms approved by
the Board of the Investment Company with a certificate of
the Secretary of the Investment Company as to such approval;
(4) All account application forms and other documents relating
to Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Investment Company
authorizing the original issuance of each Fund's, and/or
Class's Shares;
(2) Each Registration Statement filed with the SEC and
amendments thereof and orders relating thereto in effect
with respect to the sale of Shares of any Fund, and/or
Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Investment Company;
(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Custodian and
agents for fund accountant, custody services procurement,
and shareholder recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares
of any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or
appropriate in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
ARTICLE 22. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;
(2) It is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;
(4) all requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement;
(5) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties
and obligations under this Agreement;
(6) it is in compliance with federal securities law requirements
and in good standing as an administrator and fund
accountant; and
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the
Company that:
(1) It is an investment company duly organized and existing and
in good standing under the laws of its state of
organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and
By-Laws have been taken to authorize it to enter into and
perform its obligations under this Agreement;
(4) The Investment Company is an open-end investment company
registered under the 1940 Act; and
(5) A registration statement under the 1933 Act will be
effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all
Shares of each Fund being offered for sale.
ARTICLE 23. STANDARD OF CARE AND INDEMNIFICATION.
A. Standard of Care
With regard to Sections One, Three and Four, the Company
shall be held to a standard of reasonable care in carrying
out the provisions of this Contract. The Company shall be
entitled to rely on and may act upon advice of counsel (who
may be counsel for the Investment Company) on all matters,
and shall be without liability for any action reasonably
taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or
state laws or regulations, and is in good faith and without
negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment
Company or Fund shall indemnify and hold the Company,
including its officers, directors, shareholders and their
agents, employees and affiliates, harmless against any and
all losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of or
attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser
or other party contracted by or approved by the Investment
Company or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in
proper form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of
the Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of
the Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other
third parties contracted by or approved by the
Investment Company of Fund for use in the performance
of services under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Investment Company or the Fund.
(4) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations
of any state that such Shares be registered in
such state or in violation of any stop order or
other determination or ruling by any federal
agency or any state with respect to the offer or
sale of such Shares in such state.
Provided, however, that the Company shall not be
protected by this Article 23.B. from liability for
any act or omission resulting from the Company's
willful misfeasance, bad faith, negligence or
reckless disregard of its duties or failure to
meet the standard of care set forth in 23.A.
above.
C. Reliance
At any time the Company may apply to any officer of the
Investment Company or Fund for instructions, and may
consult with legal counsel with respect to any matter
arising in connection with the services to be performed by
the Company under this Agreement, and the Company and its
agents or subcontractors shall not be liable and shall be
indemnified by the Investment Company or the appropriate
Fund for any action reasonably taken or omitted by it in
reliance upon such instructions or upon the opinion of such
counsel provided such action is not in violation of
applicable federal or state laws or regulations. The
Company, its agents and subcontractors shall be protected
and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Investment Company or the
Fund, and the proper countersignature of any former
transfer agent or registrar, or of a co-transfer agent or
co-registrar.
D. Notification
In order that the indemnification provisions contained in
this Article 23 shall apply, upon the assertion of a claim
for which either party may be required to indemnify the
other, the party seeking indemnification shall promptly
notify the other party of such assertion, and shall keep
the other party advised with respect to all developments
concerning such claim. The party who may be required to
indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim.
The party seeking indemnification shall in no case confess
any claim or make any compromise in any case in which the
other party may be required to indemnify it except with the
other party's prior written consent.
ARTICLE 24. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall be effective from March 1, 1996 and shall
continue until February 28, 2003 (`Term"). Thereafter, the Agreement
will continue for 18 month terms. The Agreement can be terminated by
either party upon 18 months notice to be effective as of the end of
such 18 month period. In the event, however, of willful misfeasance,
bad faith, negligence or reckless disregard of its duties by the
Company, the Investment Company has the right to terminate the
Agreement upon 60 days written notice, if Company has not cured such
willful misfeasance, bad faith, negligence or reckless disregard of
its duties within 60 days. The termination date for all original or
after-added Investment companies which are, or become, a party to this
Agreement. shall be coterminous. Investment Companies that merge or
dissolve during the Term, shall cease to be a party on the effective
date of such merger or dissolution.
<PAGE>
Should the Investment Company exercise its rights to terminate,
all out-of-pocket expenses associated with the movement of records and
materials will be borne by the Investment Company or the appropriate
Fund. Additionally, the Company reserves the right to charge for any
other reasonable expenses associated with such termination. The
provisions of Articles 10 and 23 shall survive the termination of this
Agreement.
ARTICLE 25. AMENDMENT.
This Agreement may be amended or modified by a written agreement
executed by both parties.
ARTICLE 26. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, the Company
and the Investment Company may from time to time agree on such
provisions interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general
tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be
annexed hereto, PROVIDED that no such interpretive or additional
provisions shall contravene any applicable federal or state
regulations or any provision of the Charter. No interpretive or
additional provisions made as provided in the preceding sentence shall
be deemed to be an amendment of this Agreement.
ARTICLE 27. GOVERNING LAW.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth
of Massachusetts
ARTICLE 28. NOTICES.
Except as otherwise specifically provided herein, Notices and
other writings delivered or mailed postage prepaid to the Investment
Company at Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, or to the Company at Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779, or to such other address as the
Investment Company or the Company may hereafter specify, shall be
deemed to have been properly delivered or given hereunder to the
respective address.
ARTICLE 29. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original. ARTICLE 30.
LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE COMPANY.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Company and signed by an authorized officer of
the Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or Shareholders of
the Company, but bind only the appropriate property of the Fund, or
Class, as provided in the Declaration of Trust.
ARTICLE 31. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written.
<PAGE>
ARTICLE 32. SUCCESSOR AGENT.
If a successor agent for the Investment Company shall be
appointed by the Investment Company, the Company shall upon
termination of this Agreement deliver to such successor agent at the
office of the Company all properties of the Investment Company held by
it hereunder. If no such successor agent shall be appointed, the
Company shall at its office upon receipt of Proper Instructions
deliver such properties in accordance with such instructions.
In the event that no written order designating a successor agent
or Proper Instructions shall have been delivered to the Company on or
before the date when such termination shall become effective, then the
Company shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the 1940 Act, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown
by its last published report, of not less than $2,000,000, all
properties held by the Company under this Agreement. Thereafter, such
bank or trust company shall be the successor of the Company under this
Agreement.
ARTICLE 33. FORCE MAJEURE.
The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a result
of work stoppage, power or other mechanical failure, natural disaster,
governmental action, communication disruption or other impossibility
of performance.
ARTICLE 34. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the
prior written consent of the other party, except that either party may
assign all of or a substantial portion of its business to a successor,
or to a party controlling, controlled by, or under common control with
such party. Nothing in this Article 34 shall prevent the Company from
delegating its responsibilities to another entity to the extent
provided herein.
ARTICLE 35. SEVERABILITY.
In the event any provision of this Agreement is held illegal,
void or unenforceable, the balance shall remain in effect.
<PAGE>
ARTICLE 36. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF
THE INVESTMENT COMPANY.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Investment Company and signed by an authorized
officer of the Investment Company, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees
or Shareholders of the Investment Company, but bind only the property
of the Fund, or Class, as provided in the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in their names and on their behalf under their seals by
and through their duly authorized officers, as of the day and year
first above written.
INVESTMENT COMPANIES
(LISTED ON EXHIBIT 1)
By: /S/ S. ELLIOTT COHAN
S. Elliott Cohan
Assistant Secretary
FEDERATED SERVICES COMPANY
By: /S/ THOMAS J. WARD
Thomas J. Ward
Secretary
<PAGE>
EXHIBIT 1
CONTRACT
DATE INVESTMENT COMPANY
Portfolios
Classes
March 1, 1996 Federated Stock Trust FEDERATED SERVICES COMPANY
provides the following services:
Fund Accounting
Administrative Services
Transfer Agency Services
Custody Services Procurement
Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AMENDED AND RESTATED
SHAREHOLDER SERVICES AGREEMENT
THIS AGREEMENT, amended and restated as of the first day of
September, 1995, (originally made and enterered into 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 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.
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 ("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
<PAGE>
(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.
<PAGE>
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)
Attest: /S/JOHN W. MCGONIGLE By: /S/JOHN F. DONAHUE
John W. McGonigle John F. Donahue
Secretary Chairman
Federated Shareholder Services
Attest: /S/JOHN W. MCGONIGLE By: /S/GLEN R. JOHNSON
Secretary President
<PAGE>
EXHIBIT 1
Federated Stock Trust
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<FISCAL-YEAR-END> Oct-31-1996
<PERIOD-END> Oct-31-1996
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<NUMBER-OF-SHARES-REDEEMED> 6,474,281
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