Reg. No. 333-30676
811-3385
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FEDERATED STOCK TRUST
(Exact Name of Registrant as Specified in Charter)
(800) 341-7400
(Area Code and Telephone Number)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
JOHN W. MCGONIGLE, ESQUIRE
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
Copies to:
Amanda J. Reed, Esquire C. Todd Gibson, Esquire
Associate Corporate Counsel Associate Corporate Counsel
Federated Investors, Inc. Federated Investors, Inc.
Federated Investors Tower Federated Investors Tower
1001 Liberty Avenue 1001 Liberty Avenue
Pittsburgh, PA 15222-3779 Pittsburgh, PA 15222-3779
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, NW
Washington, DC 20037
Title of Securities Being Registered: shares of beneficial interest of
Federated Stock Trust.
Approximate Date of Proposed Public Offering: As soon as possible after
the effective date of this Registration Statement.
No filing fee is required under the Securities Act of 1933, as amended, because
an indefinite number of shares of beneficial interest have previously been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a) may determine.
2
WCT EQUITY FUND
A PORTFOLIO OF WCT FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
Dear Shareholder:
The Board of Trustees and management of the WCT Funds are pleased to
submit for your vote a proposal to transfer all of the assets of the WCT Equity
Fund (the "WCT Equity Fund") to Federated Stock Trust (the "Federated Fund"), a
mutual fund advised by Federated Investment Management Company. The Federated
Fund has an investment whereby it seeks to provide growth of income and capital
by investing primarily in common stocks of high quality companies. The WCT
Equity Fund's investment objective is to provide long-term capital appreciation,
which it pursues by investing in value-oriented common and preferred stocked of
large and medium sized companies with market capitalizations in excess of $1.5
billion. Despite the differences in fundamental objectives, both funds are
currently managed using the "value" style of investing, selecting securities
that generally have a comparatively low volatility in share price relative to
the overall equity market and which may provide relatively high dividend income.
As part of the transaction, you would receive shares of the Federated Fund equal
in value to your shares in the WCT Equity Fund.
The Board of Trustees of WCT Funds, as well as West Coast Trust
Company, Inc., the WCT Equity Fund's investment adviser, and Edgewood Services,
Inc., the WCT Equity Fund's distributor, believe the proposed Agreement and Plan
of Reorganization is in the best interests of WCT Equity Fund shareholders for
the following reasons:
--The merger of the WCT Equity Fund into the Federated Fund may provide
operating efficiencies as a result of the significantly greater size
of the Federated Fund which were not available to WCT Equity Fund
shareholders due to the smaller size of the WCT Equity Fund.
Your vote on the transaction is critical to its success. The transfer
will be completed only if approved by a majority of all of the WCT Equity Fund's
outstanding shares on the record date voted in person or represented by proxy.
We hope you will participate by casting your vote in person, or by proxy if you
are unable to attend the meeting. Please read the enclosed prospectus/proxy
statement carefully before you vote.
THE BOARD OF TRUSTEES BELIEVES THAT THE TRANSACTION IS IN THE BEST
INTERESTS OF THE WCT EQUITY FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR ITS APPROVAL.
Thank you for your prompt attention and participation.
Sincerely,
/S/ EDWARD C. GONZALES
Edward C. Gonzales
President
WCT EQUITY FUND
A PORTFOLIO OF WCT FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF WCT EQUITY FUND:
A Special Meeting of Shareholders of WCT Equity Fund, a portfolio of
WCT Funds (the "WCT Equity Fund") will be held at 2:00 p.m. on April 27, 2000,
at: 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010, for the following
purposes:
1. To approve or disapprove a proposed Agreement and Plan of
Reorganization between the WCT Equity Fund and Federated Stock Trust (the
"Federated Fund"), whereby the Federated Fund would acquire all of the assets of
the WCT Equity Fund in exchange for the Federated Fund's Shares to be
distributed PRO RATA by the WCT Equity Fund to the holders of its shares in
complete liquidation of the WCT Equity Fund; and
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Dated: March 24, 2000 By Order of the Board of Trustees,
/S/ JOHN W. MCGONIGLE
John W. McGonigle
Secretary
Shareholders of record at the close of business on March 7, 2000 are
entitled to vote at the meeting. Whether or not you plan to attend the meeting,
please sign and return the enclosed proxy card. Your vote is important.
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO SAVE THE EXPENSE OF FURTHER
MAILINGS, PLEASE MARK YOUR PROXY CARD, SIGN IT, AND RETURN IT IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY
REVOKE YOUR PROXY AT ANY TIME AT OR BEFORE THE MEETING OR VOTE IN PERSON IF YOU
ATTEND THE MEETING.
27
PROSPECTUS/PROXY STATEMENT
MARCH 24, 2000
Acquisition of the Assets of
WCT EQUITY FUND,
a portfolio of
WCT FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Telephone Number: 1-888-592-8386
By and in exchange for shares of
FEDERATED STOCK TRUST
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-245-5051
This Prospectus/Proxy Statement describes the proposed Agreement and
Plan of Reorganization (the "Plan") whereby Federated Stock Trust, a
Massachusetts business trust (the "Federated Fund"), would acquire all of the
assets of WCT Equity Fund, a portfolio of WCT Funds, a Massachusetts business
trust (the "WCT Equity Fund"), in exchange for the Federated Fund's shares to be
distributed PRO RATA by the WCT Equity Fund to the holders of its shares, in
complete liquidation of the WCT Equity Fund. As a result of the Plan, each
shareholder of the WCT Equity Fund will become the owner of the Federated Fund's
shares having a total net asset value equal to the total net asset value of his
or her holdings in the WCT Equity Fund.
THE BOARD OF TRUSTEES OF THE WCT FUNDS UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
Each of the Federated Fund and the WCT Equity Fund is a
diversified portfolio of securities of an open-end management investment
company. The Federated Fund's investment objective is to provide growth of
income and capital by investing primarily in common stocks of high quality
companies. The WCT Equity Fund's investment objective is to provide long-term
capital appreciation, which it pursues by investing in value-oriented common and
preferred stocks of large and medium-sized companies with market capitalizations
in excess of $1.5 billion. For a comparison of the investment policies of the
Federated Fund and the WCT Equity Fund, see "Summary - Investment Objectives,
Policies and Limitations."
This Prospectus/Proxy Statement should be retained for future
reference. It sets forth concisely the information about the Federated Fund that
a prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the Prospectus of the Federated Fund dated December
31, 1999, which is incorporated herein by reference. Statements of Additional
Information for the Federated Fund dated December 31, 1999 (relating to the
Federated Fund's Prospectus of the same date) and March 24, 2000 (relating to
this Prospectus/Proxy Statement) and the Annual Report to Shareholders for the
fiscal year ended October 31, 1999, all containing additional information, have
been filed with the Securities and Exchange Commission and are incorporated
herein by reference. Copies of the Statements of Additional Information and the
Annual Report may be obtained without charge by writing or calling the Federated
Fund at the address and telephone number shown above.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES, OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
i
TABLE OF CONTENTS
PAGE NO.
SUMMARY OF EXPENSES.................................................. 1
SUMMARY.............................................................. 3
About the Proposed Reorganization................................. 3
Investment Objectives, Policies and Limitations................... 4
Advisory and Other Fees........................................... 6
Distribution Arrangements......................................... 8
Purchase, Exchange and Redemption Procedures...................... 10
Dividends......................................................... 12
Tax Consequences.................................................. 12
RISK FACTORS......................................................... 13
INFORMATION ABOUT THE REORGANIZATION................................. 14
Background and Reasons for the Proposed Reorganization............ 14
Description of the Plan of Reorganization......................... 15
Description of Federated Fund Shares.............................. 16
Federal Income Tax Consequences................................... 17
Comparative Information on Shareholder Rights and Obligations..... 18
Capitalization.................................................... 21
INFORMATION ABOUT THE FEDERATED FUND, THE WCT EQUITY FUND AND THE WCT
FUNDS............................................................. 21
Federated Stock Trust............................................. 21
WCT Equity Fund, a portfolio of WCT Funds......................... 23
VOTING INFORMATION................................................... 23
Outstanding Shares and Voting Requirements........................ 24
Dissenter's Right of Appraisal.................................... 26
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY........... 26
AGREEMENT AND PLAN OF REORGANIZATION -- EXHIBIT A.................... A-1
SUMMARY OF EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the WCT Equity Fund and the Federated Fund's Shares.
FEDERATED WCT FEDERATED
FUND EQUITY PRO FORMA
FUND COMBINED
------------- ----------- ------------
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR
INVESTMENT
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage of None 4.50% None
offering price)...................
ANNUAL OPERATING EXPENSES (BEFORE
WAIVER/ REIMBURSEMENTS) (1)
EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS (AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Management Fee (2).................. 0.66% 0.75% 0.66%
Distribution (12b-1) Fees (3)....... None 0.25% None
---
Shareholder Services Fee (4)........ 0.25% 0.25% 0.25%
Other Expenses...................... 0.14% 0.44% 0.14%
Total Annual Operating 1.05% 1.69% 1.05%
Expenses............................
- ---------------------
(1)Although not contractually obligated to do so, the shareholder services
provider waived certain amounts during the year ended October 31, 1999 for
the Federated Fund and for the WCT Equity Fund. These are shown below along
with the net expenses the Federated Fund and WCT Equity Fund ACTUALLY PAID
for the year ending October 31, 1999. In addition, the Federated Pro Forma
Combined reflects the expenses which are anticipated to be paid by the
Federated Fund's Shares following the proposed transfer of assets from WCT
Equity Fund into the Federated Fund.
Federated WCT Equity Federated
Fund Fund Pro Forma
Combined
------------- ------------ -----------
Total Waivers of Fund Expenses 0.10% 0.62% 0.10%
Total Actual Annual Fund Operating 0.95% 1.07% 0.95%
Expenses
(after waivers)
(2) The adviser for WCT Equity Fund voluntarily waived a portion of its
management fee. The adviser can terminate this voluntary waiver at any time.
The management fee paid by the WCT Equity Fund (after voluntary waiver) was
0.50%, for the year ended October 31, 1999. The maximum management fee for
the Federated Fund is 0.75% of the first $500 million in average daily net
assets (ADNA); 0.675% of the second $500 million in ADNA; 0.60% of the third
$500 million in ADNA; 0.525% of the fourth $500 million in ADNA; and 0.40%
of ADNA in excess of $2 billion.
(3) The distributor waived the 0.25% distribution fee for the WCT Equity Fund.
The distributor can terminate this voluntary waiver at any time in its sole
discretion. The distribution fee paid by the WCT Equity Fund was 0.00% for
the fiscal year ended October 31, 1999.
(4) The shareholder services provider voluntarily waived 0.10% of the 0.25%
shareholder services fee for the Federated Fund and 0.12% of the 0.25%
shareholder services fee for the WCT Equity Fund. The shareholder service
provider can terminate this voluntary waiver at any time in its sole
discretion. The shareholder services fees paid by the Federated Fund and the
WCT Equity Fund were 0.15% and 0.13%, respectively, for the fiscal year
ended October 31, 1999.
EXAMPLE
This following Example is intended to help you compare the cost of
investing in the WCT Equity Fund with the cost of investing in the Federated
Fund.
The Example assumes that you invest $10,000 in each fund for the time periods
indicated and then redeem all of your Shares at the end of those periods. The
Federated Pro Forma Combined Example assumes that you invest $10,000 in the
Federated Fund after the transfer of assets from the WCT Equity Fund into the
Federated Fund. The Example assumes that your investment has a 5% return each
year and that the Federated Fund, WCT Equity Fund and Federated Pro Forma
Combined operating expenses are BEFORE WAIVERS as shown above in the Table and
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 year 3 5 years 10 years
years
-------- ------- -------- ---------
Federated Fund........................ $107 $334 $579 $1,283
WCT Equity Fund....................... $614 $959 $1,326 $2,358
Federated Pro Forma Combined.......... $107 $334 $579 $1,283
SUMMARY
This summary is qualified in its entirety by reference to the
additional information contained elsewhere in this Prospectus/Proxy Statement,
the Prospectus of the Federated Fund dated December 31, 1999, the Statement of
Additional Information of the Federated Fund dated December 31, 1999, the
Prospectus of the WCT Equity Fund dated December 31, 1999, the Statement of
Additional Information of the WCT Equity Fund dated December 31, 1999, and the
Plan, a copy of which is attached to this Prospectus/Proxy Statement as EXHIBIT
A.
ABOUT THE PROPOSED REORGANIZATION
The Board of Trustees of the WCT Equity Fund has voted to recommend
approval of the Plan to holders of the shares of the WCT Equity Fund whereby the
Federated Fund would acquire all of the assets of the WCT Equity Fund in
exchange for the Federated Fund's shares to be distributed PRO RATA by the WCT
Equity Fund to its shareholders in complete liquidation and dissolution of the
WCT Equity Fund (the "Reorganization"). As a result of the Reorganization, each
shareholder of the WCT Equity Fund will become the owner of the Federated Fund's
shares having a total net asset value equal to the total net asset value of his
or her holdings in the WCT Equity Fund on the date of the Reorganization, i.e.,
the Closing Date (as hereinafter defined).
As a condition to the Reorganization, the Federated Fund and the WCT
Equity Fund will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), so that no gain or loss
will be recognized by either the Federated Fund or the WCT Equity Fund or the
shareholders of the WCT Equity Fund. The tax basis of the Federated Fund's
shares received by WCT Equity Fund shareholders will be the same as the tax
basis of their shares in the WCT Equity Fund. After the acquisition is
completed, the WCT Equity Fund will be dissolved.
INVESTMENT OBJECTIVES, POLICIES AND LIMITATIONS
INVESTMENT INFORMATION - FEDERATED FUND
The investment objective of the Federated Fund is to provide growth of
income and capital. This investment objective may not be changed without the
affirmative vote of a majority of the outstanding voting securities of the
Federated Fund, as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). The Federated Fund pursues its investment objective by
investing in VALUE-ORIENTED equity securities of companies that are generally
leaders in their industries, are characterized by sound management and have the
ability to finance expected growth. The Federated Fund's holdings ordinarily
will be in large capitalization companies that are in the top 25% of their
industries with regard to revenues. The Federated Fund limits its exposure to
each business sector that comprises more than 5% of the Standard & Poor's 500
Index ("Index"), so that its allocation to a sector will not be less than 50%
nor more than 200% of the Index's allocation to that sector. The Federated Fund
also invests in American Depositary Receipts ("ADRs"). Unless otherwise
designated, the investment policies of the Federated Fund may be changed by the
Board of Trustees without shareholder approval, although shareholders will be
notified before any material change becomes effective.
INVESTMENT INFORMATION - WCT EQUITY FUND
The investment objective of the WCT Equity Fund is to achieve long-term
capital appreciation. This investment objective may not be changed without the
affirmative vote of a majority of the outstanding voting securities of the WCT
Equity Fund, as defined in the 1940 Act. The WCT Equity Fund pursues its
investment objective by investing in value-oriented common and preferred stocks
of large and medium-sized companies with market capitalizations in excess of
$1.5 billion. The WCT Equity Fund may also occasionally invest in stocks of
companies with smaller capitalizations that have value characteristics,
including a price-to earnings ratio less than stocks in the S&P 500,
higher-than-average dividend yields or lower-than-average price-to-book value.
As a matter of investment policy, which may be changed without shareholder
approval, the WCT Equity Fund will invest so that, under normal circumstances,
at least 80% of the value of its total assets are invested in equity securities.
The WCT Equity Fund also has the ability to invest in ADRs. Unless otherwise
designated, the investment policies of the WCT Equity Fund may be changed by the
Board of Trustees without shareholder approval.
The investment objectives, policies and practices of each of the
Federated Fund and the WCT Equity Fund are comparable in that both funds invest
in similar equity securities using the "value" style of investing, selecting
securities that generally have a comparatively low volatility in share price
relative to the overall equity market and which may provide relatively high
dividend income. The principal differences are that (i) the WCT Equity Fund has
a specific policy of investing at least 80% of its assets in equity securities
while the Federated Fund has no such formal policy, although under normal market
conditions, it would expect to do so; (ii) the WCT Equity Fund invests in stocks
of large and medium sized companies whereas the Federated Fund ordinarily
invests primarily in large capitalization companies; (iii) the WCT Equity Fund's
investment objective is to achieve long-term capital appreciation, whereas the
investment objective of the Federated Fund is to provide growth of income and
capital.
Both the Federated Fund and the WCT Equity Fund are subject to certain
investment limitations, which are similar. The principal difference in
investment limitations relates to those which may be changed without shareholder
approval (a "non-fundamental" policy), and those which require shareholder
approval to change (a "fundamental" policy). For the Federated Fund, these
include NON-FUNDAMENTAL investment limitations which prohibit it from (1)
purchasing securities on margin, provided that it may obtain short-term credits
necessary for the clearance of purchases and sales of securities, and further
provided that it may make margin deposits in connection with its use of
financial options and futures, forward and spot currency transactions and other
financial contracts or derivative instruments; and (2) mortgaging, pledging, or
hypothecating any of its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible borrowing or to
collateral arrangements in connection with permissible activities. These
investment limitations may be changed without shareholder approval.
The WCT Equity Fund has similar investment limitations that it
considers to be FUNDAMENTAL, including prohibitions on: (1) selling securities
short or purchasing any securities on margin, but may obtain such short-term
credits as may be necessary for clearance of purchases and sales of portfolio
securities; and (2) mortgaging, pledging, or hypothecating any assets except to
secure permitted borrowings, in which case, it may pledge assets having a market
value not exceeding the lesser of the dollar amounts borrowed or 15% of the
total assets at the time of the pledge, provided that the purchase of securities
on a when issued basis is not deemed to be a pledge. These investment
limitations may not be changed without shareholder approval.
In addition to the policies and limitations set forth above, both the
Federated Fund and the WCT Equity Fund are subject to certain additional
investment policies and limitations, described in the Federated Fund's Statement
of Additional Information dated December 31, 1999, and the WCT Equity Fund's
Statement of Additional Information dated December 31, 1999. Reference is hereby
made to the Federated Fund's Prospectus and Statement of Additional Information,
each dated December 31, 1999, and to the WCT Equity Fund's Prospectus and
Statement of Additional Information, each dated December 31, 1999, which set
forth in full the investment objective, policies and investment limitations of
each of the Federated Fund and the WCT Equity Fund, all of which are
incorporated herein by reference thereto.
ADVISORY AND OTHER FEES
The maximum annual investment advisory fee for the Federated Fund is
0.75 of 1% of the first $500 million in average daily net assets (ADNA); 0.675
of 1% of the second $500 million in ADNA; 0.60 of 1% of the third $500 million
in ADNA; 0.525 of 1% of the fourth $500 million in ADNA; and 0.40 of 1% of ADNA
in excess of $2 billion. The investment adviser to the Federated Fund, Federated
Investment Management Company ("Federated Investment Management Company"), a
subsidiary of Federated Investors, may voluntarily choose to waive a portion of
its advisory fee or reimburse other expenses of the Federated Fund. This
voluntary waiver or reimbursement may be terminated by Federated Investment
Management Company at any time in its sole discretion. The maximum annual
management fee for the WCT Equity Fund is 0.75 of 1% of average daily net assets
of the WCT Equity Fund. The WCT Equity Fund's investment manager, West Coast
Trust Company, Inc. ("West Coast Trust"), may similarly voluntarily choose to
waive a portion of its advisory fee or reimburse the WCT Equity Fund for certain
expenses and may likewise terminate such waiver or reimbursement at any time in
its sole discretion. West Coast Trust has delegated daily management of the WCT
Equity Fund's assets to the Sub-Adviser, Becker Capital Management, Inc., who is
paid by the Adviser and not by the Fund.
Federated Services Company, an affiliate of Federated Investment
Management Company, provides certain administrative personnel and services
necessary to operate the Federated Fund and to the WCT Equity Fund. Federated
Services Company provides these services at an annual rate based upon the
average aggregate daily net assets of all funds advised by Federated Investment
Management Company and its affiliates. The rate charged is 0.15 of 1% on the
first $250 million of all such funds' average aggregate daily net assets, 0.125
of 1% on the next $250 million, 0.10 of 1% on the next $250 million and 0.075 of
1% of all such funds' average aggregate daily net assets in excess of $750
million. Federated Services Company's minimum annual administrative fee for the
Federated Fund is $125,000 plus $30,000 for each additional class of shares of
any such portfolio, while the administrative fee received by Federated Services
Company with respect to the WCT Equity Fund during any fiscal year shall be at
least $75,000 per portfolio. Federated Services Company may choose voluntarily
to waive a portion of its fee. The administrative fee expense for the Federated
Fund's fiscal year ended October 31, 1999 was $1,224,700 or 0.08% of its average
daily net assets. The administrative fee expense for the WCT Equity Fund's
fiscal year ended October 31, 1999 was $67,969 or 0.15% of its average daily net
assets.
The Federated Fund and the WCT Equity Fund have each entered into a
Shareholder Services Agreement under which it may make payments of up to 0.25 of
1% of the average daily net asset value of the shares to obtain certain personal
services for shareholders and the maintenance of shareholder accounts. The
Shareholder Services Agreement provides that Federated Shareholder Services
Company ("FSSC"), an affiliate of Federated Investment Management Company,
either will perform shareholder services directly or will select financial
institutions to perform such services. Financial institutions will receive fees
based upon shares owned by their clients or customers. The schedule of such fees
and the basis upon which such fees will be paid is determined from time to time
by the Federated Fund, the WCT Equity Fund and FSSC.
The total annual operating expenses of the Federated Fund were 0.95% of
average daily net assets (after waivers) for the fiscal year ended October 31,
1999. The total annual operating expenses for the WCT Equity Fund were 1.02% of
average daily net assets (after waivers) for the fiscal year ended October 31,
1999. Without such waivers, the expense ratio of the Federated Fund and the WCT
Equity Fund would have been 1.05%, or 0.10% higher, and 1.42%, or 0.40% higher,
respectively, of average daily net assets.
DISTRIBUTION ARRANGEMENTS
Federated Securities Corp. ("FSC"), an affiliate of Federated
Investment Management Company, is the principal distributor for shares of the
Federated Fund. Edgewood Services, Inc. ("Edgewood"), also an affiliate of
Federated Investment Management Company, is the principal distributor for shares
of the WCT Equity Fund. Shares of the Federated Fund are sold at net asset
value, without a sales charge, next determined after an order is received. The
Federated Fund does not have a Rule 12b-1 plan in effect with respect to its
shares and, accordingly, does not, nor does FSC, compensate brokers and dealers
for sales and administrative services performed in connection with sales of
shares of the Federated Fund pursuant to a plan of distribution adopted pursuant
to Rule 12b-1. However, FSC and FSSC, from their own assets, may pay financial
institutions supplemental fees as financial assistance for providing substantial
sales services, distribution-related support services or shareholder services
with respect to the Federated Fund. Such assistance will be predicated upon the
amount of shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the financial
institution. Any payments made by FSC may be reimbursed by Federated Investment
Management Company or its affiliates.
Certain costs exist with respect to the purchase of WCT Equity Fund
shares. Except under certain circumstances, shares of the WCT Equity Fund are
sold at net asset value, next determined after an order is received, plus a
maximum sales charge of 4.50%. The WCT Equity Fund has a Rule 12b-1 plan with an
annual maximum of 0.25 of 1% of the WCT Equity Fund's average daily net assets
and, accordingly, Edgewood may compensate brokers and dealers for sales and
administrative services performed in connection with sales of shares of the WCT
Equity Fund pursuant to a plan of distribution adopted pursuant to Rule 12b-1.
For sales of shares of the WCT Equity Fund, a dealer will normally receive up to
85% of the applicable sales charge. The sales charge for shares sold other than
through West Coast Trust or registered broker/dealers will be retained by
Edgewood. However, Edgewood will, periodically, uniformly offer to pay to
dealers additional amounts in the form of cash or promotional incentives. Such
payments, all or a portion of which may be paid from the sales charge Edgewood
normally retains or any other source available to it, will be predicated upon
the amount of shares of the WCT Equity Fund that are sold by the dealer. After
the reorganization is completed, WCT Equity Fund shareholders will be able to
purchase Federated Fund shares without a sales charge. For a complete
description of sales charges and exemptions from such charges, reference is
hereby made to the Prospectus of the WCT Equity Fund dated December 31, 1999,
which is incorporated herein by reference thereto.
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES
The transfer agent and dividend disbursing agent for each of the
Federated Fund and the WCT Equity Fund is Federated Shareholder Services
Company. Procedures for the purchase, exchange and redemption of the Federated
Fund's shares differ slightly from procedures applicable to the purchase,
exchange and redemption of the WCT Equity Fund's shares. Reference is made to
the Prospectus of the Federated Fund dated December 31, 1999, and the Prospectus
of the WCT Equity Fund dated December 31, 1999, for a complete description of
the purchase, exchange and redemption procedures applicable to purchases,
exchanges and redemptions of Federated Fund and WCT Equity Fund shares,
respectively, each of which is incorporated herein by reference thereto. Set
forth below is a brief description of the significant purchase, exchange and
redemption procedures applicable to the Federated Fund's Shares and the WCT
Equity Fund's shares.
Purchases of Shares of the Federated Fund may be made through FSC or,
once an account has been established, by wire or check. Purchases of shares of
the WCT Equity Fund may be made through West Coast Trust and through certain
broker/dealers under contract with Edgewood or directly by wire or check once an
account has been established. The minimum initial investment in the Federated
Fund is $25,000; however, an account may be opened with a smaller amount as long
as the $25,000 minimum is reached within 90 days. All accounts maintained by an
institutional investor will be combined together to determine whether such
minimum investment requirement is met. For purposes of the minimum initial
investment, all WCT Equity Fund shareholder accounts maintained by Edgewood will
be combined to meet the minimum investment requirement. The minimum initial
investment in the WCT Equity Fund is $1,000 for an individual investor, and
$5,000 by a trust customer of West Coast Trust or any other financial
institution. Subsequent investments must be in amounts of at least $100. These
minimums may be waived by the WCT Equity Fund from time to time. All accounts
maintained by an institutional investor will be combined together to determine
whether such minimum investment requirement is met. The Federated Fund and the
WCT Equity Fund each reserves the right to reject any purchase request.
The purchase price of the Federated Fund's shares is based on net asset
value, without a sales charge. The purchase price of the WCT Equity Fund's
shares is based on net asset value, plus a sales charge. Except in limited
circumstances, the net asset value per share for each of the Federated Fund and
the WCT Equity Fund is calculated as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Inc. (the "NYSE") on each
day on which the NYSE is open for business. Federated Fund purchase orders by
wire are considered received immediately and payments must be received before
3:00 p.m. (Eastern time) on the next business day following the order. Federated
Fund purchase orders received by check are considered received after the check
is converted into federal funds, which normally occurs the business day after
receipt, and shares will be eligible to receive dividends when the Fund receives
the payment. Purchase orders for shares of the WCT Equity Fund received from
West Coast Trust and authorized brokers and dealers before 4:00 p.m. (Eastern
time) may be entered at that day's price. Payment is normally required in three
business days.
Shares in certain of the funds for which subsidiaries or affiliates of
Federated Investors serve as investment adviser (collectively, the "Federated
Funds") may be exchanged for shares of the Federated Fund at net asset value.
The exchange is subject to any initial or subsequent investment amounts of the
fund into which the exchange is being made. Holders of shares of the WCT Equity
Fund have exchange privileges with respect to shares in other Federated Funds.
Exchanges are made at net asset value plus the difference between the WCT Equity
Fund's sales charge already paid and any applicable sales charge on shares of
the fund to be acquired in the exchange. Exercise of the exchange privilege is
treated as a redemption and new purchase for federal income tax purposes and,
accordingly, may have tax consequences for the shareholder. Information on share
exchanges may be obtained from the Federated Fund or the WCT Equity Fund, as
appropriate.
Redemptions of Federated Fund Shares may be made through a financial
institution, by telephone or by mailing a written request. Redemptions of WCT
Equity Fund shares may be made through West Coast Trust or the WCT Equity Fund,
by telephone or by mailing a written request, or through the WCT Equity Fund's
systematic withdrawal program. Shares of the Federated Fund and shares of the
WCT Equity Fund are each redeemed at their net asset value next determined after
the redemption request is received on each day on which the Federated Fund
computes its net asset value. Proceeds will ordinarily be distributed by check
within seven days after receipt of a redemption request.
Any questions about such procedures may be directed to, and assistance
in effecting purchases, exchanges or redemptions of the Federated Fund's Shares
or the WCT Equity Fund's shares may be obtained from FSC, principal distributor
for the Federated Fund, and from Edgewood Services, Inc., principal distributor
for the WCT Equity Fund, at 1-888-592-8386.
DIVIDENDS
Each of the Federated Fund's and the WCT Equity Fund's current policy
is to declare and pay dividends quarterly and to make annual distributions of
net realized capital gains, if any. With respect to both the Federated Fund and
the WCT Equity Fund, unless a shareholder otherwise instructs, dividends and
capital gain distributions will be reinvested automatically in additional shares
at net asset value.
TAX CONSEQUENCES
As a condition to the Reorganization, the Federated Fund and the WCT
Equity Fund will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the Code
so that no gain or loss will be recognized by either the Federated Fund or the
WCT Equity Fund or the shareholders of the WCT Equity Fund. The tax basis of the
Federated Fund shares received by WCT Equity Fund shareholders will be the same
as the tax basis of their shares in the WCT Equity Fund.
RISK FACTORS
As with other mutual funds that invest in equity securities, both the
Federated Fund and the WCT Equity Fund are subject to market risks. The value of
the equity securities in the portfolios of the WCT Equity Fund and the Federated
Fund will go up and down. These fluctuations could be a sustained trend or a
drastic movement, and may reflect changes in individual portfolio securities or
general changes in stock valuations. Companies with similar characteristics may
be grouped together in broad categories called sectors. Sector risk is the
possibility that a certain sector may underperform other sectors or the market
as a whole. If the Federated Fund or the WCT Equity Fund allocates more of its
portfolio holdings to a particular sector, then its performance will be more
susceptible to any economic, business or other developments which generally
affect that sector. In addition, because the Federated Fund and the WCT Equity
Fund may invest in ADRs issued by foreign companies, their share price may be
more affected by foreign economic and political conditions, taxation policies,
and accounting and auditing standards, than would otherwise be the case. Both
the WCT Equity Fund and the Federated Fund invest primarily in value stocks,
which are typically less volatile than growth stocks, and which tend to have
higher dividends than growth stocks, which means they depend less on price
changes for returns and may lag behind growth stocks in a "up" market. The WCT
Equity Fund is also subject to risks related to company size, because it invests
in large and medium sized companies. Generally the smaller the market
capitalization of a company, the fewer the number of shares traded daily, the
less liquid its stock and the more volatile its price. In comparison, the
Federated Fund ordinarily invests in securities of large capitalization
companies. A full discussion of the risks inherent in investment in the
Federated Fund and the WCT Equity Fund is set forth in the Federated Fund's
Prospectus and Statement of Additional Information, each dated December 31,
1999, and the WCT Equity Fund's Prospectus and Statement of Additional
Information, each dated December 31, 1999, each of which is incorporated herein
by reference thereto.
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION The WCT Equity Fund was
established in 1997 to provide investors
with an opportunity to invest in a professionally-managed portfolio of equity
securities. Although the Board of Trustees of the WCT Funds has been satisfied
with the performance of the WCT Equity Fund, it, and West Coast Trust, believe
that economies of scale might be experienced by WCT Equity Fund shareholders if
they were to become shareholders of a larger fund.
The WCT Equity Fund currently has net assets of approximately
$26,540,468, compared to the Federated Fund's net assets of $1,451,876,163.
Since inception, in an effort to remain competitive with other investment
companies, West Coast Trust has waived a portion of its investment advisory fees
and reimbursed the WCT Equity Fund for certain operating expenses, resulting in
aggregate fee waivers and expense reimbursements of $183,522 for the WCT Equity
Fund's fiscal year ended October 31, 1999. West Coast Trust has concluded that
it will not be able to continue indefinitely to waive such investment advisory
fees and reimburse operating expenses in order to allow the WCT Equity Fund to
earn a return on its investments competitive with other investment companies
with similar investment objectives. As a result, West Coast Trust has
recommended to the Board of Trustees that it would be in the best interests of
the WCT Equity Fund, and its shareholders, to combine its assets with those of
the Federated Fund. Such a combination may achieve operating efficiencies and
economies of scale as a result of the larger size of the Federated Fund while
allowing shareholders to maintain an investment in a fund which has an
investment style similar to that of WCT Equity Fund, i.e., investing primarily
in value-oriented common stocks.
The Board of Trustees, including a majority of the independent
Trustees, determined that participation in the Reorganization is in the best
interests of the WCT Equity Fund and that the interests of WCT Equity Fund
shareholders would not be diluted as a result of its effecting the
Reorganization. Based upon the foregoing considerations, and the fact that
shareholders of the WCT Equity Fund will not suffer any adverse tax consequences
as a result of the Reorganization, the Board of Trustees unanimously voted to
approve, and recommend to WCT Equity Fund shareholders the approval of, the
Reorganization.
The Board of Trustees of the Federated Fund, including the independent
Trustees, have unanimously concluded that consummation of the Reorganization is
in the best interests of the Federated Fund and the shareholders of the
Federated Fund and that the interests of Federated Fund shareholders would not
be diluted as a result of effecting the Reorganization and have unanimously
voted to approve the Plan.
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Plan provides that the Federated Fund will acquire all of the
assets of the WCT Equity Fund in exchange for the Federated Fund's shares to be
distributed PRO RATA by the WCT Equity Fund to its shareholders in complete
liquidation of the WCT Equity Fund on or about April 28, 2000 (the "Closing
Date"). The value of the WCT Equity Fund's assets to be acquired by the
Federated Fund shall be the value of such assets computed as of the close of the
New York Stock Exchange (normally 4:00 p.m. Eastern time) on the Closing Date
(the "Closing"). Shareholders of the WCT Equity Fund will become shareholders of
the Federated Fund as of the Closing, and will be entitled to the Federated
Fund's next dividend distribution.
On or before the Closing, the WCT Equity Fund will declare and pay a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its shareholders all of its net investment
income and realized net capital gain, if any, for all taxable years ending on or
before the Closing Date.
Consummation of the Reorganization is subject to the conditions set
forth in the Plan, including receipt of an opinion in form and substance
satisfactory to the WCT Equity Fund and the Trust, on behalf of the Federated
Fund, as described under the caption "Federal Income Tax Consequences" below.
The Plan may be terminated and the Reorganization may be abandoned at any time
before or after approval by shareholders of the WCT Equity Fund prior to the
Closing Date by either party if it believes that consummation of the
Reorganization would not be in the best interests of its shareholders.
Federated Investment Management Company is responsible for the payment
of substantially all of the expenses of the Reorganization incurred by either
party, whether or not the Reorganization is consummated. Such expenses include,
but are not limited to, accountants' fees, legal fees, registration fees,
transfer taxes (if any), the fees of banks and transfer agents and the costs of
preparing, printing, copying and mailing proxy solicitation materials to the WCT
Equity Fund shareholders and the costs of holding the Special Meeting (as
hereinafter defined).
The foregoing description of the Plan entered into between the
Federated Fund and the WCT Equity Fund, is qualified in its entirety by the
terms and provisions of the Plan, a copy of which is attached hereto as EXHIBIT
A and incorporated herein by reference thereto.
DESCRIPTION OF FEDERATED FUND SHARES
Full and fractional Shares of the Federated Fund will be issued without
the imposition of a sales charge or other fee to the shareholders of the WCT
Equity Fund in accordance with the procedures described above. Shares of the
Federated Fund to be issued to shareholders of the WCT Equity Fund under the
Plan will be fully paid and non-assessable when issued and transferable without
restriction and will have no preemptive or conversion rights. Reference is
hereby made to the Prospectus of the Federated Fund dated December 31, 1999,
provided herewith for additional information about Shares of the Federated Fund.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization, the Federated Fund, and the WCT
Equity Fund will receive an opinion from Dickstein Shapiro Morin & Oshinsky LLP,
counsel to the Federated Fund and the WCT Equity Fund, to the effect that, on
the basis of the existing provisions of the Code, current administrative rules
and court decisions, for federal income tax purposes: (1) the Reorganization as
set forth in the Plan will constitute a tax-free "reorganization" under Section
368(a)(1)(C) of the Code and the Federated Fund and the WCT Equity Fund each
will be "a party to a reorganization" within the meaning of Section 368(b) of
the Code; (2) no gain or loss will be recognized by the Federated Fund upon its
receipt of the WCT Equity Fund's assets solely in exchange for Federated Fund
shares; (3) no gain or loss will be recognized by the WCT Equity Fund upon the
transfer of its assets to the Federated Fund in exchange for Federated Fund
shares or upon the distribution (whether actual or constructive) of the
Federated Fund shares to the WCT Equity Fund shareholders in exchange for their
shares of the WCT Equity Fund; (4) no gain or loss will be recognized by
shareholders of the WCT Equity Fund upon the exchange of their WCT Equity Fund
shares for Federated Fund shares; (5) the tax basis of the WCT Equity Fund's
assets acquired by the Federated Fund will be the same as the tax basis of such
assets to the WCT Equity Fund immediately prior to the Reorganization; (6) the
tax basis of Federated Fund shares received by each shareholder of the WCT
Equity Fund pursuant to the Plan will be the same as the tax basis of WCT Equity
Fund shares held by such shareholder immediately prior to the Reorganization;
(7) the holding period of the assets of the WCT Equity Fund in the hands of the
Federated Fund will include the period during which those assets were held by
the WCT Equity Fund; and (8) the holding period of Federated Fund shares
received by each shareholder of the WCT Equity Fund will include the period
during which the WCT Equity Fund shares exchanged therefor were held by such
shareholder, provided the WCT Equity Fund shares were held as capital assets on
the date of the Reorganization.
Shareholders should recognize that an opinion of counsel is not binding
on the Internal Revenue Service ("IRS") or any court. The WCT Equity Fund does
not expect to obtain a ruling from the IRS regarding the consequences of the
Reorganization. Accordingly, if the IRS sought to challenge the tax treatment of
the Reorganization and was successful, neither of which is anticipated, the
Reorganization would be treated as a taxable sale of assets of the WCT Equity
Fund, followed by the taxable liquidation of the WCT Equity Fund.
The Federated Fund does not anticipate that taxable sales involving
significant amounts of securities of the combined portfolio will have to be made
after the Reorganization to effect a realignment with the policies and
investment practices of the Federated Fund.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
GENERAL. Both the Federated Fund and the WCT Equity Fund are
-------
open-end, diversified management investment companies registered under the 1940
Act, which continuously offer to sell shares at their current net asset value.
Each of the Federated Fund and the WCT Funds is organized as a business trust
pursuant to a Declaration of Trust under the laws of the Commonwealth of
Massachusetts. Each of the Federated Fund and the WCT Funds is governed by its
respective Declaration of Trust, Bylaws and Board of Trustees, in addition to
applicable state and federal law. The rights of shareholders of the Federated
Fund and shareholders of the WCT Funds as set forth in the applicable
Declaration of Trust and By-laws are substantially identical. Set forth below is
a brief summary of the significant rights of shareholders of the Federated Fund
and shareholders of the WCT Equity Fund.
SHARES OF THE FEDERATED FUND AND THE WCT EQUITY FUND. The Federated
Fund is authorized to issue an unlimited number of shares of beneficial interest
which have no par value. The Federated Fund has only one class of shares. The
WCT Equity Fund is authorized to issue an unlimited number of shares of
beneficial interest which have no par value. The WCT Equity Fund is a portfolio
of the WCT Funds and has only one class of shares. Issued and outstanding shares
of both the Federated Fund and WCT Equity Fund are fully paid and
non-assessable, and freely transferable.
VOTING RIGHTS. Neither the Federated Fund nor the WCT Equity Fund is
required to hold annual meetings of shareholders, except as required under the
1940 Act. Shareholder approval is necessary only for certain changes in
operations or the election of trustees under certain circumstances. Each of the
Federated Fund and the WCT Funds requires that a special meeting of shareholders
be called for any permissible purpose upon the written request of the holders of
at least 10% of the outstanding shares of the series or class of the Federated
Fund or the WCT Funds, as the case may be, entitled to vote. Each share of the
Federated Fund and of the WCT Equity Fund gives the shareholder one vote in
trustee elections and other matters submitted to shareholders for vote. All
shares of each portfolio or class in each of the Federated Fund and the WCT
Funds have equal voting rights except that in matters affecting only a
particular portfolio or class, only shares of that portfolio or class are
entitled to vote.
TRUSTEES. The Declaration of Trust for the Federated Fund and the
Declaration of Trust for the WCT Funds each provides that the term of office of
each Trustee shall be for the lifetime of the Federated Fund or the WCT Funds,
as the case may be, or the earlier of his or her death, resignation, retirement,
removal or mental or physical incapacity. A Trustee of the Federated Fund or the
WCT Funds may be removed by: (i) written instrument signed by at least
two-thirds of the Trustees, (ii) a majority vote of the Trustees if the Trustee
has become mentally or physically incapacitated or (iii) a vote of two-thirds of
the outstanding shares at any special meeting of shareholders. A vacancy on the
Board may be filled by the Trustees remaining in office. A meeting of
shareholders will be required for the purpose of electing additional Trustees
whenever fewer than a majority of the Trustees then in office were elected by
shareholders.
LIABILITY OF TRUSTEES AND OFFICERS. Under both the Declaration of Trust
for the Federated Fund and the Declaration of Trust for the WCT Funds, a Trustee
or officer will be personally liable only for his or her own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. The Declaration of Trust of the
Federated Fund and the Declaration of Trust of the WCT Funds each further
provides that Trustees and officers will be indemnified by the Federated Fund or
the WCT Funds, as the case may be, to the fullest extent permitted by law
against liability and against all expenses of litigation unless the person's
conduct is determined to constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of the person's duties.
SHAREHOLDER LIABILITY. Under certain circumstances, shareholders of the
Federated Fund may be held personally liable as partners under Massachusetts law
for obligations of the Federated Fund. To protect its shareholders, the
Federated Fund has filed legal documents with the Commonwealth of Massachusetts
that expressly disclaim the liability of its shareholders for such acts or
obligations of the Federated Fund. These documents require that notice of this
disclaimer be given in each agreement, obligation or instrument that the
Federated Fund or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Federated Fund's obligations on behalf of the Federated Fund, the Federated Fund
is required to use its property to protect or compensate the shareholder. On
request, the Federated Fund will defend any claim made and pay any judgment
against a shareholder for any act or obligation of the Federated Fund.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Federated Fund itself cannot meet its obligations to indemnify
shareholders and pay judgments against them from assets of the Federated Fund.
Shareholders of the WCT Equity Fund have the same potential liability
under Massachusetts law.
TERMINATION. In the event of the termination of the Federated Fund or
of the termination of the WCT Equity Fund, the shareholders of the respective
portfolio are entitled to receive, when and as declared by its Trustees, the
excess of the assets belonging to the respective portfolio over the liabilities
belonging to the respective portfolio. In either case, the assets belonging to
the portfolio will be distributed among the shareholders in proportion to the
number of shares of the respective portfolio held by them.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the
Federated Fund and of the WCT Equity Fund as of March 7, 2000:
FEDERATED WCT EQUITY FEDERATED
FUND FUND PRO FORMA
COMBINED
--------------- --------------- --------------
Net Assets.............. $1,451,876,163 $26,540,468 $1,478,416,631
Net Asset Value Per Share $31.78 $7.63 $31.78
Shares Outstanding...... 45,448,113 3,459,512 46,520,347
* Because the assets of the WCT Equity Fund comprise less than 10% of the assets
of the Federated Fund, no pro forma financial statements are required to be
filed in this registration statement.
INFORMATION ABOUT THE FEDERATED FUND
AND THE WCT EQUITY FUND
FEDERATED STOCK TRUST
Information about the Federated Fund is contained in the Federated
Fund's current Prospectus dated December 31, 1999, a copy of which is included
herewith and incorporated herein by reference. Additional information about the
Federated Fund is included in the Federated Fund's Statement of Additional
Information dated December 31, 1999, and the Statement of Additional Information
dated March 24, 2000 (relating to this Prospectus/Proxy Statement) and the
Annual Report to Shareholders for the fiscal year ended October 31, 1999, each
of which is incorporated herein by reference. Copies of the Statements of
Additional Information and the Annual Report, which have been filed with the
Securities and Exchange Commission (the "SEC"), may be obtained upon request and
without charge by contacting the Federated Fund at 1-800-245-5051, option one,
or by writing the Federated Fund at Federated Investors Funds, 5800 Corporate
Drive, Pittsburgh, PA 15237-7000. The Federated Fund is subject to the
informational requirements of the Securities Act of 1933, as amended (the "1933
Act"), the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
1940 Act and in accordance therewith files reports and other information with
the SEC. Reports, proxy and information statements, charter documents and other
information filed by the Federated Fund can be obtained by calling or writing
the Federated Fund and can also be inspected and copied by the public at the
public reference facilities maintained by the SEC in Washington, D.C. located at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at certain of its
regional offices located at Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, IL 60661 and 13th Floor, Seven World Trade Center, New
York, NY 10048. Copies of such material can be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services, SEC, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates or from the SEC's
Internet site at http://www.sec.gov.
This Prospectus/Proxy Statement, which constitutes part of a
Registration Statement filed by the Federated Fund with the SEC under the 1933
Act, omits certain of the information contained in the Registration Statement.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to the Federated Fund and the
shares offered hereby. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each such statement
is qualified in its entirety by reference to the copy of the applicable document
filed with the SEC.
WCT EQUITY FUND, A PORTFOLIO OF WCT FUNDS
Information about the WCT Equity Fund and the WCT Funds is contained in
the WCT Equity Fund's current Prospectus dated December 31, 1999, the Annual
Report to Shareholders for the fiscal year ended October 31, 1999, the Statement
of Additional Information dated December 31, 1999, and the Statement of
Additional Information dated March 24, 2000 (relating to this Prospectus/Proxy
Statement), each of which is incorporated herein by reference. Copies of such
Prospectus, Annual Report, and Statements of Additional Information, which have
been filed with the SEC, may be obtained upon request and without charge from
the WCT Equity Fund by calling 1-800-245-5051, option one, or by writing to the
WCT Equity Fund at 5800 Corporate Drive, Pittsburgh, PA 15237-7010. The WCT
Equity Fund is subject to the informational requirements of the 1933 Act, the
1934 Act and the 1940 Act and in accordance therewith files reports and other
information with the SEC. Reports, proxy and information statements, charter
documents and other information filed by WCT Funds or its portfolio, the WCT
Equity Fund, can be obtained by calling or writing the WCT Equity Fund and can
also be inspected at the public reference facilities maintained by the SEC or
obtained at prescribed rates at the addresses listed in the previous section or
from the SEC's Internet site at http://www.sec.gov.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees of the WCT Funds of proxies for use at the
Special Meeting of Shareholders (the "Special Meeting") to be held at 2:00 p.m.
on April 27, 2000 at: 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010,
and at any adjournments thereof. The proxy confers discretionary authority on
the persons designated therein to vote on other business not currently
contemplated which may properly come before the Special Meeting. A proxy, if
properly executed, duly returned and not revoked, will be voted in accordance
with the specifications thereon; if no instructions are given, such proxy will
be voted in favor of the Plan. A shareholder may revoke a proxy at any time
prior to use by filing with the Secretary of the WCT Funds an instrument
revoking the proxy, by submitting a proxy bearing a later date or by attending
and voting at the Special Meeting.
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by Federated Investment Management Company. In
addition to solicitations through the mails, proxies may be solicited by
officers, employees and agents of the WCT Funds, Federated Investment Management
Company and their respective affiliates at no additional cost to the WCT Equity
Fund. Such solicitations may be by telephone, telegraph or personal contact.
Federated Investment Management Company will reimburse custodians, nominees and
fiduciaries for the reasonable costs incurred by them in connection with
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees of the WCT Funds has fixed the close of business
on March 7, 2000, as the record date for the determination of shareholders of
the WCT Equity Fund entitled to notice of and to vote at the Special Meeting and
any adjournments thereof. As of the record date, there were 3,459,588 shares of
the WCT Equity Fund outstanding. Each of the WCT Equity Fund's shares is
entitled to one vote and fractional shares have proportionate voting rights. On
the record date, the Trustees and officers of the WCT Funds as a group owned
less than 1% of the outstanding shares of the WCT Equity Fund. To the best
knowledge of West Coast Trust, as of the record date, no person, except as set
forth in the table below, owned beneficially or of record 5% or more of the WCT
Equity Fund's outstanding shares.
SHARES OWNED PERCENT OF
NAME AND ADDRESS OF RECORD AND OUTSTANDING SHARES
BENEFICIALLY
- --------------------------------- ----------------------- -------------------
Becker Capital Management, Inc. 276,157 7.98%
Portland, Oregon
West Coast Trust Company, Inc. 284,015 8.21%
Salem, Oregon
Commercial Properties 1,201,806 34.74%
Salem, Oregon
Commercial Properties 1,637,137 47.32%
Salem, Oregon
As of the record date, there were 45,448,113 Shares of the Federated
Fund outstanding. On the record date, the Trustees and officers of the Federated
Fund as a group owned less than 1% of the outstanding Shares of the Federated
Fund. To the best knowledge of Federated Investment Management Company, as of
the record date, no person, except as set forth in the table below, owned
beneficially or of record 5% or more of the Federated Fund's outstanding shares.
SHARES OWNED PERCENT OF
OF RECORD AND OUTSTANDING
NAME AND ADDRESS BENEFICIALLY SHARES
---------------------------- --------------- ----------------
Charles Schwab & Co., Inc. 2,429,340 5.35%
San Francisco, California
National Financial Services 7,682,612 16.90%
New York, New York
Approval of the Plan requires the affirmative vote of a majority of the
outstanding shares of the WCT Equity Fund. The votes of shareholders of the
Federated Fund are not being solicited since their approval is not required in
order to effect the Reorganization.
One-half of the issued and outstanding shares of the WCT Equity Fund,
represented in person or by proxy, will be required to constitute a quorum at
the Special Meeting for the purpose of voting on the proposed Reorganization.
For purposes of determining the presence of a quorum, shares represented by
abstentions and "broker non-votes" will be counted as present, but not as votes
cast, at the Special Meeting. Under the 1940 Act, however, which governs this
transaction, matters subject to the requirements of the 1940 Act, including the
Reorganization, are determined on the basis of a percentage of votes present at
the Special Meeting, which would have the effect of treating abstentions and
"broker non-votes" as if they were votes against the Reorganization.
DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the WCT Equity Fund objecting to the Reorganization
have no appraisal rights under the WCT Funds' Declaration of Trust or
Massachusetts law. Under the Plan, if approved by WCT Equity Fund shareholders,
each shareholder will become the owner of Shares of the Federated Fund having a
total net asset value equal to the total net asset value of his or her holdings
in the WCT Equity Fund at the Closing Date.
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY Management of
the WCT Funds knows of no other matters that may
properly be, or which are likely to be, brought before the Special Meeting.
However, if any other business shall properly come before the Special Meeting,
the persons named in the proxy intend to vote thereon in accordance with their
best judgment.
If at the time any session of the Special Meeting is called to order, a
quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Special Meeting to a
later date. In the event that a quorum is present but sufficient votes in favor
of one or more of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote those proxies which they are
entitled to vote in favor of the proposal, in favor of such an adjournment, and
will vote those proxies required to be voted against the proposal, against any
such adjournment.
Whether or not shareholders expect to attend the Special Meeting, all
shareholders are urged to sign, fill in and return the enclosed proxy form
promptly.
A-5
EXHIBIT A
A-1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated February 16, 2000 (the
"Agreement"), between FEDERATED STOCK TRUST, a Massachusetts business trust
(hereinafter called the "Acquiring Fund"), and WCT FUNDS, a Massachusetts
business trust (hereinafter called "WCT") on behalf of its portfolio WCT EQUITY
FUND (hereinafter called the "Acquired Fund").
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Acquired Fund in exchange solely for shares of beneficial interest
of the Acquiring Fund (the "Acquiring Fund Shares") and the distribution, after
the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, WCT and the Acquiring Fund are registered open-end management
investment companies and the Acquired Fund owns securities in which the
Acquiring Fund is permitted to invest;
WHEREAS, both the Acquired Fund and the Acquiring Fund are
authorized to issue shares of beneficial interest;
WHEREAS, the Board of Trustees, including a majority of the trustees
who are not "interested persons" (as defined under the Investment Company Act of
1940, as amended (the "1940 Act")), of the Acquiring Fund has determined that
the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares
is in the best interests of the Acquiring Fund shareholders and that the
interests of the existing shareholders of the Acquiring Fund would not be
diluted as a result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the trustees
who are not "interested persons" (as defined under the 1940 Act), of WCT has
determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares is in the best interests of the Acquired Fund shareholders
and that the interests of the existing shareholders of the Acquired Fund would
not be diluted as a result of this transaction;
NOW THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE
ACQUIRING FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions contained herein, the Acquired
Fund agrees to assign, transfer and convey to the Acquiring Fund all of the
assets of the Acquired Fund, including all securities and cash beneficially
owned by the Acquired Fund, and the Acquiring Fund agrees in exchange therefor
to deliver to the Acquired Fund the number of Acquiring Fund Shares, including
fractional Acquiring Fund Shares, determined as set forth in paragraph 2.3. Such
transaction shall take place at the closing (the "Closing") on the closing date
(the "Closing Date") provided for in paragraph 3.1. In lieu of delivering
certificates for the Acquiring Fund Shares, the Acquiring Fund shall credit the
Acquiring Fund Shares to the Acquired Fund's account, for the benefit of its
shareholders on the stock record books of the Acquiring Fund and shall deliver a
confirmation thereof to the Acquired Fund.
1.2 The Acquired Fund will discharge all of its liabilities and
obligations prior to the Closing Date.
1.3 On the Closing Date, proper instructions and all necessary
documents to transfer to the account of the Acquiring Fund, free and clear of
all liens, encumbrances, rights, restrictions and claims shall be delivered to
State Street Bank and Trust Company (hereinafter called "State Street"), Boston,
Massachusetts, the Acquired Fund's and Acquiring Fund's custodian (the
"Custodian"), for the account of the Acquiring Fund. All cash delivered shall be
in the form of currency and immediately available funds payable to the order of
the Custodian for the account of the Acquiring Fund.
1.4 The Acquired Fund will pay or cause to be paid to the Acquiring
Fund any dividends or interest received on or after the Closing Date with
respect to assets transferred to the Acquiring Fund thereunder. The Acquired
Fund will transfer to the Acquiring Fund any distributions, rights or other
assets received by the Acquired Fund after the Closing Date as distributions on
or with respect to the securities transferred. Such assets shall be deemed
included in assets transferred to the Acquiring Fund on the Closing Date and
shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable, the
Acquired Fund will liquidate and distribute pro rata to the Acquired Fund's
shareholders of record, determined as of the Valuation Time (as hereinafter
defined in Section 2.1) (the "Acquired Fund Shareholders"), the Acquiring Fund
Shares received by the Acquired Fund pursuant to paragraph 1.1. Such liquidation
and distribution will be accomplished by the transfer of the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share record books of the Acquiring Fund
in the names of the Acquired Fund Shareholders and representing the respective
pro rata number of Acquiring Fund Shares due such shareholders, based on their
ownership of shares of the Acquired Fund at the Valuation Time. All issued and
outstanding shares of the Acquired Fund will simultaneously be canceled on the
books of the Acquired Fund. Share certificates representing interests in the
Acquired Fund will represent a number of Acquiring Fund Shares after the Closing
Date as determined in accordance with Section 2.3. The Acquiring Fund shall not
issue certificates representing Acquiring Fund Shares in connection with such
exchange. The foregoing steps are necessary and appropriate to effect the
termination of the Acquired Fund. After the Closing Date, the Acquired Fund
should not conduct any business except in connection with its termination.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued
in the manner described in the Acquiring Fund's current prospectus and statement
of additional information.
1.7 Any transfer taxes payable upon issuance of Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund Shares
are to be issued and transferred.
1.8 Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of WCT.
2. VALUATION.
2.1 The value of the Acquired Fund's net assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of the
close of the New York Stock Exchange (normally 4:00 p.m. Eastern time) on the
Closing Date (such time and date being hereinafter called the "Valuation Time"),
using the valuation procedures set forth in the Acquiring Fund's then-current
prospectus or statement of additional information.
2.2 The net asset value of each Acquiring Fund Share shall be the net
asset value per share computed as of the Valuation Time, using the valuation
procedures set forth in the Acquiring Fund's then-current prospectus or
statement of additional information.
2.3 The number of Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's net assets shall
be determined by dividing the value of the net assets of the Acquired Fund,
determined using the same valuation procedures referred to in paragraph 2.1, by
the net asset value of one Acquiring Fund Share as determined in accordance with
paragraph 2.2.
2.4 All computations of value shall be made in accordance with the
regular practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be April 28, 2000 or such later date as the
parties may mutually agree. All acts taking place at the Closing on the Closing
Date shall be deemed to take place simultaneously as of the Valuation Time
unless otherwise provided. The Closing shall be held at the offices of the
Acquiring Fund's investment adviser, Federated Investors Tower, Pittsburgh, PA
15222-3779, or such other place as the parties may mutually agree.
3.2 If at the Valuation Time (a) the primary trading market for
portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed
to trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have been
restored.
3.3 Federated Shareholder Services Company, as transfer agent for each
of the Acquired Fund and the Acquiring Fund, shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the names
and addresses of the Acquired Fund Shareholders and the number and percentage
ownership of outstanding shares owned by each such shareholder at the Valuation
Time. The Acquiring Fund shall issue and deliver a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date to the Secretary of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, assumption agreements, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 WCT represents and warrants to the Acquiring Fund as follows:
(a) WCT is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts and has
power to own all of its properties and assets and to carry out this Agreement.
(b) WCT is registered under the 1940 Act, as an open-end,
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.
(c) WCT is not, and the execution, delivery and performance of
this Agreement will not result, in material violation of WCT's Declaration of
Trust or By-Laws or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquired Fund is a party or by which it is bound.
(d) The Acquired Fund has no material contracts or other
commitments outstanding (other than this Agreement) which will result in
liability to it after the Closing Date.
(e) No litigation or administrative proceeding or investigation of
or before any court or governmental body is currently pending or to its
knowledge threatened against the Acquired Fund or any of its properties or
assets which, if adversely determined, would materially and adversely affect its
financial condition or the conduct of its business. The Acquired Fund knows of
no facts which might form the basis for the institution of such proceedings, and
is not a party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein contemplated.
(f) The current prospectus and statement of additional information
of the Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act and the rules and regulations of the Securities and Exchange Commission
(the "Commission") thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(g) The Statements of Assets and Liabilities of the Acquired Fund
at October 31, 1998 and 1999 have been audited by Arthur Andersen, LLP,
independent auditors, and have been prepared in accordance with generally
accepted accounting principles, consistently applied, and such statements
(copies of which have been furnished to the Acquiring Fund) fairly reflect the
financial condition of the Acquired Fund as of such dates, and there are no
known contingent liabilities of the Acquired Fund as of such dates not disclosed
therein.
(h) Since October 31, 1999, there has not been any material
adverse change in the Acquired Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund.
(i) At the Closing Date, all Federal and other tax returns and
reports of the Acquired Fund required by law to have been filed by such dates
shall have been filed, and all Federal and other taxes shall have been paid so
far as due, or provision shall have been made for the payment thereof, and to
the best of the Acquired Fund's knowledge no such return is currently under
audit and no assessment has been asserted with respect to such returns.
(j) For each fiscal year of its operation, the Acquired Fund has
met the requirements of the Code for qualification and treatment as a regulated
investment company.
(k) All issued and outstanding shares of the Acquired Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. All of the issued and outstanding shares of the
Acquired Fund will, at the time of the Closing, be held by the persons and in
the amounts set forth in the records of the transfer agent as provided in
paragraph 3.3. The Acquired Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Acquired Fund shares,
nor is there outstanding any security convertible into any Acquired Fund shares.
(l) On the Closing Date, the Acquired Fund will have full right,
power and authority to sell, assign, transfer and deliver the assets to be
transferred by it hereunder.
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of WCT's trustees and, subject to the approval of the Acquired Fund
Shareholders, this Agreement will constitute the valid and legally binding
obligation of the Acquired Fund enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and to general
principles of equity and the discretion of the court (regardless of whether the
enforceability is considered in a proceeding in equity or at law).
(n) The prospectus/proxy statement of the Acquired Fund (the
"Prospectus/Proxy Statement") to be included in the Registration Statement
referred to in paragraph 5.5 (other than information therein that relates to the
Acquiring Fund) will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not misleading.
(o) The Acquired Fund has entered into an agreement under which
Federated Investment Management Company will assume the expenses of the
reorganization including accountants' fees, legal fees, registration fees,
transfer taxes (if any), the fees of banks and transfer agents and the costs of
preparing, printing, copying and mailing proxy solicitation materials to the
Acquired Fund's shareholders and the costs of holding the Special Meeting of
Shareholders.
4.2 The Acquiring Fund represents and warrants to WCT as follows:
(a) The Acquiring Fund is a business trust duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts and has the power to carry on its business as it is now being
conducted and to carry out this Agreement.
(b) The Acquiring Fund is registered under the 1940 Act as an
open-end, diversified, management investment company, and such registration has
not been revoked or rescinded and is in full force and effect.
(c) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of the
Acquiring Fund's Declaration of Trust or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
(d) No litigation or administrative proceeding or investigation of
or before any court or governmental body is currently pending or to its
knowledge threatened against the Acquiring Fund or any of its properties or
assets which, if adversely determined, would materially and adversely affect its
financial condition or the conduct of its business. The Acquiring Fund knows of
no facts which might form the basis for the institution of such proceedings, and
is not a party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.
(e) The current prospectus and statement of additional information
of the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(f) The Statement of Assets and Liabilities of the Acquiring Fund
at October 31, 1998 and 1999, have been audited by Deloitte & Touche LLP,
independent auditors, and have been prepared in accordance with generally
accepted accounting principles, consistently applied, and such statements
(copies of which have been furnished to the Acquired Fund) fairly reflect the
financial condition of the Acquiring Fund as of such dates, and there are no
known contingent liabilities of the Acquiring Fund as of such dates not
disclosed therein.
(g) Since October 31, 1999, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as disclosed to and
accepted by the Acquired Fund.
(h) At the Closing Date, all Federal and other tax returns and
reports of the Acquiring Fund required by law to have been filed by such date
shall have been filed, and all Federal and other taxes shall have been paid so
far as due, or provision shall have been made for the payment thereof, and to
the best of the Acquiring Fund's knowledge no such return is currently under
audit and no assessment has been asserted with respect to such returns.
(i) For each fiscal year of its operation, the Acquiring Fund has
met the requirements of the Code for qualification and treatment as a regulated
investment company.
(j) All issued and outstanding Shares of the Acquiring Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of Acquiring
Fund Shares, nor is there outstanding any security convertible into any
Acquiring Fund Shares.
(k) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action, if
any, on the part of the Acquiring Fund's Trustees, and this Agreement will
constitute the valid and legally binding obligation of the Acquiring Fund
enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto, and to general principles of equity and the discretion of
the court (regardless of whether the enforceability is considered in a
proceeding in equity or at law).
(l) The Prospectus/Proxy Statement to be included in the
Registration Statement (only insofar as it relates to the Acquiring Fund) will,
on the effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading.
(m) The Acquiring Fund has entered into an agreement under which
Federated Investment Management Company will assume the expenses of the
reorganization including accountants' fees, legal fees, registration fees,
transfer taxes (if any), the fees of banks and transfer agents and the costs of
preparing, printing, copying and mailing proxy solicitation materials to the
Acquired Fund's shareholders and the costs of holding the Special Meeting of
Shareholders.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
5.1 The Acquiring Fund and the Acquired Fund each will operate
its business in the ordinary course between the date hereof and the Closing
Date, it being understood that such ordinary course of business will include
customary dividends and distributions.
5.2 WCT will call a meeting of the Acquired Fund Shareholders to
consider and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days after
the Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in such
form as is reasonably satisfactory to the Acquiring Fund, a statement of the
earnings and profits of the Acquired Fund for Federal income tax purposes which
will be carried over to the Acquiring Fund as a result of Section 381 of the
Code and which will be certified by the Corporation's President and its
Treasurer.
5.5 The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of the Prospectus/Proxy Statement,
referred to in paragraph 4.1(o), all to be included in a Registration Statement
on Form N-14 of the Acquiring Fund (the "Registration Statement"), in compliance
with the 1933 Act, the Securities Exchange Act of 1934, as amended, and the 1940
Act in connection with the meeting of the Acquired Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
5.7 At or before the Valuation Time, the Acquired Fund shall have
declared and paid a dividend or dividends, with a record date and ex-dividend
date at or before the Valuation Time, which, together with all previous
dividends, shall have the effect of distributing to its shareholders all of its
investment company taxable income (computed without regard to any deduction for
dividends paid), if any, plus the excess of its interest income, if any,
excludable from gross income under Section 103(a) of the Code over its
deductions disallowed under Sections 265 and 171(a)(2) of the Code for all
taxable years ending on or prior to the Closing Date, and all of its net capital
gain realized (after reduction for any capital loss carryforward), if any, in
all taxable years ending on or prior to the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the
transactions provided for herein shall be subject, at its election, to the
performance by the Acquired Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
6.1 All representations and warranties of the Corporation contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
6.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets, together with a list of the Acquired
Fund's portfolio securities showing the tax costs of such securities by lot and
the holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Acquired Fund.
6.3 The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer, in form and substance satisfactory to the Acquiring
Fund, to the effect that the representations and warranties of WCT made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as the Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the
transactions provided herein shall be subject, at its election, to the
performance by the Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the Acquiring Fund contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
7.2 The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer, in form and substance satisfactory to the Acquired
Fund, to the effect that the representations and warranties of the Acquiring
Fund made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Acquired Fund shall reasonably
request.
7.3 There shall not have been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities or business since the
date hereof other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of any indebtedness, except as otherwise
disclosed to and accepted by the Acquired Fund.
8. FURTHER CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
ACQUIRING FUND AND THE ACQUIRED FUND.
If any of the conditions set forth below do not exist on or before
the Closing Date with respect to the Acquired Fund or the Acquiring Fund, the
other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement.
8.1 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of WCT's Declaration of
Trust and the 1940 Act.
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in
all material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or properties of
the Acquiring Fund or the Acquired Fund, provided that either party hereto may
for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The Acquiring Fund and WCT shall have received an opinion of
Dickstein Shapiro Morin & Oshinsky LLP substantially to the effect that for
Federal income tax purposes:
(a) The transfer of all of the Acquired Fund assets to the
Acquiring Fund in exchange for the Acquiring Fund Shares and the distribution of
the Acquiring Fund Shares to the Acquired Fund Shareholders in liquidation of
the Acquired Fund will constitute a "reorganization" within the meaning of
Section 368(a)(1)(C) of the Code, and the Acquiring Fund and the Acquired Fund
each will be "a party to a reorganization" within the meaning of Section 368(b)
of the Code; (b) No gain or loss will be recognized by the Acquiring Fund upon
the receipt of the assets of the Acquired Fund solely in exchange for the
Acquiring Fund Shares; (c) No gain or loss will be recognized by the Acquired
Fund upon the transfer of the Acquired Fund assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares or upon the distribution (whether actual
or constructive) of the Acquiring Fund Shares to Acquired Fund Shareholders in
exchange for their shares of the Acquired Fund; (d) No gain or loss will be
recognized by the Acquired Fund Shareholders upon the exchange of their Acquired
Fund shares for the Acquiring Fund Shares; (e) The tax basis of the Acquired
Fund assets acquired by the Acquiring Fund will be the same as the tax basis of
such assets to the Acquired Fund immediately prior to the Reorganization; (f)
The tax basis of the Acquiring Fund Shares received by each of the Acquired Fund
Shareholders pursuant to the Reorganization will be the same as the tax basis of
the Acquired Fund shares held by such shareholder immediately prior to the
Reorganization; (g) The holding period of the assets of the Acquired Fund in the
hands of the Acquiring Fund will include the period during which those assets
were held by the Acquired Fund; and (h) The holding period of the Acquiring Fund
Shares to be received by each Acquired Fund Shareholder will include the period
during which the Acquired Fund shares exchanged therefor were held by such
shareholder (provided the Acquired Fund shares were held as capital assets on
the date of the Reorganization).
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees of WCT or the
Board of Trustees of the Acquiring Fund at any time prior to the Closing Date
(and notwithstanding any vote of the Acquired Fund Shareholders) if
circumstances should develop that, in the opinion of either of the parties'
Board, make proceeding with the Agreement inadvisable.
9.2 If this Agreement is terminated and the exchange contemplated
hereby is abandoned pursuant to the provisions of this Section 9, this Agreement
shall become void and have no effect, without any liability on the part of any
party hereto or the trustees or officers of WCT or the Trust or the shareholders
of the Acquiring Fund or of the Acquired Fund, in respect of this Agreement.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing
conditions may be waived by the Board of Trustees of the Acquiring Fund or the
Board of Trustees of WCT, if, in the judgment of either, such waiver will not
have a material adverse effect on the benefits intended under this Agreement to
the shareholders of the Acquiring Fund or of the Acquired Fund, as the case may
be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided
for herein shall survive consummation of the transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof, and merges
and supersedes all prior discussions, agreements, and understandings of every
kind and nature between them relating to the subject matter hereof. Neither
party shall be bound by any condition, definition, warranty or representation,
other than as set forth or provided in this Agreement or as may be set forth in
a later writing signed by the party to be bound thereby.
11.3 This Agreement shall be governed and construed in accordance with
the internal laws of the Commonwealth of Pennsylvania, without giving effect to
principles of conflicts of laws.
11.4 This Agreement may be executed in any number of counterparts, each
of which, when executed and delivered, shall be deemed to be an original.
11.5 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
11.6 The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the Declaration of Trust
of the Acquiring Fund and agrees that the obligations assumed by the Acquiring
Fund pursuant to this Agreement shall be limited in any case to the Acquiring
Fund and its assets and the Acquired Fund shall not seek satisfaction of any
such obligation from the shareholders of the Acquiring Fund, the trustees,
officers, employees or agents of the Acquiring Fund or any of them.
11.7 The Acquiring Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the Declaration of Trust
of WCT and agrees that the obligations assumed by the Acquired Fund pursuant to
this Agreement shall be limited in any case to the Acquired Fund and its assets
and the Acquiring Fund shall not seek satisfaction of any such obligation from
the shareholders of the Acquired Fund, the trustees, officers, employees or
agents of WCT or any of them.
IN WITNESS WHEREOF, the Acquired Fund and the Acquiring Fund have each
caused this Agreement and Plan of Reorganization to be executed and attested on
its behalf by its duly authorized representatives as of the date first above
written.
Acquired Fund:
WCT FUNDS, on behalf of its portfolio,
Attest: WCT EQUITY FUND
By: /S/ C. TODD GIBSON By: /S/ J. CHRISTOPHER DONAHUE
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Name: C. Todd Gibson Name: J. Christopher Donahue
Title: Assistant Secretary Title: Executive Vice President
Acquiring Fund:
FEDERATED STOCK TRUST
Attest:
By:/S/ C. GRANT ANDERSON By:
-----------------------------------
Name: C. Grant Anderson /S/ J. CHRISTOPHER DONAHUE
--------------------------
Title: Assistant Secretary Name: J. Christopher Donahue
Title: Executive Vice President
25293 (3/00)
STATEMENT OF ADDITIONAL INFORMATION
MARCH 24, 2000
Acquisition of the Assets of
WCT EQUITY FUND
a portfolio of
WCT FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Telephone Number: 1-888-592-8386
By and in exchange for shares of
FEDERATED STOCK TRUST
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
TELEPHONE NUMBER: 1-800-245-5051
This Statement of Additional Information dated March 24, 2000 is not a
prospectus. A Prospectus/Proxy Statement dated March 24, 2000 related to the
above-referenced matter may be obtained from Federated Stock Trust, 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. This Statement of
Additional Information should be read in conjunction with such Prospectus/Proxy
Statement.
TABLE OF CONTENTS
1. Statement of Additional Information of Federated Stock Trust
dated December 31, 1999.
2. Statement of Additional Information of WCT Equity Fund, a portfolio
of WCT Funds dated December 31, 1999.
3. Financial Statements of Federated Stock Trust dated October
31, 1999.
4. Financial Statements of WCT Equity Fund, a portfolio of WCT
Funds, dated October 31, 1999.
The Statement of Additional Information of Federated Stock Trust (the "Trust")is
incorporated herein by reference to Post-Effective Amendment No. 32 to the
Trust's Registration Statement on Form N-1A (File Nos. 2-75756 and 811-3385)
which was filed with the Securities and Exchange Commission on or about December
29, 1999. A copy may be obtained, upon request and without charge, from the
Trust at 5800 Corporate Drive, Pittsburgh, PA 15237-7000; telephone number:
1-800-341-7400.
The Statement of Additional Information of WCT Equity Fund, a portfolio of WCT
Funds, is incorporated herein by reference to Post-Effective Amendment No. 3 to
WCT Funds' Registration Statement on Form N-1A (File Nos. 333-35785 and
811-08335) which was filed with the Securities and Exchange Commission on or
about December 22, 1999. A copy may be obtained, upon request and without
charge, from the WCT Funds at 5800 Corporate Drive, Pittsburgh, PA 15237-7010;
telephone number: 1-888-592-8386.
The audited financial statements of the Trust are incorporated herein by
reference to the Trust's Annual Report to Shareholders which was filed with the
Securities and Exchange Commission on or about December 29, 1999. A copy may be
obtained, upon request and without charge, from the Trust at 5800 Corporate
Drive, Pittsburgh, PA 15237-7000; telephone number: 1-800-341-7400.
The audited financial statements of WCT Equity Fund are incorporated herein by
reference to WCT Equity Fund's Annual Report to Shareholders which was filed
with the Securities and Exchange Commission on or about December 29, 1999. A
copy may be obtained, upon request and without charge, from the WCT Funds at
5800 Corporate Drive, Pittsburgh, PA 15237-7010; telephone number:
1-888-592-8386.
WCT EQUITY FUND
a Portfolio of
WCT FUNDS,
SPECIAL MEETING OF SHAREHOLDERS
April 27, 2000
WCT EQUITY FUND
a Portfolio of
WCT FUNDS.
CUSIP NO. 92923E100
The undersigned shareholder(s) of the WCT Equity Fund, a portfolio of WCT Funds
(the "WCT Equity Fund"), hereby appoint(s) C. Todd Gibson, Maureen A. Ferguson,
Amy S. Wilson, and Alecia A. Allison or any of them true and lawful proxies,
with power of substitution of each, to vote all shares of the WCT Equity Fund
which the undersigned is entitled to vote, at the Special Meeting of
Shareholders to be held on April 27, 2000, at 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7010 at 2:00 p.m. (local time) and at any adjournment
thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The proxies named
will vote the shares represented by this proxy in accordance with the choice
made on this ballot. IF NO CHOICE IS INDICATED, THIS PROXY WILL BE VOTED
AFFIRMATIVELY ON THAT MATTER.
PROPOSAL
TO APPROVE OR DISAPPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN
THE WCT FUNDS, ON BEHALF OF ITS PORTFOLIO WCT EQUITY FUND, AND FEDERATED
STOCK TRUST
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS X
-
KEEP THIS PORTION FOR YOUR RECORDS.
- -----------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY.
WCT EQUITY FUND
a portfolio of
WCT FUNDS
RECORD DATE SHARES: ______________________
VOTE ON THE PROPOSAL
FOR AGAINST ABSTAIN
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Please sign EXACTLY as your name(s) appear(s) above. When signing as attorney,
executor, administrator, guardian, trustee, custodian, etc., please give your
full title as such. If a corporation or partnership, please sign the full name
by an authorized officer or partner. If stock is owned jointly, all owners
should sign.
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- ------------------------------------
Signature(s) of Shareholder(s)
Date: _______________________________
