SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Federated Fund for U.S. Government Securities, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- ------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------
3) Filing Party:
- ------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------
<PAGE>
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.
PROXY STATEMENT - PLEASE VOTE!
TIME IS OF THE ESSENCE...VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! BE SURE TO COMPLETE AND RETURN YOUR PROXY CARD
PROMPTLY TO AVOID ADDITIONAL EXPENSE TO THE FUND.
Federated Fund for U.S. Government Securities, Inc., will hold an annual
meeting of shareholders on
March 26, 1999. It is important for you to vote on the issues described in
this Proxy Statement. We recommend that you read the Proxy Statement in its
entirety; the explanations will help you to decide on the issues.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types
of changes, like those included in this Proxy Statement. You have a right to
vote on these changes.
WHAT ISSUES AM I BEING ASKED TO VOTE ON?
The proposals include the election of Directors, ratification of
independent auditors, and changes to the Fund's fundamental investment policies.
WHY ARE INDIVIDUALS RECOMMENDED FOR ELECTION TO THE BOARD OF DIRECTORS?
The Fund is devoted to serving the needs of its shareholders, and the Board
is responsible for managing the Fund's business affairs to meet those needs. The
Board represents the shareholders and can exercise all of the Fund's powers,
except those reserved only for shareholders.
Directors are selected on the basis of their education and professional
experience. Candidates are chosen based on their distinct interest in, and
capacity for understanding the complexities of, the operation of a mutual fund.
These individuals bring considerable experience to the impartial oversight of a
fund's operation.
The Proxy Statement includes a brief description of each nominee's history
and current position with the Fund, if applicable.
WHY AM I BEING ASKED TO VOTE ON THE RATIFICATION OF INDEPENDENT AUDITORS?
The independent auditors conduct a professional examination of certain of
the Fund's accounting documents and supporting data to render an opinion on the
material fairness of the information. Because financial reporting involves
considerable discretion, the auditor's opinion is an important assurance to both
the Fund and its investors.
The Board of Directors approved the selection of Deloitte & Touche LLP,
long-time auditors of the Fund, for the current fiscal year and believes that
the continued employment of this firm is in the Fund's best interests.
WHY ARE THE FUND'S "FUNDAMENTAL POLICIES" BEING CHANGED OR REMOVED?
Every mutual fund has certain investment policies that can be changed only
with the approval of its shareholders. These are referred to as "fundamental"
investment policies.
In some cases, these policies were adopted to reflect regulatory, business,
or industry conditions that no longer exist or no longer are necessary. In other
cases, advances in the securities markets and the economy have created different
procedures and techniques that affect the Fund's operations.
By reducing the number of "fundamental policies," the Fund may be able to
minimize the costs and delays associated with frequent shareholder meetings.
Also, the investment adviser's ability to manage the Fund's assets may be
enhanced and investment opportunities increased.
The proposed amendments will:
o reclassify as operating policies those fundamental policies that are not
required to be fundamental by the Investment Company Act of 1940, ("1940
Act"); and
o simplify and modernize the policies that are required to be "fundamental"
by the 1940 Act, as amended.
Federated is a conservative money manager. Our highly trained professionals
are dedicated to making investment decisions in the best interest of the Fund
and its shareholders. The Board believes that the proposed changes can be
applied responsibly by the Fund's investment adviser.
WHY ARE SOME "FUNDAMENTAL POLICIES" BEING RECLASSIFIED AS "OPERATING POLICIES?"
As noted above, some "fundamental policies" have been redefined as
"operating policies" by changes made to the 1940 Act. Operating policies do not
require shareholder approval to be changed. This gives the Fund's Board
additional flexibility to determine whether to participate in new investment
opportunities and to meet industry changes promptly.
HOW DO I VOTE MY SHARES?
You may vote in person at the annual meeting of shareholders or simply sign
and return the enclosed Proxy Card. You may also vote by telephone at
1-800-________, or through the Internet at PROXYVOTE.COM. We encourage you to
vote by telephone or through the Internet, because these voting methods will
save the Fund a good deal of money. If we do not receive your Proxy Card, we may
contact you by telephone to request that you cast your vote.
WHO DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?
Call your Investment Professional or a Federated Client Service
Representative. Federated's toll-free number is 1-800-341-7400.
After careful consideration, the Board of Directors has unanimously approved
these proposals. The Board recommends that you read the enclosed materials
carefully and vote FOR all proposals.
<PAGE>
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 26, 1999
An annual meeting of the shareholders of Federated Fund for U.S. Government
Securities, Inc. (the "Fund") will be held at 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7000, at 2:00 p.m. (Eastern time), on March 26, 1999 to
consider proposals:
(1) To elect nine Directors.
(2) To ratify the selection of the Fund's independent auditors.
(3) To make changes to the Fund's fundamental investment policies:
(a) To amend the Fund's fundamental investment policy regarding borrowing to
permit the use of reverse repurchase agreements;
(b) To make non-fundamental, and to amend, the Fund's fundamental investment
policy to permit the Fund to invest in the securities of other investment
companies;
(c) To make non-fundamental, and to amend, the Fund's fundamental investment
policy regarding investing in mortgage securities; and
(d) To amend the Fund's fundamental investment policy to allow investments in
real estate investment trusts.
(4) To approve amendments to the Fund's Amended and Restated Articles of
Incorporation to permit the Board of Directors to liquidate assets of a
series or class without seeking shareholder approval to the extent
permitted under Maryland law.
To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed January 12, 1999, as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Board of Directors,
John W. McGonigle
Secretary
January 25, 1999
YOU CAN HELP THE FUND AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY.
IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE ANNUAL
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
<PAGE>
TABLE OF CONTENTS
About the Proxy Solicitation and the Annual Meeting
Election of Nine Directors
Ratification of the Selection of the Independent Auditors
Approval or Disapproval of Changes to the Fund's Fundamental Investment
Policies
Approval or Disapproval of Amendments to the Fund's Amended and
Restated Articles of Incorporation
Information About the Fund
Proxies, Quorum and Voting at the Annual Meeting
About the Election of Directors
Directors Standing for Election
Nominees Not Presently Serving as Directors
Previously Elected Directors
Share Ownership of the Directors
Director Compensation
Officers of the Fund
Other Matters and Discretion of Attorneys Named in the Proxy
<PAGE>
PRELIMINARY
PROXY STATEMENT
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
About the Proxy Solicitation and the Annual Meeting
The enclosed proxy is solicited on behalf of the Board of Directors of the
Fund (the "Board" or "Directors"). The proxies will be voted at the annual
meeting of shareholders of the Fund to be held on March 26, 1999, at 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (such annual
meeting and any adjournment or postponement thereof are referred to as the
"Annual Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Fund. In addition to solicitations through the
mails, proxies may be solicited by officers, employees, and agents of the Fund
or, if necessary, a communications firm retained for this purpose. Such
solicitations may be by telephone, telegraph, through the Internet or otherwise.
Any telephonic solicitations will follow procedures designed to ensure accuracy
and prevent fraud, including requiring identifying shareholder information,
recording the shareholder's instructions, and confirming to the shareholder
after the fact. Shareholders who communicate proxies by telephone or by other
electronic means have the same power and authority to issue, revoke, or
otherwise change their voting instruction as shareholders submitting proxies in
written form. The Fund will reimburse custodians, nominees, and fiduciaries for
the reasonable costs incurred by them in connection with forwarding solicitation
materials to the beneficial owners of shares held of record by such persons.
At its meeting on November 17, 1998, the Board reviewed both the proposed
amendments to the Amended and Restated Articles of Incorporation and changes
recommended in the investment policies of the Fund, and approved them subject to
shareholder approval. The purposes of the Annual Meeting are set forth in the
accompanying Notice. The Directors know of no business other than that mentioned
in the Notice that will be presented for consideration at the Annual Meeting.
Should other business properly be brought before the Annual Meeting, proxies
will be voted in accordance with the best judgment of the persons named as
proxies. This proxy statement and the enclosed proxy card are expected to be
mailed on or about January 25, 1999 to shareholders of record at the close of
business on January 12, 1999 (the "Record Date"). On the Record Date, the Fund
had outstanding _________ shares of common stock.
The Fund's annual report, which includes audited financial statements for
the fiscal year ended March 31, 1998, was previously mailed to shareholders.
Requests for a semi-annual report which contains unaudited financial statements
for the period ended September 30, 1998, may be made in writing to the Fund's
principal executive offices, which are located at Federated Investors Funds,
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000 or by calling
toll-free 1-800-341-7400.
PROPOSAL #1: ELECTION OF NINE DIRECTORS
The persons named as proxies intend to vote in favor of the election of
Thomas G. Bigley, John T. Conroy, Jr., Nicholas P. Constantakis, John F.
Cunningham, J. Christopher Donahue, Peter E. Madden, Charles F. Mansfield, Jr.,
John E. Murray, Jr. and John S. Walsh (collectively, the "Nominees") as
Directors of the Fund. Messrs. Bigley, Conroy, Donahue, Madden and Murray are
presently serving as Directors. If elected by shareholders, Messrs.
Constantakis, Cunningham, Mansfield and Walsh will assume their responsibilities
as Directors effective April 1, 1999. Please see "Information about the Fund"
for current information about the Nominees.
Messrs. Conroy and Madden were appointed Directors on August 21, 1991, to
fill vacancies created by the resignation of Mr. Joseph Maloney and the decision
to expand the size of the Board. Messrs. Donahue, Bigley and Murray were
appointed Directors on December 9, 1986, November 15, 1994, and February 14,
1995, respectively, also to fill vacancies resulting from the decision to expand
the size of the Board.
All Nominees have consented to serve if elected. If elected, the Directors
will hold office without limit in time until death, resignation, retirement, or
removal or until the next meeting of shareholders to elect Directors and the
election and qualification of their successors. Election of a Director is by a
plurality of the votes cast by shareholders of the Fund at the Annual Meeting.
The nine individuals receiving the greatest number of votes at the Annual
Meeting will be deemed to be elected Directors.
If any Nominee for election as a Director named above shall by reason of
death or for any other reason become unavailable as a candidate at the Annual
Meeting, votes pursuant to the enclosed proxy will be cast for a substitute
candidate by the proxies named on the proxy card, or their substitutes, present
and acting at the Annual Meeting. Any such substitute candidate for election as
a Director who is an "interested person" (as defined in the Investment Company
Act of 1940, as amended (the "1940 Act")) of the Fund shall be nominated by the
Executive Committee. The selection of any substitute candidate for election as a
Director who is not an "interested person" shall be made by a majority of the
Directors who are not "interested persons" of the Fund. The Board has no reason
to believe that any Nominee will become unavailable for election as a Director.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE TO ELECT AS DIRECTORS THE NOMINEES FOR ELECTION
TO THE BOARD OF DIRECTORS OF THE FUND
PROPOSAL #2: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS__
The 1940 Act requires that the Fund's independent auditors be selected by
the Board, including a majority of those Board members who are not "interested
persons" (as defined in the 1940 Act) of the Fund, and that the employment of
such independent auditors be conditioned on the right of the Fund, by vote of a
majority of its outstanding securities at any meeting called for that purpose,
to terminate such employment forthwith without penalty. The Board of the Fund,
including a majority of its members who are not "interested persons" of the
Fund, approved the selection of Deloitte & Touche LLP (the "Auditors") for the
current fiscal year at a Board meeting held on May 12, 1998.
The selection by the Board of the Auditors as independent auditors for the
current fiscal year is submitted to the shareholders for ratification. Apart
from their fees as independent auditors and certain consulting fees, neither the
Auditors nor any of their partners have a direct, or material indirect,
financial interest in the Fund or its investment adviser. The Auditors are a
major international independent accounting firm. The Board believes that the
continued employment of the services of the Auditors for the current fiscal year
would be in the Fund's best interests.
Representatives of the Auditors are not expected to be present at the
Annual Meeting. If a representative is present, he or she will have the
opportunity to make a statement and would be available to respond to appropriate
questions. The ratification of the selection of the Auditors will require the
affirmative vote of a majority of the shares present and voting at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3: APPROVAL OF CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT POLICIES
The 1940 Act requires investment companies such as the Fund to adopt
certain specific investment policies that can be changed only by shareholder
vote. An investment company may also elect to designate other policies that may
be changed only by shareholder vote. Both types of policies are often referred
to as "fundamental policies." Certain of the Fund's fundamental policies had
been adopted in the past to reflect regulatory, business or industry conditions
that are no longer in effect. Accordingly, the Directors have approved, and have
authorized the submission to the Fund's shareholders for their approval, and
recommend that shareholders approve, the amendment and/or reclassification of
certain of the Fund's fundamental policies.
The proposed amendments would:
(i) simplify and modernize the fundamental policies that are required to be
stated under the 1940 Act; and/or
(ii) reclassify as operating policies those fundamental policies that are
not required to be fundamental under the 1940 Act.
By reducing to a minimum those policies that can be changed only by
shareholder vote, the Directors believe that the Fund would be able to minimize
the costs and delay associated with holding future shareholder meetings to
revise fundamental policies that become outdated or inappropriate. The Directors
also believe that the investment adviser's ability to manage the Fund's assets
in a changing investment environment will be enhanced and that investment
management opportunities will be increased by these changes. The recommended
changes are specified below. Each sub-item will be voted on separately, and the
approval of any item will require the approval of a majority of the outstanding
shares of the Fund.
PROPOSAL #3(a): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY
REGARDING BORROWING TO PERMIT THE USE OF
REVERSE REPURCHASE AGREEMENTS
The Fund is currently subject to a fundamental investment policy that
provides that:
"In extraordinary or emergency situations, the Fund may borrow amounts not
in excess of 10% of its total assets taken at cost."
The Fund's investment adviser has informed the Board that it would like the
flexibility to engage in reverse repurchase agreements as a technique to borrow
money, when necessary. Reverse repurchase agreements are similar to borrowing
cash. In a reverse repurchase agreement, a mutual fund transfers possession of a
portfolio instrument to another person, such as a financial institution, broker,
or dealer, in return for a percentage of the instrument's market value in cash,
and agrees that on a stipulated date in the future the mutual fund will
repurchase the portfolio instrument by remitting the original consideration plus
interest at an agreed upon rate. The use of reverse repurchase agreements may
enable a mutual fund to avoid selling portfolio instruments at a time when a
sale may be deemed to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the mutual fund will be able to avoid
selling portfolio instruments at a disadvantageous time.
If shareholders approve the proposal, the Fund, when effecting reverse
repurchase agreements, will segregate liquid assets, in a dollar amount
sufficient to make payment for the obligations to be purchased, on its records
at the trade date. These securities will be marked to market daily and
maintained until the transaction is settled. The Fund's ability to engage in
reverse repurchase agreements will not vary the legal requirements and
limitations on borrowing to which the Fund is currently subject.
The Fund will adopt a fundamental investment policy substantially similar
to the following policy if the proposal is approved by shareholders:
"Issuing Senior Securities and Borrowing Money
The Fund will not borrow money, issue senior securities, or pledge assets,
except that under certain circumstances the Fund may borrow money and engage in
reverse repurchase agreement transactions in amounts up to one-third of the
value of its net assets, including the amounts borrowed, and pledge up to 10% of
the value of those assets to secure such borrowings.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or emergency
measure to facilitate management of the portfolio by enabling the Fund to meet
redemption requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. However, during the period any reverse
repurchase agreements are outstanding, but only to the extent necessary to
assure completion of the reverse repurchase agreements, the Fund will restrict
the purchase of portfolio instruments to money market instruments maturing on or
before the expiration date of the reverse repurchase agreements."
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE PROPOSAL
PROPOSAL #3(b): TO MAKE NON-FUNDAMENTAL AND TO AMEND THE FUND'S POLICY TO
PERMIT THE FUND TO INVEST IN THE SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund currently has a fundamental investment policy prohibiting the
Fund's investment in the securities of open-end investment companies, except for
securities acquired in a merger, consolidation or acquisition of assets. The
adviser believes, and the Board has concluded, that this prohibition
unnecessarily limits the Fund's investments.
Amending this policy would expand the investment opportunities available to
the Fund by allowing the Fund to invest in other investment companies.
Investments in other investment companies are limited under the 1940 Act. The
1940 Act limits both the portion of the Fund's assets that may be so invested in
a particular fund, and the portion of such a fund that may be owned by the Fund.
Normally, each investment company in which the Fund invests will have its own
operating expenses, including advisory fees. It is expected that the duplicative
expense are justified by the benefit of having access to the markets in which
such a fund invests, or in the investment techniques or advisers of such funds.
At the present time, the Board expects to utilize the authority provided by
this proposal to invest the Fund's temporary cash reserves in shares of money
market funds. These cash reserves typically arise from the receipt of dividend
and interest income from portfolio securities, the receipt of payment for sale
of portfolio securities, defensive cash positions and the decision to hold cash
to meet redemptions or make anticipated dividend payments. Further, by changing
the policy from fundamental to an operating policy, the Directors believe that
maximum flexibility will be afforded to the Fund to amend the policy as
appropriate in the future without the burden and delay to the Fund and its
shareholders of holding a special meeting.
The money market funds in which the Fund plans to invest pay an advisory
fee. However, the Fund's investment adviser and the Directors believe that the
benefits derived from having the cash invested outweigh any reduction in the
amount earned as a result of such a fee. The ability to purchase shares of money
market funds would be beneficial because it would provide the Fund with
additional investment opportunities late in each business day, when
opportunities to acquire money market instruments are limited. Otherwise, the
Fund would be forced to hold some of its cash uninvested, resulting in little or
no investment income.
If shareholders approve this item, the new operating policy will read as
follows in: (a) the Prospectus, and (b) the Statement of Additional Information:
(a) "Investing in Securities of Other Investment Companies
The Fund may invest its assets in securities of other investment companies
as an efficient means of carrying out its investment policies. It should be
noted that investment companies incur certain expenses, such as management fees,
and, therefore, any investment by the Fund in shares of other investment
companies may be subject to such duplicate expenses. At the present time, the
Fund expects that its investments in other investment companies will be limited
to shares of money market funds, including funds affiliated with the Fund's
investment adviser."
(b) "Investing in Securities of Other Investment Companies
The Fund may invest in the securities of affiliated money market funds as
an efficient means of managing the Fund's uninvested cash."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(c): TO MAKE NON-FUNDAMENTAL AND TO AMEND THE FUND'S
POLICY REGARDING INVESTING IN MORTGAGE SECURITIES
Presently, the Fund's acceptable investments are comprised of securities
that are primary or direct obligations of the U.S. government, its agencies or
instrumentalities, or which are guaranteed as to the payment of principal and
interest by the U.S. government, its agencies or instrumentalities, and certain
collateralized mortgage obligations ("CMOs") that are issued by agencies and
instrumentalities of the U.S. government. As a matter of fundamental policy, the
Fund is currently permitted to purchase only mortgage securities that are issued
by U.S. government agencies.
The Fund's investment adviser has informed the Board that it would like
greater flexibility to purchase mortgage securities issued by entities that are
not U.S. government agencies. The entities include originators and investors in
mortgage loans, including savings associations, mortgage bankers, commercial
banks, investment bankers and special purpose entities (collectively, "private
lenders"). Mortgage securities issued by private lenders may be supported by
pools of mortgage loans or other mortgage-backed securities that are guaranteed,
directly or indirectly, by the U.S. government or one of its agencies or
instrumentalities, or they may be issued without any governmental guarantee of
the underlying mortgage assets but with some form of non-governmental credit
enhancement. For example, the timely payment of interest and principal on such
pools may be supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance and letters of credit. The
pools of mortgages that underlie the mortgage securities that the Fund's
investment adviser has proposed to purchase for the Fund's portfolio offer a
higher rate of interest than government and government-related pools because
there are no direct or indirect government or agency guarantees of payment. If
approved by shareholders, the Fund's investment adviser, when investing in these
types of mortgage securities, will consider any insurance, guarantees and the
creditworthiness of the private lenders when determining whether to invest in
mortgage securities of private lenders.
Like other debt securities (including mortgage securities in which the Fund
may presently invest and that are issued by U.S. government agencies), mortgage
securities issued by private lenders generally will fluctuate in response to
market interest rates. The market for mortgage securities issued by private
lenders, while becoming increasingly liquid, is generally considered to be less
liquid than the market for mortgage securities issued by U.S. government
agencies. The Fund's investment adviser has no present intention to invest in
mortgage securities issued by private lenders that are not readily marketable.
If approved by shareholders, this policy would become non-fundamental, and
would no longer be subject to shareholder approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(d): TO AMEND THE FUND'S FUNDAMENTAL INVESTMENT POLICY TO ALLOW
INVESTMENTS IN REAL ESTATE INVESTMENT TRUSTS
The Fund is currently subject to a fundamental investment policy that
prohibits the Fund from investing in real estate. The present policy states that
"[t]he Fund will not buy or sell real estate." The Fund's investment adviser has
informed the Board that, in pursuing the Fund's investment objective of current
income, the adviser would like the ability to purchase interests in real estate
investment trusts. Real estate investment trusts are companies, typically
publicly traded, that own and manage a portfolio of real estate or mortgages in
order to earn profits for their shareholders. If approved by shareholders, the
Fund would be permitted to purchase interests in equity and mortgage real estate
investment trusts. Equity real estate investment trusts purchase or lease real
estate and generate income primarily from rental income, and realize capital
gains or losses from property that has appreciated or depreciated in value.
Mortgage real estate investment trusts are interests in real estate mortgages
and generate income from interest payments on mortgage loans.
To permit such investments by the Fund, it is proposed that the following
language be added to the present investment policy:
"Buying or Selling Real Estate
The Fund will not buy or sell real estate, but the Fund may invest in real
estate investment trusts, marketable securities of companies that may represent
indirect interest in real estate, or any investment security that derives its
value from real estate."
There are several risks associated with real estate investment trusts.
These include the fact that equity and mortgage real estate investment trusts
are dependent upon management skill and are not diversified, and are, therefore,
subject to the risk of financing single projects or an unlimited number of
projects. They are also subject to heavy cash flow dependency, defaults by
borrowers, and self-liquidation. Additionally, equity real estate investment
trusts may be affected by any changes in the value of the underlying property
owned by the trusts, and mortgage real estate investment trusts may be affected
by the quality of any credit extended. The Fund's investment adviser will seek
to mitigate these risks by selecting real estate investment trust diversified by
sector (shopping malls, apartment building complexes, and health care
facilities) and geographic location.
PROPOSAL #4: TO APPROVE AMENDMENTS TO THE FUND'S
ARTICLES OF INCORPORATION TO PERMIT THE BOARD OF DIRECTORS
TO LIQUIDATE ASSETS OF A SERIES OR CLASS WITHOUT SHAREHOLDER APPROVAL
Mutual funds, such as the Fund, are required to organize under the laws of
a state and to create and be bound by organizational documents outlining how
they will operate. In the case of the Fund, these organizational documents are
the Articles of Incorporation and the By-Laws. Since the adoption of the
Articles of Restatement to the Fund's Articles of Incorporation in 1993, the
market for mutual funds has evolved, requiring mutual funds to be more flexible
in their operation so that they may respond quickly to changes in the market.
Certain items in the Fund's current Articles of Restatement prohibit the Fund
from responding quickly and favorably to changing markets without going to the
expense and delay of holding a shareholder meeting. Accordingly, the Directors
have approved, and have authorized the submission to the Fund's shareholders for
their approval, of certain amendments to the Fund's Articles of Incorporation.
If these amendments are approved by shareholders, and in light of other
amendments that have been adopted to the Articles of Incorporation that do not
require shareholder approval, it is contemplated that the Amended and Restated
Articles of Incorporation will, following Board approval, be filed in Maryland
following the Annual Meeting. The approval of the proposed amendments will
require the affirmative vote of a majority of the aggregate number of shares
entitled to be cast thereon.
Shareholders are being asked to approve amendments to the Fund's Amended
and Restated Articles of Incorporation to permit the Directors, to the extent
permissible under Maryland law from time to time, to sell and convert into money
(i.e., liquidate) all of the assets of the Fund, or a class or series of the
Fund, and then redeem all outstanding shares of any portfolio or class of the
Fund. Currently, a vote of shareholders is required to liquidate the Fund. The
Directors have determined that the current restriction presents a cumbersome
structure under which the best interest of all of the Fund's shareholders may
not be served. By requiring the Directors to solicit a shareholder vote, by
means of a proxy solicitation for a meeting of shareholders, the Articles of
Restatement as currently in effect greatly hinder the Directors' ability to
effectively act on decisions about the continued viability of the Fund. If it is
determined that it is no longer advisable to continue the Fund, it may not be in
the best interest of shareholders to incur the substantial additional expense of
a shareholder meeting when it is more important to preserve for shareholders
those assets that remain.
If approved by shareholders, the Amended and Restated Articles of
Incorporation would provide substantially to the effect that:
"To the extent permitted under Maryland law, without the vote of the shares
of any class of stock of the Fund then outstanding, the Fund may, upon approval
of a majority of the Board of Directors, sell and convert into money all the
assets of any class or series of the Fund. Upon making provision for the payment
of all outstanding obligations, taxes and other liabilities, accrued or
contingent, belonging to the Fund, or any class or series thereof, the Directors
shall distribute the remaining assets of the Fund ratably among the holders of
the outstanding shares of the Fund, or any affected class or series thereof."
In the event that the amendments to the Amended and Restated Articles of
Incorporation to allow the Directors to liquidate the Fund as set forth above
are not approved by the shareholders, the provisions of the Amended and Restated
Articles of Incorporation shall remain as they are presently in the Articles of
Restatement, and the Directors will consider what action, if any, should be
taken.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
INFORMATION ABOUT THE FUND
Proxies, Quorum and Voting at the Annual Meeting
The favorable vote of: (a) the holders of 67% or more of the outstanding
voting securities present at the Annual Meeting, if the holders of 50% or more
of the outstanding voting securities of the Fund are present or represented by
proxy; or (b) the vote of the holders of more than 50% of the outstanding voting
securities, whichever is less, is required to approve all of the proposals,
except the election of Directors, the ratification of the selection of the
Auditors, and the amendments of the charter.
Only shareholders of record on the Record Date will be entitled to vote at
the Annual Meeting. Each share of the Fund is entitled to one vote. Fractional
shares are entitled to proportionate shares of one vote.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Fund. In addition, although mere attendance
at the Annual Meeting will not revoke a proxy, a shareholder present at the
Annual Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Annual Meeting will be
voted in accordance with the instructions contained in the proxies. If no
instruction is given on the proxy, the persons named as proxies will vote the
shares represented thereby in favor of the matters set forth in the attached
Notice.
In order to hold the Annual Meeting, a "quorum" of shareholders must be
present. Holders of one-third of the total number of outstanding shares of the
Fund, present in person or by proxy, shall be required to constitute a quorum
for the purpose of voting on the proposals made.
For purposes of determining a quorum for transacting business at the Annual
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted. For
this reason, abstentions and broker non-votes will have the effect of a "no"
vote for purposes of obtaining the requisite approval of some of the proposals.
If a quorum is not present, the persons named as proxies may vote those
proxies that have been received to adjourn the Annual 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 Annual Meeting to permit further
solicitations of proxies with respect to such proposal(s). All such adjournments
will require the affirmative vote of a majority of the shares present in person
or by proxy at the session of the Annual Meeting to be adjourned. The persons
named as proxies will vote AGAINST an adjournment those proxies that they are
required to vote against the proposal, and will vote in FAVOR of such an
adjournment all other proxies that they are authorized to vote. A shareholder
vote may be taken on the proposals in this proxy statement prior to any such
adjournment if sufficient votes have been received for approval.
About the Election of Directors
When elected, the Directors will hold office during the lifetime of the
Fund except that: (a) any Director may resign; (b) any Director may be removed
by written instrument signed by at least two-thirds of the number of Directors
prior to such removal; (c) any Director who requests to be retired or who has
become mentally or physically incapacitated may be retired by written instrument
signed by a majority of the other Directors; and (d) a Director may be removed
at any special meeting of the shareholders by a vote of two-thirds of the
outstanding shares of the Fund. In case a vacancy shall exist for any reason,
the remaining Directors will fill such vacancy by appointment of another
Director. The Directors will not fill any vacancy by appointment if, immediately
after filling such vacancy, less than two-thirds of the Directors then holding
office would have been elected by the shareholders. If, at any time, less than a
majority of the Directors holding office have been elected by the shareholders,
the Directors then in office will call a shareholders' meeting for the purpose
of electing Directors to fill vacancies. Otherwise, there will normally be no
meeting of shareholders called for the purpose of electing Directors.
Set forth below is a listing of: (i) Directors standing for election, (ii)
Nominees standing for election who are not presently serving as Directors, and
(iii) Directors previously elected, along with their addresses, birthdates,
present positions with the Fund, if applicable, and principal occupations during
the past five years:
Directors Standing for Election
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member of
Executive Committee, University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Director
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Director of the Fund.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Director
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Director
President, Law Professor, Duquesne University; Consulting Partner, Mollica
& Murray; Director or Trustee of the Funds.
Nominees Not Presently Serving as Directors
Nicholas P. Constantakis
175 Woodshire Drive
Pittsburgh, PA
Birthdate: September 3, 1939
Formerly, Partner, Andersen Worldwide SC; Director or Trustee of the Funds.
John F. Cunningham
353 El Brillo Way
Palm Beach, FL
Birthdate: March 5, 1943
Chairman, President and Chief Executive Officer, Cunningham & Co., Inc.
(consulting organization to high technology and computer companies in the
financial community);
Director, EMC Corporation.
Charles F. Mansfield, Jr.
54 Pine Street
Garden City, NY
Birthdate: April 10, 1945
Management consultant.
John S. Walsh
2007 Sherwood Drive
Valparaiso, IN
Birthdate: November 28, 1957
President, Heat Wagon, Inc., Manufacturers Products, Inc. ("MPI") and the
Portable Heater Parts division of MPI (engineering, manufacturing and
distribution of portable, temporary heating equipment) (1996-present); Director,
Walsh & Kelly, Inc., asphalt road construction business; formerly, Vice
President, Walsh & Kelly, Inc. (1984-1996).
Previously Elected Directors
John F. Donahue#*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director or Trustee of the Funds. Mr. Donahue is the
father of J. Christopher Donahue, President and Director of the Fund.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Director
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center--Downtown; Member, Board of Directors,
University of Pittsburgh Medical Center; formerly, Hematologist, Oncologist, and
Internist, Presbyterian and Montefiore Hospitals; Director or Trustee of the
Funds.
Edward L. Flaherty, Jr.#
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western Region;
Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
* This Director is deemed to be an "interested person" as defined in the
1940 Act.
# Member of the Executive Committee. The Executive Committee of the Board
of Directors handles the responsibilities of the Board between meetings of the
Board.
As referred to above, "The Funds" or "Funds" includes the following
investment companies: Automated Government Money Trust; Cash Trust Series II;
Cash Trust Series, Inc.; CCB Funds; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core
Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated
Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust; Federated High
Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Master Trust; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; Fixed Income
Securities, Inc.; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; Tax-Free Instruments Trust; The
Planters Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; WesMark Funds; WCT
Funds; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious Metals
Fund, Inc.; High Yield Cash Trust; Investment Series Trust; Targeted Duration
Trust; The Virtus Funds and Trust for Financial Institutions.
Share Ownership of the Fund
Officers and Directors of the Fund own less than 1% of the Fund's
outstanding shares.
At the close of business on the Record Date, the following persons owned,
to the knowledge of management, more than 5% of the outstanding shares of the
Fund: [INSERT 5% HOLDERS]
Director Compensation
Aggregate
Name, Compensation
Position With From Total Compensation Paid
Fund Fund*# From Fund Complex+
John F. Donahue $0 $0 for the Fund and
Chairman and Director 56 other investment companies in the Fund Complex
Thomas G. Bigley $2,071.01 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
John T. Conroy, Jr. $2,219.05 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
William J. Copeland $2,219.05 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
J. Christopher Donahue $0 $0 for the Fund and
President and Director 56 other investment companies in the Fund Complex
James E. Dowd $2,219.05 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $2,017.01 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $2,219.05 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
Peter E. Madden $2,017.01 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
John E. Murray, Jr. $2,017.01 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
Wesley W. Posvar $2,017.01 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
Marjorie P. Smuts $2,017.01 $_______ for the Fund and
Director 56 other investment companies in the Fund Complex
* Information is furnished for the fiscal year ended March 31, 1998.
# The aggregate compensation is provided for the Fund which is comprised of
one portfolio.
+The information is provided for the last calendar year.
During the fiscal year ended March 31, 1998, there were four meetings of
the Board of Directors. The interested Directors, other than Dr. Ellis, do not
receive fees from the Fund. Dr. Ellis is an interested person by reason of the
employment of his son-in-law by Federated Securities Corp. All Directors were
reimbursed for expenses for attendance at Board of Directors meetings.
Other than its Executive Committee, the Fund has one Board committee, the
Audit Committee. Generally, the function of the Audit Committee is to assist the
Board of Directors in fulfilling its duties relating to the Fund's accounting
and financial reporting practices and to serve as a direct line of communication
between the Board of Directors and the independent auditors. The specific
functions of the Audit Committee include recommending the engagement or
retention of the independent auditors, reviewing with the independent auditors
the plan and the results of the auditing engagement, approving professional
services provided by the independent auditors prior to the performance of such
services, considering the range of audit and non-audit fees, reviewing the
independence of the independent auditors, reviewing the scope and results of the
Fund's procedures for internal auditing, and reviewing the Fund's system of
internal accounting controls.
Messrs. Flaherty, Conroy, Copeland, and Dowd serve on the Audit Committee.
These Directors are not interested Directors of the Fund. During the fiscal year
ended March 31, 1998, there were four meetings of the Audit Committee. All of
the members of the Audit Committee were present for each meeting. Each member of
the Audit Committee receives an annual fee of $100 plus $25 for attendance at
each meeting and is reimbursed for expenses of attendance.
Officers of the Fund
The executive officers of the Fund are elected annually by the Board of
Directors. Each officer holds the office until qualification of his successor.
The names and birthdates of the executive officers of the Fund and their
principal occupations during the last five years are as follows:
John F. Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director or Trustee of the Funds. Mr. Donahue is the
father of J. Christopher Donahue, President and Director of the Fund.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Director
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Director of the Fund.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Shareholder Services Company; Director, Federated Services Company;
President and Trustee, Federated Shareholder Services; Director, Federated
Securities Corp.; Executive Vice President and Secretary of the Funds; Treasurer
of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
None of the Officers of the Fund received salaries from the Fund during the
fiscal year ended March 31, 1998.
Federated Services Company, a subsidiary of Federated Investors, is the
Fund's administrator and provides administrative personnel and services to the
Fund for a fee as described in the prospectus. For the fiscal year ended March
31, 1998, Federated Services Company earned $1,006,395.
Federated Securities Corp., a subsidiary of Federated Investors, Inc., is
the principal distributor of the Fund's shares. Federated Securities Corp.
receives no compensation from the Fund for its services.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Fund is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to Federated Fund for U.S.
Government Securities, Inc., Federated Investors Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, so that they are received within a
reasonable time before any such meeting.
No business other than the matters described above is expected to come
before the Annual Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Annual Meeting, the persons named on the enclosed proxy card will vote on
such matters according to their best judgment in the interests of the Fund.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN
THE UNITED STATES.
By Order of the Board of Directors,
John W. McGonigle
Secretary
January 25, 1999
<PAGE>
FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES, INC.
Investment Adviser
FEDERATED ADVISERS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Distributor
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Administrator
FEDERATED SERVICES COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Cusip
(_____/99)
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Federated Fund for U.S. Government Securities, Inc. (the "Fund") hereby appoint
Patricia F. Conner, Gail Cagney, Susan M. Jones and Ann M. Scanlon, or any one
of them, true and lawful attorneys, with the power of substitution of each, to
vote all shares of the Fund which the undersigned is entitled to vote at the
Annual Meeting of Shareholders to be held on March 26, 1999, at 5800 Corporate
Drive, Pittsburgh, Pennsylvania, at 2:00 p.m., and at any adjournment thereof.
The attorneys named will vote the shares represented by this proxy in
accordance with the choices made on this ballot. If no choice is indicated as to
the item, this proxy will be voted affirmatively on the matters. Discretionary
authority is hereby conferred as to all other matters as may properly come
before the Annual Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FEDERATED
FUND FOR U.S. GOVERNMENT SECURITIES, INC. THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSALS.
By checking the box "FOR" below, you will vote to approve each of the
proposed items in this proxy, and to elect each of the nominees as Directors of
the Fund
FOR [ ]
Proposal 1 To elect Thomas G. Bigley, John T. Conroy, Jr., Nicholas P.
Constantakis, John F. Cunningham, J. Christopher Donahue, Peter E. Madden,
Charles F. Mansfield, Jr., John E. Murray, Jr. and John S. Walsh as Directors of
the Fund
FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR" a particular nominee, mark
the "For All Except" box and strike a line through the name of each nominee for
whom you are NOT voting. Your shares will be voted for the remaining nominees.
Proposal 2 To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 3 To make changes to the Fund's fundamental investment policies:
(a) To approve amending the Fund's fundamental investment policy regarding
borrowing to permit the use of reverse repurchase agreements
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
(b) To approve making non-fundamental, and amending, the Fund's fundamental
investment policy regarding investing in the securities of other investment
companies
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
(c) To approve making non-fundamental, and amending, the Fund's fundamental
investment policy regarding investing in mortgage securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
(d) To approve amending the Fund's fundamental investment policy to allow
investments in real estate investment trusts
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 4 To approve an amendment to the Fund's Amended and Restated
Articles of Incorporation to permit the Board of Directors to liquidate assets
of a series or class without shareholder approval to the extent permitted under
Maryland law
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT
Please complete, sign and return
this card as soon as possible
mark with an X in the box.
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the
Fund. Joint owners should each sign personally. Directors and other fiduciaries
should indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or her title.
You may also vote your shares by telephoning 1-800-_______, or through the
Internet at proxyvote.com.
