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
Money Market Management, 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
ii
MONEY MARKET MANAGEMENT, INC.
Proxy Statement - Please Vote!
TIME IS OF THE ESSENCE ... VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! ACT NOW TO HELP THE COMPANY AVOID ADDITIONAL
EXPENSE.
Money Market Management, Inc. (the "Company") will hold a special meeting of
shareholders on November 30, 1999. It is important for you to vote on the issues
described in this Proxy Statement. We recommend that you read the Proxy
Statement in its entirety; the explanations will help you to decide on the
issues.
Following is an introduction to the proposals and the process.
Why am I being asked to vote?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like those included in this Proxy Statement. You have a right to vote
on these changes.
What issues am I being asked to vote on?
The proposals include the election of Directors; an amendment to and a
restatement of the Company's Articles of Incorporation; and a proposed
reorganization of the Company into a newly created portfolio of Money Market
Obligations Trust ("MMOT").
Why are individuals recommended for election to the Board of Directors?
The Company is devoted to serving the needs of its shareholders, and the Board
is responsible for managing the Company's business affairs to meet those needs.
The Board represents the shareholders and can exercise all of the Company'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 Company, if applicable.
Why is the Reorganization being proposed?
The Company's Board of Directors and investment adviser believe that the
Company's management structure can be simplified by reorganizing as a portfolio
of MMOT, another money market mutual fund. After the Reorganization, the
original Company will be dissolved. MMOT offers a variety of portfolios
investing in money market securities, each with its own investment objective.
How will the Reorganization affect my investment?
* The shares you own and the value of your investment will not change.
* The Reorganization will be a tax-free event.
* There will not be sales loads, commissions, or transaction charges
with the Reorganization.
* The investment objective will remain the same.
* There will be no increases in the fees payable to the Company's
adviser because of the Reorganization.
Why are the Directors recommending an amendment to the Articles of
Incorporation?
The Articles of Incorporation organizing the Company were prepared many years
ago. Since then, developments in the investment company industry and changes in
the law have resulted in many improvements. The Board is recommending changes to
the Articles of Incorporation that permit the Company to benefit from these
developments.
How do I vote my shares?
You may vote in person at the special meeting of shareholders or complete and
return the enclosed Proxy Card. If you sign and return the Proxy Card without
indicating a preference, your vote will be cast "for" all the proposals.
You may also vote by telephone at 1-800-690-6903, or through the Internet at
www.proxyvote.com. If you choose to help save the Company time and postage costs
by voting through the Internet or by telephone, please don't return your Proxy
Card. If you do not respond at all, we may contact you by telephone to request
that you cast your vote.
Who do I call if I have questions about the Proxy Statement?
Call your Investment Professional or a Federated Client Service Representative.
Federated's toll-free number is
1-800-341-7400.
After careful consideration, the Board of Directors has
unanimously approved these proposals. The Board recommends
that you read the enclosed materials
carefully and vote for all proposals.
<PAGE>
PRELIMINARY
MONEY MARKET MANAGEMENT, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 30, 1999
A special meeting of the shareholders of Money Market
Management, Inc. (the "Company") will be held at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (Eastern time), on November
30, 1999 to consider proposals:
(1) To elect three Directors.
(2) To approve an amendment to, and a restatement of, the
Company's Articles of Incorporation to permit the
Board to liquidate assets of the Company, its series
or classes, and distribute the proceeds of such
assets to the holders of such shares representing
such interests, without seeking shareholder approval
to the extent permitted under Maryland law.
(3) To approve a proposed Agreement and Plan of
Reorganization between the Company and Money Market
Obligations Trust, on behalf of its series, Money
Market Management (the "New Fund"), whereby the New
Fund would acquire all of the assets of the Company
in exchange for shares of the New Fund to be
distributed pro rata by the Company to its
shareholders in complete liquidation and termination
of the Company.
To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed September 21, 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
October 6, 1999
YOU CAN HELP THE COMPANY AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY.
IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
<PAGE>
TABLE OF CONTENTS
About the Proxy Solicitation and the Meeting...................................
Election of Three Directors....................................................
About the Election of Directors................................................
Directors Standing for Election................................................
Approval of an Amendment to and a Restatement of the Company's
Articles of Incorporation.................................................
Approval of the Proposed Agreement and Plan of Reorganization..................
Information About the Company..................................................
Proxies, Quorum and Voting at the Meeting......................................
Share Ownership of the Directors...............................................
Director Compensation..........................................................
Officers and Incumbent Directors of the Company................................
Other Matters and Discretion of Attorneys Named in the Proxy...................
Appendix I: Agreement and Plan of Reorganization............................I-1
Appendix II: Comparison of Investment Policies and Limitations.............II-1
<PAGE>
3
PRELIMINARY
PROXY STATEMENT
MONEY MARKET MANAGEMENT, INC.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
About the Proxy Solicitation and the Meeting
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company (the "Board" or "Directors"). The proxies will be voted at the
special meeting of shareholders of the Company to be held on November 30, 1999,
at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (such
special meeting and any adjournment or postponement thereof are referred to as
the "Meeting").
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by the Company. In addition to solicitations
through the mails, proxies may be solicited by officers, employees, and agents
of the Company 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 Company may 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.
The Board has reviewed the proposed amendment to the Articles of
Incorporation, as well as the proposed reorganization (the "Reorganization") of
the Company, and approved them, subject to shareholder approval. The purposes of
the 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 Meeting. Should other business properly be brought before
the Meeting, proxies will be voted in accordance with the best judgment of the
persons named as proxies. This Proxy Statement and the enclosed proxy card are
expected to be mailed on or about October 6, 1999, to shareholders of record at
the close of business on September 21, 1999 (the "Record Date"). On the Record
Date, the Company had outstanding _____________ shares of common stock.
The Company's annual report, which includes audited financial
statements for the fiscal year ended December 31, 1998, was previously mailed to
shareholders. The Company's semi-annual report, which contains unaudited
financial statements for the period ended June 30, 1999, was also previously
mailed to shareholders. The Company's annual report and semi-annual report are
incorporated by reference into this Proxy Statement. The Company will promptly
provide, without charge and upon request, to each person to whom this Proxy
Statement is delivered, a copy of the Company's annual report and/or semi-annual
report. Requests for an annual or semi-annual report may be made by writing to
the Company's principal executive offices or by calling the Company. The
Company's principal executive offices are located at Federated Investors Funds,
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The Company's
toll-free telephone number is 1-800-341-7400.
PROPOSAL #1: ELECTION OF THREE DIRECTORS
The persons named as proxies intend to vote in favor of the election of
John F. Cunningham, Charles F. Mansfield, Jr. and John S. Walsh (collectively,
the "Nominees") as Directors of the Company. Messrs. Cunningham, Mansfield and
Walsh are presently serving as Directors. Please see "About the Election of
Directors" below for current information about the Nominees, and "Officers and
Incumbent Directors of the Company" in this Proxy Statement for current
information about the incumbent Directors who have previously been elected by
shareholders.
Messrs. Cunningham, Mansfield and Walsh were appointed Directors on
January 1, 1999, to fill vacancies created by 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 majority vote.
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
Meeting, votes pursuant to the enclosed proxy will be cast for a substitute
candidate by the proxies named on the proxy card, or their substitutes, present
and acting at the Meeting. Any such substitute candidate for election as a
Director who is an "interested person" (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) of the Company 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 Company. 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 COMPANY
About the Election of Directors
Maryland law does not require the election of the Company's Directors
each year, and shareholders should anticipate that, prior to election of
successor Directors, incumbent Directors will hold office during the lifetime of
the Company, 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 Company. 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.
Directors Standing for Election
Set forth below is a listing of the Directors standing for election,
along with their addresses, birth dates, present positions with the Company and
principal occupations during the past five years:
John F. Cunningham
353 El Brillo Way
Palm Beach, FL
Birth Date: March 5, 1943
Director
Director or Trustee of some of the Funds in the Federated Fund Complex;
Chairman, President and Chief Executive Officer, Cunningham & Co., Inc.
(strategic business consulting); Trustee Associate, Boston College; Director,
Iperia Corp. (communications/software); formerly, Director, Redgate
Communications and EMC Corporation (computer storage systems). Previous
Positions: Chairman of the Board and Chief Executive Officer, Computer Consoles,
Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First
National Bank of Boston; Director, Apollo Computer, Inc.
Charles F. Mansfield, Jr.
80 South Road
Westhampton Beach, NY
Birth Date: April 10, 1945
Director
Director or Trustee of some of the Funds in the Federated Fund Complex;
management consultant. Previous Positions: Chief Executive Officer, PBTC
International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP);
Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior
Vice President, Marine Midland Bank; Vice President, Citibank; Assistant
Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra
University.
John S. Walsh
2007 Sherwood Drive
Valparaiso, IN
Birth date: November 28, 1957
Director
Director or Trustee of some of the Funds in the Federated Fund Complex;
President and Director, Heat Wagon, Inc. (manufacturer of construction temporary
heaters); President and Director, Manufacturers Products, Inc. (distributor of
portable construction heaters); President, Portable Heater Parts, a division of
Manufacturers Products, Inc.; Director, Walsh & Kelly, Inc. (heavy highway
contractor); formerly, Vice President, Walsh & Kelly, Inc.
PROPOSAL #2: TO APPROVE AN AMENDMENT TO AND A RESTATEMENT OF THE COMPANY'S
ARTICLES OF INCORPORATION TO PERMIT THE BOARD OF DIRECTORS TO LIQUIDATE THE
ASSETS OF THE COMPANY, ITS SERIES OR CLASSES, AND DISTRIBUTE THE PROCEEDS OF
SUCH ASSETS TO THE HOLDERS OF SUCH SHARES REPRESENTING SUCH INTERESTS, WITHOUT
SEEKING SHAREHOLDER APPROVAL, TO THE EXTENT PERMITTED UNDER MARYLAND LAW
Mutual funds, such as the Company, 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 Company, these organizational
documents are the Articles of Incorporation and the By-Laws. Since the adoption
of the Articles of Incorporation in 1992, 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
Company's current Articles of Incorporation prohibit the Company from responding
quickly and favorably to changing markets without going to the expense and delay
of holding a shareholder meeting.
Shareholders are being asked to approve an amendment to the Company's
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 Company, or a class or series of the
Company, and then redeem all outstanding shares of any series or class of the
Company. Currently, a vote of shareholders is required to liquidate the
Company. The Directors have determined that the current restriction presents a
cumbersome structure under which the best interest of the Company'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 Incorporation as currently in effect greatly
hinder the Directors' ability to effectively act on decisions about the
continued viability of the Company or a series of class thereof. If it is
determined that it is no longer advisable to continue the Company, or a series
or class thereof, 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. Depending on
the terms of Maryland corporate law, which may change from time to time, if
this proposal is approved by shareholders, the Directors may be authorized to
liquidate a class or series of the Company by Board action without a further
shareholder vote. The Directors have no present intention of liquidating the
Company.
<PAGE>
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 Corporation then outstanding, the
Corporation 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 Corporation. Upon making provision for the payment of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, belonging to the Corporation, or any class or series
thereof, the Directors shall distribute the remaining assets of the
Corporation ratably among the holders of the outstanding shares of the
Corporation, or any affected class or series thereof."
In the event that the amendment to the Articles of Incorporation to
allow the Directors to liquidate the Company, or a series or class thereof, as
set forth above are not approved by the shareholders, the provisions of the
Articles of Incorporation shall remain as they are presently, and the
Directors will consider what action, if any, should be taken.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3: TO APPROVE THE PROPOSED REORGANIZATION
The Board of Directors of the Company has voted to recommend to
shareholders of the Company the approval of an Agreement and Plan of
Reorganization (the "Reorganization Agreement") whereby Money Market Obligations
Trust, a Massachusetts business trust ("MMOT"), on behalf of its portfolio,
Money Market Management (the "New Fund"), would acquire all of the assets
(subject to the liabilities) of the Company in exchange for shares of beneficial
interest of the New Fund to be distributed pro rata by the Company to its
shareholders in complete liquidation and dissolution of the Company (the
"Reorganization"). As a result of the Reorganization, each shareholder of the
Company will become the owner of New Fund shares having a total net asset value
equal to the total net asset value of his or her holdings in the Company on the
date of the Reorganization.
MMOT is an open-end management investment company that consists of a
number of portfolios, each of which has its own investment objective. The New
Fund is a newly-organized portfolio of MMOT (initially a "shell" portfolio) with
the same investment objective as the Company, which is to provide for its
shareholders current income consistent with stability of principal. The
permissible investments for the New Fund are the same as the permissible
investments for the Company, and the New Fund uses comparable investment
strategies. The Company pursues its investment objective by investing in a
portfolio of high quality fixed income securities maturing in one year or less,
and the New Fund pursues its investment objective by investing in a portfolio of
high quality fixed income securities maturing in 397 days or less. The average
maturity of money market instruments in the New Fund's and the Company's
portfolios, computed on a dollar weighted basis, will be 90 days or less. Both
the New Fund and the Company are money market mutual funds which seek to
stabilize their offering and redemption prices at $1.00 per share, although
there can be no assurance that either the New Fund or the Company will be able
to do so. (See "Comparison of Investment Policies and Risk Factors" below.)
Investments in the New Fund and the Company are neither insured nor guaranteed
by the U.S. government.
As a condition to the Reorganization, the Company and MMOT will receive
an opinion of counsel that the Reorganization will be considered a tax-free
"reorganization" under applicable provisions of the Internal Revenue Code, so
that no gain or loss for federal income tax purposes will be recognized by
either the Company or the New Fund or by the shareholders of the Company. The
tax basis of the New Fund shares received by Company shareholders will be the
same as the tax basis of their shares in the Company.
Significant components of the Reorganization and provisions of the
Reorganization Agreement are summarized below; however, this summary of the
Reorganization Agreement is qualified in its entirety by reference to the full
text of the Reorganization Agreement between the Company and MMOT, a copy of
which is attached as Appendix I to this Proxy Statement.
<PAGE>
Description of the Reorganization Agreement
The Reorganization Agreement provides that all of the assets of the
Company will be transferred to the New Fund, subject to the liabilities of the
Company. Each holder of shares of the Company will receive the same number
(with the same aggregate value) of shares of the New Fund as the shareholder
had in the Company immediately prior to the Reorganization. The Company's
shareholders will not pay a sales charge, commission or other transaction cost
in connection with their receipt of the shares of the New Fund.
Following the transfer of assets (subject to liabilities) of the
Company to the New Fund, and the issuance of shares by the New Fund to the
Company, the Company will distribute the shares of the New Fund received by the
Company among the shareholders of the Company in proportion to the number of
shares each such shareholder holds in the Company. Following the Reorganization,
shareholders of the Company will be shareholders of the New Fund. Upon the
completion of the Reorganization, the Company will be deregistered as an
investment company under the 1940 Act and its existence terminated under state
law. The stock transfer books of the Company will be permanently closed after
the Reorganization. MMOT will not issue share certificates with respect to
shares of the New Fund issued in connection with the Reorganization.
The Reorganization is subject to certain conditions, including:
approval of the Reorganization Agreement and the transactions and exchange
contemplated thereby as described in this Proxy Statement by the shareholders of
the Company; the receipt of a legal opinion described in the Reorganization
Agreement regarding tax matters; the receipt of certain certificates from the
parties concerning the continuing accuracy of the representations and warranties
in the Reorganization Agreement and other matters; and the parties' performance,
in all material respects, of the agreements and undertakings in the
Reorganization Agreement. Assuming satisfaction of the conditions in the
Reorganization Agreement, the Reorganization is expected to occur on or after
December 1, 1999.
The Company's investment adviser is responsible for the payment of all
expenses of the Reorganization incurred by either party, whether or not the
Reorganization is consummated. Such expenses include, but are not limited to,
legal fees, registration fees, transfer taxes (if any), the fees of banks and
transfer agents and a portion of the costs of preparing, printing, copying and
mailing proxy solicitation materials to the Company's shareholders.
The Reorganization may be terminated at any time prior to its
consummation by either the Company or MMOT if circumstances should develop that,
in the opinion of either the Board of the Company or the Board of Trustees of
MMOT, make proceeding with the Reorganization Agreement inadvisable. The
Reorganization Agreement provides further that at any time prior to the
consummation of the Reorganization: (i) the parties thereto may amend or modify
any of the provisions of the Reorganization Agreement provided that such
amendment or modification would not have a material adverse effect on the
benefits intended under the Reorganization Agreement and it would be consistent
with the best interests of the shareholders of the Company and the New Fund; and
(ii) either party may waive any of the conditions set forth in the
Reorganization Agreement if, in the judgment of the waiving party, such waiver
will not have a material adverse effect on the benefits intended under the
Reorganization Agreement to the shareholders of the Company or the shareholders
of the New Fund, as the case may be.
Reasons for the Proposed Reorganization
The Company was established as a Maryland corporation in 1992. Although
the Board has been satisfied with the Company's performance, it, and the
Company's distributor and administrator, believe that reorganizing the Company
as a portfolio of MMOT could streamline the Company's distribution and
administration. Accordingly, the Company's distributor and administrator have
recommended to the Board of Trustees of MMOT that the New Fund be organized for
the purpose of acquiring the Company's assets and thereby reorganizing the
Company as a portfolio of MMOT. The Company's distributor and administrator
similarly recommended to the Directors of the Company that the Company's assets
be transferred to MMOT, on behalf of the New Fund, in order to reorganize it as
a separate portfolio of MMOT. In connection with this proposal, the Company's
distributor and administrator emphasized the comparable advisory services
provided the Company and the New Fund, the identical investment objectives and
similar investment policies of the Company and the New Fund, and the
administrative convenience and simplification of management achievable by
operating the Company as a portfolio of MMOT.
<PAGE>
Board of Directors' Considerations and Recommendations
The Company's Board of Directors, at its meeting on May 18, 1999,
concluded that the reorganization of the Company as a portfolio of MMOT could
provide for streamlined distribution and administration. The Company's Directors
also noted that Company shareholders would continue to receive the same quality
of investment management services from the New Fund's investment adviser, which
is also the Company's current investment adviser. The Company's Board of
Directors, including a majority of the Directors who are not "interested
persons," additionally determined that participation in the Reorganization is in
the best interests of the Company and that the interests of the Company
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 Company will not suffer any adverse federal income tax
consequences as a result of the Reorganization, the Board of Directors of the
Company unanimously voted to approve, and recommended to Company shareholders
the approval of, the Reorganization.
The Board of Trustees of MMOT, including the Trustees who are not
"interested persons," at the Board's meeting on May 18, 1999 unanimously
concluded that consummation of the Reorganization is in the best interests of
MMOT and the shareholders of the New Fund, and that the interests of New Fund
shareholders would not be diluted as a result of effecting the Reorganization.
As a consequence, the Board of Trustees of MMOT unanimously approved the
Reorganization Agreement.
Under the terms of the Articles of Incorporation, the approval of the
Reorganization requires the affirmative vote of a majority of the outstanding
voting shares of the Company. (See "Proxies, Quorum and Voting at the Meeting"
below.)
Federal Income Tax Consequences
As a condition to the Reorganization, the Company and MMOT, on behalf
of the New Fund, will receive an opinion from Dickstein Shapiro Morin & Oshinsky
LLP, special counsel to the Company and MMOT, to the effect that, on the basis
of the existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), current administrative rules and court decisions, for federal income
tax purposes: (1) the Reorganization as set forth in the Reorganization
Agreement will constitute a tax-free reorganization under section 368(a)(1)(F)
of the Code, and the Company and the New 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 New Fund upon its receipt of the Company's assets
(subject to the liabilities of the Company) in exchange for New Fund shares; (3)
no gain or loss will be recognized by the Company upon the transfer of its
assets (subject to the liabilities of the Company) to the New Fund in exchange
for New Fund shares or upon the distribution (whether actual or constructive) of
the New Fund shares to the Company shareholders in exchange for their shares of
the Company; (4) no gain or loss will be recognized by shareholders of the
Company upon the exchange of their Company shares for New Fund shares; (5) the
tax basis of the Company's assets acquired by the New Fund will be the same as
the tax basis of such assets to the Company immediately prior to the
Reorganization; (6) the tax basis of New Fund shares received by each
shareholder of the Company pursuant to the Reorganization will be the same as
the tax basis of Company shares held by such shareholder immediately prior to
the Reorganization; (7) the holding period of the assets of the Company in the
hands of the New Fund will include the period during which those assets were
held by the Company; and (8) the holding period of New Fund shares received by
each shareholder of the Company pursuant to the Reorganization will include the
period during which the Company shares exchanged therefor were held by such
shareholder, provided the Company shares were held as capital assets on the date
of the Reorganization.
The Company and MMOT have not sought a tax ruling from the Internal
Revenue Service ("IRS"), but are acting in reliance upon the opinion of
counsel discussed in the previous paragraph. That opinion is not binding on
the IRS and does not preclude the IRS from adopting a contrary position.
Shareholders should consult their own advisers concerning the potential tax
consequences to them, including state and local income taxes.
<PAGE>
Comparison of Investment Policies and Risk Factors
The investment objective of the Company is identical to the investment
objective of the New Fund. Investments in the Company and the New Fund are not
insured or guaranteed by the U.S. government. Since the Company and the New
Fund are managed to maintain a constant net asset value, the Company and the
New Fund have little risk of principal loss. However, investments in the
Company and the New Fund are subject to certain risks, which include, but are
not limited to, the following: the possibility that issuers of securities
owned by the Company and the New Fund will have their credit ratings
downgraded; the ability of the issuers of securities owned by the Company and
the New Fund to meet their obligations for payment of principal and interest
when due or to repurchase such securities as previously agreed; interest rate
or market risk, which is the potential for fluctuations in the prices of debt
securities owned by the Company and the New Fund, due to changing interest
rates (e.g., when interest rates rise, bond prices generally decline); and
prepayment or call risk, which is the likelihood that, during periods of
falling interest rates, debt securities will be prepaid (or "called") prior to
maturity, requiring the proceeds to be invested by the Company and the New
Fund at a generally lower interest rate. These risks could result in a loss of
value of an investment in the Company, or in the New Fund when it commences
operations.
The investment policies and restrictions of the New Fund have been
established so as to be comparable to the current investment policies and
restrictions of the Company. The differences between the investment policies
and restrictions of the Company and those of the New Fund result, in part,
from the standardization of certain investment policies and restrictions among
the Federated Funds, including the New Fund, and the elimination of certain
investment limitations which govern the Company and had been previously
required under state law. A number of these investment limitations have been
preempted and are no longer applicable, and hence, the New Fund is not
required to adopt such limitations. Additionally, certain of the Company's
investment policies were originally adopted as fundamental policies, when
there was (and is) no legal requirement that they be fundamental.
Consequently, the New Fund is subject to identical (or nearly identical)
non-fundamental investment policies. Appendix II to this Proxy Statement
identifies the differences in the investment policies and restrictions of the
Company and the New Fund. The investment adviser to the Company and the New
Fund does not believe that the differences in investment policies and
restrictions are material. In addition, the adviser believes that the level of
risk of an investment in the Company is comparable to, and does not materially
differ from, the level of risk of an investment in the New Fund.
Comparative Information on Shareholder Rights and Obligations
The Company is organized as a Maryland corporation pursuant to Articles
of Incorporation, while MMOT is organized as a business trust pursuant to a
Declaration of Trust under the laws of the Commonwealth of Massachusetts. The
rights of shareholders of the Company, as defined in its Articles of
Incorporation, By-Laws and under the laws of the State of Maryland, and the
rights of shareholders of MMOT, as set forth in its Declaration of Trust,
By-Laws, and under the laws of the Commonwealth of Massachusetts, relating to
voting, distributions and redemptions, are substantively similar. Set forth
below is a brief summary of the significant rights of shareholders of the
Company and of MMOT, as well as an explanation of material differences of the
Company and MMOT regarding shareholder rights.
Neither the Company nor MMOT are required to hold annual meetings of
shareholders. Shareholder approval is necessary only for certain changes in
operations or the election of Directors or Trustees, as applicable, under
certain circumstances. A special meeting of shareholders of either the Company
or MMOT for any permissible purpose shall be called by the Directors or Trustees
upon the written request of the holders of at least 10% of the outstanding
shares of the Company or MMOT, as the case may be. Each share of the Company and
MMOT is entitled to one vote. All shares of MMOT have equal voting rights,
except that only shares of the New Fund are entitled to vote on matters only
affecting the New Fund.
As provided under Maryland law, shareholders of the Company are
generally not held personally liable for obligations of the Company. Under
certain circumstances, shareholders of the of the New Fund may be held
personally liable as partners under Massachusetts law for obligations of MMOT.
To protect their shareholders, MMOT has filed legal documents with the
Commonwealth of Massachusetts that expressly disclaim the liability of their
shareholders for such acts or obligations of MMOT. These documents require that
notice of this disclaimer be given in each agreement, obligation or instrument
that MMOT or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
New Fund's obligations, the New Fund is required to use its property to protect
or compensate the shareholder. On request, the New Fund will defend any claim
made and pay any judgment against a shareholder for any act or obligation of the
New Fund. Therefore, financial loss resulting from liability as a shareholder
will occur only if MMOT cannot meet its obligations to indemnify shareholders
and pay judgments against them from the assets of MMOT.
Purchase and Redemption Information, Exchange Privileges, Distribution and
Pricing
The purchase, redemption, exchange privileges and distribution
policies of the Company and the New Fund are identical.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE
COMPANY VOTE "FOR" APPROVAL OF THE REORGANIZATION AGREEMENT
INFORMATION ABOUT THE COMPANY
Proxies, Quorum and Voting at the Meeting
Only shareholders of record on the Record Date will be entitled to vote
at the Meeting. Each share of the Company is entitled to one vote. Fractional
shares are entitled to proportionate shares of one vote. Under both the
Investment Company Act of 1940 and the Articles of Incorporation, the favorable
vote of a "majority of the outstanding voting shares" of the Company means: (a)
the holders of 67% or more of the outstanding voting securities present at the
Meeting, if the holders of 50% or more of the outstanding voting securities of
the Company 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. The
election of the Directors is subject to a specific vote requirement described
under Proposal #1 in this Proxy Statement. The favorable vote of a majority of
the votes entitled to be cast is required to approve the proposed amendment to
the Articles of Incorporation and the Reorganization.
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 Company. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given on the proxy, the persons named as proxies will vote the shares
represented thereby in favor of the matters set forth in the attached Notice.
In order to hold the Meeting, a "quorum" of shareholders must be
present. Holders of one-third of the shares of stock of the Company then
outstanding and entitled to vote, present in person or by proxy, shall be
required to constitute a quorum for the purpose of voting on Proposal #1.
Holders of one-half of the shares of stock of the Company then outstanding and
entitled to vote, present in person or by proxy, shall be required to constitute
a quorum for the purpose of voting on Proposals #2 and #3.
For purposes of determining a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted. For
this reason, abstentions and broker non-votes will have the effect of a "no"
vote for purposes of obtaining the requisite approval of some of the proposals.
If a quorum is not present, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of one or more of
the proposals have not been received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
proxies with respect to such proposal(s). All such adjournments will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote AGAINST any such adjournment those proxies which they are required to vote
against the proposal and will vote in FAVOR of the adjournment other proxies
which they are authorized to vote. A shareholder vote may be taken on other
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received for approval.
As referred to in this Proxy Statement, the "Federated Fund Complex,"
"The Funds" or "Funds" include the following investment companies: Cash Trust
Series, Inc.; Cash Trust Series II; CCB Funds; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs
Fund; Federated Core Trust; Federated Insurance Series; 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 Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated
Municipal Trust; Federated Short-Term Municipal 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.;
Edward D. Jones & Co. Daily Passport Cash Trust; Liberty Term Trust, Inc. -
1999; Liberty U.S. Government Money Market Management; Managed Series Trust;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Management; Municipal Securities Income
Trust; Newpoint Funds; Regions Funds; RIGGS Funds; Tax-Free Instruments Trust;
The Planters Funds; WesMark Funds; WCT Funds; and World Investment Series, Inc.
Share Ownership of the Directors
Officers and Directors of the Company own less than 1% of the Company's
outstanding shares.
At the close of business on the Record Date, the following persons owned 5%
or more of the Company's outstanding shares: [TO BE INSERTED]
<TABLE>
<CAPTION>
<S> <C> <C>
Director Compensation
Name and Position Aggregate Total Compensation Paid
With Company Compensation From Fund Complex+
From
Company1#
- --------------------------------------- -------------------- ----------------------------------------------------------
John F. Donahue*@ $0 $0 for the Company and 54 other
Chairman and Director investment companies in the Fund Complex
Thomas G. Bigley $1,076.32 $113,860.22 for the Company and 54 other
Director investment companies in the Fund Complex
John T. Conroy, Jr. $1,184.12 $125,264.48 for the Company and 54 other
Director investment companies in the Fund Complex
Nicholas P. Constantakis $1,076.32 $47,958.02 for the Company and 29 other
Director investment companies in the Fund Complex
John F. Cunningham** $0 $0 for the Company and 46 other
Director investment companies in the Fund Complex
J. Christopher Donahue* $0 $0 for the Company and 16 other
President and Director investment companies in the Fund Complex
Lawrence D. Ellis, M.D.* $1,076.32 $113,860.22 for the Company and 54 other
Director investment companies in the Fund Complex
Peter E. Madden $1,076.32 $113,860.22 for the Company and 54 other
Director investment companies in the Fund Complex
Charles F. Mansfield, Jr.** $0 $0 for the Company and 50 other
Director investment companies in the Fund Complex
John E. Murray, Jr., J.D., S.J.D. @ $1,076.32 $113,860.22 for the Company and 54 other
Director investment companies in the Fund Complex
Marjorie P. Smuts $1,076.32 $113,860.22 for the Company and 54 other
Director investment companies in the Fund Complex
John S. Walsh** $0 $0 for the Company and 48 other
Director investment companies in the Fund Complex
</TABLE>
1 Information is furnished for the fiscal year ended December 31, 1998.
# The aggregate compensation is provided for the Company which is comprised
of one portfolio.
+ The information is provided for the last calendar year.
* The Director is deemed to be an "interested person" as defined in the
1940 Act.
@ Member of the Executive Committee.
** Messrs. Cunningham, Mansfield and Walsh became members of the Board of
Directors on January 1, 1999. They did not receive any fees from the Fund
Complex as of the last calendar year.
During the fiscal year ended December 31, 1998, there were four
meetings of the Board of Directors. The interested Directors, other than Dr.
Ellis, do not receive fees from the Company. 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.
The Executive Committee of the Board of Directors handles the
responsibilities of the Board between meetings of the Board. Other than its
Executive Committee, the Company 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 Company'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
Company's procedures for internal auditing, and reviewing the Company's system
of internal accounting controls.
For the most recently completed fiscal year, Messrs. Conroy, Madden and
Murray served on the Audit Committee. These Directors are not interested
Directors of the Company. During the fiscal year ended December 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.
<PAGE>
Officers and Incumbent Directors of the Company
The executive officers of the Company are elected annually by the Board
of Directors. Each officer holds the office until qualification of his
successor. The names and birth dates of the executive officers of the Company,
as well as of the incumbent Directors who have previously been elected by
shareholders, and their principal occupations during the last five years, are
set forth below:
John F. Donahue
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: July 28, 1924
Chairman and Director
Dates Became an Officer and a Director: August 27, 1992 and August 19, 1992
Chief Executive Officer and Director or Trustee of the Funds; Chairman and
Director, Federated Investors, Inc.; Chairman and Trustee, Federated Investment
Management Company; Chairman and Director, Federated Investment Counseling and
Federated Global Investment Management Corp.; Chairman, Passport Research, Ltd.
Mr. Donahue is the father of J. Christopher Donahue, President and Director of
the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birth Date: February 3, 1934
Director
Date Became a Director: November 15, 1994
Director or Trustee of the Federated Fund Complex; Director, Member of the
Executive Committee, Children's Hospital of Pittsburgh; Director, Robroy
Industries, Inc. (coated steel conduits/computer storage equipment); formerly:
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc. (physician
practice management); Director, Member of Executive Committee, University of
Pittsburgh.
John T. Conroy, Jr.
Wood/IPC Commercial Dept.
John R. Wood Associates, Inc. Realtors
3255 Tamiami Trail North
Naples, FL
Birth Date: June 23, 1937
Director
Date Became a Director: August 19, 1992
Director or Trustee of the Federated Fund Complex; 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.
<PAGE>
Nicholas P. Constantakis
175 Woodshire Drive
Pittsburgh, PA
Birth Date: September 3, 1939
Director
Date Became a Director: February 23, 1998
Director of Trustee of the Federated Fund Complex; formerly: Partner,
Andersen Worldwide SC.
J. Christopher Donahue
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: April 11, 1949
President and Director
Date Became an Officer and Director: August 27, 1992 and August 19, 1992
President or Executive Vice President of the Federated Fund Complex; Director or
Trustee of some of the Funds in the Federated Fund Complex; President, Chief
Executive Officer and Director, Federated Investors, Inc.; President and
Trustee, Federated Investment Management Company; President and Trustee,
Federated Investment Counseling; President and Director, Federated Global
Investment Management Corp.; President, Passport Research, Ltd.; Trustee,
Federated Shareholder Services Company; Director, Federated Services Company.
Mr. Donahue is the son of John F. Donahue, Chairman and Trustee of the Trust.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue
Suite 1111
Pittsburgh, PA
Birth Date: October 11, 1932
Director
Date Became a Director: August 19, 1992
Director or Trustee of the Federated Fund Complex; Professor of Medicine,
University of Pittsburgh; Medical Director, University of Pittsburgh Medical
Center - Downtown; Hematologist, Oncologist, and Internist, University of
Pittsburgh Medical Center; Member, National Board of Trustees, Leukemia Society
of America.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birth Date: March 16, 1942
Director
Date Became a Director: August 19, 1992
Director or Trustee of the Federated Fund Complex; formerly:
Representative, Commonwealth of Massachusetts General Court; President, State
Street Bank and Trust Company and State Street Corporation. Previous Positions:
Director, VISA USA and VISA International; Chairman and Director, Massachusetts
Bankers Association; Director, Depository Trust Corporation; Director, The
Boston Stock Exchange.
<PAGE>
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birth Date: December 20, 1932
Director
Date Became a Director: February 14, 1995
Director or Trustee of the Federated Fund Complex; President, Law
Professor, Duquesne University; Consulting Partner, Mollica & Murray; Director,
Michael Baker Corp. (engineering, construction, operations and technical
services). Previous Positions: Dean and Professor of Law, University of
Pittsburgh School of Law; Dean and Professor of Law, Villanova University School
of Law.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birth Date: June 21, 1935
Director
Date Became a Director: August 19, 1992
Director or Trustee of the Federated Fund Complex; Public
Relations/Marketing/Conference Planning. Previous Positions: National
Spokesperson, Aluminum Company of America; television producer; business owner.
Edward C. Gonzales
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: October 22, 1930
Executive Vice President
Date Became an Officer: August 27, 1992
Trustee or Director of some of the Funds in the Federated Fund Complex;
President, Executive Vice President and Treasurer of some of the Funds in the
Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice
President, Federated Investment Management Company, Federated Investment
Counseling, Federated Global Investment Management Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company.
John W. McGonigle
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: October 26, 1938
Executive Vice President and Secretary
Date Became an Officer: August 27, 1992
Executive Vice President and Secretary of the Federated Fund Complex; Executive
Vice President, Secretary, and Director, Federated Investors, Inc.; Trustee,
Federated Investment Management Company; Trustee, Federated Investment
Counseling; Director, Federated Global Investment Management Corp.; Director,
Federated Services Company; Director, Federated Securities Corp.
William D. Dawson, III
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: March 3, 1949
Chief Investment Officer
Date Became an Officer: November 19, 1998
Chief Investment Officer of the Company and various other Funds in the Federated
Fund Complex; Executive Vice President, Federated Investment Counseling,
Federated Global Investment Management Corp., Federated Investment Management
Company and Passport Research, Ltd.; Registered Representative, Federated
Securities Corp.; Portfolio Manager, Federated Administrative Services; Vice
President, Federated Investors, Inc.; formerly: Executive Vice President and
Senior Vice President, Federated Investment Counseling Institutional Portfolio
Management Services Division; Senior Vice President, Federated Investment
Management Company and Passport Research, Ltd.
Richard J. Thomas
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: June 17, 1954
Treasurer
Date Became an Officer: November 19, 1998
Treasurer of the Federated Fund Complex; Vice President - Funds Financial
Services Division, Federated Investors, Inc.; formerly: various management
positions within Funds Financial Services Division of Federated Investors, Inc.
Richard B. Fisher
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: May 17, 1923
Vice President
Date Became an Officer: August 27, 1992
President or Vice President of some of the Funds in the Federated Fund Complex;
Director or Trustee of some of the Funds in the Federated Fund Complex;
Executive Vice President, Federated Investors, Inc.; Chairman and Director,
Federated Securities Corp.
Deborah A. Cunningham
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birth Date: September 15, 1959
Vice President
Date Became an Officer: November 19, 1998
Senior Vice President, Federated Investment Management Company.
None of the Officers of the Company received salaries from the Company
during the fiscal year ended December 31, 1998.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Company 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 Money Market Management,
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 Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Company.
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
October 6, 1999
<PAGE>
MONEY MARKET MANAGEMENT, INC.
Investment Adviser
FEDERATED INVESTMENT MANAGEMENT COMPANY
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
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Money
Market Management, Inc. (the "Company"), hereby appoint Patricia F. Conner, Gail
Cagney, William Haas, Suzanne W. Land 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 Company which the undersigned is entitled to vote at the Special
Meeting of Shareholders (the "Meeting") to be held on November 30, 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
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MONEY MARKET
MANAGEMENT, 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
Company
FOR [ ]
Proposal 1 To elect John F. Cunningham, Charles F. Mansfield, Jr. and John S.
Walsh as Directors of the Company
FOR [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
VOTE FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR"
a particular nominee, mark the "VOTE 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 approve an amendment to, and a restatement of, the
Company's Articles of Incorporation to permit the Board to
liquidate assets of the Company, its series or classes, and
distribute the proceeds of such assets to the holders of such
shares representing such interests, without seeking
shareholder approval to the extent permitted under Maryland
law
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 3 To approve a proposed Agreement and Plan of Reorganization
between the Company and Money Market Obligations Trust, on
behalf of its series, Money Market Management (the "New
Fund"), whereby the New Fund would acquire all of the assets
of the Company in exchange for shares of the New Fund to be
distributed pro rata by the Company to its shareholders in
complete liquidation and termination of the Company
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS
IMPORTANT Please
complete, sign and
return this card
as soon as
possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Company.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
You may also vote your shares by touchtone phone
by calling 1-800-690-6903 or through the
Internet at www.proxyvote.com
<PAGE>
I-5
I-1
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of June 1, 1999 (the
"Agreement") between Money Market Management, Inc., a Maryland corporation (the
"Fund"), with its principal place of business at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, and Money Market Obligations Trust, a
Massachusetts business trust (the "Trust"), with its principal place of business
located at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, on behalf
of its newly-organized portfolio, Money Market Management (the "Successor
Fund").
WHEREAS, the Board of Directors of the Fund and the Board of
Trustees of the Trust have determined that it is in the best interests of the
Fund and the Trust, respectively, that the assets of the Fund be acquired by the
Successor Fund pursuant to this Agreement; and
WHEREAS, the parties desire to enter into a plan of exchange which
would constitute a reorganization within the meaning of Section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended (the "Code"):
NOW THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Plan of Exchange.
(a) Subject to the terms and conditions set forth herein, the
Fund shall assign, transfer and convey its assets, including all securities and
cash held by the Fund (subject to the liabilities of the Fund) to the Successor
Fund, and the Successor Fund shall acquire all of the assets of the Fund
(subject to the liabilities of the Fund) in exchange for full and fractional
shares of beneficial interest of the Successor Fund (the "Successor Fund
Shares"), to be issued by the Trust, having an aggregate net asset value equal
to the value of the net assets of the Fund. The value of the assets of the Fund
and the net asset value per share of the Successor Fund Shares shall be computed
as of the close of the New York Stock Exchange (normally 4:00 p.m. Eastern time)
on the Exchange Date (such time and date being hereinafter called the "Valuation
Time") in accordance with the procedures for determining the value of the
Successor Fund's assets set forth in the Successor Fund's organizational
documents and the then-current prospectus and statement of additional
information for the Successor Fund that forms a part of the Successor Fund's
Registration Statement on Form N-1A (the "Registration Statement"). In lieu of
delivering certificates for the Successor Fund Shares, the Trust shall credit
the Successor Fund Shares to the Fund's account on the share record books of the
Trust and shall deliver a confirmation thereof to the Fund. The Fund shall then
deliver written instructions to the Trust's transfer agent to establish accounts
for the shareholders on the share record books relating to the Successor Fund.
(b) Delivery of the assets of the Fund to be transferred shall
be made on the Exchange Date (as defined herein). Assets transferred shall be
delivered to State Street Bank and Trust Company, the Trust's custodian (the
"Custodian"), for the account of the Trust and the Successor Fund with all
securities not in bearer or book entry form duly endorsed, or accompanied by
duly executed separate assignments or stock powers, in proper form for transfer,
with signatures guaranteed, and with all necessary stock transfer stamps,
sufficient to transfer good and marketable title thereto (including all accrued
interest and dividends and rights pertaining thereto) to the Custodian for the
account of the Trust and the Successor Fund free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered shall be in
the form of immediately available funds payable to the order of the Custodian
for the account of the Trust and the Successor Fund.
<PAGE>
(c) The Fund will pay or cause to be paid to the Trust any
interest received on or after the Exchange Date with respect to assets
transferred from the Fund to the Successor Fund hereunder and to the Trust and
any distributions, rights or other assets received by the Fund after the
Exchange Date as distributions on or with respect to the securities transferred
from the Fund to the Successor Fund hereunder. All such assets shall be deemed
included in assets transferred to the Successor Fund on the Exchange Date and
shall not be separately valued.
(d) The Exchange Date shall be December 1, 1999, or such
earlier or later date as may be mutually agreed upon by the parties.
(e) As soon as practicable after the Exchange Date, the Fund
shall distribute all of the Successor Fund Shares received by it among the
shareholders of the Fund in proportion to the number of shares each such
shareholder holds in the Fund and shall take all other steps necessary to effect
its dissolution and termination. After the Exchange Date, the Fund shall not
conduct any business except in connection with its dissolution and termination.
2. The Fund's Representations and Warranties. The Fund represents and
warrants to and agrees with the Trust on behalf of the Successor Fund as
follows:
(a) The Fund is a Maryland corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and has
power to own all of its properties and assets and, subject to the approval of
its shareholders as contemplated hereby, to carry out this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by the Fund and is valid and binding on the Fund, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity. The execution and delivery of this Agreement does not and
will not, and the consummation of the transactions contemplated by this
Agreement will not, violate the Fund's Articles of Incorporation or By-Laws or
any agreement or arrangement to which it is a party or by which it is bound.
(c) The Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and such registration has not been revoked or rescinded and is in full force and
effect.
(d) Except as shown on the audited financial statements of the
Fund for its most recently completed fiscal period and as incurred in the
ordinary course of the Fund's business since then, the Fund has no known
liabilities of a material amount, contingent or otherwise, and there are no
legal, administrative or other proceedings pending or, to the Fund's knowledge,
threatened against the Fund.
(e) On the Exchange Date, the Fund will have full right, power
and authority to sell, assign, transfer and deliver the Fund's assets to be
transferred by it hereunder.
3. The Trust's Representations and Warranties. The Trust, on behalf of
the Successor Fund, represents and warrants to and agrees with the Fund as
follows:
(a) The Trust is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has power to carry on its business as it is now being
conducted and to carry out this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by the Trust and is valid and binding on the Trust, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity. The execution and delivery of this Agreement does not and
will not, and the consummation of the transactions contemplated by this
Agreement will not, violate the Trust's Declaration of Trust or By-Laws or any
agreement or arrangement to which it is a party or by which it is bound.
(c) The Trust is registered under the 1940 Act as an open-end
management investment company and such registration has not been revoked or
rescinded and is in full force and effect.
(d) The Successor Fund does not have any known liabilities of
a material amount, contingent or otherwise, and there are no legal,
administrative or other proceedings pending or, to the Trust's knowledge,
threatened against the Successor Fund. Other than organizational activities, the
Successor Fund has not engaged in any business activities.
(e) At the Exchange Date, the Successor Fund Shares to be
issued to the Fund (the only Successor Fund shares to be issued as of the
Exchange Date) will have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be legally and validly issued and will be fully
paid and non-assessable. No Trust or Successor Fund shareholder will have any
preemptive right of subscription or purchase in respect thereof.
4. The Trust's Conditions Precedent. The obligations of the Trust
hereunder shall be subject to the following conditions:
(a) The Fund shall have furnished to the Trust a statement of
the Fund's assets, including a list of securities owned by the Fund with their
respective tax costs and values determined as provided in Section 1 hereof, all
as of the Exchange Date.
(b) As of the Exchange Date, all representations and
warranties of the Fund made in this Agreement shall be true and correct as if
made at and as of such date, and the Fund shall have complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such date.
(c) A vote of the shareholders of the Fund approving this
Agreement and the transactions and exchange contemplated hereby shall have been
adopted by the vote required by applicable law.
5. The Fund's Conditions Precedent. The obligations of the Fund
hereunder with respect to the Fund shall be subject to the condition that as of
the Exchange Date all representations and warranties of the Trust made in this
Agreement shall be true and correct as if made at and as of such date, and that
the Trust shall have complied with all of the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such date.
6. The Trust's and the Fund's Conditions Precedent. The obligations of
both the Trust and the Fund hereunder shall be subject to the following
conditions:
(a) The post-effective amendment to the Trust's Registration
Statement on Form N-1A relating to the Successor Fund under the Securities Act
of 1933, as amended, and the 1940 Act, if applicable, shall have become
effective, and any additional post-effective amendments to such Registration
Statement as are determined by the Directors of the Trust to be necessary and
appropriate shall have been filed with the Commission and shall have become
effective.
(b) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency which seeks to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transaction contemplated herein.
(c) Each party shall have received an opinion of Dickstein
Shapiro Morin & Oshinsky LLP to the effect that the reorganization contemplated
by this Agreement qualifies as a "reorganization" under Section 368(a)(1)(F) of
the Code.
Provided, however, that at any time prior to the Exchange Date, any of
the foregoing conditions in this Section 6 may be waived by the parties if, in
the judgment of the parties, such waiver will not have a material adverse effect
on the benefits intended under this Agreement to the shareholders of the Fund.
<PAGE>
7. Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated and abandoned by resolution of the Board
of Directors of the Fund or the Board of Trustees of the Trust at any time prior
to the Exchange Date (and notwithstanding any vote of the shareholders of the
Fund) if circumstances should develop that, in the opinion of either the Board
of Directors of the Fund or the Board of Trustees of the Trust, make proceeding
with this Agreement inadvisable.
If this Agreement is terminated and the exchange contemplated hereby is
abandoned pursuant to the provisions of this Section 7, this Agreement shall
become void and have no effect, without any liability on the part of any party
hereto or the Trustees, officers or shareholders of the Trust or the Directors,
officers or shareholders of the Fund, in respect of this Agreement.
8. Waiver and Amendments. At any time prior to the Exchange Date, any
of the conditions set forth in Section 4 may be waived by the Board of the
Trust, and any of the conditions set forth in Section 5 may be waived by the
Board of the Fund, if, in the judgment of the waiving party, such waiver will
not have a material adverse effect on the benefits intended under this Agreement
to the shareholders of the Fund or the shareholders of the Successor Fund, as
the case may be. In addition, prior to the Exchange Date, any provision of this
Agreement may be amended or modified by the Boards of the Fund and the Trust if
such amendment or modification would not have a material adverse effect upon the
benefits intended under this Agreement and would be consistent with the best
interests of shareholders of the Fund and the Successor Fund.
9. No Survival of Representations. None of the representations and
warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
10. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflict of laws; provided, however, that the due
authorization, execution and delivery of this Agreement, in the case of the Fund
and the Trust, shall be governed and construed in accordance with the laws of
the Commonwealth of Massachusetts without giving effect to principles of
conflict of laws.
11. Capacity of Trustees, Etc.
(a) The names "Money Market Obligations Trust" and "Board of
Trustees of Money Market Obligations Trust" refer, respectively, to the trust
created and the trustees, as trustees but not individually or personally, acting
from time to time under the Trust's Declaration of Trust, which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of the Trust.
The obligations of the Trust entered into in the name or on behalf of the
Successor Fund by any of the trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
trustees, shareholders or representatives of the Trust personally, but bind only
the Successor Fund's trust property, and all persons dealing with any portfolio
of shares of the Trust must look solely to the trust property belonging to such
portfolio for the enforcement of any claims against the Trust.
(b) Both parties specifically acknowledge and agree that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Successor Fund and that no other portfolio of the Trust shall be liable with
respect thereto.
12. Counterparts. This Agreement may be executed in counterparts, each
of which, when executed and delivered, shall be deemed to be an original.
<PAGE>
IN WITNESS WHEREOF, the Fund and the Trust have caused this Agreement
and Plan of Reorganization to be executed as of the date above first written.
<TABLE>
<CAPTION>
<S> <C>
MONEY MARKET MANAGEMENT, INC.
ATTEST: /s/ Gail Cagney /s/ John W. McGonigle
Title: Assistant Secretary Title: Executive Vice President
MONEY MARKET OBLIGATIONS
TRUST, on behalf of its portfolio,
Money Market Management
ATTEST: /s/ Gail Cagney /s/ John W. McGonigle
Title: Assistant Secretary Title: Executive Vice President
</TABLE>
<PAGE>
II-7
II-1
APPENDIX II
COMPARISON OF INVESTMENT POLICIES
AND LIMITATIONS
Set forth below is a comparison of the investment policies and
restrictions of the Trust and the New Fund:
FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
Permissible Investments
The Company: "The Company pursues its investment objective by investing in
a portfolio of money market instruments which include, but are not limited to,
instruments of foreign and domestic banks and savings and loans, U.S. government
obligations, repurchase agreements, prime commercial paper (including
Euro-commercial paper), and instruments secured by such obligations."
The New Fund: The New Fund is subject to an identical non-fundamental
investment policy.
Diversification of Investments
The Company: The Company is not subject to a fundamental investment policy
regarding diversification of its investments; however, the Company is registered
as a diversified investment company under the 1940 Act, and, as a money market
fund, the Company operates in accordance with the various requirements of the
1940 Act's Rule 2a-7 and complies with Rule 2a-7's diversification requirements.
The New Fund: "With respect to securities comprising 75% of the value of its
total assets, the Fund will not purchase securities of any one issuer (other
than cash; cash items; securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and securities of other
investment companies) if, as a result, more than 5% of the value of its total
assets would be invested in securities of that issuer, or the Fund would own
more than 10% of the outstanding voting securities of that issuer."
Issuing Senior Securities and Borrowing Money
The Company: "The Company will not borrow money, except as a temporary measure
for extraordinary purposes and then only in amounts not in excess of 5% of the
value of its total assets. In addition, the Company may enter into reverse
repurchase agreements and otherwise borrow up to one-third of the value of its
total assets, including the amount borrowed, in order to meet redemption
requests without immediately selling any portfolio instruments. This latter
practice is not for investment leverage but solely to facilitate management of
the portfolio by enabling the Company to meet redemption requests where the
liquidation of portfolio instruments would be inconvenient or disadvantageous.
Interest paid on borrowed funds will not be available for investment. The
Company may not purchase any portfolio instruments while any borrowings
(exclusive of reverse repurchase agreements) are outstanding."
The New Fund: "The Fund may borrow money, directly or indirectly, and issue
senior securities to the maximum extent permitted under the 1940 Act."
Selling Short and Buying on Margin
The Company: "The Company will not sell any securities short or purchase
any securities on margin."
The New Fund: The New Fund is not subject to an investment limitation regarding
selling securities short. The New Fund is subject to a non-fundamental
investment limitation relating to margin transactions that states: "The Fund
will not purchase securities on margin, provided that the Fund may obtain
short-term credits necessary for the clearance of purchases and sales of
securities."
Investing in Real Estate and Commodities
The Company: "The Company will not invest in commodities, commodity
contracts or real estate, except that it may purchase money market instruments
issued by companies that invest in real estate or interests in real estate."
The New Fund: The New Fund is subject to separate fundamental policies
governing investing in commodities and real estate that provide:
"The Fund may not purchase or sell physical commodities, provided that the Fund
may purchase securities of companies that deal in commodities."
"The Fund may not purchase or sell real estate, provided that this restriction
does not prevent the Fund from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
The Fund may exercise its rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be liquidated
in an orderly manner."
Pledging Assets
The Company: "The Company will not mortgage, pledge or hypothecate any
assets except to secure permitted borrowings. In those cases it may mortgage,
pledge or hypothecate assets having a market value not exceeding the lesser of
the dollar amounts borrowed or 10% of the value of total assets at the time of
the borrowing."
The New Fund: The New Fund is subject to a non-fundamental investment limitation
pertaining to pledging assets that provides: "The Fund will not mortgage, pledge
or hypothecate 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."
Lending Cash or Securities
The Company: "The Company will not lend any assets, except as it may
purchase or hold money market instruments permitted by its investment objective
and policies."
The New Fund: "The Fund may not make loans, provided that this restriction does
not prevent the Fund from purchasing debt obligations, entering into repurchase
agreements, lending its assets to broker/dealers or institutional investors and
investing in loans, including assignments and participation interests."
Underwriting Securities
The Company: "The Company will not act as an underwriter of securities of
securities issued by others, except as it may be deemed to be an underwriter
under the Securities Act of 1933, in connection with the sale of securities
which the Company may purchase pursuant to its investment objective, policies
and limitations."
The New Fund: "The Fund may not underwrite the securities of other issuers,
except that the Fund may engage in transactions involving the acquisition,
disposition or resale of its portfolio securities, under circumstances where it
may be considered to be an underwriter under the Securities Act of 1933."
Concentration of Investments
The Company: "The Company will not purchase money market instruments if, as a
result of such purchase, more than 25% of the value of its total assets would be
invested in any one industry. However, investing in bank instruments (such as
time and demand deposits and certificates of deposit), U.S. government
obligations, or instruments secured by these money market instruments such as
repurchase agreements, shall not be considered investments in any one industry."
The New Fund: "The Fund will not make investments that will result in the
concentration of its investments in the securities of issuers primarily engaged
in the same industry. Government securities, municipal securities and bank
instruments are not deemed to constitute an industry. To conform to the current
view of the SEC that only domestic bank instruments may be excluded from
industry concentration limitations, as a matter of non-fundamental policy, the
Fund will not exclude foreign bank instruments from industry concentration
limits as long as the policy of the SEC remains in effect. As a non-fundamental
operating policy, the Fund will consider concentration to be the investment of
more than 25% of the value of its total assets in any one industry."
Investing in Securities of Other Investment Companies
The Company: "The Company will not invest in securities issued by any other
investment company."
The New Fund: The New Fund is subject to a non-fundamental investment policy
that provides that "The Fund may invest its assets in securities of other
investment companies, including the securities of affiliated money market funds,
as an efficient means of carrying out its investment policies."
Investing for Control
The Company: "The Company will not invest in securities of a company for
the purpose of exercising control or management."
The New Fund: The New Fund is not subject to a comparable investment limitation.
NON-FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
Portfolio Instruments
The Company: "The Company invests in a portfolio of high quality fixed
income securities maturing in one year or less."
The New Fund: "The Fund pursues its investment objective by investing in a
portfolio of high quality fixed income securities maturing in 397 days or less."
Permissible Investments
The Company: The Company may invest in fixed income securities, corporate debt
securities, commercial paper, demand instruments, bank instruments, asset-backed
securities and zero coupon securities. In addition, the Company may invest in
foreign securities, depository receipts and foreign government securities. The
Company may engage in repurchase agreements, reverse repurchase agreements and
delayed delivery transactions.
The New Fund: The New Fund may invest in the same types of investments and
may engage in the same types of transactions.
Investing in Illiquid Securities
The Company: "The Company will not invest more than 10% of the value of its
net assets in illiquid securities."
The New Fund: "The Fund will not purchase securities for which there is no
readily available market, or enter into repurchase agreements or purchase time
deposits maturing in more than seven days, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 10% of the Fund's
net assets."
<PAGE>
State Undertakings
The Company: "The Company did not borrow money or pledge securities in
excess of 5% of the value of its net assets during the last fiscal year and has
no present intent to do so during the coming fiscal year."
The New Fund: The New Fund is not subject to comparable undertakings.
