1933 Act File No. 2-91091
1940 Act File No. 811-4018
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 19 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 15 X
FEDERATED HIGH YIELD TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
x on April 30, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
x filed the Notice required by that Rule on April 13,1995; or
intends to file the Notice required by that Rule on or about ____________;
or
during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
2101 L Street, N.W.
Washington, D.C. 20037
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of FEDERATED HIGH YIELD
TRUST is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page Cover Page.
Item 2. Synopsis Summary of Trust Expenses.
Item 3. Condensed Financial
Information Financial Highlights; Performance
Information
Item 4. General Description of
Registrant General Information; Investment
Information; Investment
Objective; Investment Policies;
Investment Risks; Investment
Limitations
.
Item 5. Management of the Trust Trust Information; Management of
the Trust; Distribution of Trust
Shares; Administration of the
Trust.
Item 6. Capital Stock and Other
Securities Dividends; Capital Gains,
Retirement Plans; Shareholder
Information; Voting Rights;
Massachusetts Partnership Law;
Tax Information; Federal Income
Tax; Pennsylvania Corporate and
Personal Property Tax.
Item 7. Purchase of Securities
Being Offered Net Asset Value; Investing in the
Trust; Share Purchases; Minimum
Investment Required; What Shares
Cost; Subaccounting Services;
Certificates and Confirmations.
Item 8. Redemption or
Repurchase Redeeming Shares; Telephone
Redemption; Written Requests;
Accounts with Low Balances;
Redemption in Kind.
Item 9. Pending Legal
Proceedings None.
PART. B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page Cover Page.
Item 11. Table of Contents Table of Contents.
Item 12. General Information
and History General Information About the
Trust.
Item 13. Investment Objectives
and Policies Investment Objective and
Policies; Investment Limitations
Item 14. Management of the Trust Federated High Yield Trust
Management; Trustees'
Compensation; Trustees' Liability
Item 15. Control Persons and
Principal Holders of
Securities Trust Ownership.
Item 16. Investment Advisory and
Other Services Investment Advisory Services;
Advisor to the Trust; Advisory
Fees; Administrative Services;
Shareholder Services Plan;
Transfer Agent and Dividend
Disbursing Agent
Item 17. Brokerage Allocation Brokerage Transactions.
Item 18. Capital Stock and
Other Securities Not applicable.
Item 19. Purchase, Redemption
and Pricing of
Securities Being
Offered Purchasing Shares; Determining
Net Asset Value; Redeeming
Shares; Redemption In Kind
Item 20. Tax Status Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of
Performance Data Total Return; Yield; Performance
Comparisons; Duration
Item 23. Financial Statements Filed in Part A.
- --------------------------------------------------------------------------------
FEDERATED HIGH YIELD TRUST
PROSPECTUS
A no-load, open-end, diversified management investment company (a mutual fund)
that seeks high current income by investing in a professionally managed,
diversified portfolio of fixed income securities.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before you
invest in Federated High Yield Trust (the "Trust"). Keep this prospectus for
future reference.
SPECIAL RISKS
THE TRUST'S PORTFOLIO CONSISTS PRIMARILY OF LOWER-RATED CORPORATE DEBT
OBLIGATIONS, WHICH ARE COMMONLY REFERRED TO AS "JUNK BONDS." THESE LOWER-RATED
BONDS MAY BE MORE SUSCEPTIBLE TO REAL OR PERCEIVED ADVERSE ECONOMIC CONDITIONS
THAN INVESTMENT GRADE BONDS. THESE LOWER-RATED BONDS ARE REGARDED AS
PREDOMINANTLY SPECULATIVE WITH REGARD TO EACH ISSUER'S CONTINUING ABILITY TO
MAKE INTEREST AND PRINCIPAL PAYMENTS (I.E., THE BONDS ARE SUBJECT TO THE RISK OF
DEFAULT). IN ADDITION, THE SECONDARY TRADING MARKET FOR LOWER-RATED BONDS MAY BE
LESS LIQUID THAN THE MARKET FOR INVESTMENT GRADE BONDS. PURCHASERS SHOULD
CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRUST. SEE THE
SECTIONS OF THIS PROSPECTUS ENTITLED "INVESTMENT RISKS" AND "REDUCING RISKS OF
LOWER-RATED SECURITIES."
The Trust's investment adviser will endeavor to limit these risks through
diversifying the portfolio and through careful credit analysis of individual
issuers.
The Trust has also filed a Statement of Additional Information dated April 30,
1995, with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information
free of charge by calling 1-800-235-4669. To obtain other information or to make
inquiries about the Trust, contact the Trust at the address listed in the back
of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated April 30, 1995
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF TRUST EXPENSES 1
- ---------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ---------------------------------------------------
GENERAL INFORMATION 3
- ---------------------------------------------------
INVESTMENT INFORMATION 3
- ---------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Risks 6
Investment Limitations 8
TRUST INFORMATION 8
- ---------------------------------------------------
Management of the Trust 8
Distribution of Trust Shares 9
Administration of the Trust 10
NET ASSET VALUE 11
- ---------------------------------------------------
INVESTING IN THE TRUST 11
- ---------------------------------------------------
Share Purchases 11
Minimum Investment Required 12
What Shares Cost 12
Subaccounting Services 12
Certificates and Confirmations 12
Dividends 12
Capital Gains 13
Retirement Plans 13
REDEEMING SHARES 13
- ---------------------------------------------------
Telephone Redemption 13
Written Requests 13
Accounts with Low Balances 14
Redemption in Kind 14
SHAREHOLDER INFORMATION 15
- ---------------------------------------------------
Voting Rights 15
Massachusetts Partnership Law 15
TAX INFORMATION 15
- ---------------------------------------------------
Federal Income Tax 15
Pennsylvania Corporate and Personal
Property Taxes 15
PERFORMANCE INFORMATION 16
- ---------------------------------------------------
FINANCIAL STATEMENTS 17
- ---------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT
AUDITORS 34
- ---------------------------------------------------
APPENDIX 35
- ---------------------------------------------------
ADDRESSES 37
- ---------------------------------------------------
</TABLE>
I
<PAGE>
SUMMARY OF TRUST EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)....................... None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)............ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL TRUST OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)................................................................. 0.52%
12b-1 Fee......................................................................................... None
Total Other Expenses.............................................................................. 0.34%
Shareholder Services Fee (after waiver) (2).......................................... 0.17%
Total Trust Operating Expenses (3)........................................................ 0.86%
<FN>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.75%.
(2) The maximum shareholder services fee is 0.25%.
(3) The Total Trust Operating Expenses in the table above are based on expenses
expected during the fiscal year ending February 29, 1996. The Total Trust
Operating Expenses were 0.85% for the fiscal year ended February 28, 1995
and would have been 1.07% absent the voluntary waiver of a portion of the
management fee.
</TABLE>
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Trust will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Investing in the Trust" and "Trust Information." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period................................................. $9 $27 $48 $106
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
1
<PAGE>
FEDERATED HIGH YIELD TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Ernst & Young LLP, Independent Auditors, on
page 34.
<TABLE>
<CAPTION>
PERIOD ENDED FEBRUARY 28 OR 29,
--------------------------------------------------------------
1995 1994 1993 1992 1991
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.48 $ 9.10 $ 8.91 $ 6.99 $ 8.02
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.84 0.84 0.93 1.03 1.04
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.90) 0.40 0.19 1.90 (0.92)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total from investment operations (0.06) 1.24 1.12 2.93 0.12
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.84) (0.86) (0.93) (1.01) (1.06)
- ------------------------------------------------------------
Distributions to shareholders from net realized gain on
investment transactions -- -- -- -- --
- ------------------------------------------------------------
Distributions in excess of net investment income (0.01)(a) -- -- -- (0.09)(a)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total distributions (0.85) (0.86) (0.93) (1.01) (1.15)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 8.57 $ 9.48 $ 9.10 $ 8.91 $ 6.99
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN (B) (0.32%) 14.16% 13.28% 44.15% 3.12%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.85% 0.83% 0.77% 0.76% 0.78%
- ------------------------------------------------------------
Net investment income 9.70% 9.17% 10.54% 12.73% 14.82%
- ------------------------------------------------------------
Expense waiver/reimbursement (c) 0.22% 0.13% 0.22% 0.33% 0.49%
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $464,604 $432,045 $354,383 $222,937 $103,647
- ------------------------------------------------------------
Portfolio turnover 99% 112% 93% 61% 31%
- ------------------------------------------------------------
<CAPTION>
1990 1989 1988 1987 1986
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.96 $ 10.21 $ 11.25 $ 10.96 $ 10.02
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 1.30 1.30 1.26 1.30 1.37
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (1.96) (0.25) (0.98) 0.32 0.95
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total from investment operations (0.66) 1.05 0.28 1.62 2.32
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (1.28) (1.30) (1.26) (1.30) (1.37)
- ------------------------------------------------------------
Distributions to shareholders from net realized gain on
investment transactions -- -- (0.06) (0.03) (0.01)
- ------------------------------------------------------------
Distributions in excess of net investment income -- -- -- -- --
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
Total distributions (1.28) (1.30) (1.32) (1.33) (1.38)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 8.02 $ 9.96 $ 10.21 $ 11.25 $ 10.96
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN (B) (7.50%) 10.92% 3.08% 15.75% 24.70%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.76% 0.75% 0.75% 0.75% 0.75%
- ------------------------------------------------------------
Net investment income 13.87% 12.89% 12.25% 11.86% 13.25%
- ------------------------------------------------------------
Expense waiver/reimbursement (c) 0.33% 0.32% 0.24% 0.35% 0.75%
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $134,242 $235,208 $246,745 $271,148 $26,883
- ------------------------------------------------------------
Portfolio turnover 24% 51% 73% 57% 31%
- ------------------------------------------------------------
<FN>
(a) Distributions in excess of net investment income for the periods ended
February 28, 1995 and 1991 were a result of certain book and tax timing
differences. These distributions do not represent a return of capital for
federal income tax purposes.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Further information about the Trust's performance is contained in the Trust's
annual report for the fiscal year ended February 28, 1995, which can be obtained
free of charge.
2
<PAGE>
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated April 17, 1984. The Trust is designed primarily for assets held
by bank customers or by banks in a fiduciary, advisory, agency, custodial
(including Individual Retirement Accounts), or similar capacity. It is also
designed for funds held by other institutions such as corporations, trusts,
brokers, investment counselors, pension and profit-sharing plans, and insurance
companies. A minimum initial investment of $25,000 over a 90-day period is
required.
Trust shares are currently sold and redeemed at net asset value without a sales
load imposed by the Trust.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Trust is to seek high current income by
investing primarily in a professionally managed, diversified portfolio of fixed
income securities. The fixed income securities in which the Trust intends to
invest are expected to be lower-rated corporate debt obligations. While there is
no assurance that the Trust will achieve its investment objective, it endeavors
to do so by following the investment policies described in this prospectus. The
investment objective stated above and the investment policies and limitations
described below cannot be changed without approval of shareholders.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Trust will invest primarily in fixed rate corporate
debt obligations. The fixed rate corporate debt obligations in which the Trust
intends to invest are expected to be lower-rated. Permitted investments
currently include, but are not limited to, the following:
- corporate debt obligations having fixed or floating rates of interest and
which are rated BBB or lower by nationally recognized statistical rating
organizations;
- commercial paper;
- obligations of the United States;
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the National
Bank for Cooperatives and Banks for Cooperatives; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; Export-Import Bank
of the United States; Commodity Credit Corporation; Federal Financing
Bank; Student Loan Marketing Association; National Credit Union
Administration and Tennessee Valley Authority;
- time and savings deposits (including certificates of deposit) in
commercial or savings banks whose deposits are insured by the Bank
Insurance Fund ("BIF") or the Savings Association
3
<PAGE>
Insurance Fund ("SAIF"), including certificates of deposit issued by and
other time deposits in foreign branches of BIF-insured banks;
- bankers' acceptances issued by a BIF-insured bank, or issued by the bank's
Edge Act subsidiary and guaranteed by the bank, with remaining maturities
of nine months or less. The total acceptances of any bank held by the
Trust cannot exceed 0.25 of 1% of such bank's total deposits according to
the bank's last published statement of condition preceding the date of the
acceptance; and
- general obligations of any state, territory, or possession of the United
States, or their political subdivisions, so long as they are either (1)
rated in one of the four highest grades by nationally recognized
statistical rating organizations or (2) issued by a public housing agency
and backed by the full faith and credit of the United States.
The corporate debt obligations in which the Trust may invest are generally rated
BBB or lower by Standard & Poor's Ratings Group ("S&P") or Baa or lower by
Moody's Investors Service, Inc. ("Moody's"), or are not rated but are determined
by the Trust's investment adviser to be of comparable quality. (See "Investment
Risks" on page 6.)
RESTRICTED SECURITIES. The Trust may acquire securities which are subject to
legal or contractual delays, restrictions, and costs on resale. Because of time
limitations, the Trust might not be able to dispose of these securities at
reasonable prices or at times advantageous to the Trust.
As a matter of investment practice, which can be changed without shareholder
approval, the Trust will not invest more than 15% of its net assets in illiquid
securities, which include certain private placements not determined to be liquid
under criteria established by the Board of Trustees and repurchase agreements
providing for settlement in more than seven days after notice.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Trust may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Trust purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Trust to miss a price or yield considered to be advantageous.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Trust may pay more/less than the market value of the
securities on the settlement date.
TEMPORARY INVESTMENTS. The Trust may also invest temporarily in cash and cash
items during times of unusual market conditions for defensive purposes and to
maintain liquidity. Cash items may include, but are not limited to, obligations
such as:
- certificates of deposit;
- commercial paper (generally lower-rated);
- short-term notes;
4
<PAGE>
- obligations issued or guaranteed as to principal and interest by the U.S.
government or any of its agencies or instrumentalities; and
- repurchase agreements.
REPURCHASE AGREEMENTS. Certain securities in which the Trust invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell U.S. government securities or other securities to the Trust
and agree at the time of sale to repurchase them at a mutually agreed upon time
and price. To the extent that the original seller does not repurchase the
securities from the Trust, the Trust could receive less than the repurchase
price on any sale of such securities.
PUT AND CALL OPTIONS. The Trust may purchase put options on portfolio
securities. The Trust may also write call options on securities either held in
its portfolio or which it has the right to obtain without payment of further
consideration or for which it has segregated cash in the amount of any
additional consideration. The call options which the Trust writes must be listed
on a recognized options exchange. Purchases of puts or sales of calls by the
Trust are intended to protect against price movements in particular securities
in the Trust's portfolio. Sales of calls also generate income for the Trust. The
Trust also reserves the right to hedge the portfolio by buying financial futures
and put options on financial futures.
RISKS. Prior to exercise or expiration, an option position can only be
terminated by entering into a closing purchase or sale transaction. This
requires a secondary market on an exchange for call or put options which may
or may not exist for any particular call or put option at any specific time.
The absence of a liquid secondary market also may limit the Trust's ability
to dispose of the securities underlying an option. The inability to close
options also could have an adverse impact on the Trust's ability to
effectively hedge its portfolio.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Trust may lend its portfolio securities on a short-term or long-term basis to
broker/dealers, banks, or other institutional borrowers of securities. The Trust
will only enter into loan arrangements with broker/dealers, banks, or other
institutions which the Trust's investment adviser has determined are
creditworthy under guidelines established by the Trust's Board of Trustees and
will receive collateral equal to at least 100% of the value of the securities
loaned.
There is the risk that when the Trust lends portfolio securities, the securities
may not be available to the Trust on a timely basis and the Trust may,
therefore, lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending court
action.
PORTFOLIO TURNOVER. While the Trust does not intend to do substantial
short-term trading, from time to time it may sell portfolio securities without
considering how long they have been held. The Trust would do this:
- to take advantage of short-term differentials in yields or market values;
- to take advantage of new investment opportunities;
5
<PAGE>
- to respond to changes in the creditworthiness of an issuer; or
- to try to preserve gains or limit losses.
Any such trading would increase the Trust's portfolio turnover rate and its
transaction costs. However, the Trust will not attempt to set or meet an
arbitrary turnover rate since turnover is incidental to transactions considered
necessary to achieve the Trust's investment objective.
INVESTMENT RISKS
The corporate debt obligations in which the Trust invests are usually not in the
three highest rating categories of a nationally recognized statistical rating
organization (AAA, AA, or A for S&P and Aaa, Aa, or A for Moody's) but are in
the lower rating categories or are unrated but are of comparable quality and
have speculative characteristics or are speculative. Lower-rated or unrated
bonds are commonly referred to as "junk bonds." There is no minimal acceptable
rating for a security to be purchased or held in the Trust's portfolio, and the
Trust may, from time to time, purchase or hold securities rated in the lowest
rating category. A description of the rating categories is contained in the
Appendix to this prospectus.
Lower-rated securities will usually offer higher yields than higher-rated
securities. However, there is more risk associated with these investments. This
is because of reduced creditworthiness and increased risk of default.
Lower-rated securities generally tend to reflect short-term corporate and market
developments to a greater extent than higher-rated securities which react
primarily to fluctuations in the general level of interest rates. Short-term
corporate and market developments affecting the price or liquidity of
lower-rated securities could include adverse news affecting major issuers,
underwriters, or dealers of lower-rated corporate debt obligations. In addition,
since there are fewer investors in lower-rated securities, it may be harder to
sell the securities at an optimum time.
As a result of these factors, lower-rated securities tend to have more price
volatility and carry more risk to principal and income than higher-rated
securities.
An economic downturn may adversely affect the value of some lower-rated bonds.
Such a downturn may especially affect highly leveraged companies or companies in
cyclically sensitive industries, where deterioration in a company's cash flow
may impair its ability to meet its obligation to pay principal and interest to
bondholders in a timely fashion. From time to time, as a result of changing
conditions, issuers of lower-rated bonds may seek or may be required to
restructure the terms and conditions of the securities they have issued. As a
result of these restructurings, holders of lower-rated securities may receive
less principal and interest than they had bargained for at the time such bonds
were purchased. In the event of a restructuring, the Trust may bear additional
legal or administrative expenses in order to maximize recovery from an issuer.
The secondary trading market for lower-rated bonds is generally less liquid than
the secondary trading market for higher-rated bonds. Adverse publicity and the
perception of investors relating to issuers, underwriters, dealers or underlying
business conditions, whether or not warranted by fundamental analysis, may
affect the price or liquidity of lower-rated bonds. On occasion, therefore, it
may become difficult to price or dispose of a particular security in the
portfolio.
6
<PAGE>
The Trust may, from time to time, own zero coupon bonds or pay-in-kind
securities. A zero coupon bond makes no periodic interest payments and the
entire obligation becomes due only upon maturity. Pay-in-kind securities make
periodic payments in the form of additional securities (as opposed to cash). The
price of zero coupon bonds and pay-in-kind securities are generally more
sensitive to fluctuations in interest rates than are conventional bonds.
Additionally, federal tax law requires that interest on zero coupon bonds and
pay-in-kind securities be reported as income to the Trust even though the Trust
receives no cash interest until the maturity or payment date of such securities.
Many corporate debt obligations, including many lower-rated bonds, permit the
issuers to call the security and thereby redeem their obligations earlier than
the stated maturity dates. Issuers are more likely to call bonds during periods
of declining interest rates. In these cases, if the Trust owns a bond which is
called, the Trust will receive its return of principal earlier than expected and
would likely be required to reinvest the proceeds at lower interest rates, thus
reducing income to the Trust.
The table below shows the weighted average of the ratings of the bonds in the
Trust's portfolio during the Trust's fiscal year ended February 28, 1995. The
credit rating categories are those provided by S&P, which is a nationally
recognized statistical rating organization. The percentages in the column titled
"Rated" reflect the percentage of bonds in the portfolio which received a rating
from at least one nationally recognized statistical rating organization. The
percentages in the column titled "Not Rated" reflect the percentage of bonds in
the portfolio which are not rated but which the Trust's investment adviser has
judged to be comparable in quality to the corresponding rated bonds.
<TABLE>
<CAPTION>
AS A PERCENTAGE OF TOTAL
MARKET VALUE OF BOND
HOLDINGS
---------------------------
NOT
CREDIT RATING RATED RATED TOTAL
------- ------- -------
<S> <C> <C> <C>
BB & BBB..................................... 16.99 % 0.00 % 16.99 %
B............................................ 78.26 0.86 79.12
CC & CCC..................................... 3.05 0.84 3.89
------- ------- -------
98.30 % 1.70 % 100.00 %
------- ------- -------
------- ------- -------
</TABLE>
REDUCING RISKS OF LOWER-RATED SECURITIES. The Trust's investment adviser
believes that the risks of investing in lower-rated securities can be reduced.
The professional portfolio management techniques used by the Trust to attempt to
reduce these risks include:
CREDIT RESEARCH. The Trust's investment adviser will perform its own credit
analysis in addition to using nationally recognized statistical rating
organizations and other sources, including discussions with the issuer's
management, the judgment of other investment analysts, and its own informed
judgment. The Trust's investment adviser's credit analysis will consider the
issuer's financial soundness, its responsiveness to changes in interest
rates and business conditions, and its anticipated cash flow, interest or
dividend coverage and earnings. In evaluating an issuer, the Trust's
investment adviser places special emphasis on the estimated current value of
the issuer's assets rather than historical costs.
7
<PAGE>
DIVERSIFICATION. The Trust invests in securities of many different issuers,
industries, and economic sectors to reduce portfolio risk.
ECONOMIC ANALYSIS. The Trust's investment adviser will analyze current
developments and trends in the economy and in the financial markets. When
investing in lower-rated securities, timing and selection are critical, and
analysis of the business cycle can be important.
INVESTMENT LIMITATIONS
The Trust will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Trust sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) except, under certain circumstances, the Trust may borrow up to
one-third of the value of its net assets; or
- sell securities short except, under strict limitations, the Trust may
maintain open short positions so long as not more than 10% of the value of
its net assets is held as collateral for those positions.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Board of Trustees
without shareholder approval. Shareholders will be notified before any material
changes in these limitations become effective. The Trust will not:
- invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations;
- commit more than 5% of the value of its total assets to premiums on open
put option positions;
- invest more than 5% of the value of its total assets in securities of one
issuer (except cash and cash items, repurchase agreements, and U.S.
government obligations) or acquire more than 10% of any class of voting
securities of any one issuer; or
- invest more than 10% of the value of its total assets in foreign
securities which are not publicly traded in the United States.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees (the
"Trustees"). The Trustees are responsible for managing the Trust's business
affairs and for exercising all the Trust's powers except those reserved for the
shareholders. The Executive Committee of the Board of Trustees handles the
Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Trust are made by Federated
Management, the Trust's investment adviser, subject to direction by the
Trustees. The investment adviser continually
8
<PAGE>
conducts investment research and supervision for the Trust and is responsible
for the purchase or sale of portfolio instruments, for which it receives an
annual fee from the Trust.
ADVISORY FEES. The Trust's investment adviser receives an annual investment
advisory fee equal to .75 of 1% of the Trust's average daily net assets. The
investment adviser may voluntarily choose to waive a portion of its fee or
reimburse the Trust for certain operating expenses. This does not include
reimbursement to the Trust of any expenses incurred by shareholders who use
the transfer agent's subaccounting facilities. The investment adviser can
terminate this voluntary reimbursement of expenses at any time in its sole
discretion. The investment adviser has also undertaken to reimburse the
Trust for operating expenses in excess of limitations established by certain
states.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk-averse investment philosophy serve
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
Mark E. Durbiano has been the Trust's portfolio manager since 1984. Mr.
Durbiano joined Federated Investors in 1982 and has been a Vice President of
the Trust's investment adviser since 1988. Mr. Durbiano is a Chartered
Financial Analyst and received his M.B.A. in Finance from the University of
Pittsburgh.
DISTRIBUTION OF TRUST SHARES
Federated Securities Corp. is the principal distributor for shares of the Trust.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
ADMINISTRATIVE ARRANGEMENTS. The distributor may select brokers and dealers to
provide distribution and administrative services. The distributor may also
select administrators (including depository institutions such as commercial
banks and savings and loan associations) to provide administrative services.
These administrative services include, but are not limited to, distributing
prospectuses and other information, providing accounting assistance and
communicating or facilitating purchases and redemptions of Trust shares.
9
<PAGE>
Brokers, dealers, and administrators will receive fees from the distributor
based upon shares owned by their clients or customers. The fees are calculated
as a percentage of the average aggregate net asset value of shareholder accounts
during the period for which the brokers, dealers, and administrators provide
services. Any fees paid for these services by the distributor will be reimbursed
by the investment adviser.
The Glass-Steagall Act limits the ability of a depository institution (such as a
commercial bank or a savings and loan association) to become an underwriter or
distributor of securities. In the event the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described above
or should Congress relax current restrictions on depository institutions, the
Trustees will consider appropriate changes in the administrative services.
State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE TRUST
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Trust.
Federated Administrative Services provides these at an annual rate which relates
to the average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors (the "Federated Funds") as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<C> <S>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
SHAREHOLDER SERVICES PLAN. The Trust has adopted a Shareholder Services Plan
(the "Services Plan") under which it may make payments up to 0.25 of 1% of the
average daily net asset value of the Trust to obtain certain personal services
for shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Trust has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors, under which
Federated Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their clients or
customers. The schedules of such fees and the basis upon which such fees will be
paid will be determined from time to time by the Trust and Federated Shareholder
Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS.__In addition to periodic payments to
financial institutions under the Services Plan, certain financial institutions
may be compensated by the investment
10
<PAGE>
adviser or its affiliates for the continuing investment of customers' assets in
certain funds, including the Trust, advised by those entities. These payments
will be made directly by the distributor or investment adviser from their
assets, and will not be made from the assets of the Trust or by the assessment
of a sales load on Trust shares.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
Massachusetts, is custodian for the securities and cash of the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company, a
subsidiary of Federated Investors, Pittsburgh, Pennsylvania, is transfer agent
for the shares of the Trust and dividend disbursing agent for the Trust.
INDEPENDENT AUDITORS. The independent auditors for the Trust are Ernst & Young
LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trust's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.
INVESTING IN THE TRUST
- --------------------------------------------------------------------------------
SHARE PURCHASES
Trust shares are sold on days on which the New York Stock Exchange is open.
Shares may be purchased either by wire or mail.
To purchase shares of the Trust, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken over the
telephone. The Trust reserves the right to reject any purchase request.
BY WIRE. To purchase shares of the Trust by Federal Reserve wire, call the
Trust before 4:00 p.m. (Eastern time) to place an order. The order is considered
received immediately. Payment by federal funds must be received before 3:00 p.m.
(Eastern time) on the next business day following the order. Federal funds
should be wired as follows: Federated Services Company, c/o State Street Bank
and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to:
Federated High Yield Trust; Fund Number (this number can be found on the account
statement or by contacting the Trust); Group Number or Order Number; Nominee or
Institution Name; and ABA Number 011000028. Shares cannot be purchased by wire
on days on which the New York Stock Exchange is closed and on federal holidays
restricting wire transfers.
BY MAIL. To purchase shares of the Trust by mail, send a check made payable to
Federated High Yield Trust to Federated Services Company, c/o State Street Bank
and Trust Company, P.O. Box 8602, Boston, Massachusetts 02266-8602. Orders by
mail are considered received after payment by check is converted by the transfer
agent's bank, State Street Bank, into federal funds. This is normally the next
business day after State Street Bank receives the check.
11
<PAGE>
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Trust is $25,000 plus any non-affiliated
bank or broker's fee, if applicable. However, an account may be opened with a
smaller amount as long as the $25,000 minimum is reached within 90 days. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Trust. Accounts established through a
non-affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Trust shares are sold at their net asset value next determined after an order is
received. There is no sales load imposed by the Trust. Investors who purchase
Trust shares through a non-affiliated bank or a broker may be charged an
additional service fee by that bank or broker.
The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which there are not sufficient changes in the
value of the Trust's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However, certain
institutions may wish to use the transfer agent's subaccounting system to
minimize their internal recordkeeping requirements. The transfer agent charges a
fee based on the level of subaccounting services rendered. Institutions holding
Trust shares in a fiduciary, agency, custodial, or similar capacity may charge
or pass through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided which
may be related to the ownership of Trust shares. This prospectus should,
therefore, be read together with any agreement between the customer and the
institution with regard to the services provided, the fees charged for those
services, and any restrictions and limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during the
month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are declared just prior
to determining net asset value. If an order for shares is placed on the
preceding business day, shares purchased by wire begin earning dividends on the
business day that wire payment is received by the transfer agent. If the order
for shares and payment by wire are received on the same day, shares begin
earning dividends on the next business day. Shares purchased by check begin
earning dividends on the business day after the check is converted, upon
instruction of the transfer agent, into federal funds. Dividends
12
<PAGE>
are automatically reinvested on payment dates in additional shares of the Trust
unless cash payments are requested by contacting the Trust.
CAPITAL GAINS
Capital gains realized by the Trust, if any, will be distributed at least once
every 12 months.
RETIREMENT PLANS
Shares of the Trust can be purchased as an investment for retirement plans or
for IRA accounts. For further details, contact Federated Securities Corp. and
consult a tax adviser.
REDEEMING SHARES
- --------------------------------------------------------------------------------
The Trust redeems shares at their net asset value next determined after the
Trust receives the redemption request. Redemptions will be made on days on which
the Trust computes its net asset value. Redemption requests must be received in
proper form and can be made by telephone request or by written request.
TELEPHONE REDEMPTION
Shareholders may redeem their shares by telephoning the Trust before 4:00 p.m.
(Eastern time). Telephone redemption instructions may be recorded. All proceeds
will normally be wire transferred the following business day, but in no event
more than seven days, to the shareholder's account at a domestic commercial bank
that is a member of the Federal Reserve System. If, at any time, the Trust shall
determine it necessary to terminate or modify this method of redemption,
shareholders would be promptly notified.
An authorization form permitting the transfer agent to accept telephone requests
must first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
Telephone redemption instructions may be recorded. If reasonable procedures are
not followed by the Trust, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Written Requests," should be considered.
WRITTEN REQUESTS
Trust shares may also be redeemed by sending a written request to the Trust.
Call the Trust for specific instructions before redeeming by letter. The
shareholder will be asked to provide in the request his name, the Trust name,
his account number, and the share or dollar amount requested. If share
certificates have been issued, they must be properly endorsed and should be sent
by registered or certified mail to Federated Services Company, 500 Victory Road
- -2nd Floor, Quincy, Massachusetts 02171 with the written request.
13
<PAGE>
SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Trust, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
- a trust company or commercial bank whose deposits are insured by BIF,
which is administered by the Federal Deposit Insurance Corporation
("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
- a savings bank or savings and loan association whose deposits are insured
by the SAIF, which is administered by the FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Trust does not accept signatures guaranteed by a notary public.
The Trust and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Trust may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000. This
requirement does not apply, however, if the balance falls below $25,000 because
of changes in the Trust's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
REDEMPTION IN KIND
The Trust is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Trust's net asset value, whichever is less, for any one shareholder within a
90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that further cash payments will have a material adverse effect on
remaining shareholders. In such a case, the Trust will pay all or a portion of
the remainder of the redemption in portfolio instruments, valued in the same way
as the Trust determines net asset value. The portfolio instruments will be
selected in a manner that the Trustees deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.
14
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. As a Massachusetts business
trust, the Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's
operation and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign on behalf of the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required to use its property to protect or compensate
the shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them from its assets.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares. No federal
income tax is due on any dividends earned in an IRA or qualified retirement plan
until distributed.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Trust:
- the Trust is not subject to Pennsylvania corporate or personal property
taxes; and
15
<PAGE>
- Trust shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Trust would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Trust advertises its total return and yield.
Total return represents the change, over a specified period of time, in the
value of an investment in the Trust after reinvesting all income and capital
gain distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The yield of the Trust is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Trust
over a thirty-day period by the maximum offering price per share of the Trust on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
the Trust and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.
Trust shares are sold without any sales load or other similar non-recurring
charges.
From time to time, advertisements for the Trust may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Trust's performance to certain indices.
16
<PAGE>
FEDERATED HIGH YIELD TRUST
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--87.9%
- -------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.4%
-------------------------------------------------------------------
$2,000,000 Tracor, Inc., Sr. Sub. Note, 10.875%, 8/15/2001 $ 2,015,000
------------------------------------------------------------------- -----------
AIR TRANSPORTATION--0.6%
-------------------------------------------------------------------
3,000,000 USAir, Inc., Pass Thru Cert., Series 1993-A2, 9.625%, 9/1/2003 2,580,000
------------------------------------------------------------------- -----------
AUTOMOTIVE--2.5%
-------------------------------------------------------------------
3,250,000 Aftermarket Technology Co., Sr. Sub. Note, 12.00%, 8/1/2004 3,412,500
-------------------------------------------------------------------
3,500,000 Doehler-Jarvis, Inc., Sr. Note, 11.875%, 6/1/2002 3,587,500
-------------------------------------------------------------------
1,250,000 Lear Seating Corp., Sub. Note, 8.25%, 2/1/2002 1,150,000
-------------------------------------------------------------------
4,000,000 Motor Wheel Corp., Sr. Note, 11.50%, 3/1/2000 3,530,000
------------------------------------------------------------------- -----------
Total 11,680,000
------------------------------------------------------------------- -----------
BANKING--1.0%
-------------------------------------------------------------------
4,625,000 First Nationwide Holdings, Inc., Sr. Note, 12.25%, 5/15/2001 4,786,875
------------------------------------------------------------------- -----------
BEVERAGE & TOBACCO--0.9%
-------------------------------------------------------------------
2,000,000 Dr. Pepper Bottling Holdings Co., Sr. Disc. Note, 0/11.625%,
2/15/2003 1,400,000
-------------------------------------------------------------------
3,750,000 Heileman Acquisition Co., Sr. Sub. Note, 9.625%, 1/31/2004 2,662,500
------------------------------------------------------------------- -----------
Total 4,062,500
------------------------------------------------------------------- -----------
BROADCAST RADIO & TV--5.2%
-------------------------------------------------------------------
3,000,000 Ackerley Communications, Inc., Sr. Secd. Note, 10.75%, 10/1/2003 3,015,000
-------------------------------------------------------------------
3,750,000 Allbritton Communication Co., Sr. Sub. Note, 11.50%, 8/15/2004 3,843,750
-------------------------------------------------------------------
3,250,000 Chancellor Broadcasting Co., Sr. Sub. Note, 12.50%, 10/1/2004 3,266,250
-------------------------------------------------------------------
4,000,000 NWCG Holding Corp., Sr. Disc. Note, 13.50% accrual, 6/15/1999 2,350,000
-------------------------------------------------------------------
6,750,000 SCI Television, Inc., Sr. Secd. Note, 11.00%, 6/30/2005 6,952,500
-------------------------------------------------------------------
3,550,000 Sinclair Broadcast Group, Sr. Sub. Note, 10.00%, 12/15/2003 3,425,750
-------------------------------------------------------------------
1,250,000 Young Broadcasting Inc., Sr. Sub. Note, 11.75%, 11/15/2004 1,328,125
------------------------------------------------------------------- -----------
Total 24,181,375
------------------------------------------------------------------- -----------
</TABLE>
17
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--1.2%
-------------------------------------------------------------------
$1,500,000 Anacomp, Inc., Sr. Sub. Note, 15.00%, 11/1/2000 $ 1,447,500
-------------------------------------------------------------------
3,850,000 Bell & Howell Co., Sr. Sub. Note, 10.75%, 10/1/2002 3,792,250
-------------------------------------------------------------------
274,889 San Jacinto Holdings, Inc., Sr. Sub. Note, 8.00%, 12/31/2000 89,339
-------------------------------------------------------------------
545,000 San Jacinto Holdings, Inc., Sub. PIK Deb., 8.00%, 12/31/2000 327,000
------------------------------------------------------------------- -----------
Total 5,656,089
------------------------------------------------------------------- -----------
CABLE TELEVISION--6.0%
-------------------------------------------------------------------
3,000,000 CF Cable TV Inc., Sr. Secd. 2nd Priority Note, 11.625%, 2/15/2005 3,138,750
-------------------------------------------------------------------
3,000,000 Cablevision Industries Corp., Sr. Note, 9.25%, 4/1/2008 2,943,750
-------------------------------------------------------------------
3,000,000 Cablevision Systems Co., Sr. Sub. Deb., 9.875%, 2/15/2013 2,910,000
-------------------------------------------------------------------
6,000,000 Continental Cablevision, Sr. Deb., 9.50%, 8/1/2013 5,790,000
-------------------------------------------------------------------
5,250,000 International Cabletel, Inc., Sr. Defd. Note, 0/10.875%, 10/15/2003 3,110,625
-------------------------------------------------------------------
2,100,000 Le Groupe Videotron Ltd., Sr. Note, 10.625%, 2/15/2005 2,173,500
-------------------------------------------------------------------
6,000,000 Marcus Cable Operating Co., Sr. Disc. Note, 0/13.50%, 8/1/2004 3,600,000
-------------------------------------------------------------------
7,500,000 Rogers Cablesystems Ltd., Sr. Secd. Note, 9.65%, 1/15/2014 4,391,164
------------------------------------------------------------------- -----------
Total 28,057,789
------------------------------------------------------------------- -----------
CHEMICALS & PLASTICS--7.7%
-------------------------------------------------------------------
7,000,000 Arcadian Partners L.P., Sr. Note, Series B, 10.75%, 5/1/2005 6,947,500
-------------------------------------------------------------------
5,000,000 Foamex L.P., Sr. Sub. Deb., 11.875%, 10/1/2004 4,825,000
-------------------------------------------------------------------
12,000,000 G-I Holdings, Inc., Sr. Disc. Note, 11.375% accrual, 10/1/1998 7,740,000
-------------------------------------------------------------------
2,500,000 LaRoche Industries, Inc., Sr. Sub. Note, 13.00%, 8/15/2004 2,450,000
-------------------------------------------------------------------
5,000,000 Polymer Group, Inc., Sr. Note, 12.75%, 7/15/2002 (c) 4,825,000
-------------------------------------------------------------------
3,000,000 UCC Investors Holdings, Inc., Sr. Sub. Note, 11.00%, 5/1/2003 3,022,500
-------------------------------------------------------------------
5,000,000 UCC Investors Holdings, Inc., Sub. Disc. Note, 0/12.00%, 5/1/2005 3,550,000
-------------------------------------------------------------------
2,750,000 Uniroyal Technology Corp., Sr. Secd. Note, 11.75%, 6/1/2003 2,323,750
------------------------------------------------------------------- -----------
Total 35,683,750
------------------------------------------------------------------- -----------
</TABLE>
18
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
CLOTHING & TEXTILES--1.6%
-------------------------------------------------------------------
$8,125,000 WestPoint Stevens, Inc., Sr. Sub. Deb., 9.375%, 12/15/2002 $ 7,596,875
------------------------------------------------------------------- -----------
CONGLOMERATES--2.6%
-------------------------------------------------------------------
4,000,000 Fairchild Industries, Sr. Secd. Note, 12.25%, 2/1/1999 3,960,000
-------------------------------------------------------------------
4,200,000 Sherritt Gordon Ltd., Sr. Note, 9.75%, 4/1/2003 4,163,250
-------------------------------------------------------------------
1,000,000 Sherritt, Inc., Deb., 10.50%, 3/31/2014 990,000
-------------------------------------------------------------------
5,000,000 Walter Industries, Inc., Sub. Deb., 17.00%, 1/1/1996 (b) 3,125,000
------------------------------------------------------------------- -----------
Total 12,238,250
------------------------------------------------------------------- -----------
CONSUMER PRODUCTS--0.9%
-------------------------------------------------------------------
4,750,000 Playtex Family Products Corp., Sr. Sub. Note, 9.00%, 12/15/2003 4,364,063
------------------------------------------------------------------- -----------
CONTAINER & GLASS PRODUCTS--5.0%
-------------------------------------------------------------------
1,260,000 Kane Industries, Inc., Sr. Sub. Disc. Note, 8.00%, 2/1/1998 (b)(c) 0
-------------------------------------------------------------------
2,900,000 Owens-Illinois, Inc., Note, 10.00%, 8/1/2002 2,918,125
-------------------------------------------------------------------
1,000,000 Owens-Illinois, Inc., Sr. Amort. Deb., 11.00%, 12/1/2003 1,077,500
-------------------------------------------------------------------
5,000,000 Owens-Illinois, Inc., Sr. Sub. Note, 10.50%, 6/15/2002 5,125,000
-------------------------------------------------------------------
4,000,000 Owens-Illinois, Inc., Sr. Sub. Note, 9.75%, 8/15/2004 3,950,000
-------------------------------------------------------------------
1,000,000 Owens-Illinois, Inc., Sr. Sub. Note, 9.95%, 10/15/2004 992,500
-------------------------------------------------------------------
500,000 Plastic Containers, Inc., Sr. Secd. Note, 10.75%, 4/1/2001 502,500
-------------------------------------------------------------------
2,000,000 Silgan Corp., Sr. Sub. Note, 11.75%, 6/15/2002 2,092,500
-------------------------------------------------------------------
4,750,000 Silgan Holdings, Inc., Sr. Disc. Deb., 0/13.25%, 12/15/2002 4,227,500
-------------------------------------------------------------------
2,250,000 U.S. Can Co., Sr. Sub. Note, 13.50%, 1/15/2002 2,480,625
------------------------------------------------------------------- -----------
Total 23,366,250
------------------------------------------------------------------- -----------
COSMETICS & TOILETRIES--1.8%
-------------------------------------------------------------------
2,000,000 Revlon Consumer Products Corp., Sr. Sub. Note, 10.50%, 2/15/2003 1,880,000
-------------------------------------------------------------------
10,500,000 Revlon Worldwide Corp., Sr. Secd. Note, Series B, 12.00% accrual,
3/15/1998 6,365,625
------------------------------------------------------------------- -----------
Total 8,245,625
------------------------------------------------------------------- -----------
</TABLE>
19
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
ECOLOGICAL SERVICES & EQUIPMENT--2.8%
-------------------------------------------------------------------
$4,625,000 Allied Waste Industries, Inc., Sr. Sub. Note, 12.00%, 2/1/2004 $ 4,578,750
-------------------------------------------------------------------
4,000,000 ICF Kaiser International, Inc., Sr. Sub. Note, 12.00%, 12/31/2003 3,660,000
-------------------------------------------------------------------
4,500,000 Mid-American Waste Systems, Inc., Sr. Sub. Note, 12.25%, 2/15/2003 4,623,750
------------------------------------------------------------------- -----------
Total 12,862,500
------------------------------------------------------------------- -----------
FARMING & AGRICULTURE--0.6%
-------------------------------------------------------------------
3,000,000 Spreckels Industries, Inc., Sr. Secd. Note, 11.50%, 9/1/2000 2,925,000
------------------------------------------------------------------- -----------
FOOD & DRUG RETAILERS--2.9%
-------------------------------------------------------------------
8,500,000 Grand Union Co., Sr. Sub. Note, 12.25%, 7/15/2002 (b) 2,592,500
-------------------------------------------------------------------
5,975,000 Pathmark Stores, Inc., Sr. Sub. Note, 9.625%, 5/1/2003 5,616,500
-------------------------------------------------------------------
5,350,000 Penn Traffic Co., Sr. Sub. Note, 9.625%, 4/15/2005 5,042,375
------------------------------------------------------------------- -----------
Total 13,251,375
------------------------------------------------------------------- -----------
FOOD PRODUCTS--3.6%
-------------------------------------------------------------------
4,725,000 Curtice-Burns Foods, Inc., Sr. Sub. Note, 12.25%, 2/1/2005 4,925,813
-------------------------------------------------------------------
4,500,000 Doskocil Cos., Inc., Sr. Sub. Note, 9.75%, 7/15/2000 4,095,000
-------------------------------------------------------------------
1,000,000 PMI Acquisition Corp., Sr. Sub. Note, 10.25%, 9/1/2003 967,500
-------------------------------------------------------------------
6,000,000 Specialty Foods Acquisition Corp., Sr. Secd. Disc. Deb., 0/13.00%,
8/15/2005 3,060,000
-------------------------------------------------------------------
3,750,000 Specialty Foods Corp., Sr. Sub. Note, 11.25%, 8/15/2003 3,618,750
------------------------------------------------------------------- -----------
Total 16,667,063
------------------------------------------------------------------- -----------
FOOD SERVICES--1.9%
-------------------------------------------------------------------
6,000,000 Flagstar Corp., Sr. Note, 10.875%, 12/1/2002 5,872,500
-------------------------------------------------------------------
3,250,000 Flagstar Corp., Sr. Sub. Deb., 11.25%, 11/1/2004 2,770,625
------------------------------------------------------------------- -----------
Total 8,643,125
------------------------------------------------------------------- -----------
FOREST PRODUCTS--4.2%
-------------------------------------------------------------------
1,875,000 Container Corp. of America, Sr. Note, 11.25%, 5/1/2004 1,982,813
-------------------------------------------------------------------
1,000,000 Container Corp. of America, Sr. Note, 9.75%, 4/1/2003 982,500
-------------------------------------------------------------------
</TABLE>
20
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
FOREST PRODUCTS--CONTINUED
-------------------------------------------------------------------
$1,000,000 Domtar, Inc., Deb., 11.25%, 9/15/2017 $ 1,030,000
-------------------------------------------------------------------
4,500,000 Domtar, Inc., Note, 12.00%, 4/15/2001 4,882,500
-------------------------------------------------------------------
1,750,000 Repap Wisconsin, Inc., 2nd Priority Sr. Secd. Note, 9.875%,
5/1/2006 1,618,750
-------------------------------------------------------------------
1,000,000 S. D. Warren Company, Sr. Sub. Note, 12.00%, 12/15/2004 (c) 1,062,500
-------------------------------------------------------------------
500,000 Stone Container Corp., 1st Mtg. Note, 10.75%, 10/1/2002 520,000
-------------------------------------------------------------------
7,500,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 7,378,125
------------------------------------------------------------------- -----------
Total 19,457,188
------------------------------------------------------------------- -----------
HEALTHCARE--2.9%
-------------------------------------------------------------------
3,053,572 AmeriSource Corp., Sr. PIK Deb., 11.25%, 7/15/2005 3,259,688
-------------------------------------------------------------------
1,500,000 Hillhaven Corp., Sr. Sub. Note, 10.125%, 9/1/2001 1,533,750
-------------------------------------------------------------------
1,750,000 National Medical Enterprises, Inc., Sr. Note, 9.625%, 9/1/2002 1,787,188
-------------------------------------------------------------------
4,200,000 National Medical Enterprises, Inc., Sr. Sub. Note, 10.125%,
3/1/2005 4,294,500
-------------------------------------------------------------------
2,375,000 Surgical Health Corp., Sr. Sub. Note, 11.50%, 7/15/2004 2,600,625
------------------------------------------------------------------- -----------
Total 13,475,751
------------------------------------------------------------------- -----------
HOME PRODUCTS & FURNISHINGS--3.1%
-------------------------------------------------------------------
1,250,000 American Standard, Inc., Sr. Deb., 11.375%, 5/15/2004 1,359,375
-------------------------------------------------------------------
10,500,000 American Standard, Inc., Sr. Sub. Disc. Deb., 0/10.50%, 6/1/2005 7,205,625
-------------------------------------------------------------------
2,250,000 Nortek, Inc., Sr. Sub. Note, 9.875%, 3/1/2004 2,058,750
-------------------------------------------------------------------
4,000,000 Triangle Pacific Corp., Sr. Note, 10.50%, 8/1/2003 3,940,000
------------------------------------------------------------------- -----------
Total 14,563,750
------------------------------------------------------------------- -----------
HOTELS, MOTELS, INNS & CASINOS--0.7%
-------------------------------------------------------------------
3,000,000 Motels of America, Inc., Sr. Sub. Note, 12.00%, 4/15/2004 3,075,000
------------------------------------------------------------------- -----------
INDUSTRIAL PRODUCTS & EQUIPMENT--1.9%
-------------------------------------------------------------------
3,250,000 Fairfield Manufacturing Co., Inc., Sr. Sub. Note, 11.375%, 7/1/2001 3,103,750
-------------------------------------------------------------------
2,250,000 Pace Industries, Inc., Sr. Note, 10.625%, 12/1/2002 2,075,625
-------------------------------------------------------------------
</TABLE>
21
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT--CONTINUED
-------------------------------------------------------------------
$3,500,000 Truck Components, Inc., Sr. Note, 12.25%, 6/30/2001 $ 3,640,000
------------------------------------------------------------------- -----------
Total 8,819,375
------------------------------------------------------------------- -----------
LEISURE & ENTERTAINMENT--2.6%
-------------------------------------------------------------------
2,750,000 Affinity Group, Inc., Sr. Sub. Note, 11.50%, 10/15/2003 2,609,063
-------------------------------------------------------------------
10,500,000 Viacom, Inc., Sub. Deb., 8.00%, 7/7/2006 9,476,250
------------------------------------------------------------------- -----------
Total 12,085,313
------------------------------------------------------------------- -----------
MACHINERY & EQUIPMENT--1.5%
-------------------------------------------------------------------
2,250,000 Primeco Inc., Sr. Sub. Note, 12.75%, 3/1/2005 2,289,375
-------------------------------------------------------------------
4,500,000 Waters Corp., Sr. Sub. Note, 12.75%, 9/30/2004 4,590,000
------------------------------------------------------------------- -----------
Total 6,879,375
------------------------------------------------------------------- -----------
OIL & GAS--3.4%
-------------------------------------------------------------------
3,250,000 Falcon Drilling Co., Inc., Sr. Note, 9.75%, 1/15/2001 3,107,813
-------------------------------------------------------------------
3,500,000 Giant Industries, Inc., Sr. Sub. Note, 9.75%, 11/15/2003 3,202,500
-------------------------------------------------------------------
2,250,000 H.S. Resources, Inc., Sr. Sub. Note, 9.875%, 12/1/2003 2,126,250
-------------------------------------------------------------------
2,300,000 Mesa Capital Corp., Note, 0/12.75%, 6/30/1998 2,162,000
-------------------------------------------------------------------
2,000,000 Triton Energy Corp., Sr. Sub. Disc. Note, 0/9.75%, 12/15/2000 1,615,000
-------------------------------------------------------------------
3,550,000 WRT Energy Corporation, Unit, 13.875%, 3/1/2002 3,550,000
------------------------------------------------------------------- -----------
Total 15,763,563
------------------------------------------------------------------- -----------
PRINTING & PUBLISHING--1.8%
-------------------------------------------------------------------
4,500,000 Affiliated Newspapers, Sr. Disc. Note, 0/13.25%, 7/1/2006 2,250,000
-------------------------------------------------------------------
1,250,000 American Media Operations, Inc., Sr. Sub. Note, 11.625%, 11/15/2004 1,331,250
-------------------------------------------------------------------
2,625,000 Garden State Newspapers, Inc., Sr. Sub. Note, 12.00%, 7/1/2004 2,575,781
-------------------------------------------------------------------
2,750,000 Webcraft Technologies, Inc., Sr. Sub. Note, 9.375%, 2/15/2002 2,437,188
------------------------------------------------------------------- -----------
Total 8,594,219
------------------------------------------------------------------- -----------
RETAILERS--2.1%
-------------------------------------------------------------------
4,200,000 Brylane Capital Corp., Sr. Sub. Note, 10.00%, 9/1/2003 4,158,000
-------------------------------------------------------------------
</TABLE>
22
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
RETAILERS--CONTINUED
-------------------------------------------------------------------
$2,500,000 Hosiery Corp. of America, Inc., Unit, 13.75%, 8/1/2002 (c) $ 2,375,000
-------------------------------------------------------------------
3,000,000 ICON Health & Fitness, Inc., Unit, 13.00%, 7/15/2002 (c) 3,135,000
------------------------------------------------------------------- -----------
Total 9,668,000
------------------------------------------------------------------- -----------
SERVICES--0.8%
-------------------------------------------------------------------
3,975,000 Solon Automated Services, Inc., Sr. Note, 12.75%, 7/15/2001 3,776,250
------------------------------------------------------------------- -----------
STEEL--6.7%
-------------------------------------------------------------------
4,650,000 Acme Metals, Inc., Sr. Secd. Disc. Note, 0/13.50%, 8/1/2004 3,464,250
-------------------------------------------------------------------
2,250,000 Armco, Inc., Sr. Note, 11.375%, 10/15/1999 2,261,250
-------------------------------------------------------------------
3,000,000 Armco, Inc., Sr. Note, 9.375%, 11/1/2000 2,775,000
-------------------------------------------------------------------
3,500,000 Bayou Steel Corp., 1st Mtg. Note, 10.25%, 3/1/2001 3,211,250
-------------------------------------------------------------------
4,250,000 Carbide/Graphite Group, Sr. Note, 11.50%, 9/1/2003 4,451,875
-------------------------------------------------------------------
5,000,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 4,475,000
-------------------------------------------------------------------
4,400,000 GS Technologies Operating Co., Inc., Sr. Note, 12.00%, 9/1/2004 4,526,500
-------------------------------------------------------------------
3,000,000 Geneva Steel Co., Sr. Note, 11.125%, 3/15/2001 2,850,000
-------------------------------------------------------------------
3,000,000 Northwestern Steel & Wire Co., Sr. Note, 9.50%, 6/15/2001 2,790,000
------------------------------------------------------------------- -----------
Total 30,805,125
------------------------------------------------------------------- -----------
SURFACE TRANSPORTATION--2.8%
-------------------------------------------------------------------
3,000,000 Gearbulk Holding Limited, Sr. Note, 11.25%, 12/1/2004 3,150,000
-------------------------------------------------------------------
3,500,000 Sea Containers Ltd., Sr. Note, 9.50%, 7/1/2003 3,220,000
-------------------------------------------------------------------
775,000 Sea Containers Ltd., Sr. Sub. Deb., Series B, 12.50%, 12/1/2004 809,875
-------------------------------------------------------------------
3,125,000 Trans Ocean Container Corp., Sr. Sub. Note, 12.25%, 7/1/2004 3,015,625
-------------------------------------------------------------------
3,000,000 Trism, Inc., Sr. Sub. Note, 10.75%, 12/15/2000 2,955,000
------------------------------------------------------------------- -----------
Total 13,150,500
------------------------------------------------------------------- -----------
TECHNOLOGY SERVICES--0.4%
-------------------------------------------------------------------
2,200,000 Computervision Corp., Sr. Sub. Note, 11.375%, 8/15/1999 2,013,000
------------------------------------------------------------------- -----------
</TABLE>
23
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR--2.4%
-------------------------------------------------------------------
$3,000,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/11.50%, 9/1/2003 $ 1,312,500
-------------------------------------------------------------------
4,000,000 NEXTEL Communications, Inc., Sr. Disc. Note, 0/9.75%, 8/15/2004 1,580,000
-------------------------------------------------------------------
6,250,000 PanAmSat, L.P., Sr. Sub. Disc. Note, 0/11.375%, 8/1/2003 4,156,250
-------------------------------------------------------------------
4,750,000 USA Mobile Communications, Inc., Sr. Note, 9.50%, 2/1/2004 4,096,875
------------------------------------------------------------------- -----------
Total 11,145,625
------------------------------------------------------------------- -----------
UTILITIES--1.4%
-------------------------------------------------------------------
8,500,000 California Energy Co., Inc., Sr. Disc. Note, 0/10.25%, 1/15/2004 6,332,500
------------------------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $432,564,540) 408,468,038
------------------------------------------------------------------- -----------
COMMON STOCKS--0.5%
- -------------------------------------------------------------------------------
BUILDING & DEVELOPMENT--0.0%
-------------------------------------------------------------------
3,080 Atlantic Gulf Communities Corp. 27,720
-------------------------------------------------------------------
2,342 Atlantic Gulf Communities Corp., Warrants 805
------------------------------------------------------------------- -----------
Total 28,525
------------------------------------------------------------------- -----------
BUSINESS EQUIPMENT & SERVICES--0.0%
-------------------------------------------------------------------
5,460 San Jacinto Holdings, Inc. (c) 2,730
------------------------------------------------------------------- -----------
CHEMICALS & PLASTICS--0.1%
-------------------------------------------------------------------
14,862 UCC Investors Holdings, Inc. (c) 178,344
-------------------------------------------------------------------
27,500 Uniroyal Technology Corp., Warrants 65,313
------------------------------------------------------------------- -----------
Total 243,657
------------------------------------------------------------------- -----------
CONGLOMERATES--0.2%
-------------------------------------------------------------------
722,871 Triton Group Ltd. 948,768
------------------------------------------------------------------- -----------
CONTAINER & GLASS PRODUCTS--0.0%
-------------------------------------------------------------------
53,400 Kane Industries, Inc., Warrants (b)(c) 0
------------------------------------------------------------------- -----------
FARMING & AGRICULTURE--0.2%
-------------------------------------------------------------------
114,545 Spreckels Industries, Inc., Class A 1,152,605
------------------------------------------------------------------- -----------
</TABLE>
24
<PAGE>
FEDERATED HIGH YIELD TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------
PRINTING & PUBLISHING--0.0%
-------------------------------------------------------------------
4,500 Affiliated Newspapers $ 112,500
------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $10,283,519) 2,488,785
------------------------------------------------------------------- -----------
U.S. TREASURY SECURITIES--6.0%
- -------------------------------------------------------------------------------
U.S. TREASURY NOTES--6.0%
-------------------------------------------------------------------
$6,000,000 United States Treasury Note, 7.25%, 2/15/1998 6,056,340
-------------------------------------------------------------------
11,000,000 United States Treasury Note, 7.50%, 1/31/1997 11,144,980
-------------------------------------------------------------------
5,000,000 United States Treasury Note, 7.75%, 1/31/2000 5,140,500
-------------------------------------------------------------------
5,000,000 United States Treasury Note, 9.00%, 5/15/1998 5,292,850
------------------------------------------------------------------- -----------
TOTAL U.S. TREASURY SECURITIES (IDENTIFIED COST $27,329,456) 27,634,670
------------------------------------------------------------------- -----------
(A) REPURCHASE AGREEMENT--7.4%
- -------------------------------------------------------------------------------
34,480,000 J.P. Morgan & Co., Inc., 6.13%, dated 2/28/1995, due 3/1/1995 (at
amortized cost) 34,480,000
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $504,657,515) $473,071,493(D)
------------------------------------------------------------------- -----------
-----------
<FN>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other Federated funds.
(b) Non-income producing security.
(c) Indicates private placement securities held at February 28, 1995, with a
total market value of $11,578,574, which represent 2.5% of total net assets.
(d) The cost of investments for federal tax purposes amounts to $505,607,371.
The unrealized appreciation/depreciation of investments on a federal tax
basis amounts to $32,535,878 which is comprised of $4,740,962 appreciation
and $37,276,840 depreciation at February 28, 1995.
Note: The categories of investments are shown as a percentage of net assets
($464,604,305) at February 28, 1995.
</TABLE>
<TABLE>
<S> <C>
The following abbreviation(s) are used throughout this portfolio:
PIK --Payment in Kind
</TABLE>
(See Notes which are an integral part of the Financial Statements)
25
<PAGE>
FEDERATED HIGH YIELD TRUST
NOTES TO PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
WALTER INDUSTRIES INC. (ALSO KNOWN AS GEORGIA MARBLE CO.; FORMERLY JIM WALTER
CORP.)
On March 17, 1995, Walter Industries exited from Chapter 11 bankruptcy
protection. The distribution of new securities in exchange for the Trust's
debentures is pending.
KANE INDUSTRIES, INC.
On March 18, 1994, Kane Industries, Inc., along with two of its affiliates,
Kane, Inc. and Alford Industries, Inc., filed for protection under Chapter 11 of
the U.S. Bankruptcy Code. The Trust's investment adviser is unable to predict
the outcome or timing of these proceedings.
GRAND UNION COMPANY
On January 25, 1995, the Grand Union Company announced that it had filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. The Trust's investment
adviser is unable to predict the outcome or timing of these proceedings.
26
<PAGE>
FEDERATED HIGH YIELD TRUST
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (identified cost $504,657,515 and tax cost
$505,607,371)) $473,071,493
- --------------------------------------------------------------------------------
Cash 88
- --------------------------------------------------------------------------------
Income receivable 8,924,409
- --------------------------------------------------------------------------------
Receivable for investments sold 1,390,000
- --------------------------------------------------------------------------------
Receivable for shares sold 2,778,794
- -------------------------------------------------------------------------------- ------------
Total assets 486,164,784
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Payable for investments purchased $18,879,319
- ----------------------------------------------------------------------
Payable for shares redeemed 1,063,678
- ----------------------------------------------------------------------
Income distribution payable 1,477,600
- ----------------------------------------------------------------------
Accrued expenses 139,882
- ---------------------------------------------------------------------- -----------
</TABLE>
<TABLE>
<S> <C> <C>
Total liabilities 21,560,479
- ----------------------------------------------------------------------------------- ------------
NET ASSETS for 54,220,503 shares outstanding $464,604,305
- ----------------------------------------------------------------------------------- ------------
------------
NET ASSETS CONSISTS OF:
- -----------------------------------------------------------------------------------
Paid in capital $524,506,965
- -----------------------------------------------------------------------------------
Net unrealized appreciation(depreciation) of investments and foreign
currency transactions (31,589,600)
- -----------------------------------------------------------------------------------
Accumulated net realized gain(loss) on investments and foreign
currency transactions (27,870,857)
- -----------------------------------------------------------------------------------
Distributions in excess of net investment income (442,203)
- ----------------------------------------------------------------------------------- ------------
Total Net Assets $464,604,305
- ----------------------------------------------------------------------------------- ------------
------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------
($464,604,305/54,220,503 SHARES OUTSTANDING) $ 8.57
- ----------------------------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
27
<PAGE>
FEDERATED HIGH YIELD TRUST
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest $41,102,902
- -----------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------
Investment advisory fee $2,922,038
- ------------------------------------------------------------
Administrative personnel and services fee 295,457
- ------------------------------------------------------------
Custodian fees 133,455
- ------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 74,111
- ------------------------------------------------------------
Trustees' fees 11,244
- ------------------------------------------------------------
Auditing fees 24,000
- ------------------------------------------------------------
Legal fees 12,980
- ------------------------------------------------------------
Portfolio accounting fees 49,839
- ------------------------------------------------------------
Shareholder services fee 586,690
- ------------------------------------------------------------
Share registration costs 19,693
- ------------------------------------------------------------
Printing and postage 29,839
- ------------------------------------------------------------
Insurance premiums 10,947
- ------------------------------------------------------------
Taxes 13,991
- ------------------------------------------------------------
Miscellaneous 7,312
- ------------------------------------------------------------ --------
Total expenses 4,191,596
- ------------------------------------------------------------
Deduct--Waiver of investment advisory fee 867,430
- ------------------------------------------------------------ --------
Net expenses 3,324,166
- ----------------------------------------------------------------------- ----------
Net investment income 37,778,736
- ----------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency
transactions (4,773,544)
- -----------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments and
foreign currency transactions (33,406,182)
- ----------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments and foreign
currency transactions (38,179,726)
- ----------------------------------------------------------------------- ----------
Change in net assets resulting from operations $ (400,990)
- ----------------------------------------------------------------------- ----------
----------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
28
<PAGE>
FEDERATED HIGH YIELD TRUST
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
------------------------------
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 37,778,736 $ 39,253,901
- ---------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency transactions
($1,456,604, net loss, and $6,960,443, net gain, respectively, as computed
for federal income tax purposes) (4,773,544) 8,764,555
- ---------------------------------------------------------------------------
Net change in unrealized appreciation/depreciation on investments and
foreign currency transactions (33,406,182) 8,262,255
- --------------------------------------------------------------------------- ------------- -------------
Change in assets resulting from operations (400,990) 56,280,711
- --------------------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income (37,778,736) (39,699,282)
- ---------------------------------------------------------------------------
Distributions in excess of net investment income (428,915) 0
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from distributions to shareholders (38,207,651) (39,699,282)
- ---------------------------------------------------------------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of Shares 629,838,185 576,417,640
- ---------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 20,569,292 21,954,239
- ---------------------------------------------------------------------------
Cost of Shares redeemed (579,239,706) (537,290,888)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from share transactions 71,167,771 61,080,991
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets 32,559,130 77,662,420
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 432,045,175 354,382,755
- --------------------------------------------------------------------------- ------------- -------------
End of period $ 464,604,305 $ 432,045,175
- --------------------------------------------------------------------------- ------------- -------------
------------- -------------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
29
<PAGE>
FEDERATED HIGH YIELD TRUST
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Federated High Yield Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, open-end
management investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed corporate bonds (and other fixed income and
asset-backed securities), unlisted securities and short-term obligations and
private placement securities are generally valued at the prices provided by
an independent pricing service. Listed equity securities are valued at the
last sale price reported on national securities exchanges. Short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be stated at amortized cost, which approximates value.
REPURCHASE AGREEMENTS--It is the policy of the Trust to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System, or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Trust to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Trust's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Trust could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
30
<PAGE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary. Additionally, net capital losses
of $3,325,355, attributable to security transactions incurred after October
31, 1994 are treated as arising on March 1, 1995, the first day of the
Trust's next taxable year. At February 28, 1995, the Trust, for federal tax
purposes, had a capital loss carryforward of $24,374,244, which will reduce
the Trust's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Code, and thus will
reduce the amount of the distributions to shareholders which would otherwise
be necessary to relieve the Trust of any liability for federal tax. Pursuant
to the Code, such capital loss carryforward will expire in 1998
($5,075,478), 1999 ($11,012,464), 2000 ($6,829,698) and 2003 ($1,456,604).
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
FOREIGN CURRENCY--The accounting records of the Trust are maintained in U.S.
dollars. All assets and liabilities denominated in foreign currencies ("FC")
are translated into U.S. dollars based on the rate of exchange of such
currencies against U.S. dollars on the date of valuation. Purchases and
sales of securities, income and expenses are translated at the rate of
exchange quoted on the respective date that such transactions are recorded.
Differences between income and expense amounts recorded and collected or
paid are adjusted when reported by the custodian bank. The Trust does not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from
changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments. Reported
net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of FCs, currency gains or losses
realized between the trade and settlement dates on securities transactions,
the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Trust's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
31
<PAGE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28,
-----------------------------
1995 1994
- -------------------------------------------------- ------------ --------------
<S> <C> <C>
Shares sold 72,545,518 62,036,140
- --------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 2,380,438 2,356,256
- --------------------------------------------------
Shares redeemed (66,300,129) (57,724,385)
- -------------------------------------------------- ------------ --------------
Net change resulting from Share transactions 8,625,827 6,668,011
- -------------------------------------------------- ------------ --------------
------------ --------------
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Trust's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .75 of 1% of the Trust's average daily net assets. The Adviser may
voluntarily choose to waive portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of average daily net assets of the Trust for the period. This fee is to
obtain certain services for shareholders and to maintain the shareholder
accounts.
TRANSFER AGENT FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Trust. The fee is based on the size, type, and
number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records,
for which it receives a fee. The fee is based on the level of the Trust's
average net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Trustees of the above companies.
32
<PAGE>
FEDERATED HIGH YIELD TRUST
- --------------------------------------------------------------------------------
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended February 28, 1995, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------
PURCHASES $404,755,110
- -------------------------------------------------- ------------
SALES $363,522,094
- -------------------------------------------------- ------------
</TABLE>
33
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- ---------------------------------------------------------
To the Trustees and Shareholders of
FEDERATED HIGH YIELD TRUST:
We have audited the accompanying statement of assets and liabilities of
Federated High Yield Trust, including the portfolio of investments, as of
February 28, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights (see page 2 of this prospectus)
for each of the ten years in the period then ended. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Federated High Yield Trust at February 28, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the ten years
in the period then ended, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
April 13, 1995
34
<PAGE>
APPENDIX
- --------------------------------------------------------------------------------
STANDARD & POOR'S RATINGS GROUP ("S&P") CORPORATE BOND RATING DEFINITIONS
AAA--Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB--Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
BB, B, CCC, CC--Debt rated "BB," "B," "CCC," and "CC" is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.
CI--The rating "CI" is reserved for income bonds on which no interest is being
paid.
D--Debt rated "D" is in default, and payment of interest and/or repayment of
principal is in arrears.
MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATING DEFINITIONS
Aaa--Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated "A" possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
35
<PAGE>
Baa--Bonds which are rated "Baa" are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba--Bonds which are "Ba" are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated "Ca" represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
36
<PAGE>
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Federated High Yield Trust Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Independent Auditors
Ernst & Young LLP One Oxford Centre
Pittsburgh, Pennsylvania 15219
- -------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
FEDERATED HIGH
YIELD TRUST
PROSPECTUS
A No-Load, Open-End, Diversified
Management Investment Company
April 30, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314197104
8040401A (4/95) [RECYCLED PAPER LOGO]
Federated High Yield Trust
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Federated High Yield Trust (the "Trust") dated April
30, 1995 . This Statement is not a prospectus itself. To receive a
copy of the prospectus, write or call the Trust.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Statement dated April 30, 1995
Federated Securities Corp.
Distributor
A subsidiary of FEDERATED
INVESTORS
General Information About The
Trust 1
Investment Objective And Policies 1
Corporate Debt Obligations 1
Put And Call Options 1
U.S. Government Obligations 1
Restricted Securities 2
When-Issued And Delayed Delivery
Transactions 2
Repurchase Agreements 2
Lending Of Portfolio Securities 2
Reverse Repurchase Agreements 2
Portfolio Turnover 3
Investment Risks 3
Investment Limitations 4
Federated High Yield Trust
Management 6
Officers And Trustees 6
Trust Ownership 10
Trustees Compensation 11
Trustee Liability 11
Investment Advisory Services 11
Adviser To The Trust 11
Advisory Fees 12
Administrative Services 12
Shareholder Services Plan 12
Transfer Agent And Dividend
Disbursing Agent 12
Purchasing Shares 13
Conversion To Federal Funds 13
Determining Net Asset Value 13
Determining Market Value Of
Securities 13
Redeeming Shares 14
Redemption In Kind 14
Tax Status 14
The Trust's Tax Status 14
Shareholders' Tax Status 14
Total Return 15
Yield 15
Performance Comparisons 15
Duration 16
General Information About the Trust
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated April 17, 1984.
Investment Objective and Policies
The Trust's investment objective is to seek high current income.
Corporate Debt Obligations
The corporate debt obligations in which the Trust invests may bear fixed,
floating, floating and contingent, or increasing rates of interest. The Trust
invests primarily in fixed rate corporate debt securities.
Put and Call Options
The Trust may purchase listed put options on portfolio securities or write
covered call options to protect against price movements in particular
securities in its portfolio and to generate income. A put option gives the
Trust, in return for a premium, the right to sell the underlying security to
the writer (seller) at a specified price during the term of the option. As
writer of a call option, the Trust has the obligation upon exercise of the
option during the option period to deliver the underlying security upon
payment of the exercise price.
The Trust may only: (1) buy put options which are listed on a recognized
options exchange and which are on securities held in its portfolio and (2)
sell listed call options either on securities held in its portfolio or on
securities which it has the right to obtain without payment of further
consideration (or has segregated cash in the amount of any such additional
consideration). The Trust will maintain its positions in securities, option
rights, and segregated cash subject to puts and calls until the options are
exercised, closed, or expired.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although the Trust's
investment adviser will consider liquidity before entering into option
transactions, there is no assurance that a liquid secondary market on an
exchange will exist for any particular option, or at any particular time.
The Trust reserves the right to hedge the portfolio by buying financial
futures and put options on stock index futures and financial futures. However,
the Trust will not engage in these transactions until (1) an amendment to its
Registration Statement is filed with the U.S. Securities and Exchange
Commission and becomes effective and (2) ten days after a supplement to the
prospectus disclosing this change in policy has been mailed to the
shareholders.
U.S. Government Obligations
The types of U.S. government obligations in which the Trust may invest
include, but are not limited to, direct obligations of the U.S. Treasury (such
as U.S. Treasury bills, notes, and bonds) and obligations issued or guaranteed
by U.S. government agencies or instrumentalities. These securities may be
backed by:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
o the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
o Student Loan Marketing Association;
o Federal Home Loan Mortgage Corporation;
o Federal Home Loan Banks;
o Farmers Home Administration; and
o Federal National Mortgage Association.
Restricted Securities
The Trust expects that any restricted securities would be acquired either from
institutional investors who originally acquired the securities in private
placements or directly from the issuers of the securities in private
placements. Restricted securities and securities that are not readily
marketable may sell at a discount from the price they would bring if freely
marketable.
When-Issued and Delayed Delivery Transactions
The Trust engages in when-issued and delayed delivery transactions only
for the purpose of acquiring portfolio securities consistent with the Trust's
investment objective and policies, and not for investment leverage. These
transactions are made to secure what is considered to be an advantageous price
or yield for the Trust. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Trust
sufficient to make payment for the securities to be purchased are segregated
on the Trust's records at the trade date. These assets are marked to market
daily and are maintained until the transaction has been settled. The Trust
does not intend to engage in when-issued and delayed delivery transactions to
an extent that would cause the segregation of more than 20% of the total value
of its assets.
Repurchase Agreements
The Trust requires its custodian to take possession of the securities subject
to repurchase agreements, and these securities are marked to market daily. To
the extent that the original seller does not repurchase the securities from
the Trust, the Trust could receive less than the repurchase price on any sale
of such securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Trust
might be delayed pending court action. The Trust believes that under the
regular procedures normally in effect for custody of the Trust's portfolio
securities subject to repurchase agreements, a court of competent jurisdiction
would rule in favor of the Trust and allow retention or disposition of such
securities. The Trust will only enter into repurchase agreements with banks
and other recognized financial institutions, such as broker/dealers, which are
deemed by the Trust's investment adviser to be creditworthy pursuant to
guidelines established by the Board of Trustees (the "Trustees").
Lending of Portfolio Securities
In order to generate additional income, the Trust may lend its portfolio
securities to broker/dealers, banks, or other institutional borrowers of
securities. The Trust will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the Trust's investment
adviser has determined are creditworthy under guidelines established by the
Trustees.
The collateral received when the Trust lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Trust. During the time
portfolio securities are on loan, the borrower pays the Trust any dividends or
interest paid on such securities. Loans are subject to termination at the
option of the Trust or the borrower. The Trust may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker. The Trust does not have the right to vote
securities on loan, but would terminate the loan and regain the right to vote
if that were considered important with respect to the investment.
Reverse Repurchase Agreements
The Trust may also enter into reverse repurchase agreements. This transaction
is similar to borrowing cash. In a reverse repurchase agreement the Trust
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 Trust 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 the Trust 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
Trust will be able to avoid selling portfolio instruments at a disadvantageous
time.
When effecting reverse repurchase agreements, liquid assets of the Trust, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled. During the period any
reverse repurchase agreements are outstanding, but only to the extent
necessary to assure completion of the reverse repurchase agreements, the Trust
will restrict the purchase of portfolio instruments to money market
instruments maturing on or before the expiration date of the reverse
repurchase agreements.
Portfolio Turnover
The Trust may experience greater portfolio turnover than would be expected
with a portfolio of higher-rated securities. A high portfolio turnover will
result in increased transaction costs to the Trust. The Trust will not attempt
to set or meet a portfolio turnover rate since any turnover would be
incidental to transactions undertaken in an attempt to achieve the Trust's
investment objective. For the fiscal years ended February 28, 1995 and
1994, the portfolio turnover rates were 99% and 112%, respectively.
Investment Risks
Adverse Legislation
Federal and state legislatures and regulators may propose laws and
regulations designed to limit the number or type of institutions that
may purchase lower-rated bonds, reduce the tax benefits to the issuers
of such bonds, or otherwise adversely impact the liquidity of such
bonds. The Trust cannot predict the likelihood that any of these
proposals will be adopted, or their potential impact on the liquidity of
lower-rated bonds.
Foreign Securities
Investments in foreign securities involve special risks that differ from
those associated with investments in domestic securities. The risks
associated with investments in foreign securities relate to political
and economic developments abroad, as well as those that result from the
differences between the regulation of domestic securities and issuers in
contrast to foreign securities and issuers. These risks may include, but
are not limited to, expropriation, confiscatory taxation, currency
fluctuations, withholding taxes on interest, limitations on the use or
transfer of Trust assets, political or social instability and adverse
diplomatic developments. Moreover, individual foreign economies may
differ favorably or unfavorably from the domestic economy in such
respects as growth of gross national product, the rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position.
Additional differences exist between investing in foreign and domestic
securities. Examples of such differences include:
o less publicly available information about foreign issuers;
o credit risks associated with certain foreign governments;
o the lack of uniform financial accounting standards applicable to
foreign issuers;
o less readily available market quotations on foreign issues;
o the likelihood that securities of foreign issuers may be less liquid
or more volatile;
o generally higher foreign brokerage commissions; and
o unreliable mail service between countries.
U.S. Government Policies
In the past, U.S. government policies have discouraged or restricted
certain investments abroad by investors such as the Trust. Although the
Trust is unaware of any current restrictions, investors are advised that
such policies could be reinstituted.
Currency Risk
To the extent that debt securities purchased by the Trust are
denominated in currencies other than the U.S. dollar, changes in foreign
currency exchange rates will affect the Trust's net asset value, the
value of interest earned, gains and losses realized on the sale of
securities, and net investment income and capital gains, if any, to be
distributed to shareholders by the Trust. If the value of a foreign
currency rises against the U.S. dollar, the value of the Trust assets
denominated in that currency will increase; correspondingly, if the
value of a foreign currency declines against the U.S. dollar, the value
of Trust assets denominated in that currency will decrease.
The exchange rates between the U.S. dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental intervention,
speculation and other economic and political conditions. Although the
Trust values its assets daily in U.S. dollars, the Trust may not convert
its holdings of foreign currencies to U.S. dollars daily. When the Trust
converts its holdings to another currency, it may incur conversion
costs. Foreign exchange dealers may realize a profit on the difference
between the price at which they buy and sell currencies.
The Trust will engage in foreign currency exchange transactions in
connection with its investments in foreign securities. The Trust will
conduct its foreign currency exchange transactions either on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through forward contracts to purchase or sell
foreign currencies.
Investment Limitations
Concentration of Investments
The Trust will not purchase securities (other than those issued or
guaranteed by the U.S. government) if, as a result of such purchase,
more than 25% of the value of its assets would be invested in any one
industry.
However, the Trust may invest more than 25% of the value of its total
assets in cash or cash items (not including certificates of deposit),
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or instruments secured by these instruments, such as
repurchase agreements.
Investing in Commodities
The Trust will not purchase or sell commodities. The Trust reserves the
right to purchase put options on stock index futures and on financial
futures.
Investing in Real Estate
The Trust will not purchase or sell real estate, although it will invest
in the securities of companies whose business involves the purchase or
sale of real estate or in securities which are secured by real estate or
interests in real estate.
Buying on Margin
The Trust will not purchase any securities on margin but may obtain such
short-term credits as may be necessary for clearance of transactions and
may make margin payments in connection with buying financial futures and
put options on financial futures.
Selling Short
The Trust will not sell securities short unless:
o during the time the short position is open it owns an equal amount of
the securities sold or securities readily and freely convertible into
or exchangeable, without payment of additional consideration, for
securities of the same issue as, and equal in amount to, the
securities sold short; and
o not more than 10% of the Trust's net assets (taken at current value)
is held as collateral for such sales at any one time.
Borrowing Money
The Trust will not issue senior securities, except as permitted by the
Trust's investment objective and policies, and except that the Trust
will borrow money and engage in reverse repurchase agreements only in
amounts up to one-third of the value of the Trust's net assets including
the amounts borrowed. The Trust will not borrow money directly or
through reverse repurchase agreements except as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Trust to meet redemption requests when the
liquidation of portfolio instruments would be deemed to be inconvenient
or disadvantageous. The Trust will not purchase any securities while any
such borrowings (including reverse repurchase agreements) are
outstanding.
Lending Cash or Securities
The Trust will not lend any of its assets except portfolio securities.
This shall not prevent the purchase or holding of corporate bonds,
debentures, notes, certificates of indebtedness, or other debt
securities of an issuer, repurchase agreements, or other transactions
which are permitted by the Trust's investment objective and policies or
Declaration of Trust.
Underwriting
The Trust will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
Investing in Minerals
The Trust will not purchase interests in oil, gas, or other mineral
exploration or development programs, although it may purchase the
securities of issuers which invest in or sponsor such programs.
The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
Investing in New Issuers or in Securities not Readily Marketable
The Trust will not invest more than 5% of the value of its total assets
in securities of companies, including their predecessors, that have been
in operation for less than three years and in equity securities of any
issuer that are not readily marketable.
Investing in Issuers Whose Securities are Owned by Officers and Trustees of
the Trust
The Trust will not purchase or retain the securities of any issuer if
the officers and Trustees of the Trust or its investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
Investing in Put Options
The Trust will not purchase put options on securities unless the
securities are held in the Trust's portfolio, and not more than 5% of
the value of the Trust's total assets would be invested in premiums on
open put options.
Writing Covered Call Options
The Trust will not write call options on securities unless the
securities are held in the Trust's portfolio or unless the Trust is
entitled to them in deliverable form without further payment or after
segregating cash in the amount of any further payment.
Diversification of Investments
The Trust will not purchase the securities of any issuer (other than the
U.S. government, its agencies, or instrumentalities or instruments
secured by securities of such issuers, such as repurchase agreements) if
as a result more than 5% of the value of its total assets would be
invested in the securities of such issuer. For these purposes, the Trust
takes all common stock and all preferred stock of an issuer each as a
single class, regardless of priorities, series, designations, or other
differences.
Acquiring Securities
The Trust will not purchase securities of a company for the purpose of
exercising control or management.
However, the Trust may invest in up to 10% of the voting securities of
any one issuer and may exercise its voting powers consistent with the
best interests of the Trust. In addition, the Trust, other companies
advised by the Trust's investment adviser, and other affiliated
companies may together buy and hold substantial amounts of voting stock
of a company and may vote together in regard to such company's affairs.
In some cases, the Trust and its affiliates might collectively be
considered to be in control of such company. In some such cases,
Trustees and other persons associated with the Trust and its affiliates
might possibly become directors of companies in which the Trust holds
stock.
Investing in Foreign Securities
The Trust will not invest more than 10% of the value of its total assets
in foreign securities which are not publicly traded in the United
States.
Except with respect to borrowing money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
The Trust did not borrow money, invest in reverse repurchase agreements, sell
securities short, or invest in foreign securities during the last fiscal year
and has no present intent to do so in the coming fiscal year.
In addition, in order to comply with certain state restrictions, the Trust may
not invest in real estate limited partnerships or in oil, gas, or other
mineral leases.
For purposes of its policies and limitations, the Trust considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings and loan having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment, to be "cash items".
Federated High Yield Trust Management
Officers and Trustees
Officers and Trustees are listed with their addresses, present positions with
Federated High Yield Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life and Casualty
Company; Chief Executive Officer and Director, Trustee, or Managing General
Partner of the Funds. Mr. Donahue is the father of J. Christopher Donahue,
Vice President of the Trust.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; President, Northgate Village Development
Corporation; Partner or Trustee in private real estate ventures in Southwest
Florida; Director, Trustee, or Managing General Partner of the Funds;
formerly, President, Naples Property Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice Chairman and
Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes, Inc.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director, Trustee,
or Managing General Partner of the Funds; formerly, Director, Blue Cross of
Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, 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, Trustee, or Managing General Partner of the Funds.
Edward L. Flaherty, Jr.@
Henny, Koehuba, Meyer and Flaherty
Two Gateway Center, Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty; Director, Eat'N
Park Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Counsel, Horizon
Financial, F.A., Western Region.
Peter E. Madden
225 Franklin Street
Boston, MA
Birthdate: April 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President, State
Street Bank and Trust Company and State Street Boston Corporation and Trustee,
Lahey Clinic Foundation, Inc.
Gregor F. Meyer
Henny, Koehuba, Meyer and Flaherty
Two Gateway Center, Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or
Managing General Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director, Trustee or Managing General Partner of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak Management
Center; Director, Trustee, or Managing General Partner of the Funds; President
Emeritus, University of Pittsburgh; formerly, Chairman, National Advisory
Council for Environmental Policy and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: July 21, 1935
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp. and Federated Administrative
Services.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp.; President, Passport Research, Ltd.; Trustee, Federated Administrative
Services, Federated Services Company, and Federated Shareholder Services;
President or Vice President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director, Federated
Research Corp.; Chairman and Director, Federated Securities Corp.; President
or Vice President of some of the Funds; Director or Trustee of some of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice President
and Treasurer, Federated Advisers, Federated Management, Federated Research,
Federated Research Corp., and Passport Research, Ltd.; Executive Vice
President, Treasurer, and Director, Federated Securities Corp.; Trustee,
Federated Services Company and Federated Shareholder Services; Chairman,
Treasurer, and Trustee, Federated Administrative Services; Trustee or Director
of some of the Funds; Vice President and Treasurer of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Vice President, Secretary, and Trustee, Federated Advisers, Federated
Management, and Federated Research; Vice President and Secretary, Federated
Research Corp. and Passport Research, Ltd.; Trustee, Federated Services
Company; Executive Vice President, Secretary, and Trustee, Federated
Administrative Services; Secretary and Trustee, Federated Shareholder
Services; Executive Vice President and Director, Federated Securities Corp.;
Vice President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Cash Management Trust; Automated Government Money
Trust; California Municipal Cash Trust; Cash Trust Series II; Cash Trust
Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated Growth Trust; Federated High
Yield Trust; Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal Trust; Federated
Short-Intermediate Government Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated U.S.
Government Bond Trust; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty High Income
Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Term Trust, Inc. - 1999; Liberty
Utility Funds, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO Monument
Funds; The Shawmut Funds; Short-Term Municipal Trust; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; Trademark Funds;
Trust for Financial Institutions; Trust For Government Cash Reserves; Trust
for Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; The Virtus Funds; and World Investment Series, Inc.
Trust Ownership
Officers and Trustees own less than 1% of the Trust's outstanding shares.
As of April 7, 1995, the following shareholders of record owned 5% or more of
the outstanding shares of the Trust: Charles Schwab & Co., Inc.(as record
owner holding shares for its clients), San Francisco, California, owned
approximately 22,269,162 shares (40.42%); National Financial Services, for the
exclusive benefit of its customers, owned approximately 2,866,784 shares
(5.20%); and Donaldson, Lufkin & Jenrette, owned approximately 3,786,123
shares (6.87%).
Trustees Compensation
<TABLE>
<CAPTION>
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM THE TOTAL COMPENSATION PAID
THE TRUST TRUST* FROM FUND COMPLEX +
<S> <C> <C>
John F. Donahue, $ 0 $0 for the Trust and
Chairman and Trustee 68 other investment companies in the Fund Complex
John T. Conroy, Jr., $1,543 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
William J. Copeland, $1,543 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
James E. Dowd, $1,543 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D., $1,400 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Edward L. Flaherty, Jr., $1,543_ $117,202 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Peter E. Madden, $1,188_ $90,563 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Gregor F. Meyer, $1,400_ $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
John E. Murray, Jr., $0_ $0 for the Trust and
Trustee 68 other investment companies in the Fund Complex
Wesley W. Posvar, $1,400 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
Marjorie P. Smuts, $1,400 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund Complex
</TABLE>
*Information is furnished for the fiscal year ended February 28, 1995.
+The information is provided for the last calendar year.\
Trustee Liability
The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
Investment Advisory Services
Adviser to the Trust
The Trust's investment adviser is Federated Management. It is a subsidiary
of Federated Investors. All of the voting securities of Federated Investors
are owned by a trust, the trustees of which are John F. Donahue, his wife, and
his son, J. Christopher Donahue.
The Trust's investment adviser shall not be liable to the Trust or any
shareholder for any losses that may be sustained in the purchase, holding, or
sale of any security, or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
Advisory Fees
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus. During the fiscal years ended
February 28, 1995, 1994 and 1993, the Trust's investment adviser earned
$2,922,038, $3,211,691, and $1,939,130, respectively, which were reduced by
$867,430, $535,318, and $569,405, respectively, because of undertakings to
limit the Trust's expenses.
State Expense Limitations
The Trust's investment adviser has undertaken to comply with the expense
limitations established by certain states for investment companies whose
shares are registered for sale in those states. If the Trust's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2 1/2% per year of the first $30 million of average net
assets, 2% per year of the next $70 million of average net assets, and 1
1/2% per year of the remaining average net assets, the Trust's
investment adviser will reimburse the Trust for its expenses over the
limitation.
If the Trust's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Trust's
investment adviser will be limited, in any single fiscal year, by the
amount of the investment advisory fee.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
Administrative Services
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Trust for a fee as
described in the prospectus. Prior to March 1, 1994, Federated Administrative
Services, Inc., also a subsidiary of Federated Investors, served as the
Trust's administrator. (For purposes of this Statement of Additional
Information, Federated Administrative Services and Federated Administrative
Services, Inc., may hereinafter collectively be referred to as the
"Administrators.") For the fiscal year ended February 28, 1995, the
Administrators collectively earned $295,457. For the fiscal years ended
February 28, 1994 and 1993, Federated Administrative Services, Inc. earned
$495,082 and $354,785, respectively. Dr. Henry J. Gailliot, an officer of
Federated Management, the investment adviser to the Trust, holds approximately
20% of the outstanding common stock and serves as a director of Commercial
Data Services, Inc., a company which provides computer processing services to
Federated Administrative Services.
Shareholder Services Plan
This arrangement permits the payment of fees to Federated Shareholder Services
and, indirectly, to financial institutions, to cause services to be provided
to shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may include,
but are not limited to, providing office space, equipment, telephone
facilities, and various clerical, supervisory, computer, and other personnel,
as necessary or beneficial to establish and maintain shareholder accounts and
records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses. For the fiscal year ended February 28, 1995,
payments in the amount of $586,690 were made pursuant to the Shareholder
Services Plan.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend disbursing
agent for the Trust. The fee paid to the transfer agent is based upon the
size, type and number of accounts and transactions made by shareholders.
Federated Services Company also maintains the Trust's accounting records. The
fee paid for this service is based upon the level of the Trust's average net
assets for the period plus out-of-pocket expenses.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Trust's investment adviser looks for prompt
execution of the order at a favorable price. In working with dealers, the
Trust's investment adviser will generally use those who are recognized dealers
in specific portfolio instruments, except when a better price and execution of
the order can be obtained elsewhere. The Trust's investment adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.
The Trust's investment adviser may select brokers and dealers who offer
brokerage and research services. These services may be furnished directly to
the Trust or to its investment adviser and may include:
o advice as to the advisability of investing in securities;
o security analysis and reports;
o economic studies;
o industry studies;
o receipt of quotations for portfolio evaluations; and
o similar services.
The Trust's investment adviser and its affiliates exercise reasonable business
judgment in selecting brokers who offer brokerage and research services to
execute securities transactions. They determine in good faith that commissions
charged by such persons are reasonable in relationship to the value of the
brokerage and research services provided.
Research services provided by brokers may be used by the Trust's investment
adviser or by affiliates of Federated Investors in advising the Funds and
other accounts. To the extent that receipt of these services may supplant
services for which the Trust's investment adviser or its affiliates might
otherwise have paid, it would tend to reduce their expenses.
For the fiscal years ended February 28, 1995, 1994 and 1993, the Trust did
not pay any brokerage commissions on brokerage transactions.
Purchasing Shares
Shares are sold at their net asset value without a sales load on days the New
York Stock Exchange is open for business. The procedure for purchasing shares
of the Trust is explained in the prospectus under "Investing in the Trust."
Conversion to Federal Funds
It is the Trust's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from investors must be in
federal funds or be converted into federal funds. Federated Services Company
acts as the shareholder's agent in depositing checks and converting them to
federal funds.
Determining Net Asset Value
Net asset value generally changes each day. The days on which net asset value
is calculated by the Trust are described in the prospectus.
Determining Market Value of Securities
Market values of the Trust's portfolio securities other than options are
determined as follows:
o according to the last sale price in the market in which they are
primarily traded (either a national securities exchange or the over-the-
counter market), if available, and if not available, on the basis of
prices provided by an independent pricing service;
o for most short-term obligations, at the mean between bid and asked
prices, as provided by an independent pricing service; or
o for short-term obligations with remaining maturities of 60 days or less
at the time of purchase, at amortized cost, or at fair value as
determined in good faith by the Trustees.
Options are valued at the market values established by the exchanges at the
close of option trading unless the Trustees determine in good faith that
another method of valuing option positions is necessary.
Redeeming Shares
The Trust redeems shares at the next computed net asset value after the Trust
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares." Although Federated Services Company does
not charge a fee for telephone redemptions, it reserves the right to charge a
fee for the cost of wire-transferred redemptions of less than $5,000.
Redemption in Kind
Although the Trust intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part by
a distribution of securities from the Trust's portfolio.
Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed
in determining net asset value and selecting the securities in a manner the
Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940 under which the Trust is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Trust's net
asset value during any 90-day period.
Tax Status
The Trust's Tax Status
The Trust will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code, as amended,
applicable to regulated investment companies and to receive the special tax
treatment afforded to such companies. To qualify for this treatment, the Trust
must, among other requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities
held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
Shareholders' Tax Status
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. Only a nominal portion of any income
dividend paid by the Trust is expected to be eligible for the dividends
received deduction available to corporations. These dividends and any short-
term capital gains are taxable as ordinary income.
Capital Gains
Fixed income securities offering the high current income sought by the
Trust are often purchased at a discount from par value. Because the
total yield on such securities when held to maturity and retired may
include an element of capital gain, the Trust may achieve capital gains.
However, the Trust will not hold securities to maturity for the purpose
of realizing capital gains unless current yields on those securities
remain attractive.
Capital gains or losses may also be realized on the sale of securities.
Sales would generally be made because of:
o the availability of higher relative yields;
o differentials in market values;
o new investment opportunities;
o changes in creditworthiness of an issuer; or
o an attempt to preserve gains or limit losses.
Distributions of long-term capital gains are taxed as such, whether they
are taken in cash or reinvested, and regardless of the length of time
the shareholder has owned the shares.
Total Return
The Trust's average annual total returns for the one-year, five-year and
ten-year periods ended February 28, 1995, were (0.32%), 13.89%, and 11.33%,
respectively.
The average annual total return for the Trust is the average annual compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned at the
end of the period by the net asset value per share at the end of the period.
The number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000, adjusted over the
period by any additional shares, assuming the monthly reinvestment of all
dividends and distributions.
Yield
The Trust's yield for the thirty-day period ended February 28, 1995 was
10.83%.
The yield for the Trust is determined by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by the
Trust over a thirty-day period by the maximum offering price per share of the
Trust on the last day of the period. This value is then annualized using semi-
annual compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a twelve-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by the Trust because of certain adjustments
required by the Securities and Exchange Commission and, therefore, may not
correlate to the dividends or other distributions paid to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Trust, performance will be reduced for those shareholders paying those fees.
Performance Comparisons
The Trust's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in Trust expenses; and
o various other factors.
The Trust's performance fluctuates on a daily basis largely because net
earnings and maximum offering price per share fluctuate daily. Both net
earnings and offering price per share are factors in the computation of yield
and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Trust's performance. When comparing performance,
investors should consider all relevant factors, such as the composition of any
index used, prevailing market conditions, portfolio compositions of other
funds, and methods used to value portfolio securities and compute offering
price. The financial publications and/or indices which the Trust uses in
advertising may include:
o Lehman Brothers Government/Corporate (Total) Index is comprised
of approximately 5,000 issues, which include: non-convertible bonds
publicly issued by the U.S. government or its agencies; corporate bonds
guaranteed by the U.S. government and quasi-federal corporations; and
publicly issued, fixed rate, non-convertible domestic bonds of companies
in industry, public utilities, and finance. The average maturity of
these bonds approximates nine years. Tracked by Lehman Brothers, Inc.,
the index calculates total returns for one-month, three-month, twelve-
month, and ten-year periods and year-to-date.
o Lehman Brothers Government/Corporate (Long-Term) Index is
composed of the same types of issues as defined above. However, the
average maturity of the bonds included on this index approximates 22
years.
o Merrill Lynch 7-10 Year Treasury Index is an unmanaged index tracking
U.S. government securities with maturities between 7 and 9.99 years. The
index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
o Merrill Lynch 10-15 Year Treasury Index is an unmanaged index tracking
U.S. government securities with maturities between 10 and 14.99 years.
The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
o Merrill Lynch High Yield Master Index is an unmanaged index comprised of
publicly placed, non-convertible, coupon-bearing domestic debt. Issues
in the index are less than investment grade as rated by Standard &
Poor's Ratings Group or Moody's Investors Service, Inc., and must not be
in default. Issues have a term to maturity of at least one year. The
index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
o Lipper Analytical Services, Inc., ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time. From time to time, the Trust will quote its
Lipper ranking in the high current yield funds category in advertising
and sales literature.
o Salomon Brothers AAA-AA Corporates calculates total returns of
approximately 775 issues which include long-term, high grade domestic
corporate taxable bonds, rated AAA-AA, with maturities of twelve years
or more; it also includes companies in industry, public utilities, and
finance.
o Morningstar, Inc., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their risk-
adjusted returns. The maximum rating is five stars, and ratings are
effective for two weeks.
Advertisements and other sales literature for the Trust may quote total
returns which are calculated on non-standardized base periods. These total
returns also represent the historic change in the value of an investment in
the Trust based on monthly reinvestment of dividends over a specified period
of time.
Duration
Duration is a commonly used measure of the potential volatility in the price
of a bond, or other fixed income security, or in a portfolio of fixed income
securities, prior to maturity. Volatility is the magnitude of the change in
the price of a bond relative to a given change in the market rate of interest.
A bond's price volatility depends on three primary variables: the bond's
coupon rate; maturity date; and the level of market yields of similar fixed
income securities. Generally, bonds with lower coupons or longer maturities
will be more volatile than bonds with higher coupon or shorter maturities.
Duration combines these variables into a single measure.
Duration is calculated by dividing the sum of the time-weighted values of the
cash flows of a bond or bonds, including interest and principal payments, by
the sum of the present values of the cash flows.
8040401B (4/95)
314197104
PART. C. OTHER INFORMATION.
ITEM 24. Financial Statements
and Exhibits:
(a) Financial Statements (filed in Part A)
(b) Exhibits:
(1) (i) Conformed Copy of Declaration of Trust;+
(ii) Conformed Copy of Amendment Nos. 1 and 2 to
Declaration of Trust;+
(2) (i) Copy of By-Laws of the Registrant;+
(ii) Copy of Amendment Nos. 1 through 3 to the
Bylaws;+
(3) Not applicable;
(4) Conformed Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant;+
(5) Conformed copy of the Investment Advisory Contract
of the
Registrant (7.);
(6) Conformed copy of the Distributor's Contract of the
Registrant (7.);
(7) Not applicable;
(8) Conformed Copy of Custodian Agreement of the
Registrant;+
(9) (i) Conformed Copy of Portfolio Accounting and
Shareholder Recordkeeping Agreement of the
Registrant;+
(ii) Conformed Copy of Administrative Services
Agreement;+
(iii) Conformed Copy of Shareholder Services
Agreement;+
(iv) Conformed Copy of Shareholder Services Plan;+
(v) Copy of Shareholder Services Sub-Contract;+
(10) Conformed Copy of the Opinion of Counsel as to the
Legality
of the Shares being Registered;+
(11) Conformed copy of Consent of Independent Auditors;+
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding;+
(14) Not applicable;
(15) Not applicable;
(16) Conformed copy of Schedule for Computation of Trust
Performance Data (to be filed by Amendment);
(17) Copy of Financial Data Schedule;+
(19) Conformed Copy of Power of Attorney;+
________________
+ All exhibits have been filed electronically.
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed February 20, 1990. (File Nos. 2-
91091 and 811-4018)
Item 25. Persons Controlled by or Under Common Control with Registrant;
None.
Item 26. Number of Holders of Securities;
Number of Record Holders
as of
Title of Class April 7, 1994
Shares of Beneficial Interest 6,347
(No par value)
Item 27. Indemnification: (1.)
Item 28. Business and Other Connections of Investment Adviser
For a description of the other business of the investment
adviser, see the section entitled "Trust Information --
Management of the Trust" in Part A. The affiliations with the
Registrant of four of the Trustees and one of the Officers of
the investment adviser are included in Part B of this
Registration Statement under "Federated High Yield Trust
Management" The remaining Trustee of the investment adviser,
his position with the investment adviser, and, in parentheses,
his principal occupation is: Mark D. Olson (Partner, Wilson,
Halbrook & Bayard), 107 West Market Street, Georgetown,
Delaware 19947.
The remaining Officers of the investment adviser are: William
D. Dawson, J. Thomas Madden, Mark L. Mallon, Executive Vice
President; Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson and J. Alan Minteer, Senior Vice Presidents;
Randall A. Bauer, David A. Briggs, Jonathan C. Conley, Deborah
A. Cunningham, Michael P. Donnelly, Mark E. Durbiano, Kathleen
M. Foody-Malus, Thomas M. Franks, Jeff A. Kozemchak, Marian R.
Marinack, Gregory M. Melvin, Susan M. Nason, Mary Jo Ochson,
Robert J. Ostrowski, Frederick L. Plautz, Jr., Charles A.
Ritter, James D. Roberge, Sandra L. Weber and Christopher H.
Wiles, Vice Presidents; Edward C. Gonzales, Treasurer; and John
W. McGonigle, Secretary. The business address of each of the
Officers of the investment adviser is Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779. These individuals
are also officers of a majority of the investment advisers to
the Funds listed in Part B of this Registration Statement.
1. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1 filed July 9, 1984. (File No. 2-91091)
Item 29. Principal Underwriters
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the following
open-end investment companies: Alexander Hamilton Funds;
American
Leaders Fund, Inc.; Annuity Management Series; Arrow Funds;
Automated Cash Management Trust; Automated Government Money
Trust;
BayFunds; The Biltmore Funds; The Biltmore Municipal Funds;
California Municipal Cash Trust; Cash Trust Series, Inc.; Cash
Trust Series II; DG Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated ARMs Fund; Federated Exchange
Fund, Ltd.; Federated GNMA Trust; Federated Government Trust;
Federated Growth Trust; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust;
Federated
Tax-Free Trust; Federated U.S. Government Bond Fund; First
Priority Funds; First Union Funds; Fixed Income Securities,
Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain
Square Funds; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield Cash Trust;
Independence One Mutual Funds; Insight Institutional Series,
Inc.;
Insurance Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund,
Inc.; Liberty U.S. Government Money Market Trust; Liberty
Utility
Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; The Medalist Funds;
Money Market Obligations Trust; Money Market Trust; The Monitor
Funds; Municipal Securities Income Trust; Newpoint Funds;
New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Short-
Term Municipal Trust; SouthTrust Vulcan Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund,
Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; Tower Mutual Funds; Trademark Funds;
Trust for
Financial Institutions; Trust for Government Cash Reserves;
Trust
for Short-Term U.S. Government Securities; Trust for U.S.
Treasury
Obligations; Vision Fiduciary Funds, Inc.; Vision Group of
Funds,
Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Investors Tower Executive Officer, Chief Federated
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice President and
Federated Investors Tower President, and Treasurer, Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph L. Epstein Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent and Pittsburgh, PA 15222-3779
Dividend Disbursing Agent")
Federated Administrative Federated Investors Tower
Services Pittsburgh, PA 15222-3779
("Administrator")
Federated Management Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust P.O. Box 8604
Company Boston, MA 02266-8604
("Custodian")
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, you request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED HIGH YIELD TRUST,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
21st day of April, 1995.
FEDERATED HIGH YIELD
BY: /s/Mark A. Sheehan
Mark A. Sheehan, Assistant Secretary
Attorney in Fact for John F. Donahue
April 21, 2995
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Mark A. Sheehan Attorney In Fact April 21, 1995
Mark A. Sheehan For the Persons
ASSISTANT SECRETARY Listed Below
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Glen R. Johnson* President
Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr. Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 10 under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors" and to the use of our report dated
April 13, 1995, in Post-Effective Amendment Number 19 to the Registration
Statement (Form N-1A No. 2-91091) and the related Prospectus of Federated
High Yield Trust dated April 30, 1995.
Ernst & Young LLP
Boston, Massachusetts
April 19, 1995
Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of FEDERATED HIGH YIELD
TRUST and the Assistant General Counsel of Federated Investors, and each of
them, their true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution for them and in their names, place and
stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, by means of the Securities and Exchange Commission's electronic
disclosure system known as EDGAR; and to file the same, with all exhibits
thereto and other documents in connection thterewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to sign and perform each and
every act and thing requisite and necessary to be done in connection
thereiwth, as fully to all intents and purposes as each of them might or
could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/ John F. Donahue Chairman and Trustee April 13, 1995
John F. Donahue (Chief Executive Officer)
/s/ Glen R. Johnson President April 13, 1995
Glen R. Johnson
/s/ Edward C. Gonzales Vice President & Treasurer April 13, 1995
Edward C. Gonzales (Principal Financial and
Accounting Officer)
/s/ John T. Conroy, Jr. Trustee April 13, 1995
John T. Conroy, Jr.
/s/ William J. Copeland Trustee April 13, 1995
William J. Copeland
/s/ James E. Dowd Trustee April 13, 1995
James E. Dowd
/s/ Lawrence D. Ellis, M.D. Trustee
April 13, 1995
Lawrence D. Ellis, M.D.
/s/ Edward L. Flaherty, Jr. Trustee
April 13, 1995
Edward L. Flaherty, Jr.
/s/ Peter E. Madden Trustee April 13, 1995
Peter E. Madden
/s/ Gregor F. Meyer Trustee April 13, 1995
Gregor F. Meyer
/s/ John E. Murray, Jr. Trustee April 13, 1995
John E. Murray, Jr.
/s/ Marjorie P. Smuts Trustee April 13, 1995
Marjorie P. Smuts
/s/ Wesley W. Posvar Trustee April 13, 1995
Wesley W. Posvar
Sworn to and subscribed before me this 13th day of April, 1995.
/s/ Marie M. Hamm
Notary Public
Exhibit 1(i) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
FEDERATED HIGH YIELD TRUST
DECLARATION OF TRUST
Page
Article I Name and Definitions 1
1. Name 1
2. Definitions -
(a) Affiliated Person, Assignment,
Commission, Interested Person,
Majority Shareholder Vote,
Principal Underwriter 1
(b) Trust 1
(c) Accumulated Net Income 2
(d) Shareholder 2
(e) Trustees 2
(f) Shares 2
(g) 1940 Act 2
Article II Purpose of Trust 2
Article III Beneficial Interest 2
1. Shares of Beneficial Interest 2
2. Ownership of Shares 3
3. Investment in the Trust 3
4. No Pre-emptive Rights 3
Article IV The Trustees 3
1. Management of the Trust 3
2. Election of Trustees at 1984 Meeting of
Shareholders 4
3. Terms of Office of Trustees 4
4. Termination of Service and Appointment of
Trustees 4
5. Temporary Absence of Trustees 5
6. Number of Trustees 5
7. Effect of Death, Resignation, Etc. of a Trustee 6
8. Owernership of the Trust 6
Article V Powers of the Trustees 6
1. Powers 6
2. Principal Transactions 10
3. Trustees and Officers as Shareholders 10
4. Parties to Contract 11
Article VI Trustees' Expenses and Compensation 11
1. Trustee Reimbursement 11
2. Trustee Compensation 13
Article VII Investment Adviser, Administrative Services, Principal
Underwriter and Transfer Agent 13
1. Investment Adviser 13
2. Administrative Services 14
3. Principal Underwriter 14
4. Transfer Agent 15
5. Provisions and Amendments 15
Article VIII Shareholders' Voting Powers and Meetings 15
1. Voting Powers 15
2. Meetings 16
3. Quorum and Required Vote 16
4. Additional Provisions 17
Article IX Custodian 17
1. Appointment and Duties 17
2. Central Certificate System 18
Article X Distribution and Redemptions 19
1. Distributions 19
2. Redemptions and Repurchases 20
3. Determination of Accumulated Net Income 21
4. Net Asset Value of Shares 22
5. Suspension of the Right of Redemption 22
6. Trust's Right to Redeem Shares 22
Article XI Limitation of Personal Liability and Indemnification of
Shareholders 23
1. Limitations of Personal Liability and
Indemnification of Shareholders 23
2. Limitation of Personal Liability of Trustees,
Officers, Employees or Agents of the Trust 24
3. Express Exculpatory Clauses and Instruments 24
4. Indemnification of Trustees, Officers, Employees
and Agents 25
Article XII Miscellaneous 26
1. Trust is not a Partnership 26
2. Trustee's Good Faith Action, Expert Advice,
No Bond or Surety 27
3. Establishment of Record Dates 27
4. Termination of Trust 28
5. Offices of the Trust, Filings of Copies,
References, Headings 29
6. Applicable Law 30
7. Amendments 30
8. Use of Name 30
FEDERATED HIGH YIELD TRUST
DECLARATION OF TRUST
Dated
April 17, 1984
DECLARATION OF TRUST made April 17, 1984 by John F. Donahue, William
J. Copeland, James E. Dowd, Edward L. Flaherty, Jr., J. Joseph Maloney,
Jr., Gregor F. Meyer, Wesley W. Posvar, and Majorie P. Smuts.
WHEREAS the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, The Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under
this Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS
Section 1. Name. This Trust shall be known as the "Federated
High Yield Trust".
Section 2. Definitions. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) The terms "Affiliated Person," "Assignment,"
"Commission," "Interested Person," "Majority Shareholder Vote" (the
67% or 50% requirement of the third sentence of Section 2(a)(42) of
the 1940 Act, whichever may be applicable) and "Principal
Underwriter" shall have the meanings given them in the Investment
Company Act of 1940, as amended from time to time;
(b) The "Trust" refers to Federated High Yield
Trust;
(c) "Accumulated Net Income" means the
accumulated net income of the Trust determined in the manner provided
or authorized in Article X, Section 3;
(d) "Shareholder" means a record owner of Shares
of the Trust;
(e) The "Trustees" refer to the individual
Trustees in their capacity as Trustees hereunder of the Trust and
their successor or successors for the time being in office as such
Trustees;
(f) "Shares" means the equal proportionate units
of interest into which the beneficial interest in the Trust shall be
divided from time to time and includes fractions of Shares as well as
whole Shares; and
(g) The "1940 Act" refers to the Investment
Company Act of 1940, as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors a continuous source
of managed investments primarily in securities.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest. The beneficial
interest in the Trust shall at all times be divided into transferable
Shares, without par value, each of which shall represent an equal
proportionate interest in the Trust with each other Share outstanding, none
having priority or preference over another. The number of Shares which may
be issued is unlimited. The Trustees may from time to time divide or
combine the outstanding Shares into a greater or lesser number without
thereby changing the proportionate beneficial interest in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be
redeemed as, whole Shares and/or fractions.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded in the books of the Trust or a transfer agent. The Trustees may
make such rules as they consider appropriate for the transfer of shares and
similar matters. The record books of the Trust or any transfer agent, as
the case may be, shall be conclusive as to who are the holders of Shares
and as to the number of Shares held from time to time by each.
Section 3. Investment in the Trust. The Trustees shall accept
investments in the Trust from such persons and on such terms as they may
from time to time authorize. After the date of the initial contribution of
capital (which shall occur prior to the initial public offering of Shares
of the Trust), the number of Shares to represent the initial contribution
shall be considered as outstanding and the amount received by the Trustees
on account of the contribution shall be treated as an asset of the Trust.
Subsequent to such initial contribution of capital, Shares (including
Shares which may have been redeemed or repurchased by the Trust) may be
issued or sold at a price which will net the Trust, before paying any taxes
in connection with such issue or sale, not less than the net asset value
(as defined in Article X, Section 4) thereof; provided, however, that the
Trustees may in their discretion impose a sales charge upon investments in
the Trust.
Section 4. No Pre-emptive Rights. Shareholders shall have no pre-
emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of
the Trust shall be managed by the Trustees, and they shall have all powers
necessary and desirable to carry out that responsibility. The Trustees who
shall serve until the election of Trustees at the 1984 Meeting of
Shareholders shall be John F. Donahue, William J. Copeland, James E. Dowd,
Edward L. Flaherty, Jr., J. Joseph Maloney, Jr., Gregor F. Meyer, Wesley W.
Posvar, and Majorie P. Smits.
Section 2. Election of Trustees at 1980 Meeting of Shareholders.
In the year 1984, on a date fixed by the Trustees, which shall be
subsequent to the initial public offering of Shares of the Trust, the
Shareholders shall elect Trustees. The number of Trustees shall be
determined by the Trustees pursuant to Article IV, Section 6.
Section 3. Term of Office of Trustees. The Trustees shall hold
office during the lifetime of this Trust, and until its termination as
hereinafter provided; except (a) that any Trustee may resign his trust by
written instrument signed by him and delivered to the other Trustees, which
shall take effect upon such delivery or upon such later date as is
specified therein; (b) that any Trustee may be removed at any time by
written instrument signed by at least two-thirds of the number of Trustees
prior to such removal, specifying the date when such removal shall become
effective; (c) that any Trustee who requests in writing to be retired or
who has become mentally or physically incapacitated may be retired by
written instrument signed by a majority of the other Trustees, specifying
the date of his retirement; and (d) a Trustee may be removed at any special
meeting of Shareholders of the Trust by a vote of two-thirds of the
outstanding Shares.
Section 4. Termination of Service and Appointment of Trustees.
In case of the death, resignation, retirement, removal or mental or
physical incapacity of any of the Trustees, or in case a vacancy shall, by
reason of an increase in number, or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other person
as they in their discretion shall see fit. Such appointment, shall be
effected by the signing of a written instrument by a majority of the
Trustees in office. Within three months of such appointment, the Trustees
shall cause notice of such appointment to be mailed to each Shareholder at
his address as recorded on the books of the Trust. An appointment of a
Trustee may be made by the Trustees then in office and notice thereof
mailed to Shareholders as aforesaid in anticipation of a vacancy to occur
by reason of retirement, resignation or increase in number of Trustees
effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted this Trust, the Trust estate shall vest in
the new Trustee or Trustees, together with the continuing Trustees, without
any further act or conveyance, and he shall be deemed a Trustee hereunder.
Any appointment authorized by this Section 4 is subject to the provisions
of Section 16(a) of the 1940 Act.
Section 5. Temporary Absence of Trustee. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six months
at any one time to any other Trustee or Trustees, provided that in no case
shall less than two of the Trustees personally exercise the other power
hereunder except as herein otherwise expressly provided.
Section 6. Number of Trustees. The number of Trustees, not less
than three (3) not more than twenty (20) serving hereunder at any time
shall be determined by the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is physically or
mentally incapacitated, the other Trustees shall have all the powers
hereunder and the certificate signed by a majority of the other Trustees of
such vacancy, absence or incapacity, shall be conclusive, provided,
however, that no vacancy which reduces the number of Trustees below three
(3) shall remain unfilled for a period longer than six calendar months.
Section 7. Effect of Death, Resignation, ect. of a Trustee. The
death, resignation, retirement, removal, or mental pr physical incapacity
of the Trustees, or any one of them, shall not operate to annual the Trust
or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
Section 8. Ownership of the Trust. The assets of the Trust shall
be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any successor
Trustee. All of the assets of the Trust shall at all times be considered
as vested on the Trustees. No Shareholder shall be deemed to have a
severable ownership in any individual asset of the Trust or any right or
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders.
The Trustees shall have full power and authority to do any and all acts and
to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future
laws or customs in regard to trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Without limiting the foregoing, the Trustees shall have the
following specific powers and authority, subject to any applicable
limitation in this Declaration of Trust or in the By-Laws of the Trust.
(a) To buy, and invest funds in their hands in,
securities including, but not limited to, common stocks, preferred
stocks, bonds, debentures, warrants and rights to purchase
securities, certificates of beneficial interest, money market
instruments, notes or other evidences or indebtness issued by any
corporation, trust or association, domestic or foreign, or issued or
guaranteed by the United States of America or any agency or
instrumentality thereof, by the government of any goreign country, by
any State of the United States, or by any political subdivision or
agency or instrumentality of and State or foreign country, or in
"when-issued" or "delayed-delivery" contracts for any such
securities, or in any repurchase agreement (agreements under which
the seller agrees at the time of sale to repurchase the security at
any agreed time and price), or retain Trust assets in cash, and from
time to time change the investments of the assets of the Trust;
(b) To adopt By-Laws not inconsistent with the
Declaration of Trust providing for the conduct of the business of the
Trust and to amend and repeal them to the extent that they do not
reserve that right to the Shareholders;
(c) To Elect and remove such officers and appoint
and terminate such agents as they consider appropriate;
(d) To appoint or otherwise engage a bank or
trust company as custodian of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or in the By-Laws;
(e) To appoint or otherwise engage transfer
agents, dividend disbursing agents, Shareholder servicing agents,
investment advisers, sub-investment advisers, principal underwriters,
administrative service agents, and such other agents as the Trustees
may from time to time appoint or otherwise engage;
(f) To provide for the distribution of interests
of the Trust either through a principal underwriter in the manner
hereinafter provided for or by the Trust itself, or both;
(g) To set record dates in the manner hereinafter
provided for;
(h) To delegate such authority as they consider
desirable to a committee or committees composed of Trustees,
including without limitation, an Executive Committee, or to any
officers of the Trust and to any agent, custodian or underwriter;
(i) To sell or exchange any or all of the assets
of the Trust, subject to the provisions of Article XII, Section 4(b)
hereof;
(j) To vote or give assent, or exercise any
rights of ownership, with respect to stock or other securities or
property; and to execute and deliver powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such
persons or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(k) To exercise powers and rights of subscription
or otherwise which in any manner arise out of ownership of
securities;
(l) To hold any security or property in a form
not indicating any trust, whether in bearer, unregistered or other
negotiable form; or either in its own name or in the name of a
custodian or a nominee or nominees, subject in either case to proper
safeguards according to the usual practice of Massachusetts trust
companies or investment companies;
(m) To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to consent to
any contract, lease, mortgage, purchase, or sale of property by such
corporation or concern, and to pay calls or subscriptions with
respect to any security held in the Trust;
(n) To engage in and to prosecute, compound,
compromise, abandon, or adjust by arbitration, or otherwise, any
actions, suits, proceedings, disputes, claims, demands, and things
relating to the Trust, and out of the assets of the Trust to pay, or
to satisfy, any debts, claims or expenses incurred in connection
therewith, including those of litigation, upon any evidence that the
Trustees may deem sufficient (such powers shall include without
limitation any actions, suits, proceedings, disputes, claims, demands
and things relating to the Trust wherein any of the Trustees may be
named individually and the subject matter of which arises by reason
of business for or on behalf of the Trust);
(o) To make distributions of income and of
capital gains to Shareholders in the manner hereinafter provided for;
(p) To borrow money but only as a temporary
measure for extraordinary or emergency purposes and then (a) only in
amounts not in excess of 5% of the value of its total assets or (b)
in any amount up to one-third of the value of its total assets,
including the amount borrowed, in order to meet redemption requests
without immediately selling any portfolio securities. The Trust may
also enter into reverse repurchase agreements in amounts not in
excess of one-third of its total assets in order to meet redemption
requests without immediatley selling any portfolio instruments. The
Trustees shall not pledge, mortgage or hypothecate the assets of the
Trust, except in connection with any borrowing described in (a) and
(b) herein and in amounts not in excess of the lesser of the dollar
amounts borrowed or 10% of the value of the Trust's total assets at
the time of such borrowing.
(q) From time to time to issue and sell the
Shares of the Trust either for cash or for property whenever and in
such amounts as the Trustee may deem desirable, but subject to the
limitation set forth in Section 3 of Article III.
(r) To purchase insurance of any kind, including,
without limitation, insurance on behalf of any person who is or was a
Trustee, Officer, employee or agent of the trust, or is or was
serving at the request of the Trust as a Trustee, Director, Officer,
agent or employee of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status
as such.
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or
upon their order.
Section 2. Principal Transactions. The Trustees shall not on
behalf of the Trust buy any securities (other than Shares of the Trust)
from or sell any securities (other than Shares of the Trust) to, or lend
any assets of the Trust to, any Trustee or officer or employee of the Trust
or any firm of which any such Trustee or officer is a member acting as
principal unless permitted by the 1940 Act, but the Trust may employ and
such other party or any such person or firm or company in which any such
person is an interested person in any capacity not prohibited by the 1940
Act.
Section 3. Trustees and Officers as Shareholders. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of shares
of the Trust to the same extent as if he were not a Trustee, officer or
agent; and the Trustees may issue and sell or cause to be issued or sold
Shares of the Trust to and buy such Shares from any such person or any firm
or company in which he is an interested person subject only to the general
limitations herein contained as to the sale and purchase of such Shares;
and all subject to any restrictions which may be contained in the By-Laws.
Section 4. Parties to Contract. The Trustees may enter into any
contract of the character described in Section 1, 2, 3, or 4 of Article VII
or in Article IX hereof or any other capacity not prohibited by the 1940
Act with any corporation, firm, trust or association, although one or more
of the shareholder, Trustees, officers, employees or agents of the Trust or
their affiliated may be an officer, director, Trustee, shareholder or
interested person of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any
such relationship, nor shall any person holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust
under or by reason of said contract or accountable for any profit realized
directly or indirectly therefrom, in the absence of actual fraud. The same
person (including a firm, corporation, trust or association) may be the
other party to contracts entered into pursuant to Sections 1, 2, 3, and 4
of Article VII or Article IX or any other capacity deemed legal under the
1940 Act, and any individual may be financially interested or otherwise an
interested person of persons who are parties to any or all of the contracts
mentioned in this Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement. The Trustees shall be
reimbursed from the Trust estate for all of their expenses and
disbursements, including, without limitation, expenses of organizing the
Trust and continuing its existence; fees and expenses of Trustees and
Officers of the Trust; fees for investment advisory services,
administrative services and principal underwriting services provided for in
Article VII, Sections 1, 2, and 3; fees and expenses of preparing and
printing its Registration Statements under the Securities Act of 1933 and
the Investment Company Act of 1940 and any amendments thereto; expenses of
registering and qualifying the Trust and its shares under federal and state
laws and regulations; expenses of preparing, printing and distributing
prospectuses and any amendments thereof sent to shareholders, underwriters,
broker-dealers and to investors who may be considering the purchase of
shares; expenses of registering, licensing or other authorization of the
Trust as a broker-dealer and of its Officers as agents and salesmen under
federal and state laws and regulations; interest expense, taxes, fees and
commissions of every kind; expenses of issue (including cost of share
certificates), purchase, repurchase and redemption of shares, including
expenses attributable to a program of periodic issue; charges and expenses
of custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars; printing and mailing costs; auditing,
accounting and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of shareholders and proxy
solicitations therefor; insurance expenses; association membership dues and
nonrecurring items as may arise, including all losses and liabilities by
them incurred in administering the Trust, including expenses incurred in
connection with litigation, proceedings and claims and the obligations of
the Trust under Article XI, hereof to indemnify its Trustees, Officers,
employees, shareholders, and agents, and any Contract obligation to
indemnify principal underwriters under Section 3 of Article VII and for the
payment of such expenses, disbursements, losses and liabilities, the
Trustees shall have a lien on the Trust estate prior to any rights or
interests of the Shareholders thereto. This section shall not preclude the
Trust from directly paying any of the aforementioned fees and expenses.
Section 2. Trustee Compensation. The Trustee shall be entitled
to compensation from the Trust for their respective services as Trustees,
to be determined from time to time by vote of the Trustees, and the
Trustees shall also determine the compensation of all Officers, consultants
and agents whom they may elect or appoint. The Trust may pay any Trustee
or any corporation, firm, trust or association of which a Trustee is an
interested person for services rendered to the Trust in any capacity not
prohibited by the 1940 Act, and such payments shall not be deemed
compensation for services as a Trustee under the first sentence of this
Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER AGENT
Section 1. Investment Adviser. Subject to a Majority Shareholder
Vote, the Trustees may in their discretion from time to time enter into an
investment advisory contract whereby the other party to such contract shall
undertake to furnish the Trustees investment advisory services upon such
terms and conditions and for such compensation as the Trustees may in their
discretion determine. Subject to a Majority Shareholder Vote, the
investment adviser may enter into a sub-investment advisory contract to
receive investment advice and/or statistical and factual information from
the sub-investment adviser upon such terms and conditions and for such
compensation as the Trustees may in their discretion agree to.
Notwithstanding any provisions of this Declaration of Trust, the Trustees
may authorize the investment adviser or sub-investment adviser or any
person furnishing administrative personnel and services as set forth in
Article VII, Section 2 (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect purchases, sales or
exchanges of portfolio securities of the Trust on behalf of the Trustees or
may authorize any officer or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by the Trustees. The
Trustees may also authorize the investment adviser to determine what firms
shall be employed to effect transactions in securities for the account of
the Trust and to determine what firms shall participate in any such
transactions or shall share in commissions or fees charged in connection
with such transactions.
Section 2. Administrative Services. The Trustees may in their
discretion from time to time contract for administrative personnel and
services whereby the other party shall agree to provide the Trustees
administrative personnel and services to operate the Trust on a daily
basis, on such terms and conditions as the Trustees may in their discretion
determine. Such services may be provided by one or more entities.
Section 3. Principal Underwriter. The Trustees may in their
discretion from time to time enter into an exclusive or non exclusive
contract or contracts providing for the sale of the Shares of the Trust to
net the Trust not less than the amount provided in Article III, Section 3
hereof, whereby the Trust may either agree to sell the Shares to the other
party to the contract or appoint such other party its sales agent for such
shares. In either case, the contract shall be on such terms and conditions
(including indemnification of principal underwriters allowable under
applicable law and regulation) as the Trustees may in their discretion
determine not inconsistent with the provisions of this Article VII; and
such contract may also provide for the repurchase of sale of Shares of the
Trust by such other party as principal or as agent of the Trust and may
provide that the other party may maintain a market for shares of the Trust.
Section 4. Transfer Agent. The Trustees may in their discretion
from time to time enter into transfer agency and shareholder services
contracts whereby the other party shall undertake to furnish the Trustees
transfer agency and shareholder services. The contracts shall be on such
terms and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or of the By-
Laws. Such services may be provided by one or more entities.
Section 5. Provisions and Amendments. Any contract entered into
pursuant to Sections 1 or 3 of this Article VII shall be consistent with
and subject to the requirements of Section 15 of the 1940 Act (including
any amendments thereof or other applicable Act of Congress hereafter
enacted) with respect to its continuance in effect, its termination, and
the method of authorization and approval of such contract or renewal
thereof.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to
vote (i) for the election of Trustees as provided in Article IV, Section 2;
(ii) for the removal of Trustees as provided in Article IV, Section 3(d);
(iii) with respect to any investment adviser or sub-investment adviser as
provided in Article VII, Section 1; (iv) with respect to the amendment of
this Declaration of Trust as provided in Article XII, Section 7; (v) to the
same extent as the shareholders of a Massachusetts business corporation as
to whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders; and (vi) with respect to such additional matters relating to
the Trust as may be required by law, by this Declaration of Trust, or the
By-Laws of the Trust or any regulation of the Trust with the Commission or
any State, or as the Trustees may consider desirable. Each whole Share
shall be entitled to one vote as to any matter on which it is entitled to
vote, and each fractional Share shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take
any action required or permitted by law, this Declaration of Trust or any
By-Laws of the Trust to be taken by Shareholders.
Section 2. Meetings. A Shareholders meeting shall be held as
specified in Section 2 of Article IV at the principal office of the Trust
or such other place as the Trustees may designate. Special meetings of the
Shareholders may be called by the Trustees or the Chief Executive Officer
of the Trust and shall be called by the Trustees upon the written request
of Shareholders owning at least one-tenth of the outstanding Shares
entitled to vote. Shareholders shall be entitled to at least fifteen days'
notice of any meeting.
Section 3. Quorum and Required Vote. Except as otherwise
provided by law, to constitute a quorum for the transaction of any business
at any meeting of Shareholders there must be present, in person or by
proxy, holders of one-forth of the total number of Shares of the Trust then
outstanding and entitled to vote at such meeting. If a quorum, as above
defined, shall not be present for the purpose of any vote that may properly
come before the meeting, the Shareholders present in person or by proxy and
entitled to vote at meeting on such matter holding a majority of the Shares
present entitled to vote on such matter may by vote adjourn the meeting
from time to time to be held at the same place without further notice than
by announcement to be given at the meeting until a quorum, as above
defined, entitled to vote on such matter shall be present, whereupon any
such matter may be voted upon at the meeting as though held when originally
convened. Subject to any applicable requirement of law or of this
Declaration of Trust or the By-Laws, a plurality of the votes shall elect a
Trustee and all other matters shall be decided by a majority of the votes
cast entitled to vote thereon.
Section 4. Additional Provisions. The By-Laws may include
further provisions for Shareholders' votes and meeting and related matters.
ARTICLE IX
CUSTODIAN
Section 1. Appointment and Duties. The Trustees shall appoint or
otherwise engage a bank or trust company having an aggregate capital,
surplus and undivided profits (as shown in its last published report) of at
least two million dollars ($2,000,000) as custodian with authority as its
agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the By-Laws of the Trust:
(1) To receive and hold the securities owned by the Trust
and deliver the same upon written order;
(2) To receive and receipt for any moneys due to the Trust
and deposit the same in its own banking department or elsewhere as the
Trustees may direct; and
(3) To distribute such funds upon orders or vouchers;
(4) To keep the books and accounts of the Trust and
furnish clerical and accounting services;
(5) To compute, if authorized to do so by the Trustees,
the Accumulated Net Income of the Trust and the net asset value of the
Shares in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the custodian and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank or trust
company organized under the laws of the United State or one of the states
thereof and having an aggregate capital, surplus and undivided profits (as
shown in its last published report) of at least two million dollars
($2,000,000).
Section 2. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct
the custodian to deposit all or any part of the securities owned by the
Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association
registered with the Commission under the Securities Exchange Act of 1934,
or such other person as may be permitted by the Commission or otherwise in
accordance with the 1940 Act as from time to time amended, pursuant to
which system all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred
or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal
only upon the order of the custodian at the direction of the Trustees.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay
dividends, and the amount of such dividends and the payment of them shall
be wholly in the discretion of the Trustees.
(b) The Trustees may, on each day Accumulated Net Income
of the Trust (as defined in Section 3 of this Article X) is determined and
is positive, declare such Accumulated Net Income as a dividend to
Shareholders of record at such time as the Trustees shall designate,
payable in addition full and fractional Shares or in cash.
(c) The Trustees may distribute in respect of any fiscal
year as ordinary dividends and as capital gains distributions,
respectively, amounts sufficient to enable the Trust as a regulated
investment company to avoid any liability for federal income taxes in
respect of that year.
(d) The decision of the Trustees as to what, in accordance
with good accounting practice, is income and what is principal shall be
final, and except as specifically provided herein the decision of the
Trustees as to what expenses and charges of the Trust shall be charged
against principal and what against the income shall be final. Any income
not distributed in any year may be permitted to accumulate and as long as
not distributed may be invested from time to time in the same manner as the
principal funds of the Trust.
(e) The Trustees shall have power, to the fullest extent
permitted by the laws of Massachusetts, at any time, or from time to time,
to declare and cause to be paid dividends, which dividends, at the election
of the Trustees, may be accrued, automatically reinvested in additional
Shares (or fractions thereof) of the Trust or paid in cash or additional
Shares, all upon such terms and conditions as the Trustees may prescribe.
(f) Anything in this instrument to the contrary
notwithstanding, the Trustees may at any time declare and distribute a
dividend consisting of shares of the Trust.
Section 2. Redemptions and Repurchases
(a) In case any Shareholder of record of the Trust at any
time desires to dispose of Shares recorded in his name, he may deposit a
written request (or such other form of request as the Trustees may from
time to time authorize) requesting that the Trust purchase his Shares,
together with such other instruments or authorizations to effect the
transfer as the Trustees may from time to time require, at the office of
the Custodian, and the Trust shall purchase his said Shares, but only at
the net asset value of such Shares (as defined in Section 4 of this Article
X) determined by or on behalf of the Trustees next after said deposit.
Payment for such Shares shall be made by the Trustees to the
Shareholders of record with seven (7) days after the date upon which the
request (and, if required, such other instruments or authorizations of
transfer) is deposited, subject to the right of the Trustees to postpone
the date of payment pursuant to Section 5 of this Article X. If the
redemption is postponed beyond the date on which it would normally occur by
reason of a declaration by the Trustees suspending the right of redemption
pursuant to Section 5 of this Article X, the right of the Shareholder to
have his Shares purchased by the Trust shall be similarly suspended, and he
may withdraw his request (or such other instruments or authorizations of
transfer ) from deposit if he so elects; or, if he does not so elect, the
purchase price shall be the net asset value of his Shares, determined next
after termination of such suspension and payment therefor shall be made
within seven (7) days thereafter.
(b) The Trust may purchase Shares of the Trust by
agreement with the owner thereof (1) at a price not exceeding the net asset
value per Share determined next after the purchase or contract of purchase
is made or (2) at a price not exceeding the net asset value per Share
determined at some later time.
(c) Shares purchased by the Trust either pursuant to
paragraph (a) or paragraph (b) of this Section 2 shall be deemed treasury
Shares and may be resold by the Trust.
(d) If the Trustees determine that economic conditions
would make it seriously detrimental to the best interests of the remaining
Shareholders of the Trust to make payment wholly to partly in cash, the
Trust may pay the redemption price in whole or in part by a distribution in
kind of securities from the portfolio of the Trust, in lieu of cash in
conformity with applicable rules of the Securities and Exchange Commission,
taking such securities at the same value employed in determining net asset
value, and selecting the securities in such manner as the Trustee may deem
fair and equitable.
Section 3. Determination of Accumulated Net Income. The
Accumulated Net Income of the Trust shall be determined by or on behalf of
the Trustees at such time or times as the Trustees shall in their
discretion determine. Such determination shall be made in accordance with
generally accepted accounting principles and practices and may include
realized and/or unrealized gains from the sale or other disposition of
securities or other property of the Trust. The power and duty to determine
Accumulated Net Income may be delegated by the Trustees from time to time
to one or more of the Trustees or officers of the Trust, to the other party
to any contract entered into pursuant to Section 1 or 2 of Article VII, or
to the custodian or to a transfer agent.
Section 4. Net Asset Value of Shares. The net asset value of
each Share of the Trust outstanding shall be determined at such time or
times as may be determined by or on behalf of the Trustees. The power and
duty to determine net asset value may be delegated by the Trustees from
time to time to one or more of the Trustees or Officers of the Trust, to
the other party to any contract entered into pursuant to Section 1 or 2 of
Article VII or to the custodian or to a transfer agent.
The net asset value of each Share of the Trust as of any particular
time shall be the quotient (adjusted to nearer cent) obtained by dividing
the value, as of such time, of the net assets of the Trust (i.e., the value
of the assets of the Trust less its liabilities exclusive of capital and
surplus) by the total number of Shares outstanding (exclusive of treasury
Shares) at such time in accordance with the requirements of the 1940 Act
and applicable provisions of the By-Laws of the Trust in conformity with
generally accepted accounting practices and principles.
The Trustee may declare a suspension of the determination of net
asset value for the whole or any part of any period in accordance with the
Investment Company Act of 1940 and the rules and regulations adopted
thereunder.
Section 5. Suspension of the Right of Redemption. The Trustees
may declare a suspension of the right of redemption or postpone the date of
payment for the whole or any part of any period in accordance with the
Investment Company Act of 1940 and the rules and regulations adopted
thereunder.
Section 6. Trust's Right to Redeem Shares. The Trust shall have
the right to cause the redemption of Shares in any Shareholder's account
for their then current net asset value (which will be promptly paid to the
Shareholder in cash), if at any time the total investment in the account
does not have a minimum dollar value determined from time to time by the
Trustees in their sole discretion. Shares of the Trust are redeemable at
the option of the Trust if, in the opinion of the Trustees, ownership of
Trust Shares has or may become concentrated to an extent which would cause
the Trust to be a personal holding company within the meaning of the
Federal Internal Revenue Code (and thereby disqualified under Sub-chapter M
of said Code); in such circumstances the Trust may compel the redemption of
Shares, reject any order for the purchase of Shares or refuse to give
effect to the Transfer of Shares.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Liability of Personal Liability and Indemnification of
Shareholders. The Trustees, officers, employees or agents of the Trust
shall have no power to bind any Shareholder personally or to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever,
other than such as the Shareholder may at any time agree to pay by way of
subscription to any Shares or otherwise.
No Shareholder or former Shareholder of the Trust shall be liable
solely by reason of his being or having been a Shareholder for any debt,
claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind, against, or with respect to the Trust arising out
of any action taken or omitted for or on behalf of the Trust, and the Trust
shall be solely liable therefor and resort shall be had solely to the Trust
property to performance thereof.
Each Shareholder or former Shareholder of the Trust (or their heirs,
executors, administrators or other legal representatives or, in case of a
corporate entity, its corporate or general successor) shall be entitled to
indemnity and reimbursement out of the Trust property to the full extent of
such liability and the cost of any litigation or other proceedings in which
such liability shall have been determined, including, without limitation,
the fees and disbursements of counsel if, contrary to the provisions
hereof, such Shareholder of former Shareholder or former Shareholer of the
Trust shall be held to personal liability.
The Trust shall, upon request by the Shareholder or former
Shareholder, assume the defense of any claim made against any Shareholder
for any act or obligation of the Trust and satisfy any judgment thereon.
Section 2. Limitation of Personal Liability of Trustees,
Officers, Employees or Agents of the Trust. No Trustee, officer, employee
or agent of the Trust shall have the power to bind any other Trustee,
officer, employee of agent of the Trust personally. The Trustees,
officers, employees or agents of the trust incurring any debts, liabilities
or obligations, or in taking or omitting any other actions for or in
connection with the Trust are, and each shall be deemed to be, acting as
Trustee, officer, employee or agent of the Trust and not in his own
individual capacity.
Provided they have acted under the belief their actions are in the
best interest of the Trust, the Trustee and officers shall not responsible
for or liable in any event for neglect or wrongdoing by them or any
officer, agent, employee, investment adviser or principal underwriter of
the Trust or any entity providing administrative services for the Trust,
but nothing herein contained shall protect any Trustee or officer against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 3. Express Exculpatory Clauses and Instruments. The
Trustees shall use every reasonable means to assure that all persons having
dealings with the Trust shall be informed that the property of the
Shareholders and the Trustees, officers, employees and agents of the Trust
shall not be subject to claims against or obligations of the Trust to any
extent whatsoever. The Trustees shall cause to be inserted in any written
agreement, undertaking or obligation made or issued on behalf of the Trust
(including certificates for Shares of the Trust) an appropriate reference
to this declaration, providing that neither the Shareholders, the Trustees,
the officers, the employees nor any agent of the Trust shall be liable
thereunder, and that the other parties to such instrument shall look solely
to the Trust property for the payment of any claim thereunder or for the
performance thereof; but the omission of such provisions from any such
instrument shall not render any Shareholder, Trust, officer, employee or
agent liable, nor shall the Trustee, or any officer, agent or employee of
the Trust be liable to anyone for such omission. If notwithstanding this
provision, any Shareholder, Trustee, officer, employee or agent shall be
held liable to any other person by reason of the omission of such provision
from any such agreement, undertaking or obligation, the Shareholder,
Trustee, officer, employee or agent shall be entitled to indemnity and
reimbursement out of the Trust property, as provided in this Article XI.
Section 4. Indemnification of Trustees, Officers, Employees and
Agents. (a) Every person who is or has been a Trustee, officer, employee
or agent of the Trust and persons who serve at the Trust's request as
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise shall be indemnified by the Trust
to fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any debt,
claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee, officer, employee or agent
of the Trust or of another corporation, partnership, joint venture, trust
or other enterprise at a request of the Trust and against amounts paid or
incurred by him in the settlement thereof.
(b) The words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal,
administrative, legislative, investigative or other, including appeals),
actual or threatened, and the words 'liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a
Trustee, officer, employee or agent against any liability to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office.
(d) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable,
shall not affect any other rights to which any Trustee, officer, employee
or agent may now or hereafter be entitled, shall continue as to a person
who has ceased to be such Trustee, officer, employee, or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(e) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or proceeding of the
character described in paragraph (a) of this Section 4 may be paid by the
Trust prior to final disposition thereof upon receipt of an undertaking by
or on behalf of the Trustees, officer, employee or agent secured by a
surety bond or other suitable insurance that such amount will be paid over
by him to the Trust if it is ultimately determined that he is not entitled
to indemnification under this Section 4.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership. It is hereby expressly
declared that a trust and not a partnership is created hereby.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to the
provisions of Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact of law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and subject to the provisions of Article XI, shall be
under no liability for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
Section 3. Establishment of Record Dates. The Trustees may close
the Share transfer books of the Trust for a period not exceeding sixty (60)
days preceding the date of any meeting of Shareholders, or the date for the
payment of any dividend or the making of any distribution to Shareholders,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect; or in lieu of
closing the Share transfer books as aforesaid, the Trustees may fix in
advance a date, not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for the payment of any dividend or the
making of any distribution to Shareholders, or the date for the allotment
of rights, or the date when any change or conversion or exchange of Shares
shall go into effect, or the last day on which the consent or dissent of
Shareholders may be effectively expressed for any purpose, as a record date
for the determination of the Shareholders entitled to notice of, and, to
vote at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or distribution, or to any such
allotment of rights, or to exercise the rights in respect of any such
change, conversation or exchange of shares, or to exercise the right to
give such consent or dissent, and in such case such Shareholder and only
such Shareholder as shall be Shareholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend or distribution, or to receive such
allotment or rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any Shares on the books of the Trust after
any such date fixed as aforesaid.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time
but subject to the provisions of paragraphs (b), (c) and (d) of this
Section 4.
(b) The Trustees, with the approval of the holders of at
least two-thirds of the outstanding Shares, may be unanimous action sell
and convey the assets of the Trust to another trust or corporation
organized under the laws of any state of the United States, which is a
diversified open-end management investment company as defined in the 1940
Act, for an adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust and which may include shares of beneficial
interest or stock of such trust or corporation. Upon making provision for
the payment of all such liabilities, by such assumption or otherwise, the
Trustees shall distribute the remaining proceeds ratably among the holders
of the Shares of the Trust then outstanding.
(c) Subject to a Majority Shareholder Vote, the Trustees
may at any time sell and convert into money all the assets of the Trust.
Upon making provision for the payment of all outstanding obligations, taxes
and other liabilities, accrued or contingent, of the Trust, the Trustees
shall distribute the remaining assets of the Trust ratably among the
holders of the outstanding Shares.
(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b) and (c), the
Trust shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest
of all parties shall be canceled and discharged.
Section 5. Officers of the Trust, Filing of Copies, References,
Headings.
The Trust shall maintain a usual place of business in Massachusetts, which,
initially, shall be 31 Milk Street, Boston, Massachusetts, and shall
continue to maintain an office at such address unless changed by the
Trustees to another location in Massachusetts. The Trust may maintain
other offices as the Trustees may from time to time determine. The
original or a copy of this instrument and of each declaration of trust
supplemental hereto shall be kept at the office of the Trust where it may
be inspected by any Shareholder. A copy of this instrument and of each
supplemental declaration of trust shall be filed by the Trustees with the
Massachusetts Secretary of State and the Boston City Clerk, as well as any
other governmental officer where such filing may from time to time be
required. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such supplemental declaration
of trust has been made and as to any matters in connection to the Trust
hereunder, and with the same effect as if it were the original, may relyon
a copy certified by an officer of the Trust to be a copy of this instrument
or of any such supplemental declaration of trust. In this instrument or in
any such supplemental declaration of trust, references to this instrument,
and all expressions like "herein, " "hereof" and "hereunder," shall be
deemed to refer to this instrument as amended or affected by an such
supplemental declaration of trust. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
instrument, rather than the headings, shall control. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.
Section 6. Applicable Law. The Trust set forth in this
instrument is created be governed by and constructed and administered
according to the laws of the Commonwealth of Massachusetts. The Trust
shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
Section 7. Amendments. Prior to the initial issuance of Shares
pursuant to the second sentence of Section 3 of Article II, a majority of
the Trustees then in office may amend or otherwise supplement this
instrument by making a Declaration of Trust supplemental hereto, which
thereafter shall form a part of hereof. Subsequent to such initial
issuance of Shares, if authorized by a majority of the Trustees then in
office and by a Majority Shareholder Vote, or by any larger vote which may
be required by applicable law or this Declaration of Trust in any
particular case, the Trustees shall amend or otherwise supplement this
instrument, by making a Declaration of Trust supplemental hereto, which
thereafter shall form a part hereof. Any such supplemental Declaration of
Trust shall be signed by at least a majority of the Trustees then in
office. Copies of the supplemental Declaration of Trust shall be filed as
specified in Section 5 of this Article XII.
Section 8. Use of Name. The Trust acknowledges that Federated
Investors, Inc. has reserved the right to grant the non-exclusive use of
the name "Federated" or any derivative thereof to any other investment
company, investment adviser, distributor, or other business enterprise, and
to withdraw from the Trust the use of the name "Federated."
IN WITNESS WHEREOF, the undersigned have executed this instrument the
day and year first above written.
/s/ John F. Donahue /s/ J. Joseph Maloney, Jr.
John F. Donahue J. Joseph Maloney, Jr.
/s/William J. Copeland /s/ Gregor F. Meyer
William J. Copeland Gregor F. Meyer
/s/ James E. Dowd /s/ Wesley W. Posvar
James E. Dowd Wesley W. Posvar
/s/ Edward L. Flaherty, Jr. /s/ Majorie P. Smuts
Edward L. Flaherty, Jr. Majorie P. Smuts
COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )
I hereby certify that on January 9, 1979 before me, the subscriber, a
Notary Public of the Commonwealth of Pennsylvania, in for the County of
Allegheny, personally appeared JOHN F. DONAHUE, WILLIAM J. COPELAND, JAMES
E. DOWD, EDWARD L. FLAHERTY, JR., J. JOSEPH MALONEY, JR., GREGOR F. MEYER,
WESLEY W. POSVAR, AND MAJORIE P. SMUTS who acknowledged the foregoing
Declaration of Trust to be their act.
Witness my hand and notarial seal the day and year last above
written.
/s/ Susan E. Grosser
Notary Public
SUSAN E. GROSSER, Notary Public
Pittsburgh, Allegheny County
My Commission Expires March 21, 1988
Member, Pennsylvania of Notaries
Exhibit 1(ii) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
FEDERATED HIGH YIELD TRUST
Amendment No. 1
to
DECLARATION OF TRUST
Dated April 17, 1984
THIS Amendment to the Declaration of Trust is made this 19th day of
July, 1984, by John F. Donahue, William J. Copeland, James E. Dowd, Edward
L. Flaherty, Jr., J. Joseph Maloney, Jr., Gregor F. Meyer, Wesley W. Posvar
and Marjorie P. Smuts.
WHEREAS, the Trustees executed a Declaration of Trust among
themselves on April 17, 1984 creating a Massachusetts business trust for
the investment and reinvestment of funds contributed thereto; and
WHEREAS, pursuant to Section 7 of Article XII of the Declaration of
Trust the Trustees desire to amend the Declaration of Trust; and
WHEREAS, pursuant to Article V, Section 9 of the Bylaws of the Trust,
any action by the Trustees may be taken without a meeting by written
Unanimous Consent of Trustees.
NOW, THEREFORE, the Trustees hereby amend the Declaration of Trust as
follows:
1. By deleting Article X, Section 2, subparagraph (d) from the
Declaration of Trust and substituting in its place the following:
(d) The Trust may pay the redemption price in whole or in part
by a distribution in kind of securities from the portfolio of the
Trust, taking such securities at the same value employed in
determining net asset value, and selecting the securities in such
manner as the Trustees may deem fair and equitable.
IN WITNESS WHEREOF, the undersigned being all of the Trustees, have
executed this Amendment to the Declaration of Trust the day and year first
above written.
/s/ John F. Donahue /s/ J. Joseph Maloney, Jr.
John F. Donahue J. Joseph Maloney, Jr.
/s/ William J. Copeland /s/ Gregor F. Meyer
William J. Copeland Gregor F. Meyer
/s/ James E. Dowd /s/ Wesley W. Posvar
James E. Dowd Wesley W. Posvar
/s/ Edward L. Flaherty, Jr. /s/ Marjorie P. Smuts
Edward L. Flaherty, Jr. Marjorie P. Smuts
December 15, 1993
Ms. Sheila Burke
The Commonwealth of Massachusetts
Office of the Secretary of State
Room 1712- Trust Division
One Ashburton Place
Boston, Massachusetts 02108
Re: FEDERATED HIGH YIELD TRUST
Dear Ms. Burke:
I, S. Elliott Cohan, Assistant Secretary of Federated High Yield Trust, am
writing to inform you that on November 18, 1993, the Board of Trustees
voted to change the Resident Agent of said Trust, from 176 Federal Street,
Boston, Massachusetts 02110 to Donnelly, Conroy & Gelhaar, One Post Office
Square, Boston, Massachusetts 02109-2105. Please return a date stamped
copy of the change.
Very truly yours,
/s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
Exhibit 2(i) under Form N-1A
Exhibit 3(b) under Item 601/Reg. S-K
FEDERATED HIGH YIELD TRUST
OUTLINE OF BY-LAWS
Page
Article I Officers and Their Election 1
1. Officers 1
2. Election of Officers 1
3. Resignation and Removals and Vacancies 1
Article II Powers and Duties of Transfer and Officers 1
1. Trustees 1
2. Chairman of the Trustees 1
3. President 2
4. Vice President 2
5. Secretary 2
6. Treasurer 2
7. Assistant Vice President 2
8. Assistant Secretaries and Assistant Treasurer 2
9. Salaries
2
Article III Powers and Duties of the Executive and Other
Committees 3
1. Executive and Other Committees 3
2. Vacancies in Executive Committee 3
3. Executive Committee to Report to Trustees 3
4. Procedure of Executive Committee 3
5. Powers of Executive Committee 3
6. Compensation 3
7. Informal Action by Executive Committee or
Other Committees 4
Article IV Shareholders' Meetings 4
1. Special Meetings 4
2. Notices 4
3. Place of Meetings 4
4. Action by Consent 4
5. Proxies 4
Article V Trustees Meetings 5
1. Number and Qualifications of Trustees 5
2. Special Meetings 5
3. Regular Meetings 5
4. Quorum and Vote 5
5. Notices 5
6. Place of Meeting 5
7. Telephonic Meeting 6
8. Special Action 6
9. Action by Consent 6
10. Compensation of Trustees 6
Article VI Shares of Beneficial Interest 6
1. Beneficial Interest 6
2. Certificates 6
3. Transfer of Shares 7
4. Equitable Interest not Recognized 7
5. Lost, Destroyed or Mutilated Certificates 7
6. Transfer Agent and Registrar: Regulations 7
Article VII Inspection of Books 7
Article VIII Agreements, Checks, Drafts, Endorsements, Etc 7
1. Agreements, Etc 7
2. Checks, Drafts, Etc 8
3. Endorsements, Assignments and Transfer of
Securities 8
4. Evidence of Authority 8
Article IX Seal 8
Article X Fiscal Year 8
Article XI Amendments 8
Article XII Waivers of Notice 9
Article XIII Report of Shareholders 9
Article XIV Books and Records 9
BY-LAWS
of
FEDERATED HIGH YIELD TRUST
ARTICLE I
OFFICERS AND THEIR ELECTION
Section 1. Officers. The officers of the Trust shall be a
Chairman of the Trustees, a President, one or more Vice Presidents, a
Treasurer, a Secretary and such other officers as the Trustees may from
time to time elect. It shall not be necessary for any Trustee or other
officer to be a holder of shares in the Trust.
Section 2. Election of Officers. The President, Vice
President(s), Treasurer and Secretary shall be chosen annually by the
Trustees. The Chairman of the Trustees shall be chosen annually by and
from the Trustees.
Two or more offices may be held by a single person
except the offices of President and Secretary. The officers shall hold
office until their successors are chosen and qualified.
Section 3. Resignations and Removal and Vacancies. Any officer
of the Trust may resign by filing a written resignation with the Chairman
of the Trustees or with the Trustees or wiht the Secretary, which shall
take effect on being so filed or at such time as may be therein specified.
The Trustees may remove any officer, with or without cause, by a majority
vote of all of the Trustees. The Trustees may fill any vacancy created in
any office whether by resignation, removal or otherwise.
ARTICLE II
POWERS AND DUTIES OF TRUSTEES AND OFFICERS
Section 1. Trustees. The business and affairs of the Trust shall
be managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility.
Section 2. Chairman of the Trustees ("Chairman"). The Chairman
shall be the chief executive officer of the Trust. He shall have general
supervision over the business of the Trust and policies of the Trust. He
shall employ and define the duties of all employees of the Trust, shall
have power to discharge any such employees, shall exercise general
supervision over the affairs of the Trust and shall perform such other
duties as may be assigned to him from time to time by the Trustees. He
shall preside at the meetings of shareholders and of the Trustees. The
Chairman shall appoint a Trustee to preside at such meetings in his
absence, with the approval of the Trustees.
Section 3. President. The President, in the absence of the
Chairman, shall perform all duties and may exercise any of the powers of
the Chairman subject to the control of the other Trustees. He shall
counsel and advise the Chairman on matters of the major importance and
shall perform such other duties as may be assigned to him from time to time
by the Trustees, the Chairman or the Executive Committee.
Section 4. Vice President. The Vice President (or if more than
one, the senior Vice President) in the absence of the President shall
perform all duties and may exercise any of the powers of the President
subject to the control of the Trustees. Each Vice President shall perform
such other duties as may be assigned to him from time to time by the
Trustees, the Chairman or the Executive Committee.
Section 5. Secretary. The Secretary shall keep or cause to be
kept in books provided for the purpose the Minutes of the Meetings of
Shareholders and of the Trustees; shall see that all Notices are duly given
in accordance with the provisions of these By-Laws and as required by law;
shall be custodian of the records and of the Seal of the Trust and see that
the Seal is affixed to all documents, the execution of which on behalf of
the Trust under its Seal is duly authorized; shall keep directly or through
a transfer agent a register of the post office address of each shareholder,
and make all proper changes in such register, retaining and filing his
authority for such entries; shall see that the books, reports, statements,
certificates and all other documents and records required by law are
properly kept and filed; and in general shall perform all duties incident
to the Office of Secretary and such other duties as may from time to time
be assigned to him by the Trustees, President or the Executive Committee.
Section 6. Treasurer. The Treasurer shall be the principal
financial and accounting officer of the Trust. He shall deliver all funds
and securities of the Trust which may come into his hands to such bank or
trust company as the Trustees shall employ as custodian or sub-custodian in
accordance with Article IX of the Declaration of Trust. The Treasurer
shall perform such duties additional to the foregoing as the Trustees,
Chairman or the Executive Committee may from time to time designate.
Section 7. Assistant Vice President. The Assistant Vice or Vice
Presidents of the Trust shall have such authority and perform such duties
as may be assigned to them by the Trustees, the Executive Committee or the
Chairman.
Section 8. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretary or Secretaries and the Assistant Treasurer or
Treasurers shall perform the duties of the Secretary and of the Treasurer,
respectively, in the absence of those Officers and shall have such further
powers and perform such other duties as may be assigned to them
respectively by the Trustees or the Executive Committee or the Chairman.
Section 9. Salaries. The salaries of the Officers shall be fixed
from time to time by the Trustees. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a Trustee.
ARTICLE III
POWERS AND DUTIES OF THE
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive and Other Committees. The Trustees may
elect from their own number an executive committee to consist of not less
than two members. The executive committee shall be elected by a resolution
passed by a vote of at least a majority of the Trustees then in office.
The Trustees may also elect from their own number other committees from
time to time, the number composing such committees and the powers conferred
upon the same to be determined by vote of the Trustees.
Section 2. Vacancies in Executive Committee. Vacancies occurring
in the Executive Committee from any cause shall be filled by the Trustees
by a resolution passed by the vote of at least a majority of the Trustees
then in office.
Section 3. Executive Committee to Report to Trustees. All action
by the Executive Committee shall be reported to the Trustees at their
meeting next succeeding such action.
Section 4. Procedure of Executive Committee. The Executive
Committee shall fix its own rules of procedure not inconsistent with these
By-Laws or with any directions of the Trustees. It shall meet at such
times and places and upon such notice as shall be provided by such rules or
by resolution of the Trustees. The presence of a majority shall constitute
a quorum for the transaction of business, and in every case an affirmative
vote of a majority of all the members of the Committee present shall be
necessary for the taking of any action.
Section 5. Powers of Executive Committee. During the intervals
between the Meetings of the Trustees, the Executive Committee, except as
limited by the By-Laws of the Trust or by specific directions of the
Trustees, shall possess and may exercise all the powers of the Trustees in
the management and direction of the business and conduct of the affairs of
the Trust in such manner as the Executive Committee shall deem for the best
interests of the Trust, and shall have power to authorize the Seal of the
Trust to be affixed to all instruments and documents requiring same.
Notwithstanding the foregoing, the Executive Committee shall not have the
power to elect Trustees, increase or decrease the number of Trustees, elect
or remove any Officer, declare dividends, issue shares or recommend to
shareholders any action requiring shareholder approval.
Section 6. Compensation. The members of any duly appointed
committee shall receive such compensation and/or fee as from time to time
may be fixed by the Trustees.
Section 7. Informal Action by Executive Committee or Other
Committee. Any action required or permitted to be taken at any meeting of
the Executive Committee or any other duly appointed Committee may be taken
without a meeting if a consent in writing setting forth such action is
signed by all member of such committee and such consent is filed with the
records of the Trust.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 1. Special Meetings. A special meeting of the
shareholders shall be called by the Secretary whenever ordered by the
Trustees, the Chairman or requested in writing by the holder or holders of
at least one-tenth of the outstanding shares entitled to vote. If the
Secretary, when so ordered or requested, refuses or neglects for more than
two days to call such special meeting, the Trustees, Chairman or the
shareholders so requesting may, in the name of the Secretary, call the
meeting by giving notice thereof in the manner required when notice is
given by the Secretary.
Section 2. Notices. Except as above provided, notices of any
special meeting of the shareholders shall be given by the Secretary by
delivering or mailing, postage prepaid, to each shareholder entitled to
vote at said meeting, a written or printed notification of such meeting, at
least fifteen days before the meeting, to such address as may be registered
with the Trust by the shareholder.
Section 3. Place of Meeting. Meetings of the Shareholders shall
be held at the principal place of business of the Trust in Pittsburgh,
Pennsylvania, or at such place within or without the Commonwealth of
Massachusetts as fixed from time to time by resolution of the Trustees.
Section 4. Action by Consent. Any action required or permitted
to be taken at any meeting of shareholders may be taken without a meeting,
if a consent in writing, setting forth such action, is signed by all the
shareholders entitled to vote on the subject matter thereof, and such
consent is filed with the records of the Trust.
Section 5. Proxies. Any shareholder entitled to vote at any
meeting of shareholders may vote either in person or by proxy. Every proxy
shall be in writing subscribed by the shareholder or his duly authorized
attorney and dated, but need not be sealed, witnessed or acknowledged. All
proxies shall be filed with and verified by the Secretary or an Assistant
Secretary of the Trust or, if the meeting shall so decide, by the Secretary
of the Meeting.
ARTICLE V
TRUSTEES' MEETINGS
Section 1. Number and Qualifications of Trustees. The number of
Trustees shall be as fixed from time to time by a majority of the Trustees
but shall be no less than three nor more than twenty. The Trustees may
from time to time increase or decrease the number of Trustees to such
number as they deem expedient, not to be less than three nor more than
twenty, however, and fill the vacancies so created. The term of office of
a Trustee shall not be affected by any decrease in the number of Trustees
made by the Trustees pursuant to the foregoing authorization.
Section 2. Special Meeting. Special meetings of the Trustees
shall be called by the Secretary at the written request of the Chairman or
any Trustee, and if the Secretary when so requested refuses or fails for
more than twenty-four hours to call such meeting, the Chairman or such
Trustee may in the name of the Secretary call such meeting by giving due
notice in the manner required when notice is given by the Secretary.
Section 3. Regular Meeting. Regular meetings of the Trustees may
be held without call or notice at such places and at such times as the
Trustees may from time to time determine, provided that any Trustee who is
absent when such determination is made shall be given notice of the
determination.
Section 4. Quorum and Vote. A majority of the Trustees shall
constitute a quorum for the transaction of business. The act of a majority
of the Trustees present at any meeting at which a quorum is present shall
be the act of the Trustees unless a greater proportion is required by the
Declaration of Trust or these By-Laws or applicable law. In the absence of
a quorum, a majority of the Trustees present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned
meeting need not be given.
Section 5. Notices. Except as otherwise provided, notice of any
special meeting of the Trustees shall be given by the Secretary to each
Trustee, by mailing to him, postage prepaid, addressed to him at his
address as registered on the books of the Trust or, if not so registered,
at his last known address, a written or printed notification of such
meeting at least four days before the meeting or by sending to him at least
one day before the meeting, by prepaid telegram, addressed to him at his
said registered address, if any, or if he has no such registered address,
at his last known address, notice of such meeting. Subject to compliance
with Section 15(c) of the Investment Company Act of 1940, notice or waiver
of notice need not specify the purpose of any special meeting.
Section 6. Place of Meeting. Meetings of the Trustees shall be
held at the principal place of business of the Trust in Pittsburgh,
Pennsylvania, or at such place within or without the Commonwealth of
Massachusetts as fixed from time to time by resolution of the Trustees, or
as the person or persons requesting said meeting to be called may
designate, but any meeting may adjourn to any other place.
Section 7. Telephonic Meeting. Subject to compliance with
Sections 15(c) and 32(a) of the Investment Company Act of 1940, if it is
impractical for the Trustees to meet in person, the Trustees may meet by
means of a telephone conference circuit to which all Trustees are connected
or of which all Trustees shall have waived notice, which meeting shall be
deemed to have been held at a place designated by the Trustees at the
meeting.
Section 8. Special Action. When all the Trustees shall be
present at any meeting, however called, or whenever held, or shall assent
to the holding of the meeting without notice, or after the meeting shall
sign a written assent thereto on the record of such meeting, the acts of
such meeting shall be valid as if such meeting had been regularly held.
Section 9. Action by Consent. Any action by the Trustees may be
taken without a meeting if a written consent thereto is signed by all the
Trustees and filed with the records of the Trustees' meetings. Such
consent shall be treated as a vote of the Trustees for all purposes.
Section 10. Compensation of Trustees. The Trustees may receive a
stated salary for their services as Trustees, and by Resolutions of
Trustees a fixed fee and expenses of attendance may be allowed for
attendance at each Meeting. Nothing herein contained shall be construed to
preclude any Trustee from serving the Trust in any other capacity, as an
officer, agent or otherwise, and receiving compensation therefor.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 1. Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into an unlimited number of shares
without par value. The shares of beneficial interest shall have one vote
per share at any meeting of the shareholders and a fractional vote for each
fraction of a share.
Section 2. Certificates. All certificates for shares shall be
signed by the Chairman, President or any Vice President and by the
Treasurer or Secretary or any Assistant Treasurer or Assistant Secretary
and sealed with the seal of the Trust. The signatures may be either manual
or facsimile signatures and the seal may be either facsimile or any other
form of seal. Certificates for shares for which the Trust has appointed an
independent Transfer Agent and Registrar shall not be valid unless
countersigned by such Transfer Agent and registered by such Registrar. In
case any officer who has signed any certificate ceases to be an officer of
the Trust before the certificate is issued, the certificate may
nevertheless be issued by the Trust with the same effect as if the officer
had not ceased to be such officer as of the date of its issuance. Share
certificates shall be in such form not inconsistent with law or the
Declaration of Trust or these By-Laws as may be determined by the Trustees.
Section 3. Transfer of Shares. The shares of the Trust shall be
transferable, so as to affect the rights of the Trust, only by transfer
recorded on the books of the Trust, in person or by attorney.
Section 4. Equitable Interest not Recognized. The Trust shall be
entitled to treat the holder of record of any share or shares as the
absolute owner thereof and shall not be bound to recognize any equitable or
other claim or interest in such share or shares on the part of any other
person except as may be otherwise expressly provided by law.
Section 5. Lost, Destroyed or Mutilated Certificates. In case
any certificate for shares is lost, mutilated or destroyed, the Trustees
may issue a new certificate in place thereof upon indemnity to the Trust
against loss and upon such other terms and conditions as the Trustees may
deem advisable.
Section 6. Transfer Agent and Registrar: Regulations. The
Trustees shall have power and authority to make all such rules and
regulations as they may deem expedient concerning the issuance, transfer
and registration of certificates for shares and may appoint a Transfer
Agent and/or Registrar of certificates for shares, and may require all such
share certificates to bear the signature of such Transfer Agent and/or of
such Registrar.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what
extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be
open to the inspection of the shareholders; and no shareholder shall have
any right of inspecting any account or book or document of the Trust except
as conferred by laws or authorized by the Trustees or by resolution of the
shareholders.
ARTICLE VIII
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.
Section 1. Agreements, Etc. The Trustees or the Executive
Committee may authorize any Officer or Officers, or Agent or Agents of the
Trust to enter into any Agreement or execute and deliver any instrument in
the name of and on behalf of the Trust, and such authority may be general
or confined to specific instances; and, unless so authorized by the
Trustees or by the Executive Committee or by these By-Laws, no Officer,
Agent or Employee shall have any power or authority to bind the Trust by
any Agreement or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
Section 2. Checks, Drafts, Etc. All checks, drafts, or orders
for the payment of money, notes and other evidences of indebtedness shall
be signed by such Officer or Officers, Employee or Employees, or Agent or
Agents, as shall from time to time be designated by the Trustees or the
Executive Committee, or as may be specified in or pursuant to the agreement
between the Trust and the Bank or Trust Company appointed as custodian,
pursuant to the provisions of the Declaration of Trust.
Section 3. Endorsements, Assignments and Transfer of Securities.
All endorsements, assignments, stock powers or other instruments of
transfer of securities standing in the name of the Trust or its nominee or
directions for the transfer of securities belonging to the Trust shall be
made by such Officer or Officers, Employee or Employees, or Agent or Agents
as may be authorized by the Trustees or the Executive Committee.
Section 4. Evidence of Authority. Anyone dealing with the Trust
shall be fully justified in relying on a copy of a resolution of the
Trustees or of any committee thereof empowered to act in the premises which
is certified as true by the Secretary or an Assistant Secretary under the
seal of the Trust.
ARTICLE IX
SEAL
The seal of the Trust shall be circular in form, bearing the
inscription:
FEDERATED HIGH YIELD TRUST - 1984 - MASSACHUSETTS
ARTICLE X
FISCAL YEAR
The fiscal year of the Trust shall be the period of twelve months
ending on the last day of June in each calendar year.
ARTICLE XI
AMENDMENTS
These By-Laws may be amended by a majority vote of all of the
Trustees.
ARTICLE XII
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of any statute of the Commonwealth of Massachusetts, or under
the provisions of the Declaration of Trust or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. A notice shall be deemed to have been given if
telegraphed, cabled or sent be wireless when it has been delivered to a
representative of any telegraph, cable or wireless company with
instructions that it be telegraphed, cabled or sent by wireless. Any
notice shall be deemed to be given if mailed at the time when the same
shall be deposited in the mail.
ARTICLE XIII
REPORT TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the shareholders
a written financial report of the transactions of the Trust, including
financial statements which shall at least annually be certified by
independent public accountants.
ARTICLE XIV
BOOKS AND RECORDS
The books and records of the Trust, including the stock ledger or
ledgers, may be kept in or outside the Commonwealth of Massachusetts at
such office or agency of the Trust as may be from time to time determined
by the Trustees.
Exhibit 2(ii) under Form N-1A
Exhibit 3(b) under Item 601/Reg. S-K
FEDERATED HIGH YIELD TRUST
Amendment No. 1 to Bylaws
Article X
Fiscal Year
The fiscal year of the Trust shall be the period of twelve months ending on
the last day of May in each calendar year.
FEDERATED HIGH YIELD TRUST
Amendment No. 2 to Bylaws
Article X
Fiscal Year
The fiscal year of the Trust shall be the period of twelve months ending on
the last day of February in each calendar year.
Amendment No. 3 to Bylaws
FEDERATED HIGH YIELD TRUST
Effective February 2, 1987
ARTICLE II
POWERS AND DUTIES OF TRUSTEES AND OFFICERS
Section 2. Chairman of the Trustees ("Chairman"). The Chairman
shall be the chief executive officer of the Trust. He shall have general
supervision over the business of the Trust and policies of the Trust. He
shall employ and define the duties of all employees of the Trust, shall
have power to discharge and such employees, shall exercise general
supervision over the affairs of the Trust and shall perform such other
duties as may be assigned to him from time to time by the Trustees. He
shall preside at the meetings of shareholders and of the Trustees. The
Chairman shall appoint a Trustee or officer to preside at such meetings in
his absence.
Exhibit 4 under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
FEDERATED HIGH YIELD TRUST
Number Shares
_____ _____
Account No. Alpha Code Organized Under the See Reverse Side For
Laws of the Commonwealth Certain Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 314197 10 4
Fully Paid and Non-Assessable Shares of Beneficial Interest of
FEDERATED HIGH YIELD TRUST hereafter called the "Trust," transferable on
the books of the Trust by the owner, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and
all amendments thereto, all of which the holder by acceptance hereof
assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be
signed in its name by its proper officers and to be sealed with its Seal.
Dated: THE SHAWMUT FUNDS
Seal
1984
Massachusetts
/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman
Countersigned: State Street Bank
and Trust Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT-
...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above
list.
For value received__________ hereby sell, assign, and transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
___________________________________________________________________________
__
(Please print or typewrite name and address, including zip code, of
assignee)
___________________________________________________________________________
__
___________________________________________________________________________
__
______________________________________________________________________
shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint
__________________________________________
_______________________________________________________________
_Attorney
to transfer the said shares on the books of the within named Trust with
full power of substitution in the premises.
Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written
upon the face of the certificate in
every particular, without alteration or
enlargement or any change whatever.
All persons dealing with FEDERATED HIGH YIELD TRUST, a Massachusetts
business trust, must look solely to the Trust property for the enforcement
of any claim against the Trust, as the Trustees, officers, agents or
shareholders of the Trust assume no personal liability whatsoever for
obligations entered into on behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch border.
B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts corporate seal appears in the bottom middle of the
page.
Page Two
The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.
Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
CUSTODIAN CONTRACT
Between
FEDERATED INVESTMENT COMPANIES
and
STATE STREET BANK AND TRUST COMPANY
and
FEDERATED SERVICES COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian With Respect to Property of the Funds
Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 5
2.4 Bank Accounts 6
2.5 Payments for Shares 7
2.6 Availability of Federal Funds 7
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 8
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. 9
2.10 Payments for Repurchases or Redemptions of Shares of a
Fund 9
2.11 Appointment of Agents 10
2.12 Deposit of Fund Assets in Securities System 10
2.13 Segregated Account 12
2.14 Joint Repurchase Agreements 13
2.15 Ownership Certificates for Tax Purposes 13
2.16 Proxies 13
2.17 Communications Relating to Fund Portfolio Securities 13
2.18 Proper Instructions 14
2.19 Actions Permitted Without Express Authority 14
2.20 Evidence of Authority 15
2.21 Notice to Trust by Custodian Regarding Cash Movement. 15
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and NetIncome 15
4. Records 16
5. Opinion of Funds' Independent Public Accountants/Auditors 16
6. Reports to Trust by Independent Public Accountants/Auditors 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 17
9. Effective Period, Termination and Amendment 19
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Massachusetts Law to Apply 22
13. Notices 22
14. Counterparts 22
15. Limitations of Liability 22
CUSTODIAN CONTRACT
This Contract between those INVESTMENT COMPANIES listed on Exhibit 1, as it
may be amended from time to time, (the "Trust"), which may be Massachusetts
business trusts or Maryland corporations or have such other form of
organization as may be indicated, on behalf of the portfolios (hereinafter
collectively called the "Funds" and individually referred to as a "Fund")
of the Trust, having its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian", and FEDERATED SERVICES COMPANY, a Delaware business
trust company, having its principal place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, hereinafter called
("Company").
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets
of each of the Funds of the Trust. Except as otherwise expressly
provided herein, the securities and other assets of each of the Funds
shall be segregated from the assets of each of the other Funds and
from all other persons and entities. The Trust will deliver to the
Custodian all securities and cash owned by the Funds and all payments
of income, payments of principal or capital distributions received by
them with respect to all securities owned by the Funds from time to
time, and the cash consideration received by them for shares
("Shares") of beneficial interest/capital stock of the Funds as may
be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Funds held or received by the
Funds and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more sub-
custodians upon the terms specified in the Proper Instructions,
provided that the Custodian shall have no more or less responsibility
or liability to the Trust or any of the Funds on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian.
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Fund all non-cash property,
including all securities owned by each Fund, other than
securities which are maintained pursuant to Section 2.12 in a
clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities
System", or securities which are subject to a joint repurchase
agreement with affiliated funds pursuant to Section 2.14. The
Custodian shall maintain records of all receipts, deliveries
and locations of such securities, together with a current
inventory thereof, and shall conduct periodic physical
inspections of certificates representing stocks, bonds and
other securities held by it under this Contract in such manner
as the Custodian shall determine from time to time to be
advisable in order to verify the accuracy of such inventory.
With respect to securities held by any agent appointed
pursuant to Section 2.11 hereof, and with respect to
securities held by any sub-custodian appointed pursuant to
Section 1 hereof, the Custodian may rely upon certificates
from such agent as to the holdings of such agent and from such
sub-custodian as to the holdings of such sub-custodian, it
being understood that such reliance in no way relieves the
Custodian of its responsibilities under this Contract. The
Custodian will promptly report to the Trust the results of
such inspections, indicating any shortages or discrepancies
uncovered thereby, and take appropriate action to remedy any
such shortages or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by a Fund held by the Custodian or in
a Securities System account of the Custodian only upon receipt
of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the
following cases:
(1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Trust;
(3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.12
hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund, in
accordance with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the
name of a Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee name of any
agent appointed pursuant to Section 2.11 or into the name
or nominee name of any sub-custodian appointed pursuant to
Section 1; or for exchange for a different number of
bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided
that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of a
Fund, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery custom"; provided that in any such case, the
Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities
prior to receiving payment for such securities except as
may arise from the Custodian's own failure to act in
accordance with the standard of reasonable care or any
higher standard of care imposed upon the Custodian by any
applicable law or regulation if such above-stated standard
of reasonable care were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts
or temporary securities for definitive securities;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
(10)For delivery in connection with any loans of portfolio
securities of a Fund, but only against receipt of adequate
collateral in the form of (a) cash, in an amount specified
by the Trust, (b) certificated securities of a description
specified by the Trust, registered in the name of the Fund
or in the name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for transfer, or
(c) securities of a description specified by the Trust,
transferred through a Securities System in accordance with
Section 2.12 hereof;
(11)For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against
receipt of amounts borrowed, except that in cases where
additional collateral is required to secure a borrowing
already made, further securities may be released for the
purpose;
(12)For delivery in accordance with the provisions of any
agreement among the Trust or a Fund, the Custodian and a
broker-dealer registered under the Securities Exchange Act
of 1934, as amended, (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered
national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund;
(13)For delivery in accordance with the provisions of any
agreement among the Trust or a Fund, the Custodian, and a
Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations,
regarding account deposits in connection with transaction
for a Fund;
(14)Upon receipt of instructions from the transfer agent
("Transfer Agent") for a Fund, for delivery to such
Transfer Agent or to the holders of shares in connection
with distributions in kind, in satisfaction of requests by
holders of Shares for repurchase or redemption; and
(15)For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Executive Committee
of the Trust on behalf of a Fund signed by an officer of
the Trust and certified by its Secretary or an Assistant
Secretary, specifying the securities to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery
of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian
(other than bearer securities) shall be registered in the name
of a particular Fund or in the name of any nominee of the Fund
or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Fund, unless the Trust has
authorized in writing the appointment of a nominee to be used
in common with other registered investment companies
affiliated with the Fund, or in the name or nominee name of
any agent appointed pursuant to Section 2.11 or in the name or
nominee name of any sub-custodian appointed pursuant to
Section 1. All securities accepted by the Custodian on behalf
of a Fund under the terms of this Contract shall be in "street
name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of each Fund,
subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such
account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of each Fund,
other than cash maintained in a joint repurchase account with
other affiliated funds pursuant to Section 2.14 of this
Contract or by a particular Fund in a bank account established
and used in accordance with Rule 17f-3 under the Investment
Company Act of 1940, as amended, (the "1940 Act"). Funds held
by the Custodian for a Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian
or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to
act as a custodian under the 1940 Act and that each such bank
or trust company and the funds to be deposited with each such
bank or trust company shall be approved by vote of a majority
of the Board of Trustees/Directors ("Board") of the Trust.
Such funds shall be deposited by the Custodian in its capacity
as Custodian for the Fund and shall be withdrawable by the
Custodian only in that capacity. If requested by the Trust,
the Custodian shall furnish the Trust, not later than twenty
(20) days after the last business day of each month, an
internal reconciliation of the closing balance as of that day
in all accounts described in this section to the balance shown
on the daily cash report for that day rendered to the Trust.
2.5 Payments for Shares. The Custodian shall make such
arrangements with the Transfer Agent of each Fund, as will
enable the Custodian to receive the cash consideration due to
each Fund and will deposit into each Fund's account such
payments as are received from the Transfer Agent. The
Custodian will provide timely notification to the Trust and
the Transfer Agent of any receipt by it of payments for Shares
of the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between
the Trust and the Custodian, the Custodian shall make federal
funds available to the Funds as of specified times agreed upon
from time to time by the Trust and the Custodian in the amount
of checks, clearing house funds, and other non-federal funds
received in payment for Shares of the Funds which are
deposited into the Funds' accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income
and other payments with respect to registered securities
held hereunder to which each Fund shall be entitled either
by law or pursuant to custom in the securities business,
and shall collect on a timely basis all income and other
payments with respect to bearer securities if, on the date
of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such
income, as collected, to each Fund's custodian account.
Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when
they become due and shall collect interest when due on
securities held hereunder. The collection of income due
the Funds on securities loaned pursuant to the provisions
of Section 2.2 (10) shall be the responsibility of the
Trust. The Custodian will have no duty or responsibility
in connection therewith, other than to provide the Trust
with such information or data as may be necessary to
assist the Trust in arranging for the timely delivery to
the Custodian of the income to which each Fund is properly
entitled.
(2) The Custodian shall promptly notify the Trust whenever
income due on securities is not collected in due course
and will provide the Trust with monthly reports of the
status of past due income unless the parties otherwise
agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate
by the parties, the Custodian shall pay out moneys of each
Fund in the following cases only:
(1) Upon the purchase of securities, futures contracts or
options on futures contracts for the account of a Fund but
only (a) against the delivery of such securities, or
evidence of title to futures contracts, to the Custodian
(or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under
the 1940 Act to act as a custodian and has been designated
by the Custodian as its agent for this purpose) registered
in the name of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in proper
form for transfer, (b) in the case of a purchase effected
through a Securities System, in accordance with the
conditions set forth in Section 2.12 hereof or (c) in the
case of repurchase agreements entered into between the
Trust and any other party, (i) against delivery of the
securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase for the account of the Fund of
securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase
such securities from the Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2
hereof;
(3) For the redemption or repurchase of Shares of a Fund
issued by the Trust as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by a
Fund, including but not limited to the following payments
for the account of the Fund: interest; taxes; management,
accounting, transfer agent and legal fees; and operating
expenses of the Fund, whether or not such expenses are to
be in whole or part capitalized or treated as deferred
expenses;
(5) For the payment of any dividends on Shares of a Fund
declared pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect
of securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on
behalf of a Fund signed by an officer of the Trust and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring
such purpose to be a proper purpose, and naming the person
or persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for purchase
of securities for the account of a Fund is made by the
Custodian in advance of receipt of the securities purchased,
in the absence of specific written instructions from the Trust
to so pay in advance, the Custodian shall be absolutely liable
to the Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.10Payments for Repurchases or Redemptions of Shares of a Fund.
From such funds as may be available for the purpose of
repurchasing or redeeming Shares of a Fund, but subject to the
limitations of the Declaration of Trust/Articles of
Incorporation and any applicable votes of the Board of the
Trust pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of shares of such Fund who have delivered
to the Transfer Agent a request for redemption or repurchase
of their shares including without limitation through bank
drafts, automated clearinghouse facilities, or by other means.
In connection with the redemption or repurchase of Shares of
the Funds, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming
shareholders.
2.11Appointment of Agents. The Custodian may at any time or times
in its discretion appoint (and may at any time remove) any
other bank or trust company which is itself qualified under
the 1940 Act and any applicable state law or regulation, to
act as a custodian, as its agent to carry out such of the
provisions of this Section 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
2.12Deposit of Fund Assets in Securities System. The Custodian
may deposit and/or maintain securities owned by the Funds in a
clearing agency registered with the Securities and Exchange
Commission ("SEC") under Section 17A of the Exchange Act,
which acts as a securities depository, or in the book-entry
system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in
the Securities System which shall not include any assets
of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of
the Funds which are maintained in a Securities System
shall identify by book-entry those securities belonging to
each Fund;
(3) The Custodian shall pay for securities purchased for the
account of each Fund upon (i) receipt of advice from the
Securities System that such securities have been
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The
Custodian shall transfer securities sold for the account
of a Fund upon (i) receipt of advice from the Securities
System that payment for such securities has been
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund. Copies
of all advices from the Securities System of transfers of
securities for the account of a Fund shall identify the
Fund, be maintained for the Fund by the Custodian and be
provided to the Trust at its request. Upon request, the
Custodian shall furnish the Trust confirmation of each
transfer to or from the account of a Fund in the form of a
written advice or notice and shall furnish to the Trust
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of a
Fund.
(4) The Custodian shall provide the Trust with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Trust for any loss or
damage to a Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any
of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of
the Trust, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against
the Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that a Fund has not been made
whole for any such loss or damage.
(7) The authorization contained in this Section 2.12 shall not
relieve the Custodian from using reasonable care and
diligence in making use of any Securities System.
2.13Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of each Fund, into which
account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance with the
provisions of any agreement among the Trust, the Custodian and
a broker-dealer registered under the Exchange Act and a member
of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market),
or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions
for a Fund, (ii) for purpose of segregating cash or government
securities in connection with options purchased, sold or
written for a Fund or commodity futures contracts or options
thereon purchased or sold for a Fund, (iii) for the purpose of
compliance by the Trust or a Fund with the procedures required
by any release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but
only, in the case of clause (iv), upon receipt of, in addition
to Proper Instructions, a certified copy of a resolution of
the Board or of the Executive Committee signed by an officer
of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper
corporate purposes.
2.14Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, the Custodian shall deposit and/or maintain any
assets of a Fund and any affiliated funds which are subject to
joint repurchase transactions in an account established solely
for such transactions for the Fund and its affiliated funds.
For purposes of this Section 2.14, "affiliated funds" shall
include all investment companies and their portfolios for
which subsidiaries or affiliates of Federated Investors serve
as investment advisers, distributors or administrators in
accordance with applicable exemptive orders from the SEC. The
requirements of segregation set forth in Section 2.1 shall be
deemed to be waived with respect to such assets.
2.15Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for
all federal and state tax purposes in connection with receipt
of income or other payments with respect to securities of a
Fund held by it and in connection with transfers of
securities.
2.16Proxies. The Custodian shall, with respect to the securities
held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of a Fund or a nominee
of a Fund, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver
to the Trust such proxies, all proxy soliciting materials and
all notices relating to such securities.
2.17Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Trust all written
information (including, without limitation, pendency of calls
and maturities of securities and expirations of rights in
connection therewith and notices of exercise of call and put
options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the
Custodian from issuers of the securities being held for the
Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Trust all written
information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer. If
the Trust desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the
Trust shall notify the Custodian in writing at least three
business days prior to the date on which the Custodian is to
take such action. However, the Custodian shall nevertheless
exercise its best efforts to take such action in the event
that notification is received three business days or less
prior to the date on which action is required.
2.18Proper Instructions. Proper Instructions as used throughout
this Section 2 means a writing signed or initialed by one or
more person or persons as the Board shall have from time to
time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a)
the Custodian reasonably believes them to have been given by a
person previously authorized in Proper Instructions to give
such instructions with respect to the transaction involved,
and (b) the Trust promptly causes such oral instructions to be
confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by
the Board of the Trust accompanied by a detailed description
of procedures approved by the Board, Proper Instructions may
include communications effected directly between electro-
mechanical or electronic devices provided that the Board and
the Custodian are satisfied that such procedures afford
adequate safeguards for a Fund's assets.
2.19Actions Permitted Without Express Authority. The Custodian
may in its discretion, without express authority from the
Trust:
(1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such
payments shall be accounted for to the Trust in such form
that it may be allocated to the affected Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of a Fund, checks,
drafts and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the securities
and property of each Fund except as otherwise directed by
the Trust.
2.20Evidence of Authority. The Custodian shall be protected in
acting upon any instructions, notice, request, consent,
certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed on
behalf of a Fund. The Custodian may receive and accept a
certified copy of a vote of the Board of the Trust as
conclusive evidence (a) of the authority of any person to act
in accordance with such vote or (b) of any determination of or
any action by the Board pursuant to the Declaration of
Trust/Articles of Incorporation as described in such vote, and
such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
2.21Notice to Trust by Custodian Regarding Cash Movement. The
Custodian will provide timely notification to the Trust of any
receipt of cash, income or payments to the Trust and the
release of cash or payment by the Trust.
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information
to the entity or entities appointed by the Board of the Trust to keep
the books of account of each Fund and/or compute the net asset value
per share of the outstanding Shares of each Fund or, if directed in
writing to do so by the Trust, shall itself keep such books of
account and/or compute such net asset value per share. If so
directed, the Custodian shall also calculate daily the net income of
a Fund as described in the Fund's currently effective prospectus and
Statement of Additional Information ("Prospectus") and shall advise
the Trust and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the Trust
to do so, shall advise the Transfer Agent periodically of the
division of such net income among its various components. The
calculations of the net asset value per share and the daily income of
a Fund shall be made at the time or times described from time to time
in the Fund's currently effective Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will
meet the obligations of the Trust and the Funds under the 1940 Act,
with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder, and specifically including identified cost records
used for tax purposes. All such records shall be the property of the
Trust and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of the SEC.
In the event of termination of this Contract, the Custodian will
deliver all such records to the Trust, to a successor Custodian, or
to such other person as the Trust may direct. The Custodian shall
supply daily to the Trust a tabulation of securities owned by a Fund
and held by the Custodian and shall, when requested to do so by the
Trust and for such compensation as shall be agreed upon between the
Trust and the Custodian, include certificate numbers in such
tabulations.
5. Opinion of Funds' Independent Public Accountants/Auditors.
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions
from each Fund's independent public accountants/auditors with respect
to its activities hereunder in connection with the preparation of the
Fund's registration statement, periodic reports, or any other reports
to the SEC and with respect to any other requirements of such
Commission.
6. Reports to Trust by Independent Public Accountants/Auditors.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public
accountants/auditors for each Fund on the accounting system, internal
accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian for the Fund under
this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Trust, to
provide reasonable assurance that any material inadequacies would be
disclosed by such examination and, if there are no such inadequacies,
the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between Company and the Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in
carrying out the provisions of this Contract; provided, however, that
the Custodian shall be held to any higher standard of care which
would be imposed upon the Custodian by any applicable law or
regulation if such above stated standard of reasonable care was not
part of this Contract. The Custodian shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for the Trust)
on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or state laws
or regulations, and is in good faith and without negligence. Subject
to the limitations set forth in Section 15 hereof, the Custodian
shall be kept indemnified by the Trust but only from the assets of
the Fund involved in the issue at hand and be without liability for
any action taken or thing done by it in carrying out the terms and
provisions of this Contract in accordance with the above standards.
In order that the indemnification provisions contained in this
Section 8 shall apply, however, it is understood that if in any case
the Trust may be asked to indemnify or save the Custodian harmless,
the Trust shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further understood
that the Custodian will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or
appears likely to present the probability of such a claim for
indemnification. The Trust shall have the option to defend the
Custodian against any claim which may be the subject of this
indemnification, and in the event that the Trust so elects it will so
notify the Custodian and thereupon the Trust shall take over complete
defense of the claim, and the Custodian shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no case
confess any claim or make any compromise in any case in which the
Trust will be asked to indemnify the Custodian except with the
Trust's prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian
with respect to redemptions effected by check shall be in accordance
with a separate Agreement entered into between the Custodian and the
Trust.
If the Trust requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which
action may, in the reasonable opinion of the Custodian, result in the
Custodian or its nominee assigned to a Fund being liable for the
payment of money or incurring liability of some other form, the
Custodian may request the Trust, as a prerequisite to requiring the
Custodian to take such action, to provide indemnity to the Custodian
in an amount and form satisfactory to the Custodian.
Subject to the limitations set forth in Section 15 hereof, the Trust
agrees to indemnify and hold harmless the Custodian and its nominee
from and against all taxes, charges, expenses, assessments, claims
and liabilities (including counsel fees) (referred to herein as
authorized charges) incurred or assessed against it or its nominee in
connection with the performance of this Contract, except such as may
arise from it or its nominee's own failure to act in accordance with
the standard of reasonable care or any higher standard of care which
would be imposed upon the Custodian by any applicable law or
regulation if such above-stated standard of reasonable care were not
part of this Contract. To secure any authorized charges and any
advances of cash or securities made by the Custodian to or for the
benefit of a Fund for any purpose which results in the Fund incurring
an overdraft at the end of any business day or for extraordinary or
emergency purposes during any business day, the Trust hereby grants
to the Custodian a security interest in and pledges to the Custodian
securities held for the Fund by the Custodian, in an amount not to
exceed 10 percent of the Fund's gross assets, the specific securities
to be designated in writing from time to time by the Trust or the
Fund's investment adviser. Should the Trust fail to make such
designation, or should it instruct the Custodian to make advances
exceeding the percentage amount set forth above and should the
Custodian do so, the Trust hereby agrees that the Custodian shall
have a security interest in all securities or other property
purchased for a Fund with the advances by the Custodian, which
securities or property shall be deemed to be pledged to the
Custodian, and the written instructions of the Trust instructing
their purchase shall be considered the requisite description and
designation of the property so pledged for purposes of the
requirements of the Uniform Commercial Code. Should the Trust fail
to cause a Fund to repay promptly any authorized charges or advances
of cash or securities, subject to the provision of the second
paragraph of this Section 8 regarding indemnification, the Custodian
shall be entitled to use available cash and to dispose of pledged
securities and property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by either party by an instrument
in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than sixty (60) days after
the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section 2.12 hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Trust has approved the initial use of
a particular Securities System as required in each case by Rule 17f-4
under the 1940 Act; provided further, however, that the Trust shall
not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the
Declaration of Trust/Articles of Incorporation, and further provided,
that the Trust may at any time by action of its Board (i) substitute
another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this
Contract in the event of the appointment of a conservator or receiver
for the Custodian by the appropriate banking regulatory agency or
upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the
Trust, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and
in the form for transfer, all securities then held by it hereunder
for each Fund and shall transfer to separate accounts of the
successor custodian all of each Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of
the Board of the Trust, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance
with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board shall have been delivered to
the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the 1940
Act, (delete "doing business ... Massachusetts" unless SSBT is the
Custodian) doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than
$100,000,000, all securities, funds and other properties held by the
Custodian and all instruments held by the Custodian relative thereto
and all other property held by it under this Contract for each Fund
and to transfer to separate accounts of such successor custodian all
of each Fund's securities held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof
owing to failure of the Trust to procure the certified copy of the
vote referred to or of the Board to appoint a successor custodian,
the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this
Contract relating to the duties and obligations of the Custodian
shall remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and
the Trust may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Contract as may in their
joint opinion be consistent with the general tenor of this Contract.
Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Declaration of Trust/Articles of Incorporation. No interpretive or
additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or
to the Custodian at address for SSBT only: 225 Franklin Street,
Boston, Massachusetts, 02110, or to such other address as the Trust
or the Custodian may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust of
those Trusts which are business trusts and agrees that the
obligations and liabilities assumed by the Trust and any Fund
pursuant to this Contract, including, without limitation, any
obligation or liability to indemnify the Custodian pursuant to
Section 8 hereof, shall be limited in any case to the relevant Fund
and its assets and that the Custodian shall not seek satisfaction of
any such obligation from the shareholders of the relevant Fund, from
any other Fund or its shareholders or from the Trustees, Officers,
employees or agents of the Trust, or any of them. In addition, in
connection with the discharge and satisfaction of any claim made by
the Custodian against the Trust, for whatever reasons, involving more
than one Fund, the Trust shall have the exclusive right to determine
the appropriate allocations of liability for any such claim between
or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed effective as of the 1st day of December,
1993.
ATTEST: INVESTMENT COMPANIES
/s/John G. McGonigle_________ By /s/John G. Donahue_____________
John G. McGonigle John F. Donahue
Secretary Chairman
ATTEST: STATE STREET BANK AND TRUST
COMPANY
/s/ Ed McKenzie______________ By /s/ F. J. Sidoti, Jr.___________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan________________
Jeannette Fisher-Garber James J. Dolan
Secretary President
EXHIBIT 1
<TABLE>
<S> <C>
CONTRACT
DATE INVESTMENT COMPANY
12/01/93 Federated High Yield Trust
</TABLE>
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of December 1, 1994, by and between those investment
companies listed on Exhibit 1 as may be amended from time to time, having
their principal office and place of business at Federated Investors
Tower, Pittsburgh, PA 15222-3779 (the "Trust"), on behalf of the
portfolios (individually referred to herein as a "Fund" and collectively
as "Funds") of the Trust, and FEDERATED SERVICES COMPANY, a Delaware
business trust, having its principal office and place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 (the
"Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the
"1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares"); and
WHEREAS, the Trust may desire to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so
indicated on Exhibit 1, and the Company is willing to furnish such
services; and
WHEREAS, the Trust may desire to appoint the Company as its transfer
agent, dividend disbursing agent if so indicated on Exhibit 1, and agent
in connection with certain other activities, and the Company desires to
accept such appointment; and
WHEREAS, the Trust may desire to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks if so indicated on Exhibit 1, and the Company
desires to accept such appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or
another agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for
those investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and
on the terms set forth in this Agreement. The Company accepts such
appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Trust's Board of
Trustees or Directors ("Board"), the Company will assist the Trust with
regard to fund accounting for the Trust, and/or the Funds, and/or the
Classes, and in connection therewith undertakes to perform the following
specific services;
A. Value the assets of the Funds using: primarily, market
quotations, including the use of matrix pricing, supplied by
the independent pricing services selected by the Company in
consultation with the adviser, or sources selected by the
adviser, and reviewed by the board; secondarily, if a
designated pricing service does not provide a price for a
security which the Company believes should be available by
market quotation, the Company may obtain a price by calling
brokers designated by the investment adviser of the fund
holding the security, or if the adviser does not supply the
names of such brokers, the Company will attempt on its own to
find brokers to price those securities; thirdly, for
securities for which no market price is available, the Pricing
Committee of the Board will determine a fair value in good
faith. Consistent with Rule 2a-4 of the 40 Act, estimates may
be used where necessary or appropriate. The Company's
obligations with regard to the prices received from outside
pricing services and designated brokers or other outside
sources, is to exercise reasonable care in the supervision of
the pricing agent. The Company is not the guarantor of the
securities prices received from such agents and the Company is
not liable to the Fund for potential errors in valuing a
Fund's assets or calculating the net asset value per share of
such Fund or Class when the calculations are based upon such
prices. All of the above sources of prices used as described
are deemed by the Company to be authorized sources of security
prices. The Company provides daily to the adviser the
securities prices used in calculating the net asset value of
the fund, for its use in preparing exception reports for those
prices on which the adviser has comment. Further, upon receipt
of the exception reports generated by the adviser, the Company
diligently pursues communication regarding exception reports
with the designated pricing agents.
B. Determine the net asset value per share of each Fund and/or
Class, at the time and in the manner from time to time
determined by the Board and as set forth in the Prospectus and
Statement of Additional Information ("Prospectus") of each
Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and
financial records of the Trust, including for each Fund,
and/or Class, as required under Section 31(a) of the 1940 Act
and the Rules thereunder in connection with the services
provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records to be maintained by Rule 31a-1 under the
1940 Act in connection with the services provided by the
Company. The Company further agrees that all such records it
maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust such records
upon the Trust's request;
G. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other
applicable laws and regulations; and
H. Such other similar services as may be reasonably requested by
the Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services
rendered pursuant to Section One of this Agreement in
accordance with the fees agreed upon from time to time between
the parties hereto. Such fees do not include out-of-pocket
disbursements of the Company for which the Funds shall
reimburse the Company upon receipt of a separate invoice. Out-
of-pocket disbursements shall include, but shall not be
limited to, the items agreed upon between the parties from
time to time.
B. The Fund and/or the Class, and not the Company, shall bear the
cost of: custodial expenses; membership dues in the Investment
Company Institute or any similar organization; transfer agency
expenses; investment advisory expenses; costs of printing and
mailing stock certificates, Prospectuses, reports and notices;
administrative expenses; interest on borrowed money; brokerage
commissions; taxes and fees payable to federal, state and
other governmental agencies; fees of Trustees or Directors of
the Trust; independent auditors expenses; Federated
Administrative Services and/or Federated Administrative
Services, Inc. legal and audit department expenses billed to
Federated Services Company for work performed related to the
Trust, the Funds, or the Classes; law firm expenses; or other
expenses not specified in this Article 3 which may be properly
payable by the Funds and/or classes.
C. The compensation and out-of-pocket expenses shall be accrued
by the Fund and shall be paid to the Company no less
frequently than monthly, and shall be paid daily upon request
of the Company. The Company will maintain detailed information
about the compensation and out-of-pocket expenses by Fund and
Class.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a
duly authorized officer of the Trust and/or the Funds and a
duly authorized officer of the Company.
E. The fee for the period from the effective date of this
Agreement with respect to a Fund or a Class to the end of the
initial month shall be prorated according to the proportion
that such period bears to the full month period. Upon any
termination of this Agreement before the end of any month, the
fee for such period shall be prorated according to the
proportion which such period bears to the full month period.
For purposes of determining fees payable to the Company, the
value of the Fund's net assets shall be computed at the time
and in the manner specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited
to assist it in performing services under this Section One.
Such person or persons may be third-party service providers,
or they may be officers and employees who are employed by both
the Company and the Funds. The compensation of such person or
persons shall be paid by the Company and no obligation shall
be incurred on behalf of the Trust, the Funds, or the Classes
in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby appoints the Company to act as, and the Company agrees to
act as, transfer agent and dividend disbursing agent for each Fund's
Shares, and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic investment
plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a) the Company
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust, or the
Fund, and the Company are satisfied that such procedures afford adequate
safeguards for the Fund's assets. Proper Instructions may only be amended
in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Trust as
to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the
purchase of shares and promptly deliver payment and
appropriate documentation therefore to the custodian of
the relevant Fund, (the "Custodian"). The Company shall
notify the Fund and the Custodian on a daily basis of the
total amount of orders and payments so delivered.
(2) Pursuant to purchase orders and in accordance with the
Fund's current Prospectus, the Company shall compute and
issue the appropriate number of Shares of each Fund and/or
Class and hold such Shares in the appropriate Shareholder
accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or
its agent requests a certificate, the Company, as Transfer
Agent, shall countersign and mail by first class mail, a
certificate to the Shareholder at its address as set forth
on the transfer books of the Funds, and/or Classes,
subject to any Proper Instructions regarding the delivery
of certificates.
(4) In the event that any check or other order for the
purchase of Shares of the Fund and/or Class is returned
unpaid for any reason, the Company shall debit the Share
account of the Shareholder by the number of Shares that
had been credited to its account upon receipt of the check
or other order, promptly mail a debit advice to the
Shareholder, and notify the Fund and/or Class of its
action. In the event that the amount paid for such Shares
exceeds proceeds of the redemption of such Shares plus the
amount of any dividends paid with respect to such Shares,
the Fund and/the Class or its distributor will reimburse
the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with
the provisions of its governing document and the then-
current Prospectus of the Fund. The Company shall prepare
and mail or credit income, capital gain, or any other
payments to Shareholders. As the Dividend Disbursing
Agent, the Company shall, on or before the payment date of
any such distribution, notify the Custodian of the
estimated amount required to pay any portion of said
distribution which is payable in cash and request the
Custodian to make available sufficient funds for the cash
amount to be paid out. The Company shall reconcile the
amounts so requested and the amounts actually received
with the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any
such distribution or dividend, appropriate credits shall
be made to the Shareholder's account, for certificated
Funds and/or Classes, delivered where requested; and
(2) The Company shall maintain records of account for each
Fund and Class and advise the Trust, each Fund and Class
and its Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and
redemption directions and, if such redemption requests
comply with the procedures as may be described in the Fund
Prospectus or set forth in Proper Instructions, deliver
the appropriate instructions therefor to the Custodian.
The Company shall notify the Funds on a daily basis of the
total amount of redemption requests processed and monies
paid to the Company by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds
from the Custodian with respect to any redemption, the
Company shall pay or cause to be paid the redemption
proceeds in the manner instructed by the redeeming
Shareholders, pursuant to procedures described in the then-
current Prospectus of the Fund.
(3) If any certificate returned for redemption or other
request for redemption does not comply with the procedures
for redemption approved by the Fund, the Company shall
promptly notify the Shareholder of such fact, together
with the reason therefor, and shall effect such redemption
at the price applicable to the date and time of receipt of
documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the
registered owners thereof.
(5) The Company shall identify and process abandoned accounts
and uncashed checks for state escheat requirements on an
annual basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each
Fund, and/or Class, and maintain pursuant to applicable
rules of the Securities and Exchange Commission ("SEC") a
record of the total number of Shares of the Fund and/or
Class which are authorized, based upon data provided to it
by the Fund, and issued and outstanding. The Company shall
also provide the Fund on a regular basis or upon
reasonable request with the total number of Shares which
are authorized and issued and outstanding, but shall have
no obligation when recording the issuance of Shares,
except as otherwise set forth herein, to monitor the
issuance of such Shares or to take cognizance of any laws
relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant
to applicable rules of the SEC relating to the services to
be performed hereunder in the form and manner as agreed to
by the Trust or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and
whether such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account,
including dividends paid and date and price for all
transactions;
(d) Any stop or restraining order placed against the
account;
(e) Information with respect to withholding in the case of
a foreign account or an account for which withholding
is required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any
Shareholder holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by
this Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the
periods prescribed in said rules as specifically noted
below. Such record retention shall be at the expense of
the Company, and such records may be inspected by the Fund
at reasonable times. The Company may, at its option at any
time, and shall forthwith upon the Fund's demand, turn
over to the Fund and cease to retain in the Company's
files, records and documents created and maintained by the
Company pursuant to this Agreement, which are no longer
needed by the Company in performance of its services or
for its protection. If not so turned over to the Fund,
such records and documents will be retained by the Company
for six years from the year of creation, during the first
two of which such documents will be in readily accessible
form. At the end of the six year period, such records and
documents will either be turned over to the Fund or
destroyed in accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in
each state for "blue sky" purposes as determined
according to Proper Instructions delivered from time
to time by the Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption
fees, or other transaction- or sales-related
payments;
(f) Such other information as may be agreed upon from time
to time.
(2) The Company shall prepare in the appropriate form, file
with the Internal Revenue Service and appropriate state
agencies, and, if required, mail to Shareholders, such
notices for reporting dividends and distributions paid as
are required to be so filed and mailed and shall withhold
such sums as are required to be withheld under applicable
federal and state income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth
above, the Company shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant,
agent in connection with accumulation, open-account
or similar plans (including without limitation any
periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining
all Shareholder accounts, mailing Shareholder reports
and Prospectuses to current Shareholders, withholding
taxes on accounts subject to back-up or other
withholding (including non-resident alien accounts),
preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms
required with respect to dividends and distributions
by federal authorities for all Shareholders,
preparing and mailing confirmation forms and
statements of account to Shareholders for all
purchases and redemptions of Shares and other
conformable transactions in Shareholder accounts,
preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor
the total number of Shares of each Fund and/or Class
sold in each state ("blue sky reporting"). The Fund
shall by Proper Instructions (i) identify to the
Company those transactions and assets to be treated
as exempt from the blue sky reporting for each state
and (ii) verify the classification of transactions
for each state on the system prior to activation and
thereafter monitor the daily activity for each state.
The responsibility of the Company for each Fund's
and/or Class's state blue sky registration status is
limited solely to the recording of the initial
classification of transactions or accounts with
regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as
provided above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other
correspondence as may from time to time be addressed to
the Company;
(2) The Company shall prepare Shareholder meeting lists, mail
proxy cards and other material supplied to it by the Fund
in connection with Shareholder Meetings of each Fund;
receive, examine and tabulate returned proxies, and
certify the vote of the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account
of, such certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of
the Securities Act of 1933, as amended (the "1933 Act"), the 1940
Act and any laws, rules and regulations of government authorities
having jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of
blank Share certificates and from time to time shall renew such
supply upon request of the Company. Such blank Share certificates
shall be properly signed, manually or by facsimile, if authorized
by the Trust and shall bear the seal of the Trust or facsimile
thereof; and notwithstanding the death, resignation or removal of
any officer of the Trust authorized to sign certificates, the
Company may continue to countersign certificates which bear the
manual or facsimile signature of such officer until otherwise
directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of
any dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as agreed
upon between the parties and as may be added to or amended from
time to time. Such fees may be changed from time to time subject
to written agreement between the Trust and the Company. Pursuant
to information in the Fund Prospectus or other information or
instructions from the Fund, the Company may sub-divide any Fund
into Classes or other sub-components for recordkeeping purposes.
The Company will charge the Fund the same fees for each such
Class or sub-component the same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time
to time. In addition, any other expenses incurred by the Company
at the request or with the consent of the Trust and/or the Fund,
will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued
by the Fund and shall be paid to the Company no less
frequently than monthly, and shall be paid daily upon request
of the Company. The Company will maintain detailed information
about the compensation and out-of-pocket expenses by Fund and
Class.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a
duly authorized officer of the Trust and/or the Funds and a
duly authorized officer of the Company.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section
Two may be assigned by either party without the written consent of the
other party.
A. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns.
B. The Company may without further consent on the part of the
Trust subcontract for the performance hereof with (A) State
Street Bank and its subsidiary, Boston Financial Data
Services, Inc., a Massachusetts Trust ("BFDS"), which is duly
registered as a transfer agent pursuant to Section 17A(c)(1)
of the Securities Exchange Act of 1934, as amended, or any
succeeding statute ("Section 17A(c)(1)"), or (B) a BFDS
subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate, or (D) such other
provider of services duly registered as a transfer agent under
Section 17A(c)(1) as Company shall select; provided, however,
that the Company shall be as fully responsible to the Trust
for the acts and omissions of any subcontractor as it is for
its own acts and omissions; or
C. The Company shall upon instruction from the Trust subcontract
for the performance hereof with an Agent selected by the
Trust, other than BFDS or a provider of services selected by
Company, as described in (2) above; provided, however, that
the Company shall in no way be responsible to the Trust for
the acts and omissions of the Agent.
SECTION THREE: Custody Services Procurement.
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and obtain
custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved
by the Board as eligible for selection by the Company as a custodian (the
"Eligible Custodian"). The Company accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the
Company shall:
A. evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
B. employ the Eligible Custodian to serve on behalf of the Trust
as Custodian of the Trust's assets substantially on the terms
set forth as the form of agreement in Exhibit 2;
C. negotiate and enter into agreements with the Custodians for
the benefit of the Trust, with the Trust as a party to each
such agreement. The Company shall not be a party to any
agreement with any such Custodian;
D. establish procedures to monitor the nature and the quality of
the services provided by the Custodians;
E. continuously monitor the nature and the quality of services
provided by the Custodians; and
F. periodically provide to the Trust (i) written reports on the
activities and services of the Custodians; (ii) the nature and
amount of disbursement made on account of the Trust with
respect to each custodial agreement; and (iii) such other
information as the Board shall reasonably request to enable it
to fulfill its duties and obligations under Sections 17(f) and
36(b) of the 1940 Act and other duties and obligations
thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three
of this Agreement, the Trust and/or the Fund agree to pay the
Company an annual fee as agreed upon between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time
to time. In addition, any other expenses incurred by the Company
at the request or with the consent of the Trust and/or the Fund,
will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued
by the Fund and shall be paid to the Company no less
frequently than monthly, and shall be paid daily upon request
of the Company. The Company will maintain detailed information
about the compensation and out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be
adjusted from time to time, shall be dated and signed by a
duly authorized officer of the Trust and/or the Funds and a
duly authorized officer of the Company.
Article 12. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to
enter into this arrangement and to provide the services contemplated in
Section Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this
Agreement, the Trust shall file with the Company the following
documents:
(1) A copy of the Charter and By-Laws of the Trust and all
amendments thereto;
(2) A copy of the resolution of the Board of the Trust
authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates
of the Trust or the Funds in the forms approved by the
Board of the Trust with a certificate of the Secretary of
the Trust as to such approval;
(4) All account application forms and other documents relating
to Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and
amendments thereof and orders relating thereto in effect
with respect to the sale of Shares of any Fund, and/or
Class;
(3) A certified copy of each amendment to the governing
document and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Custodian and
agents for fund accountant, custody services procurement,
and shareholder recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing
Shares of any Fund, accompanied by Board resolutions
approving such forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or
appropriate in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in
good standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State
of Delaware.
(3) It is empowered under applicable laws and by its charter
and by-laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations
under this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties
and obligations under this Agreement.
(6) It is in compliance with federal securities law
requirements and in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing
and in good standing under the laws of its state of
organization;
(2) It is empowered under applicable laws and by its Charter
and By-Laws to enter into and perform its obligations
under this Agreement;
(3) All corporate proceedings required by said Charter and By-
Laws have been taken to authorize it to enter into and
perform its obligations under this Agreement;
(4) The Trust is an open-end investment company registered
under the 1940 Act; and
(5) A registration statement under the 1933 Act will be
effective, and appropriate state securities law filings
have been made and will continue to be made, with respect
to all Shares of each Fund being offered for sale.
Article 15. Standard of Care and Indemnification.
A. Standard of Care
The Company shall be held to a standard of reasonable care in
carrying out the provisions of this Contract. The Company shall
be entitled to rely on and may act upon advice of counsel (who
may be counsel for the Trust) on all matters, and shall be
without liability for any action reasonably taken or omitted
pursuant to such advice, provided that such action is not in
violation of applicable federal or state laws or regulations, and
is in good faith and without negligence.
B. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund
shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents employees and
affiliates, harmless against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-
adviser or other party contracted by or approved by the
Trust or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in
proper form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of
the Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of
the Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other
third parties contracted by or approved by the Trust
of Fund for use in the performance of services under
this Agreement;
(d) have been prepared and/or maintained by the Fund or
its affiliates or any other person or firm on behalf
of the Trust.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Trust or the Fund.
(4) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations of any
state that such Shares be registered in such state or in
violation of any stop order or other determination or
ruling by any federal agency or any state with respect to
the offer or sale of such Shares in such state.
Provided, however, that the Company shall not be protected
by this Article 15.A. from liability for any act or
omission resulting from the Company's willful misfeasance,
bad faith, negligence or reckless disregard of its duties
of failure to meet the standard of care set forth in 15.A.
above.
C. Reliance
At any time the Company may apply to any officer of the Trust or
Fund for instructions, and may consult with legal counsel with
respect to any matter arising in connection with the services to
be performed by the Company under this Agreement, and the Company
and its agents or subcontractors shall not be liable and shall be
indemnified by the Trust or the appropriate Fund for any action
reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Trust or the Fund, and the
proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with
respect to all developments concerning such claim. The party who
may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such
claim. The party seeking indemnification shall in no case confess
any claim or make any compromise in any case in which the other
party may be required to indemnify it except with the other
party's prior written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. Should the Trust exercise
its rights to terminate, all out-of-pocket expenses associated with the
movement of records and materials will be borne by the Trust or the
appropriate Fund. Additionally, the Company reserves the right to charge
for any other reasonable expenses associated with such termination. The
provisions of Article 15 shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and
the Trust may from time to time agree on such provisions interpretive of
or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by
both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Charter. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Company
at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to
such other address as the Trust or the Company may hereafter specify,
shall be deemed to have been properly delivered or given hereunder to the
respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of
the Trust.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Trust and signed by an authorized officer of the
Trust, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any
of them personally, and the obligations of this Agreement are not binding
upon any of the Trustees or Shareholders of the Trust, but bind only the
appropriate property of the Fund, or Class, as provided in the
Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized by
the Trustees of the Company and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any
of them personally, and the obligations of this Agreement are not binding
upon any of the Trustees or Shareholders of the Company, but bind only
the property of the Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to the Trust or the Funds by either of the
parties hereto except by the specific written consent of the other party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust,
the Company shall upon termination of this Agreement deliver to such
successor agent at the office of the Company all properties of the Trust
held by it hereunder. If no such successor agent shall be appointed, the
Company shall at its office upon receipt of Proper Instructions deliver
such properties in accordance with such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before
the date when such termination shall become effective, then the Company
shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $2,000,000, all properties held by the
Company under this Agreement. Thereafter, such bank or trust company
shall be the successor of the Company under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a result of
work stoppage, power or other mechanical failure, natural disaster,
governmental action, communication disruption or other impossibility of
performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign
to a successor all of or a substantial portion of its business, or to a
party controlling, controlled by, or under common control with such
party. Nothing in this Article 28 shall prevent the Company from
delegating its responsibilities to another entity to the extent provided
herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first
above written.
ATTEST: INVESTMENT COMPANIES
(listed on Exhibit 1)
/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman
ATTEST: FEDERATED SERVICES COMPANY
/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President
EXHIBIT 1
<TABLE>
<S> <C>
CONTRACT
DATE INVESTMENT COMPANY
Portfolios
Classes
12/01/93 FEDERATED HIGH YIELD TRUST
FEDERATED SERVICES COMPANY provides the following services:
Fund Accounting
Shareholder Recordkeeping
Custody Services Procurement
</TABLE>
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this first day
of March, 1994, between those investment companies listed on Exhibit 1, as
may be amended from time to time, having their principal office and place
of business at Federated Investors Tower, Pittsburgh PA 15222-3779
(individually referred to herein as "Fund" and collectively referred to as
"Funds), on behalf of the portfolios of the Funds, and Federated
Administrative Services, a Delaware business trust (herein called "FAS").
WHEREAS, the Funds desire to retain FAS as their Administrator to
provide them with Administrative Services (as herein defined), and FAS is
willing to render such services;
WHEREAS, the Funds are registered as open-end management investment
companies under the Investment Company Act of 1940, as amended (the "1940
Act"), with authorized and issued shares of capital stock or beneficial
interest ("Shares"); and
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Funds hereby appoint FAS as
Administrator of the Funds on the terms and conditions set forth in this
Agreement; and FAS hereby accepts such appointment and agrees to perform
the services and duties set forth in Section 2 of this Agreement in
consideration of the compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to the
supervision and control of the Funds' Boards of Trustees or Directors, as
applicable (the "Boards"), FAS will provide facilities, equipment, and
personnel to carry out the following administrative services for operation
of the business and affairs of the Funds and each of their portfolios:
(a) prepare, file, and maintain the
Funds' governing documents and any amendments thereto,
including the Declaration of Trust or Articles of
Incorporation, as appropriate,(which has already been
prepared and filed), the By-laws and minutes of meetings of
their Boards, Committees, and shareholders;
(b) prepare and file with the
Securities and Exchange Commission and the appropriate state
securities authorities the registration statements for the
Funds and the Funds' shares and all amendments thereto,
reports to regulatory authorities and shareholders,
prospectuses, proxy statements, and such other documents all
as may be necessary to enable the Funds to make continuous
offerings of their shares, as applicable;
(c) prepare, negotiate, and administer
contracts on behalf of the Funds with, among others, each
Fund's investment adviser, distributor, custodian, and
transfer agent, subject to any applicable restrictions of the
Boards or the 1940 Act;
(d) supervise the Funds' custodians in
the maintenance of the Funds' general ledgers and in the
preparation of the Funds' financial statements, including
oversight of expense accruals and payments, the determination
of the net asset value of the Funds and the declaration and
payment of dividends and other distributions to shareholders;
(e) calculate performance data of the
Funds for dissemination to information services covering the
investment company industry;
(f) prepare and file the Funds' tax
returns;
(g) examine and review the operations
of the Funds' custodians and transfer agents;
(h) coordinate the layout and printing
of publicly disseminated prospectuses and reports;
(i) perform internal audit examinations
in accordance with a charter to be adopted by FAS and the
Funds;
(j) assist with the design,
development, and operation of the Funds;
(k) provide individuals reasonably
acceptable to the Funds' Boards for nomination, appointment,
or election as officers of the Funds, who will be responsible
for the management of certain of the Funds' affairs as
determined by the Funds' Boards; and
(l) consult with the Funds and their
Boards of Trustees or Directors, as appropriate, on matters
concerning the Funds and their affairs.
The foregoing, along with any additional services that FAS shall
agree in writing to perform for the Funds hereunder, shall hereafter be
referred to as "Administrative Services." Administrative Services shall
not include any duties, functions, or services to be performed for any
Fund by such Fund's investment adviser, distributor, custodian, transfer
agent, or shareholder service agent, pursuant to their respective
agreements with such Fund.
3. Expenses. FAS shall be responsible for expenses incurred in
providing office space, equipment, and personnel as may be necessary or
convenient to provide the Administrative Services to the Fund, including
the compensation of FAS employees who serve on the Funds' Boards, or as
officers of the Funds. Each Fund shall be responsible for all other
expenses incurred by FAS on behalf of such Fund, including without
limitation postage and courier expenses, printing expenses, travel
expenses, registration fees, filing fees, fees of outside counsel and
independent auditors, insurance premiums, fees payable to members of such
Fund's Board who are not FAS employees, and trade association dues.
4. Compensation. For the Administrative Services provided, each
Fund hereby agrees to pay and FAS hereby agrees to accept as full
compensation for its services rendered hereunder an administrative fee at
an annual rate, payable daily, as specified below, based upon the total
assets of all of the Funds:
Maximum Administrative Average Daily Net Assets
Fee of the Funds
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of
$750 million
However, in no event shall the administrative fee received during
any year of this Agreement be less than, or be paid at a rate less than
would aggregate, $125,000, per individual Fund, with an additional $30,000
for each class of shares added to any such Fund after the date hereof.
5. Standard of Care.
(a) FAS shall not be liable for any
error of judgment or mistake of law or for any loss suffered
by any Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. FAS shall
be entitled to rely on and may act upon advice of counsel
(who may be counsel for such Fund) on all matters, and shall
be without liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even though
also an officer, trustee, partner, employee or agent of FAS,
who may be or become a member of such Fund's Board, officer,
employee or agent of any Fund, shall be deemed, when
rendering services to such Fund or acting on any business of
such Fund (other than services or business in connection with
the duties of FAS hereunder) to be rendering such services to
or acting solely for such Fund and not as an officer,
trustee, partner, employee or agent or one under the control
or direction of FAS even though paid by FAS.
(b) This Section 5 shall survive
termination of this Agreement.
6. Duration and Termination. The initial term of this Agreement
with respect to each Fund shall commence on the date hereof, and extend
for a period of one year, renewable annually by the approval of the Board
of Directors/Trustees of each Fund.
7. Amendment. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which an enforcement of the change,
waiver, discharge or termination is sought.
8. Limitations of Liability of Trustees or Officers, Employees,
Agents and Shareholders of the Funds. FAS is expressly put on notice of
the limitation of liability as set forth in the Declaration of Trust of
each Fund that is a Massachusetts business trust and agrees that the
obligations assumed by each such Fund pursuant to this Agreement shall be
limited in any case to such Fund and its assets and that FAS shall not
seek satisfaction of any such obligations from the shareholders of such
Fund, the Trustees, Officers, Employees or Agents of such Fund, or any of
them.
9. Limitations of Liability of Trustees and Shareholders of FAS.
The execution and delivery of this Agreement have been authorized by the
Trustees of FAS and signed by an authorized officer of FAS, acting as
such, and neither such authorization by such Trustees nor such execution
and delivery by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally,
and the obligations of this Agreement are not binding upon any of the
Trustees or shareholders of FAS, but bind only the trust property of FAS
as provided in the Declaration of Trust of FAS.
10. Notices. Notices of any kind to be given hereunder shall
be in writing (including facsimile communication) and shall be duly given
if delivered to any Fund at the following address: Federated Investors
Tower, Pittsburgh, PA 15222-3779, Attention: President and if delivered
to FAS at Federated Investors Tower, Pittsburgh, PA 15222-3779,
Attention: President.
11. Miscellaneous. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior agreement
with respect to the subject hereof whether oral or written. The captions
in this Agreement are included for convenience of reference only and in no
way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute,
rule or otherwise, the remainder of this Agreement shall not be affected
thereby. Subject to the provisions of Section 5, hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and shall be governed by Pennsylvania law;
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission
thereunder.
12. Counterparts. This Agreement may be executed by different
parties on separate counterparts, each of which, when so executed and
delivered, shall be an original, and all such counterparts shall together
constitute one and the same instrument.
13. Assignment; Successors. This Agreement shall not be assigned
by any party without the prior written consent of FAS, in the case of
assignment by any Fund, or of the Funds, in the case of assignment by FAS,
except that any party may assign to a successor all of or a substantial
portion of its business to a party controlling, controlled by, or under
common control with such party. Nothing in this Section 14 shall prevent
FAS from delegating its responsibilities to another entity to the extent
provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year
first above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Administrative Services
By: /s/ Edward C. Gonzales
Edward C. Gonzales
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
EXHIBIT 1
FEDERATED HIGH YIELD TRUST
Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of the first day of March, 1994, by and between
those investment companies listed on Exhibit 1, as may be amended from time
to time, having their principal office and place of business at Federated
Investors Tower, Pittsburgh, PA 15222-3779 and who have approved a
Shareholder Services Plan (the "Plan") and this form of Agreement
(individually referred to herein as a "Fund" and collectively as "Funds")
and Federated Shareholder Services, a Delaware business trust, having its
principal office and place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779 ("FSS").
1. The Funds hereby appoint FSS to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). In addition to
providing Services directly to shareholders of the Funds, FSS is hereby
appointed the Funds' agent to select, negotiate and subcontract for the
performance of Services. FSS hereby accepts such appointments. FSS agrees
to provide or cause to be provided Services which, in its best judgment
(subject to supervision and control of the Funds' Boards of Trustees or
Directors, as applicable), are necessary or desirable for shareholders of
the Funds. FSS further agrees to provide the Funds, upon request, a
written description of the Services which FSS is providing hereunder.
2. During the term of this Agreement, each Fund will pay FSS and
FSS agrees to accept as full compensation for its services rendered
hereunder a fee at an annual rate, calculated daily and payable monthly, up
to 0.25% of 1% of average net assets of each Fund.
For the payment period in which this Agreement becomes effective or
terminates with respect to any Fund, there shall be an appropriate
proration of the monthly fee on the basis of the number of days that this
Agreement is in effect with respect to such Fund during the month. To
enable the Funds to comply with an applicable exemptive order, FSS
represents that the fees received pursuant to this Agreement will be
disclosed to and authorized by any person or entity receiving Services, and
will not result in an excessive fee to FSS.
3. This Agreement shall continue in effect for one year from the
date of its execution, and thereafter for successive periods of one year
only if the form of this Agreement is approved at least annually by the
Board of each Fund, including a majority of the members of the Board of the
Fund who are not interested persons of the Fund and have no direct or
indirect financial interest in the operation of the Funds' Plan or in any
related documents to the Plan ("Independent Board Members") cast in person
at a meeting called for that purpose.
4. Notwithstanding paragraph 3, this Agreement may be terminated
as follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Independent Board Members of any Fund or
by a vote of a majority of the outstanding voting securities of any
Fund as defined in the Investment Company Act of 1940 on sixty (60)
days' written notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's
assignment as defined in the Investment Company Act of 1940; and
(c) by any party to the Agreement without cause by giving
the other party at least sixty (60) days' written notice of its
intention to terminate.
5. FSS agrees to obtain any taxpayer identification number
certification from each shareholder of the Funds to which it provides
Services that is required under Section 3406 of the Internal Revenue Code,
and any applicable Treasury regulations, and to provide each Fund or its
designee with timely written notice of any failure to obtain such taxpayer
identification number certification in order to enable the implementation
of any required backup withholding.
6. FSS shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement. FSS shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for such Fund) on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. Any person, even though also an officer, trustee,
partner, employee or agent of FSS, who may be or become a member of such
Fund's Board, officer, employee or agent of any Fund, shall be deemed, when
rendering services to such Fund or acting on any business of such Fund
(other than services or business in connection with the duties of FSS
hereunder) to be rendering such services to or acting solely for such Fund
and not as an officer, trustee, partner, employee or agent or one under the
control or direction of FSS even though paid by FSS.
This Section 6 shall survive termination of this Agreement.
7. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
8. FSS is expressly put on notice of the limitation of liability
as set forth in the Declaration of Trust of each Fund that is a
Massachusetts business trust and agrees that the obligations assumed by
each such Fund pursuant to this Agreement shall be limited in any case to
such Fund and its assets and that FSS shall not seek satisfaction of any
such obligations from the shareholders of such Fund, the Trustees,
Officers, Employees or Agents of such Fund, or any of them.
9. The execution and delivery of this Agreement have been
authorized by the Trustees of FSS and signed by an authorized officer of
FSS, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any
of the Trustees or shareholders of FSS, but bind only the trust property of
FSS as provided in the Declaration of Trust of FSS.
10. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
any Fund and to such Fund at the following address: Federated Investors
Tower, Pittsburgh, PA 15222-3779, Attention: President and if delivered
to FSS at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
11. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written. If any provision of this Agreement
shall be held or made invalid by a court or regulatory agency decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Sections 3 and 4, hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein shall be construed
in a manner inconsistent with the Investment Company Act of 1940 or any
rule or regulation promulgated by the Securities and Exchange Commission
thereunder.
12. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the
same instrument.
13. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by any Fund, or of
the Funds in the case of assignment by FSS, except that any party may
assign to a successor all of or a substantial portion of its business to a
party controlling, controlled by, or under common control with such party.
Nothing in this Section 14 shall prevent FSS from delegating its
responsibilities to another entity to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
EXHIBIT 1
FEDERATED HIGH YIELD TRUST
Exhibit 9(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as of this 1st day
of March, 1994, by the Boards of Directors or Trustees, as applicable (the
"Boards"), of those investment companies listed on Exhibit 1 hereto as may
be amended from time to time, having their principal office and place of
business at Federated Investors Tower, Pittsburgh, PA 15222-3779
(individually referred to herein as a "Fund" and collectively as "Funds").
1. This Plan is adopted to allow the Funds to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate Federated Shareholder
Services ("FSS") for providing personal services and/or the maintenance of
shareholder accounts to the Funds and their shareholders. In compensation
for the services provided pursuant to this Plan, FSS may be paid a monthly
fee computed at the annual rate not to exceed .25 of 1% of the average
aggregate net asset value of the shares of each Fund held during the month.
3. Any payments made by the Funds to FSS pursuant to this Plan
will be made pursuant to a "Shareholder Services Agreement" between FSS and
each of the Funds.
4. Quarterly in each year that this Plan remains in effect, FSS
shall prepare and furnish to the Boards of the Funds, and the Boards shall
review, a written report of the amounts expended under the Plan.
5. This Plan shall become effective with regard to each Fund
(i) after approval by majority votes of: (a) such Fund's Board; and (b)
the members of the Board of such Fund who are not interested persons of
such Fund and have no direct or indirect financial interest in the
operation of such Fund's Plan or in any related documents to the Plan
("Independent Trustees or Directors"), cast in person at a meeting called
for the purpose of voting on the Plan.
6. This Plan shall remain in effect with respect to each Fund
presently set forth on an exhibit and any subsequent Fund added pursuant to
an exhibit during the initial year of this Plan for the period of one year
from the date set forth above and may be continued thereafter if this Plan
is approved with respect to each Fund at least annually by a majority of
the relevant Fund's Board and a majority of the Independent Trustees or
Directors, of such Fund as applicable, cast in person at a meeting called
for the purpose of voting on the renewal of such Plan. If this Plan is
adopted with respect to a fund after the first annual approval by the
Trustees or Directors as described above, this Plan will be effective as to
that Fund at such time as Exhibit 1 hereto is amended to add such Fund and
will continue in effect until the next annual approval of this Plan by the
Funds' Boards and thereafter for successive periods of one year subject to
approval as described above.
7. All material amendments to this Plan must be approved by a vote
of the Board of each Fund and of the Independent Directors or Trustees of
such Fund, cast in person at a meeting called for such purpose.
8. This Plan may be terminated as follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Independent Board Members of any Fund or
by a vote of a majority of the outstanding voting securities of any
Fund as defined in the Investment Company Act of 1940 on sixty (60)
days' written notice to the parties to this Agreement; or
(b) by any party to the Agreement without cause by giving
the other party at least sixty (60) days' written notice of its
intention to terminate.
9. While this Plan shall be in effect, the selection and
nomination of Independent Directors or Trustees of each Fund shall be
committed to the discretion of the Independent Directors or Trustees then
in office.
10. All agreements with any person relating to the implementation
of this Plan shall be in writing and any agreement related to this Plan
shall be subject to termination, without penalty, pursuant to the
provisions of Paragraph 8 herein.
11. This Plan shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this as of the date set forth above.
Investment Companies (listed
on Exhibit 1)
By: /s/ John F. Donahue
John F. Donahue
Chairman
Attest: /s/ John W. McGonigle
John W. McGonigle
Federated Shareholder Services
By: /s/ James J. Dolan
Title: President
Attest: /s/ John W. McGonigle
John W. McGonigle
EXHIBIT 1
FEDERATED HIGH YIELD TRUST
Exhibit 9(v) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES SUB-CONTRACT
This Agreement is made between the Financial Institution executing
this Agreement ("Provider") and Federated Shareholder Services ("FSS") on
behalf of the investment companies listed in Exhibit A hereto (the
"Funds"), for whom FSS administers the Shareholder Services Plan ("Plan")
and who have approved this form of Agreement. In consideration of the
mutual covenants hereinafter contained, it is hereby agreed by and between
the parties hereto as follows:
1. FSS hereby appoints Provider to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). Provider agrees to
provide Services which, in its best judgment, are necessary or desirable
for its customers who are investors in the Funds. Provider further agrees
to provide FSS, upon request, a written description of the Services which
Provider is providing hereunder.
2. During the term of this Agreement, the Funds will pay the
Provider fees as set forth in a written schedule delivered to the Provider
pursuant to this Agreement. The fee schedule for Provider may be changed
by FSS sending a new fee schedule to Provider pursuant to Paragraph 9 of
this Agreement. For the payment period in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the fee
on the basis of the number of days that this Agreement is in effect during
the quarter. To enable the Funds to comply with an applicable exemptive
order, Provider represents that the fees received pursuant to this
Agreement will be disclosed to its customers, will be authorized by its
customers, and will not result in an excessive fee to the Provider.
3. The Provider understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from
receiving shareholder service fees or other compensation from funds in
which the fiduciary's discretionary ERISA assets are invested. To date,
the Department of Labor has not issued any exemptive order or advisory
opinion that would exempt fiduciaries from this interpretation. Without
specific authorization from the Department of Labor, fiduciaries should
carefully avoid investing discretionary assets in any fund pursuant to an
arrangement where the fiduciary is to be compensated by the fund for such
investment. Receipt of such compensation could violate ERISA provisions
against fiduciary self-dealing and conflict of interest and could subject
the fiduciary to substantial penalties.
4. The Provider agrees not to solicit or cause to be solicited
directly, or indirectly at any time in the future, any proxies from the
shareholders of a Fund in opposition to proxies solicited by management of
the Fund, unless a court of competent jurisdiction shall have determined
that the conduct of a majority of the Board of Trustees or Directors of the
Fund constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties. This paragraph 4 will survive the term
of this Agreement.
5. This Agreement shall continue in effect for one year from the
date of its execution, and thereafter for successive periods of one year if
the form of this Agreement is approved at least annually by the Board of
each Fund, including a majority of the members of the Board of the Fund who
are not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the Fund's Plan or in any related
documents to the Plan ("Disinterested Board Members") cast in person at a
meeting called for that purpose.
6. Notwithstanding paragraph 5, this Agreement may be terminated
as follows:
(a) at any time, without the payment of any penalty, by the
vote of a majority of the Disinterested Board Members of the Fund
or by a vote of a majority of the outstanding voting securities of
the Fund as defined in the Investment Company Act of 1940 on not
more than sixty (60) days' written notice to the parties to this
Agreement;
(b) automatically in the event of the Agreement's
assignment as defined in the Investment Company Act of 1940; and
(c) by either party to the Agreement without cause by
giving the other party at least sixty (60) days' written notice of
its intention to terminate.
7. The Provider agrees to obtain any taxpayer identification
number certification from its customers required under Section 3406 of the
Internal Revenue Code, and any applicable Treasury regulations, and to
provide the Fund or its designee with timely written notice of any failure
to obtain such taxpayer identification number certification in order to
enable the implementation of any required backup withholding.
8. The execution and delivery of this Agreement have been
authorized by the Trustees of FSS and signed by an authorized officer of
FSS, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any
of the Trustees or shareholders of FSS, but bind only the trust property of
FSS as provided in the Declaration of Trust of FSS.
9. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
Provider at the address set forth below and if delivered to FSS at
Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
10. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written. If any provision of this Agreement
shall be held or made invalid by a court or regulatory agency decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Sections 5 and 6, hereof,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein shall be construed
in a manner inconsistent with the Investment Company Act of 1940 or any
rule or regulation promulgated by the Securities and Exchange Commission
thereunder.
11. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the
same instrument.
12. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by Provider, or of
Provider in the case of assignment by FSS, except that any party may assign
to a successor all of or a substantial portion of its business to a party
controlling, controlled by, or under common control with such party.
13. This Agreement may be amended by FSS from time to time by the
following procedure. FSS will mail a copy of the amendment to the
Provider's address, as shown below. If the Provider does not object to the
amendment within thirty (30) days after its receipt, the amendment will
become part of the Agreement. The Provider's objection must be in writing
and be received by FSS within such thirty days.
14. This Agreement may be terminated with regard to a particular
Fund or Class at any time, without the payment of any penalty, by FSS or by
the vote of a majority of the Disinterested Trustees or Directors, as
applicable, or by a majority of the outstanding voting securities of the
particular Fund or Class on not more than sixty (60) days' written notice
to the Provider. This Agreement may be terminated by Provider on sixty
(60) days' written notice to FSS.
15. The Provider acknowledges and agrees that FSS has entered into
this Agreement solely in the capacity of agent for the Funds and
administrator of the Plan. The Provider agrees not to claim that FSS is
liable for any responsibilities or amounts due by the Funds hereunder.
[Provider]
Address
City State Zip Code
Dated: By:
Authoried Signature
Title
Print Name of Authorized Signature
FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
By:
Vice President
EXHIBIT A to Shareholder Services Sub-Contract with
Funds covered by this Agreement:
Shareholder Service Fees
1. During the term of this Agreement, FSS will pay Provider a
quarterly fee. This fee will be computed at the annual rate of ______ of
the average net asset value of shares of the Funds held during the quarter
in accounts for which the Provider provides Services under this Agreement,
so long as the average net asset value of Shares in the Funds during the
quarter equals or exceeds such minimum amount as FSS shall from time to
time determine and communicate in writing to the Provider.
2. For the quarterly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration of any fee
payable on the basis of the number of days that the Agreement is in effect
during the quarter.
Exhibit 10 under Form N-1A
Exhibit 5 under Item 601/Reg. S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTON PITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
(1914 - 1971)
July 3, 1984
The Trustees of
Federated High Yield Trust
421 Seventh Avenue
Pittsburgh, PA 15222-3779
Gentlemen:
Federated High Yield Trust ("Trust") proposes to offer and sell
Shares of Beneficial Interest ("Shares") in the manner and on the terms set
forth in its Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
As counsel we have participated in the organization of the Trust, its
registration under the Investment Company Act of 1940 and the preparation
and filing of its Registration Statement under the Securities Act of 1933.
We have examined and are familiar with the provisions of the written
Declaration of Trust dated December 10, 1981, as amended, ("Declaration of
Trust"), the Bylaws of the Trust and such other documents and records
deemed relevant. We have also reviewed questions of law and consulted with
counsel thereon as deemed necessary or appropriate by us for the purposes
of this opinion.
Based on the foregoing, it is our opinion that:
1. The Trust is duly organized and validly existing pursuant to
the Declaration of Trust.
2. The Shares which are currently being registered by the amended
Registration Statement referred to above may be legally and validly issued
from time to time in accordance with the Declaration of Trust upon receipt
of consideration sufficient to comply with the provisions of Article III,
Section 3 of the Declaration of Trust and subject to compliance with the
Securities Act of 1933, as amended, the Investment Company Act of 1940, as
amended, and applicable state laws regulating the sale of securities. Such
Shares, when so issued, will be fully paid and non-assessable.
We consent to your filing this opinion as an exhibit to the amended
Registration Statement referred to above and to any application or
registration statement filed under the securities laws of any of the States
of the United States. We further consent to the reference to our firm
under the caption "Legal Counsel and Accountants" in the prospectuses filed
as a part of such amended Registration Statement, applications and
registration statements.
Very truly yours,
HOUSTON, HOUSTON & DONNELLY
By: /s/Thomas J. Donnelly
TJD:heh
Exhibit 13 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K
THE STANDARD FIRE INSURANCE COMPANY
Federated Investors Building
421 Seventh Avenue
Pittsburgh, Pennsylvania 15219
(412) 288-1900
July 6, 1984
Federated High Yield Trust
Federated Investors Building
421 Seventh Avenue
Pittsburgh, Pennsylvania 15219
Gentlemen:
The initial $100,000 investment by The Standard Fire Insurance
Company in Federated High Yield Trust will not be redeemed while any
organizational expenses remain unamortized unless the proceeds of any
redemption of that initial investment is reduced by its pro rata portion of
any unamortized organizational expenses. These shares are purchased for
investment purposes, and The Standard Fire Insurance Company has no present
intention of selling or publicly distributing these shares.
Very truly yours,
/s/ John A. Staley, IV
John A. Staley, IV
Vice President
clr
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<FISCAL-YEAR-END> Feb-28-1995
<PERIOD-END> Feb-28-1995
<INVESTMENTS-AT-COST> 504,657,515
<INVESTMENTS-AT-VALUE> 473,071,493
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<NET-CHANGE-FROM-OPS> (400,990)
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<DISTRIBUTIONS-OF-INCOME> 37,778,736
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<NUMBER-OF-SHARES-REDEEMED> 66,300,128
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<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 4,191,596
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<PER-SHARE-NAV-BEGIN> 9.480
<PER-SHARE-NII> 0.840
<PER-SHARE-GAIN-APPREC> (0.900)
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<AVG-DEBT-PER-SHARE> 0.000
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