1933 Act File No. 2-98494
1940 Act File No. 811-4489
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. 17 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 17 X
FEDERATED U.S. GOVERNMENT BOND FUND
(formerly, Federated Bond Fund)
(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 October 31, 1994, 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 October 17, 1994; 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:
Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin, L.L.P.
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of FEDERATED U.S.
GOVERNMENT BOND FUND 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 Fund 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
Limitations.
Item 5. Management of the Fund Fund Information; Management of the
Fund; Distribution of Fund Shares;
Administration of the Fund;
Shareholder Services Plan.
Item 6. Capital Stock and Other
Securities Dividends; Capital Gains; Shareholder
Information; Voting Rights;
Massachusetts Partnership Law; Tax
Information; Federal Income Tax;
Pennsylvania Corporate and Personal
Property Taxes.
Item 7. Purchase of Securities Being
Offered Net Asset Value; Investing in the
Fund; Share Purchases; Minimum
Investment Required; What Shares Cost;
Exchanging Securities for Fund Shares;
Subaccounting Services; Certificates
and Confirmations.
Item 8. Redemption or Repurchase Redeeming Shares; Telephone
Redemption; Written Requests; Accounts
with Low Balances.
Item 9. 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 Fund.
Item 13. Investment Objectives and
Policies Investment Objective and Policies.
Item 14. Management of the Fund Fund Management.
Item 15. Control Persons and Principal
Holders of Securities Fund Ownership.
Item 16. Investment Advisory and Other
Services Investment Advisory Services;
Administrative Services; Shareholder
Services Plan.
Item 17. Brokerage Allocation Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered Purchasing Shares; Determining Net
Asset Value; Redeeming Shares;
Exchanging Securities for Fund Shares.
Item 20. Tax Status Tax Status.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data Total Return; Yield; Performance
Comparisons.
Item 23. Financial Statements Filed in Part A.
- - - --------------------------------------------------------------------------------
FEDERATED U.S. GOVERNMENT BOND FUND
PROSPECTUS
A no-load, open-end, diversified management investment company (a
mutual fund) investing primarily in U.S. government bonds to pursue
total return.
This prospectus contains the information you should read and know
before you invest in Federated U.S. Government Bond Fund (the "Fund").
Keep this prospectus for future reference.
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.
The Fund has also filed a Statement of Additional Information dated
October 31, 1994, 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 Fund, contact the Fund 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 October 31, 1994
TABLE OF CONTENTS
- - - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- - - --------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- - - --------------------------------------------------
GENERAL INFORMATION 3
- - - --------------------------------------------------
INVESTMENT INFORMATION 3
- - - --------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 7
FUND INFORMATION 8
- - - --------------------------------------------------
Management of the Fund 8
Distribution of Fund Shares 9
Administration of the Fund 9
NET ASSET VALUE 10
- - - --------------------------------------------------
INVESTING IN THE FUND 10
- - - --------------------------------------------------
Share Purchases 10
Minimum Investment Required 11
What Shares Cost 11
Exchanging Securities for Fund Shares 11
Subaccounting Services 11
Certificates and Confirmations 11
Dividends 12
Capital Gains 12
REDEEMING SHARES 12
- - - --------------------------------------------------
Telephone Redemption 12
Written Requests 12
Accounts With Low Balances 13
SHAREHOLDER INFORMATION 13
- - - --------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 14
TAX INFORMATION 14
- - - --------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and Personal
Property Taxes 14
PERFORMANCE INFORMATION 14
- - - --------------------------------------------------
FINANCIAL STATEMENTS 16
- - - --------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 24
- - - --------------------------------------------------
ADDRESSES 25
- - - --------------------------------------------------
</TABLE>
I
SUMMARY OF FUND 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 FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee.................................................................................... 0.60%
12b-1 Fee......................................................................................... None
Total Other Expenses.............................................................................. 0.25%
Shareholder Services Fee (1)......................................................... 0.05%
Total Fund Operating Expenses (2)................................................................. 0.85%
<FN>
(1) The maximum shareholder services fee is 0.25%.
(2) The Total Fund Operating Expenses in the table above are based on expenses
expected during the fiscal year ending August 31, 1995. The Total Fund
Operating Expenses were 0.83% for the fiscal year ended August 31, 1994, and
would have been 1.00% absent the voluntary waiver 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 Fund will bear, either
directly or indirectly. For more complete description of the various costs and
expenses, see "Fund 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 $47 $105
</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
FEDERATED U.S. GOVERNMENT BOND FUND
FINANCIAL HIGHLIGHTS
- - - --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 24.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986*
--------- --------- --------- --------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - - ------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $11.04 $ 10.03 $ 9.48 $ 8.90 $ 9.12 $ 8.78 $ 9.08 $10.00 $ 10.00
- - - ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- - - ------------------------------
Net investment income 0.54 0.58 0.63 0.66 0.71 0.70 0.76 0.86 0.66
- - - ------------------------------
Net realized and unrealized
gain (loss) on investments (1.09) 1.01 0.55 0.58 (0.22) 0.34 (0.30) (0.89) (0.03)
- - - ------------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ------------
Total from investment
operations (0.55) 1.59 1.18 1.24 0.49 1.04 0.46 (0.03) 0.63
- - - ------------------------------
LESS DISTRIBUTIONS
- - - ------------------------------
Dividends to shareholders
from net investment income (0.54) (0.58) (0.63) (0.66) (0.71) (0.70) (0.76) (0.89) (0.63)
- - - ------------------------------
Distributions to
shareholders from net
realized gain on investment
transactions (0.23) -- -- -- -- -- -- -- --
- - - ------------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ------------
Total distributions (0.77) (0.58) (0.63) (0.66) (0.71) (0.70) (0.76) (0.89) (0.63)
- - - ------------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ------------
NET ASSET VALUE, END OF PERIOD $9.72 $ 11.04 $ 10.03 $ 9.48 $ 8.90 $ 9.12 $ 8.78 $9.08 $ 10.00
- - - ------------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ------------
TOTAL RETURN** (5.23%) 16.44% 12.89% 14.37% 5.50% 12.35% 5.23% (0.43%) 5.75%
- - - ------------------------------
RATIOS TO AVERAGE NET ASSETS
- - - ------------------------------
Expenses 0.83% 0.81% 0.88% 0.78% 0.78% 0.80% 0.75% 0.76% 0.91% (b)
- - - ------------------------------
Net investment income 5.25% 5.58% 6.54% 7.17% 7.81% 7.87% 8.40% 8.87% 9.87% (b)
- - - ------------------------------
Expense waiver/reimbursement
(a) 0.17% 0.62% 0.88% 0.85% 0.76% 0.96% 1.17% 0.75% 1.50% (b)
- - - ------------------------------
SUPPLEMENTAL DATA
- - - ------------------------------
Net assets, end of period
(000 omitted) $138,016 $82,737 $34,125 $27,427 $43,729 $36,325 $13,125 $11,067 $1,467
- - - ------------------------------
Portfolio turnover rate 22% 53% 98% 73% 42% 35% 152% 62% 25%
- - - ------------------------------
<FN>
* Reflects operations for the period from December 3, 1985 (start of business)
to August 31, 1986.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Computed on an annualized basis.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FURTHER INFORMATION ABOUT THE FUND'S PERFORMANCE IS CONTAINED IN THE FUND'S
ANNUAL REPORT FOR THE FISCAL YEAR ENDED AUGUST 31, 1994, WHICH CAN BE OBTAINED
FREE OF CHARGE.
2
GENERAL INFORMATION
- - - --------------------------------------------------------------------------------
The Fund was established as a Massachusetts business trust under a Declaration
of Trust dated May 24, 1985. The Declaration of Trust permits the Fund to offer
separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Board of
Trustees (the "Trustees") has not established separate portfolios of securities
or separate classes of shares.
The Fund is designed primarily for individuals and institutions seeking total
return through a professionally managed, diversified portfolio consisting
primarily of U.S. government bonds. A minimum initial investment of $25,000 over
a 90-day period is required.
Fund shares are currently sold and redeemed at net asset value without a sales
charge imposed by the Fund.
INVESTMENT INFORMATION
- - - --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to pursue total return. While there is
no assurance that the Fund will achieve its investment objective, it endeavors
to do so by following the investment policies described in this prospectus. The
investment objective stated above cannot be changed without approval of
shareholders. Unless stated otherwise, the investment policies and limitations
stated below cannot be changed without shareholder approval. A description of
the ratings categories is contained in the Appendix to the Statement of
Additional Information.
INVESTMENT POLICIES
ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations (i.e.,
bills, notes and bonds) of the U.S. government, its agencies and
instrumentalities, with at least 65% of the value of its total assets being
invested under normal circumstances in U.S. government bonds. This policy may be
changed without shareholder approval. The Fund will limit its investments to
those that are permitted for purchase by federally chartered savings and loan
associations pursuant to applicable rules, regulations, or interpretations of
the Office of Thrift Supervision. Should additional permitted investments be
allowed as a result of future changes in applicable regulations or federal laws,
the Fund reserves the right, without shareholder approval, to make such
investments consistent with the Fund's investment objective, policies, and
limitations. Further, should existing statutes or regulations change, so as to
cause any securities held by the Fund to become ineligible for purchase by
federally chartered savings and loan associations, the Fund will dispose of
those securities at times advantageous to the Fund. The permitted investments of
the Fund are:
- obligations of the United States;
- notes, bonds, and discount notes of the following U.S. government agencies
or instrumentalities: Federal Home Loan Banks, Federal National Mortgage
Association, Government National Mortgage Association, Banks for
Cooperatives, Farm Credit Banks,
3
Tennessee Valley Authority, Export-Import Bank of the United States,
Commodity Credit Corporation, Federal Financing Bank, The Student Loan
Marketing Association, Federal Home Loan Mortgage Corporation, or National
Credit Union Administration; and
- domestic issues of corporate debt obligations (rated Aaa, Aa, or A by
Moody's Investors Service, Inc. ("Moody's"); AAA, AA, or A by Standard &
Poor's Ratings Group ("S&P"); or AAA, AA, or A by Fitch Investors Service,
Inc. ("Fitch")).
The prices of fixed income securities (debt obligations) fluctuate inversely to
the direction of interest rates.
The obligations of U.S. government agencies or instrumentalities which the Fund
may buy are backed in a variety of ways by the U.S. government, its agencies or
instrumentalities. Some of these obligations, such as Government National
Mortgage Association mortgage-backed securities, are backed by the full faith
and credit of the U.S. Treasury. Obligations of the Farm Credit Banks are also
backed by the issuer's right to borrow from the U.S. Treasury. Obligations of
Federal Home Loan Banks and the Student Loan Marketing Association are backed by
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities. Obligations of Federal Home Loan
Banks, Federal Farm Credit Banks, Federal National Mortgage Association, and
Federal Home Loan Mortgage Corporation are backed by the credit of the agency or
instrumentality issuing the obligations.
The Fund may also purchase put options on financial futures contracts and on
portfolio securities and write call options on its portfolio securities. The
Fund will engage in such transactions only to the extent permitted under
applicable Office of Thrift Supervision rules, regulations, or interpretations
thereof.
RESTRICTED AND ILLIQUID SECURITIES. The Fund intends to invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restriction on resale under federal securities law. However, the Fund
will limit investments in illiquid securities, including certain restricted
securities determined by the Trustees to be illiquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under the federal
securities law and is generally sold to institutional investors, such as the
Fund, who agree that they are purchasing the paper for investment purposes and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Board of Trustees of the Fund are quite liquid. The
Fund intends, therefore, to treat the restricted securities which meet the
criteria for liquidity established by the Trustees, including Section 4(2)
commercial paper, as
4
determined by the Fund's investment adviser, as liquid and not subject to the
investment limitations applicable to illiquid securities.
TEMPORARY INVESTMENTS. The Fund may also invest temporarily in cash and money
market instruments during times of unusual market conditions for defensive
purposes and to maintain liquidity. These money market instruments consist of:
- commercial paper which matures in 270 days or less so long as at least two
ratings are high quality ratings by nationally recognized rating services.
Such ratings would include: A-1 or A-2 by S&P, Prime-1 or Prime-2 by
Moody's, or F-1 or F-2 by Fitch;
- time and savings deposits (including certificates of deposit) in
commercial or savings banks whose accounts are insured by the Bank
Insurance Fund ("BIF") or in institutions whose accounts are insured by
the Savings Association Insurance Fund ("SAIF"), including certificates of
deposit issued by and other time deposits in foreign branches of
BIF-insured banks which, if negotiable, mature in six months or less or if
not negotiable, either mature in ninety days or less, or are withdrawable
upon notice not exceeding ninety days;
- 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 Fund
cannot exceed 0.25% of such bank's total deposits according to the bank's
last published statement of condition preceding the date of acceptance;
- obligations of the U.S. government or its agencies or instrumentalities;
and
- repurchase agreements collateralized by eligible investments.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or certificates of deposit to the Fund 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 Fund, the Fund
could receive less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund 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 Fund may pay more/less than the market value of the securities
on the settlement date.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend portfolio securities on a short-term or a long-term basis up to
one-third of the value of its total assets to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other institutions which the
investment adviser has determined are creditworthy under guidelines established
by the Fund's Board of Trustees and will
5
receive collateral in the form of cash or U.S. government securities equal to at
least 100% of the value of the securities loaned.
PUT AND CALL OPTIONS. The Fund may purchase put options on financial futures
contracts and put options on portfolio securities. Financial futures may include
index futures. These options will be used as a hedge to attempt to protect
securities which the Fund holds against decreases in value. For the immediate
future, the Fund will enter into futures contracts directly only when it desires
to exercise a financial futures put option in its portfolio rather than either
closing out the option or allowing it to expire. The Fund will only purchase
puts on financial futures contracts which are traded on a recognized exchange.
The Fund will generally purchase over-the-counter put options on portfolio
securities in negotiated transactions with the writers of the options since
options on the portfolio securities held by the Fund are typically not traded on
an exchange. The Fund purchases options only from investment dealers and other
financial associations (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Fund's adviser.
In general, over-the-counter put options differ from exchange traded put options
in the following respects. Over-the-counter put options are two party contracts
with price and terms negotiated between buyer and seller, and such options are
endorsed and/or guaranteed by third parties (such as a New York Stock Exchange
member). Additionally, over-the-counter strike prices are adjusted to reflect
dividend payments, initial strike prices are generally set at market, and option
premiums (which are all time premiums) are amortized on a straight line basis
over the life of the option. In contrast, exchange traded options are
third-party contracts with standardized strike prices and expiration dates and
are purchased from the Clearing Corporation. Strike prices are not adjusted for
dividends, and options are marked to market, thereby obviating the need to
amortize the time premium. Exchange traded options have a continuous liquid
market while over-the-counter options do not.
The Fund may also write call options on all or any portion of its portfolio to
generate income for the Fund. The Fund will 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 Fund writes and sells
must be listed on a recognized options exchange. Although the Fund reserves the
right to write covered call options on its entire portfolio, it will not write
such options on more than 25% of its total assets unless a higher limit is
authorized by its Trustees.
The Fund may attempt to hedge the portfolio by entering into financial futures
contracts and to write calls on financial futures contracts. The Fund will
notify shareholders before it begins engaging in these transactions.
RISKS. When the Fund writes a call option, the Fund risks not participating
in any rise in the value of the underlying security. In addition, when the
Fund purchases puts on financial futures contracts to protect against
declines in prices of portfolio securities, there is a risk that the prices
of the securities subject to the futures contracts may not correlate
perfectly with the prices of the securities in the Fund's portfolio. This
may cause the futures contract and its corresponding put
6
to react differently than the portfolio securities to market changes. In
addition, the Fund's investment adviser could be incorrect in its
expectations about the direction or extent of market factors such as
interest rate movements. In such an event, the Fund may lose the purchase
price of the put option. Finally, it is not certain that a secondary market
for options will exist at all times. Although the 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 Fund's ability to establish
and close out option positions depends on this secondary market.
The Fund will engage in such transactions only to the extent permitted under
applicable rules, regulations, or interpretations thereof of the Office of
Thrift Supervision.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Fund's investment adviser believes it is appropriate to do so in light of
the Fund's investment objective, without regard to the length of time a
particular security may have been held.
INVESTMENT LIMITATIONS
The Fund will not:
- borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund
may:
- borrow up to one-third of the value of its total assets and pledge up to
10% of the value of those assets to secure such borrowings;
- lend any of its assets except portfolio securities up to one-third of the
value of its total assets;
- sell securities short except, under strict limitations, it 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;
- invest more than 10% of the value of its total assets in securities
subject to restrictions on resale under the federal securities laws
(except for commercial paper issued under Section 4(2) of the Securities
Act of 1933);
- 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 objectives, policies, and
limitations;
- invest more than 5% of its total assets in securities of one issuer
(except cash and cash items, repurchase agreements, and U.S. government
obligations). The Fund may invest up to 15% of its total assets in the
certificates of deposit of one bank; or
- invest more than 5% of its total assets in securities of issuers that have
records of less than three years of continuous operations.
7
The above investment limitations cannot be changed without shareholder approval.
FUND INFORMATION
- - - --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES. The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for exercising all the
Fund's powers, except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee from the Fund.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to .60 of 1% of the Fund's average daily net assets. The
investment advisory contract allows for the voluntary reimbursement of
expenses by the adviser from time to time. The adviser can terminate any
voluntary reimbursement of expenses at any time at its sole discretion. The
adviser has also undertaken to reimburse the Fund 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,
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.
Susan M. Nason has been the Fund's portfolio manager since October, 1994. Ms.
Nason joined Federated Investors in 1987 and has been a Vice President of the
Fund's investment adviser since 1993. Ms. Nason served as an Assistant Vice
President of the investment adviser from 1990 until 1992, and from 1987 until
1990 she acted as an investment analyst. Ms. Nason is a Chartered Financial
Analyst and received her M.B.A. in Finance from Carnegie Mellon University.
8
Gary J. Madich has been the Fund's co-portfolio manager since October, 1994. Mr.
Madich joined Federated Investors in 1984 and has been a Senior Vice President
of the Fund's investment adviser since 1993. Mr. Madich served as a Vice
President of the Fund's investment adviser from 1988 until 1993. Mr. Madich is a
Chartered Financial Analyst and received his M.B.A. in Public Finance from the
University of Pittsburgh.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
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.
ADMINISTRATION OF THE FUND
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 Fund.
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 ("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 Fund 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 Fund to obtain certain personal services
for shareholders and the maintenance of shareholder accounts ("shareholder
services"). The Fund 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 Fund and Federated Shareholder
Services.
OTHER PAYMENTS TO FINANCIAL INSTITUTIONS. The Fund's adviser or its affiliates
may offer to pay a fee from their own assets to financial institutions as
financial assistance for providing substantial marketing and sales support. The
support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of shares the dealer sells or may sell, and/or upon
the type and nature of sales or operational support
9
furnished by the financial institution. These payments will be made by the
Fund's adviser and will not be made from the assets of the Fund.
CUSTODIAN. State Street Bank and Trust Company ("State Street Bank"), Boston,
MA, is custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund. Federated Services Company is a
subsidiary of Federated Investors.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, PA and Dickstein, Shapiro & Morin, L.L.P., Washington, D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
- - - --------------------------------------------------------------------------------
The Fund'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 FUND
- - - --------------------------------------------------------------------------------
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange is open for
business. Shares may be purchased either by wire or mail.
To purchase shares of the Fund, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken over the
telephone. The Fund reserves the right to reject any purchase request.
BY WIRE. To purchase shares of the Fund by Federal Reserve wire, call the Fund
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 U.S. Government Bond Fund; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; ABA Number 011000028. Shares cannot be purchased 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 Fund by mail, send a check made payable to
Federated U.S. Government Bond Fund to Federated Services 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.
10
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund 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 Fund. Accounts established through a non-
affiliated bank or broker may be subject to a smaller minimum investment.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.
Investors who purchase Fund shares through a non-affiliated bank or 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 Fund'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.
EXCHANGING SECURITIES FOR FUND SHARES
Investors may exchange certain securities or a combination of securities and
cash for Fund shares. The securities and any cash must have a market value of at
least $25,000. The Fund reserves the right to determine the acceptability of
securities to be exchanged. Securities accepted by the Fund are valued in the
same manner as the Fund values its assets. Investors wishing to exchange
securities should first contact Federated Securities Corp.
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
Fund 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 Fund 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 Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund.
Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during the
month.
11
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 wire payment is received by State Street Bank. 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 are automatically reinvested on
payment dates in additional shares of the Fund unless cash payments are
requested by contacting the Fund.
CAPITAL GAINS
Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months.
REDEEMING SHARES
- - - --------------------------------------------------------------------------------
The Fund redeems shares at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund 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 Fund before 4:00 p.m.
(Eastern time). The proceeds will normally be wired the following business day,
but in no event more than seven days, to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System, provided State
Street Bank has received payment for shares from the shareholder. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
An authorization form permitting the Fund 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 Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, shareholders 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
Fund shares may also be redeemed by sending a written request to the Fund. Call
the Fund for specific instructions before redeeming by letter. The shareholder
will be asked to provide in the request his or her name, the Fund name, the
shareholder's account number, and the share or dollar amount requested. If share
certificates have been issued, they must be properly endorsed and should be sent
by registered or certified mail with the written request.
12
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 Fund 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 the BIF;
- 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; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund 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 provided State Street Bank has received payment for
shares from the shareholder.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund 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 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $25,000 because of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- - - --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of any portfolios
in the Fund have equal voting rights except that in matters affecting only a
particular portfolio or class, only shares of that portfolio or class are
entitled to vote.
As a Massachusetts business trust, the Fund is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Fund'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 Fund's outstanding
shares.
13
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Fund or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Fund's
obligations, the Fund is required to use its property to protect or compensate
the shareholder. On request, the Fund will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Fund. Therefore,
financial loss resulting from liability as a shareholder will occur only if the
Fund itself cannot meet its obligations to indemnify shareholders and pay
judgments against them.
TAX INFORMATION
- - - --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held the shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
- the Fund is not subject to Pennsylvania corporate or personal property
taxes; and
- Fund shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that
the Fund's portfolio securities 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 Fund 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 Fund 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.
14
The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the offering price per share of the Fund 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 Fund and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.
The Fund is sold without any sales load or other similar non-recurring charges.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
15
FEDERATED U.S. GOVERNMENT BOND FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994
- - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------------------------------------------------------------- ------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS--95.2%
---------------------------------------------------------------------------------
U.S. TREASURY NOTES AND BONDS--95.2%
-------------------------------------------------------------------
$ 3,000,000 8.75%, 8/15/2000 $ 3,270,630
-------------------------------------------------------------------
5,000,000 8.50%, 11/15/2000 5,397,650
-------------------------------------------------------------------
12,000,000 6.25%, 2/15/2003 11,343,120
-------------------------------------------------------------------
7,000,000 10.75%, 2/15/2003 8,627,570
-------------------------------------------------------------------
5,000,000 11.125%, 8/15/2003 6,322,700
-------------------------------------------------------------------
5,000,000 5.875%, 2/15/2004 4,558,300
-------------------------------------------------------------------
3,000,000 12.375%, 5/15/2004 4,073,190
-------------------------------------------------------------------
5,000,000 12.00%, 5/15/2005 6,739,350
-------------------------------------------------------------------
3,000,000 10.75%, 8/15/2005 3,779,070
-------------------------------------------------------------------
6,600,000 9.375%, 2/15/2006 7,676,460
-------------------------------------------------------------------
2,000,000 13.25%, 5/15/2014 3,014,920
-------------------------------------------------------------------
7,000,000 11.25%, 2/15/2015 9,644,110
-------------------------------------------------------------------
4,180,000 7.25%, 5/15/2016 4,025,841
-------------------------------------------------------------------
10,260,000 8.875%, 2/15/2019 11,667,980
-------------------------------------------------------------------
10,000,000 8.75%, 8/15/2020 11,266,400
-------------------------------------------------------------------
8,000,000 8.125%, 5/15/2021 8,475,120
-------------------------------------------------------------------
11,500,000 8.00%, 11/15/2021 12,028,310
-------------------------------------------------------------------
10,000,000 7.125%, 2/15/2023 9,494,200
------------------------------------------------------------------- ------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST, $136,212,874) $131,404,921
------------------------------------------------------------------- ------------
</TABLE>
16
FEDERATED U.S. GOVERNMENT BOND FUND
- - - ---------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------------------------------------------------------------- ------------
<C> <S> <C>
*REPURCHASE AGREEMENT--4.4%
---------------------------------------------------------------------------------
$ 6,030,000 J.P. Morgan Securities, Inc. 4.85%, dated 8/31/94, due 9/1/94 (at
amortized cost) $ 6,030,000
------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST, $142,242,874) $137,434,921+
------------------------------------------------------------------- ------------
<FN>
* The repurchase agreement is fully collateralized by U.S. Treasury
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.
+ The cost of investments for federal tax purposes amounts to $142,242,874.
The net unrealized depreciation of investments on a federal tax cost
basis amounts to $4,807,953, which is comprised of $453,118 appreciation
and $5,261,071 depreciation at August 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($138,016,139) at August 31, 1994.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
17
FEDERATED U.S. GOVERNMENT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1994
- - - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- - - ------------------------------------------------------------------
Investments in other securities $131,404,921
- - - ------------------------------------------------------------------
Investment in repurchase agreement 6,030,000
- - - ------------------------------------------------------------------ -----------
Total investments, at amortized cost and value (Identified and
tax cost $142,242,874) $137,434,921
- - - -------------------------------------------------------------------------------
Cash 1,034
- - - -------------------------------------------------------------------------------
Interest receivable 1,202,838
- - - -------------------------------------------------------------------------------
Receivable for Fund shares sold 25,583
- - - ------------------------------------------------------------------------------- -----------
Total assets 138,664,376
- - - -------------------------------------------------------------------------------
LIABILITIES:
- - - ------------------------------------------------------------------
Dividends payable 524,762
- - - ------------------------------------------------------------------
Payable for Fund shares redeemed 66,457
- - - ------------------------------------------------------------------
Accrued expenses 57,018
- - - ------------------------------------------------------------------ -----------
Total liabilities 648,237
- - - ------------------------------------------------------------------------------- -----------
NET ASSETS for 14,199,325 shares of beneficial interest outstanding $138,016,139
- - - ------------------------------------------------------------------------------- -----------
-----------
NET ASSETS CONSIST OF:
- - - -------------------------------------------------------------------------------
Paid-in capital $143,852,133
- - - -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (4,807,953)
- - - -------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,028,041)
- - - ------------------------------------------------------------------------------- -----------
Total Net Assets $138,016,139
- - - ------------------------------------------------------------------------------- -----------
-----------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($138,016,139 DIVIDED BY 14,199,325 shares of beneficial interest outstanding) $ 9.72
- - - ------------------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
18
FEDERATED U.S. GOVERNMENT BOND FUND
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1994
- - - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- - - ---------------------------------------------------------------------------------------------
Interest income $ 6,508,692
- - - ---------------------------------------------------------------------------------------------
EXPENSES:
- - - ---------------------------------------------------------------------------------------------
Investment advisory fee $ 642,275
- - - --------------------------------------------------------------------------------
Trustees' fees 8,727
- - - --------------------------------------------------------------------------------
Administrative personnel and services fees 201,377
- - - --------------------------------------------------------------------------------
Custodian and portfolio accounting fees and expenses 79,329
- - - --------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 18,530
- - - --------------------------------------------------------------------------------
Shareholder services fees 27,414
- - - --------------------------------------------------------------------------------
Fund share registration costs 38,818
- - - --------------------------------------------------------------------------------
Auditing fees 17,595
- - - --------------------------------------------------------------------------------
Legal fees 9,058
- - - --------------------------------------------------------------------------------
Printing and postage 17,687
- - - --------------------------------------------------------------------------------
Insurance premiums 4,830
- - - --------------------------------------------------------------------------------
Taxes 428
- - - --------------------------------------------------------------------------------
Miscellaneous 3,221
- - - -------------------------------------------------------------------------------- ----------
Total expenses 1,069,289
- - - --------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 177,861
- - - -------------------------------------------------------------------------------- ----------
Net expenses 891,428
- - - --------------------------------------------------------------------------------------------- -----------
Net investment income 5,617,264
- - - ---------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- - - ---------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (1,028,041)
- - - ---------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (9,813,977)
- - - --------------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments (10,842,018)
- - - --------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $(5,224,754)
- - - --------------------------------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
19
FEDERATED U.S. GOVERNMENT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- - - ---------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------
1994 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- - - ---------------------------------------------------------------------------
OPERATIONS--
- - - ---------------------------------------------------------------------------
Net investment income $ 5,617,264 $ 2,794,504
- - - ---------------------------------------------------------------------------
Net realized gain (loss) on investments ($1,028,041 net loss and $2,272,871
net gain, respectively, as computed for federal tax purposes) (1,028,041) 2,272,871
- - - ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (9,813,977) 3,468,352
- - - --------------------------------------------------------------------------- ------------- -------------
Change in net assets resulting from operations (5,224,754) 8,535,727
- - - ---------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- - - ---------------------------------------------------------------------------
Dividends to shareholders from net investment income (5,617,264) (2,794,504)
- - - ---------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment
transactions (2,249,765) --
- - - --------------------------------------------------------------------------- ------------- -------------
Change in net assets from distributions to shareholders (7,867,029) (2,794,504)
- - - ---------------------------------------------------------------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- - - ---------------------------------------------------------------------------
Proceeds from sale of shares 147,438,720 81,129,017
- - - ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 1,039,068 819,693
- - - ---------------------------------------------------------------------------
Cost of shares redeemed (80,106,516) (39,078,037)
- - - --------------------------------------------------------------------------- ------------- -------------
Change in net assets from Fund share transactions 68,371,272 42,870,673
- - - --------------------------------------------------------------------------- ------------- -------------
Change in net assets 55,279,489 48,611,896
- - - ---------------------------------------------------------------------------
NET ASSETS:
- - - ---------------------------------------------------------------------------
Beginning of period 82,736,650 34,124,754
- - - --------------------------------------------------------------------------- ------------- -------------
End of period $ 138,016,139 $ 82,736,650
- - - --------------------------------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
20
FEDERATED U.S. GOVERNMENT BOND FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1994
- - - --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated U.S. Government Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end, no-load, management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. 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.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund 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 Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying collateral to ensure that the value of collateral at least equals
the principal amount of the repurchase agreement, including accrued
interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. 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").
Distributions to shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund'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 taxable income. Accordingly,
no provisions for federal tax are necessary. Additionally, net capital
losses of $1,028,041 attributable to security transactions incurred after
October 31, 1993 are treated as arising on September 1, 1994, the first day
of the Fund's next taxable year.
21
FEDERATED U.S. GOVERNMENT BOND FUND
- - - --------------------------------------------------------------------------------
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund 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.
F. RECLASSIFICATION--During the current period year ended 1994, the Fund
adopted Statement of Position 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies. Accordingly, permanent book and tax
differences have been reclassified to paid-in capital. The Fund reclassified
$7,584 from accumulated net realized loss to paid-in capital in accordance
with SOP 93-2. Net investment income, net realized gains, and net assets
were not affected by this change.
G. 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 intest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------
1994 1993
- - - --------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Shares sold 14,322,697 7,729,440
- - - ---------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 102,603 79,323
- - - ---------------------------------------------------------------------------
Shares redeemed (7,723,265) (3,715,292)
- - - --------------------------------------------------------------------------- ------------ -----------
Net change resulting from Fund share transactions 6,702,035 4,093,471
- - - --------------------------------------------------------------------------- ------------ -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
IVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
.60 of 1% of the Fund's average daily net assets. The Adviser may voluntarily
choose to waive a 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") provides Fund with
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, 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 Fund will pay FSS up to 0.25 of
1% of average net assets of the Fund
22
FEDERATED U.S. GOVERNMENT BOND FUND
- - - --------------------------------------------------------------------------------
for the period. This fee is to obtain certain personal services for shareholders
and to maintain the shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Fund.
The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
Certain of the Officers and Trustees of the Fund are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
fiscal year ended August 31, 1994, were as follows:
<TABLE>
<S> <C>
Purchases $95,020,313
- - - ------------------------------------------------------------------ -----------
Sales $21,494,063
- - - ------------------------------------------------------------------ -----------
</TABLE>
23
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- - - ---------------------------------------------------------
To the Shareholders and Board of Trustees of
FEDERATED U.S. GOVERNMENT BOND FUND:
We have audited the accompanying statement of assets and liabilities of
Federated U.S. Government Bond Fund (a Massachusetts business trust), including
the schedule of portfolio investments, as of August 31, 1994, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund'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
August 31, 1994, by correspondence with the custodian. 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 U.S. Government Bond Fund as of August 31, 1994, 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 the
periods presented in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
October 5, 1994
24
ADDRESSES
- - - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Fund
Federated U.S. Government Bond Fund 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
- - - -------------------------------------------------------------------------------------------
Shareholder Servicing Agent
Federated Shareholder Services Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- - - -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- - - -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- - - -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- - - -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
</TABLE>
25
- - - --------------------------------------------------------------------------------
FEDERATED
U.S. GOVERNMENT
BOND FUND
PROSPECTUS
A No-Load, Open-End, Diversified
Management Investment Company
Prospectus dated October 31, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
________
[LOGO]
RECYCLED
314284100 PAPER
8100308A (10/94)
FEDERATED U.S. GOVERNMENT BOND FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of the Fund dated October 31, 1994. This Statement is not
a prospectus itself. To receive a copy of the prospectus, write or
call Federated U.S. Government Bond Fund.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated October 31, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
- - - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GENERAL INFORMATION ABOUT THE FUND 1
- - - ------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- - - ------------------------------------------------------------
Types of Investments 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Option Transactions 2
Lending of Portfolio Securities 3
Reverse Repurchase Agreements 3
Portfolio Turnover 3
INVESTMENT LIMITATIONS 3
- - - ------------------------------------------------------------
FEDERATED U.S. GOVERNMENT BOND FUND MANAGEMENT 6
- - - ------------------------------------------------------------
Officers and Trustees 6
The Funds 9
Fund Ownership 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 10
- - - ------------------------------------------------------------
Adviser to the Fund 10
Advisory Fees 10
Other Related Services 10
ADMINISTRATIVE SERVICES 10
- - - ------------------------------------------------------------
SHAREHOLDER SERVICES PLAN 10
- - - ------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT 11
- - - ------------------------------------------------------------
BROKERAGE TRANSACTIONS 11
- - - ------------------------------------------------------------
PURCHASING SHARES 11
- - - ------------------------------------------------------------
Conversion to Federal Funds 11
DETERMINING NET ASSET VALUE 12
- - - ------------------------------------------------------------
Determining Market Value of Securities 12
REDEEMING SHARES 12
- - - ------------------------------------------------------------
EXCHANGING SECURITIES FOR FUND SHARES 12
- - - ------------------------------------------------------------
Tax Consequences 12
TAX STATUS 13
- - - ------------------------------------------------------------
The Fund's Tax Status 13
Shareholders' Tax Status 13
TOTAL RETURN 13
- - - ------------------------------------------------------------
YIELD 13
- - - ------------------------------------------------------------
PERFORMANCE COMPARISONS 13
- - - ------------------------------------------------------------
Duration 15
APPENDIX 16
- - - ------------------------------------------------------------
</TABLE>
I
GENERAL INFORMATION ABOUT THE FUND
- - - --------------------------------------------------------------------------------
Federated U.S. Government Bond Fund (the "Fund") was established as a
Massachusetts business trust under a Declaration of Trust dated May 24, 1985. On
August 30, 1993, shareholders of the Fund approved changing the name of the Fund
from Federated Bond Fund to Federated U.S. Government Bond Fund.
INVESTMENT OBJECTIVE AND POLICIES
- - - --------------------------------------------------------------------------------
The investment objective of the Fund is to pursue total return. The investment
objective cannot be changed without approval of shareholders. Unless stated
otherwise, the investment policies stated below cannot be changed without
shareholder approval.
TYPES OF INVESTMENTS
The Fund invests primarily in debt obligations (i.e. bills, notes and bonds) of
the U.S. government, its agencies and instrumentalities with at least 65% of the
value of its total assets being invested under normal circumstances in U.S.
government bonds. This policy may be changed without shareholder approval. The
permitted investments of the Fund include:
- obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities; and
- domestic issues of corporate debt obligations (rated Aaa, Aa, or A by
Moody's Investors Service, Inc.; AAA, AA, or A by Standard & Poor's
Ratings Group; or AAA, AA, or A by Fitch Investors Service, Inc.).
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are backed
by:
- the full faith and credit of the U.S. Treasury;
- the issuer's right to borrow from the U.S. Treasury;
- the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
- 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:
- Farm Credit Banks;
- Banks for Cooperatives;
- Federal Home Loan Banks;
- The Student Loan Marketing Association;
- and Federal National Mortgage Association.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund engages in when-issued and delayed delivery transactions only for the
purpose of acquiring portfolio securities consistent with the Fund's investment
objectives and policies, not for investment leverage. These transactions are
made to secure what is considered to be an advantageous price or yield for the
Fund. 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. No fees or other expenses, other than normal transaction costs,
are incurred. However, liquid assets of the Fund sufficient to make payment for
the securities to be purchased are segregated on the Fund"s records at the trade
date. These assets are marked to market daily and are maintained until the
transaction has been settled. As a matter of policy which can be changed without
shareholder approval, the Fund 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 Fund or its custodian will take possession of the securities subject to
repurchase agreements and these securities will be marked to market daily. To
the extent that the original seller does not repurchase the securities from the
Fund, the Fund 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 Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect
1
- - - --------------------------------------------------------------------------------
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial institutions,
such as broker/dealers, which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
OPTION TRANSACTIONS
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio through
the purchase of put options on portfolio securities and listed put options on
financial futures contracts for portfolio securities. The Fund may also write
covered call options on its portfolio securities to attempt to increase its
current income. The Fund will only engage in such transactions to the extent
permitted under applicable rules, regulations, or interpretations thereof of the
Office of Thrift Supervision.
The Fund will maintain its positions in securities, option rights, and
segregated cash subject to puts and calls until the options are exercised,
closed, or have expired.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series.
PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase listed put options on financial futures contracts.
These options will be used only to protect portfolio securities against
decreases in value resulting from market factors such as an anticipated
increase in interest rates.
A futures contract is a firm commitment by two parties: the seller who
agrees to make delivery of the specific type of instrument called for in
the contract ("going short") and the buyer who agrees to take delivery of
the instrument ("going long") at a certain time in the future. Financial
futures contracts call for the delivery of particular debt instruments
issued or guaranteed by the U.S. Treasury or by specified agencies or
instrumentalities of the U.S. government. If the Fund could enter into
financial futures contracts directly to hedge its holdings of fixed income
securities, it would enter into contracts to deliver securities at a
predetermined price (i.e., "go short") to protect itself against the
possibility that the prices of its fixed income securities may decline
during the Fund's anticipated holding period.
Unlike entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a specified
price, the purchase of a put option on a futures contract entitles (but
does not obligate) its purchaser to decide on or before a future date
whether to assume a short position at the specified price. Generally, if
the hedged portfolio securities decrease in value during the term of an
option, the related futures contracts will also decrease in value and the
option will increase in value. In such an event, the Fund will normally
close out its option by selling an identical option. If the hedge is
successful, the proceeds received by the Fund upon the sale of the second
option will be large enough to offset both the premium paid by the Fund
for the original option plus the realized decrease in value of the hedged
securities.
Alternately, the Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract
of the type underlying the option (for a price less than the strike price
of the option) and exercise the option. The Fund would then deliver the
futures contract in return for payment of the strike price.
Currently, the Fund will only enter into futures contracts in order to
exercise put options in its portfolio. If the Fund neither closes out nor
exercises an option, the option will expire on the date provided in the
option contract, and only the premium paid for the contract will be lost.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put options on portfolio securities to protect
against price movements in particular securities in its portfolio. A put
option gives the Fund, 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.
2
- - - --------------------------------------------------------------------------------
WRITING COVERED CALL OPTIONS
The Fund may also write covered call options to generate income. As writer
of a call option, the Fund has the obligation upon exercise of the option
during the option period to deliver the underlying security upon payment
of the exercise price.
The Fund may only 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 Fund will only engage in such transactions to the extent permitted
under applicable Office of Thrift Supervision rules, regulations, or
interpretations thereof.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund 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 Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund 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 Fund 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 Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future, the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but the ability to
enter into reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. The securities are marked to market daily and
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 Fund 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 Fund 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 Fund's investment objectives. For the fiscal years ended August 31, 1994 and
1993, the portfolio turnover rates were 22% and 53%, respectively.
INVESTMENT LIMITATIONS
- - - --------------------------------------------------------------------------------
BUYING ON MARGIN
The Fund will not purchase any securities on margin but may obtain such
short-term credits as may be necessary for the clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
one-third of the value of its net assets, including the amounts borrowed.
3
- - - --------------------------------------------------------------------------------
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while any such borrowings are outstanding.
During the period any reverse repurchase agreements are outstanding, but
only to the extent necessary to assure completion of the reverse
repurchase agreements, the Fund will restrict the purchase of portfolio
instruments to money market instruments maturing on or before the
expiration date of the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or
10% of the value of total assets at the time of the borrowing.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate, although it may 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.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities. However, the Fund may
purchase put options on portfolio securities and on financial futures
contracts. In addition, the Fund reserves the right to hedge the portfolio
by entering into financial futures contracts and to sell calls on
financial futures contracts. The Fund will notify shareholders before such
a change in its operating policies is implemented.
RESTRICTED SECURITIES
The Fund will not invest more than 10% of its total assets in securities
subject to restrictions on resale under the federal securities laws
(except for commercial paper issued under Section 4(2) of the Securities
Act of 1933).
UNDERWRITING
The Fund 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 objectives,
policies, and limitations.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities in
accordance with that section of the prospectus entitled "Lending of
Portfolio Securities."
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in
any one industry. However, investing in U.S. government obligations shall
not be considered investments in any one industry.
SELLING SHORT
The Fund will not sell securities short unless:
- 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 issuer as, and equal in amount to, the
securities sold short; and
- not more than 10% of the Fund's net assets (taken at current value)
is held as collateral for such sales at any one time.
INVESTING IN MINERALS
The Fund 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.
4
- - - --------------------------------------------------------------------------------
DIVERSIFICATION OF INVESTMENTS
The Fund will not invest more than 5% of the value of its total assets in
any one issuer (except cash and cash items, repurchase agreements, and
U.S. government obligations). The Fund may invest up to 15% of its total
assets in the certificates of deposit of one bank.
The Fund considers the type of bank obligations it purchases as cash
items.
ACQUIRING SECURITIES
The Fund will not purchase securities of a company for the purpose of
exercising control or management.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
portfolio instruments of unseasoned issuers, including their predecessors,
that have been in operation for less than three years.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE FUND
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Fund 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 ILLIQUID SECURITIES
The Fund will not invest more than 10% of its net assets in securities
which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice.
WRITING COVERED CALL OPTIONS AND PURCHASING PUT OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them in
deliverable form without further payment or after segregating cash in the
amount of any further payment. The Fund will not purchase put options on
securities unless the securities are held in the Fund's portfolio.
The above investment limitations cannot be changed without shareholder approval.
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 use of short sales will allow the Fund to retain certain bonds in its
portfolio longer than it would without such sales. To the extent the Fund
receives the current income produced by such bonds for a longer period than it
might otherwise, the Fund's investment objective of total return (which includes
current income) is furthered.
For purposes of its policies and limitations, the Fund 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."
In addition, in order to comply with certain state restrictions, the Fund will
not purchase or sell real estate limited partnership interests, or oil, gas or
other mineral leases, except that the Fund may purchase or sell securities of
companies which invest in or hold the foregoing. If state requirements change,
these restrictions may be revised without notice to shareholders.
The Fund did not engage in options transactions or reverse repurchase
agreements, sell securities short, borrow money, or invest in illiquid
securities in excess of 5% of the value of its total assets during the last
fiscal year, and has no present intent to do so in the coming fiscal year.
5
FEDERATED U.S. GOVERNMENT BOND FUND MANAGEMENT
- - - --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions.
- - - --------------------------------------------------------------------------------
John F. Donahue+*
Federated Investors Tower
Pittsburgh, PA
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 and Trustee.
- - - --------------------------------------------------------------------------------
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
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
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
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.
- - - --------------------------------------------------------------------------------
6
- - - --------------------------------------------------------------------------------
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Trustee
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
Professor of Medicine and Trustee, University of Pittsburgh; Director of
Corporate Health, University of Pittsburgh Medical Center; Director, Trustee, or
Managing General Partner of the Funds.
- - - --------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+
5916 Penn Mall
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, 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
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
5916 Penn Mall
Pittsburgh, PA
Trustee
Attorney-at-law; Partner, 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.
- - - --------------------------------------------------------------------------------
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
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.
- - - --------------------------------------------------------------------------------
7
- - - --------------------------------------------------------------------------------
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing General
Partner of the Funds.
- - - --------------------------------------------------------------------------------
Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
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
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
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
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.
- - - --------------------------------------------------------------------------------
8
- - - --------------------------------------------------------------------------------
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
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.
THE FUNDS
"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 Fund; 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 Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The Medalist Funds:
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; New York Municipal Cash Trust; 111
Corcoran Funds; Peachtree Funds; The Planters Funds; Portage 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; and
World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of October 7, 1994, the following shareholders of record owned 5% or more of
the outstanding shares of the Fund: First National Bank in Gainesville,
Gainesville, Georgia, owned approximately 3,383,765 shares (23.87%); and Worthen
Bank and Trust Co., N.A., Little Rock, Arkansas, owned approximately 3,315,286
shares (23.39%).
TRUSTEE LIABILITY
The Fund'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.
9
INVESTMENT ADVISORY SERVICES
- - - --------------------------------------------------------------------------------
ADVISER TO THE FUND
The Fund'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 adviser shall not be liable to the Fund 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 Fund.
ADVISORY FEES
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus. During the fiscal years ended
August 31, 1994, 1993, and 1992, the Fund's adviser earned $642,275, $301,709
and $157,979, respectively, of which $177,861, $301,709 and $157,979 were
voluntarily waived because of undertakings to limit the Fund's expenses.
STATE EXPENSE LIMITATION
The 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 Fund'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 adviser will reimburse the Fund for
its expenses over the limitation.
If the Fund'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 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.
OTHER RELATED SERVICES
Affiliates of the adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of shares of funds offered by Federated Securities Corp.
ADMINISTRATIVE SERVICES
- - - --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund 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 Fund'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
August 31, 1994, the Administrators collectively earned $201,377. For the fiscal
years ended August 31, 1993 and August 31, 1992, Federated Administrative
Services, Inc., earned $256,961 and $180,409, respectively. Dr. Henry J.
Gailliot, an officer of Federated Management, the adviser to the Fund, 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.
10
- - - --------------------------------------------------------------------------------
For the fiscal period ended August 31, 1994, payments in the amount of $27,414
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 Fund. The fee is based on the size, type and number of accounts
and transactions made by shareholders.
Federated Services Company also maintains the Fund's accounting records. The fee
is based on the level of the Fund'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 adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. In selecting among firms
believed to meet these criteria, the adviser may give consideration to those
firms which have sold or are selling shares of the Fund and other funds
distributed by Federated Securities Corp. The adviser makes decisions on
portfolio transactions and selects brokers and dealers subject to review by the
Board of Trustees.
The adviser may select brokers and dealers who offer brokerage and research
services. These services may be
furnished directly to the Fund or to the adviser and may include:
- advice as to the advisability of investing in securities;
- security analysis and reports;
- economic studies;
- industry studies;
- receipt of quotations for portfolio evaluations; and
- similar services.
The adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Research services provided by brokers may be used by the adviser or by
affiliates of Federated Investors in advising other accounts. To the extent that
receipt of these services may supplant services for which the adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
For the fiscal years ended August 31, 1994, 1993, and 1992, the Fund paid no
brokerage commissions on brokerage transactions.
PURCHASING SHARES
- - - --------------------------------------------------------------------------------
Shares are sold at their net asset value without a sales charge on days on which
the New York Stock Exchange is open for business. The procedure for purchasing
shares of the Fund is explained in the prospectus under "Investing in the Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds before shareholders begin to
earn dividends. Federated Services Company acts as the shareholder's agent in
depositing checks and converting them to federal funds.
11
DETERMINING NET ASSET VALUE
- - - --------------------------------------------------------------------------------
Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
- according to the last sale price on a national securities exchange, if
available;
- in the absence of recorded sales for equity securities, according to the
mean between the current closing bid and asked prices and for bonds and
other fixed income securities as determined by an independent pricing
service;
- for short-term obligations, according to the mean between bid and asked
prices, as furnished by an independent pricing service, or for short-term
obligations with remaining maturities of 60 days or less at the time of
purchase, at amortized cost unless the Board determines this is not fair
value; or
- at fair value as determined in good faith by the Fund's Board of Trustees.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices. Pricing services may consider:
- yield;
- quality;
- coupon rate;
- maturity;
- type of issue;
- trading characteristics; and
- other market data.
Over-the-counter put options will be valued at the mean between the bid and the
asked prices.
REDEEMING SHARES
- - - --------------------------------------------------------------------------------
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under "Redeeming Shares." Although State Street Bank does not charge
for telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
EXCHANGING SECURITIES FOR FUND SHARES
- - - --------------------------------------------------------------------------------
Investors may exchange securities they already own for Fund shares, or they may
exchange a combination of securities and cash for Fund shares. An investor
should forward the securities in negotiable form with an authorized letter of
transmittal to Federated Securities Corp. The Fund will notify the investor of
its acceptance and valuation of the securities within five business days of
their receipt by State Street Bank.
The Fund values securities in the same manner as the Fund values its assets. The
basis of the exchange will depend upon the net asset value of Fund shares on the
day the securities are valued. One share of the Fund will be issued for each
equivalent amount of securities accepted.
Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription, or other
rights attached to the securities become the property of the Fund, along with
the securities.
TAX CONSEQUENCES
Exercise of this exchange privilege is treated as a sale for federal income tax
purposes. Depending upon the cost basis of the securities exchanged for Fund
shares, a gain or loss may be realized by the investor.
12
TAX STATUS
- - - --------------------------------------------------------------------------------
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:
- derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
- derive less than 30% of its gross income from the sale of securities held
less than three months;
- invest in securities within certain statutory limits; and
- 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. No portion of any income dividend paid by
the Fund is eligible for the dividends received deduction available to
corporations. These dividends, and any short-term capital gains, are taxable as
ordinary income.
CAPITAL GAINS
Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund shares.
TOTAL RETURN
- - - --------------------------------------------------------------------------------
The Fund's average annual total returns for the one-year and five-year periods
ended August 31, 1994, and for the period from December 3, 1985 (effective date
of the Fund's registration statement), to August 31, 1994, were (5.23%), 8.49%
and 7.50%, respectively.
The average annual total return for the Fund is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the 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 Fund's yield for the thirty-day period ended August 31, 1994 was 6.47%.
The yield for the Fund is determined by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the net asset value per share of the Fund on the
last day of the period. This value is then annualized using semi-annual
compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a 12-month period
and is reinvested every six months. The yield does not necessarily reflect
income actually earned by the Fund 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 Fund,
performance will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
- - - --------------------------------------------------------------------------------
The Fund's performance depends upon such variables as:
- average portfolio maturity;
- type of instruments in which the portfolio is invested;
- changes in interest rates and market value of portfolio securities;
13
- - - --------------------------------------------------------------------------------
- changes in Fund expenses; and
- various other factors.
The Fund's performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund'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 Fund uses in advertising may include:
- LEHMAN BROTHERS GOVERNMENT INDEX is comprised of long term bonds publicly
issued by the U.S. government or its agencies. It is limited to securities
with maturities of 10 years or longer. The index calculates total return
for one-month, three-month, twelve-month and ten-year periods and
year-to-date.
- MERRILL LYNCH LONG TERM GOVERNMENT INDEX is an unmanaged index comprised
of publicly issued U.S. government or U.S. agency debt obligations with
final maturities of 10 years or longer.
- LEHMAN BROTHERS LONG TERM TREASURY INDEX is comprised of U.S. Treasury
securities, publicly issued by the U.S. Treasury. It is limited to
securities with final maturities of 10 years or longer. The index
calculates total returns for one-month, three-month, twelve-month and
ten-year periods and year-to-date.
- 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. The index calculates total returns for
one-month, three-month, twelve-month, and ten-year periods and
year-to-date.
- SALOMON BROTHERS AAA-AA CORPORATES INDEX 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 and companies in industry, public utilities, and finance.
- LEHMAN BROTHERS LONG TERM CORPORATE INDEX is comprised of publicly issued
fixed rate, non-convertible domestic bonds of companies in industry,
public utilities and finance. All bonds are at least 10 years in length of
maturity and are rated at least BBB by one of the major rating agencies.
- MERRILL LYNCH 10-15 YEAR U.S. TREASURY INDEX is an unmanaged index
tracking long-term U.S. Treasury securities with maturities between 10 and
15 years. The index is produced by Merrill Lynch, Pierce, Fenner and
Smith, Inc.
- MERRILL LYNCH 10-YEAR U.S. TREASURY INDEX is an unmanaged index tracking
current 10-year Treasury notes. The index is produced by Merrill Lynch,
Pierce, Fenner and Smith, Inc.
- MERRILL LYNCH LONG TERM CORPORATE INDEX is an unmanaged index comprised of
publicly issued non-convertible domestic corporate debt obligations having
both a rating of BBB or higher and a maturity of 10 years or longer. These
quality parameters are based on composites of rating assigned by Standard
and Poor's Ratings Group and Moody's Investors Service, Inc.
- MERRILL LYNCH CORPORATE & GOVERNMENT MASTER INDEX is an unmanaged index
comprised of approximately 4,821 issues which include corporate debt
obligations rated BBB or better and publicly issued, non-convertible
domestic debt of the U.S. government or any agency thereof. These quality
parameters are based on composites of ratings assigned by Standard and
Poor's Ratings Group and Moody's Investors Service, Inc. Only notes and
bonds with a minimum maturity of one year are included.
- MERRILL LYNCH CORPORATE MASTER INDEX is an unmanaged index comprised of
approximately 4,256 corporate debt obligations rated BBB or better. These
quality parameters are based on composites of ratings assigned by Standard
and Poor's Ratings Group and Moody's Investors Service, Inc. Only bonds
with a minimum maturity of one year are included.
14
- - - --------------------------------------------------------------------------------
- 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 Fund may quote total returns
which are calculated or non-standardized base periods. These total returns also
represent the historic change in the value of an investment in the Fund 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 coupons 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. When the Fund invests in mortgage
pass-through securities, its duration will be calculated in a manner which
requires assumptions to be made regarding future principal prepayments. A more
complete description of this calculation is available upon request from the
Fund.
15
APPENDIX
- - - --------------------------------------------------------------------------------
STANDARD AND POOR'S RATINGS GROUP CORPORATE BOND RATING DEFINITIONS
AAA--Debt rated "AAA" has the highest rating assigned by Standard & Poor's
Ratings Group. 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.
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 by 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 some time in the future.
FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATING DEFINITIONS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATING DEFINITIONS
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATING DEFINITIONS
PRIME-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. PRIME-1
repayment capacity will normally be evidenced by the following characteristics:
-- Leading market positions in well established industries.
-- High rates of return on funds employed.
-- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
-- Broad margins in earning coverage of fixed financial charges and high
internal cash generation.
-- Well-established access to a range of financial markets and assured
sources of alternate liquidity
16
- - - --------------------------------------------------------------------------------
PRIME-2--Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATING DEFINITIONS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment but the margin of safety is not as great for
issues assigned "F-1+" and "F-1" ratings.
314284100
8100308B (10/94) 17
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (Filed in Part A);
(b) Exhibits:
(1) Conformed Copy of Declaration of Trust of the Registrant,
as Amended and Restated; +
(2) Copy of By-Laws of the Registrant, as Restated
and Amended +;
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant; (14)
(5) Conformed Copy of Investment Advisory Contract of the
Registrant +;
(6) Conformed Copy of the Distributor's Contract +;
(7) Not applicable;
(8) (i)Conformed Copy of Custodian Agreement of the
Registrant+;
(ii) Conformed Copy of Transfer Agency and Service
Agreement of the Registrant +;
(9) (i) Conformed Copy of Administrative Services
Agreement+;
(ii) Conformed Copy of Shareholder Services
Agreement +:
(iii) Conformed Copy of Shareholder Services Plan +;
(iv) Copy of Shareholder Services Sub-Contract +;
(10) Conformed Copy of Opinion and Consent of Counsel as
to legality of shares being registered +;
(11) Conformed Copy of Consent of Independent Public
Accountants;+
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding +;
(14) Not applicable;;
(15) Not applicable;
(16) Copy of Schedule for Computation of Fund Performance
Data(9.);
(17) Copy of Financial Data Schedule +;
(18) Conformed Copy of Opinion and consent of counsel as
to availability of Rule 485(b); +
(19) Conformed copy of Power of Attorney (12.);
+ All exhibits are being filed electronically.
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed October 21, 1988. (File Nos.
2-98494 and 811-4489)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed October 23, 1992. (File Nos.2-98494
and 811-4489)
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed Ocotober 26, 1993. (File Nos.
2-98494 and 811-4489)
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of October 7, 1994
Shares of Beneficial Interest 2
(no par value)
Item 27. Indemnification: (11.)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment
adviser, see the section entitled "Fund Management"
in Part A. The affiliations with the Registrant of
four of the Trustees and Officers of the investment adviser are
included in Part B of this Registration
Statement under "Fund Management - Officers and Trustees." The
remaining Trustee of the investment adviser, his position with the
investment adviser, and, in parentheses, his principal occupation
is:
Mark D. Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market
Street, Georgetown, DE 19947.
The remaining Officers of the investment adviser are: William D.
Dawson, J. Thomas Madden, and Mark L. Mallon, Executive Vice
Presidents; Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson, Gary J. Madich, and J. Alan Minteer, Senior Vice
Presidents; Jonathan C. Conley, Deborah A. Cunningham, Mark E.
Durbiano, Kathleen M. Foody-Malus, Thomas M. Franks, Edward C.
Gonzales, Jeff A. Kozemchak, John W. McGonigle, Gregory M. Melvin,
Susan M. Nason, Mary Jo Ochson, Robert J. Ostrowski, Charles A.
Ritter, 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, PA 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 under "The Funds."
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;
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 filed October 23, 1989 (File Nos. 2-98484 and 911-
8489)
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; 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; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; Portage 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)
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Vice President
Federated Investors Tower President, and Treasurer, and 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
Timothy C. Pillion Senior 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
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
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
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
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
Solon A. Person, IV 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
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
Thomas E. Territ 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
Richard B. Watts 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
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower 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 of the following
locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Recordkeeper")
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and Trust Compnay P.O. Box 8604
("Custodian") Boston, MA 02266-8604
Item 31. Management Services: Not applicable.
Item 32. Undertakings: Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by shareholders.
Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of the Registrant's latest Annual Report to
Shareholders upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, FEDERATED U.S. GOVERNMENT
BOND FUND, has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Pittsburgh and Commonwealth of Pennsylvania, on the 24th day of
October, 1994.
FEDERATED U.S. GOVERNMENT BOND FUND
BY: /s/Victor R. Siclari
Victor R. Siclari, Assistant Secretary
Attorney in Fact for John F. Donahue
October 24, 1994
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/Victor R. Siclari
Victor R. Siclari Attorney In Fact October 24, 1994
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
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
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg SK
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No.17 to Form N-1A Registration Statement of Federated
U.S. Government Bond Fund, of our report dated October 5, 1994, included in
or made part of this registration statement.
By: ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
October 20, 1994
FEDERATED U.S. GOVERNMENT BOND FUND
(Formerly, Federated Bond Fund)
Federated Investors
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(412) 288-1900
October 25, 1994
EDGAR Operations Branch
Securities and Exchange Commission
Division of Investment Management
450 Fifth Street, Northwest
Washington, DC 20549
RE: FEDERATED U.S. GOVERNMENT BOND FUND (the "Fund")
1933 Act File No. 2-98494
1940 Act File No. 811-4489
Dear Sir or Madam:
Post-Effective Amendment No. 17 under the Securities Act of 1933 and
Amendment No. 17 under the Investment Company Act of 1940 to the
Registration Statement of the above-referenced Fund is hereby
electronically transmitted. This filing has been electronically redlined
to indicate the changes from the Fund's currently effective Prospectus.
As indicated on the facing page of the Amendment, the Registrant has
specified that it is to become effective on October 31, 1994, pursuant to
paragraph (b) of Rule 485 under the Securities Act of 1933.
As required by the Rule, the Registrant has submitted a written
representation of counsel to the Registrant, who reviewed the filing, that
the Amendment does not contain disclosure which would render it ineligible
to become effective pursuant to paragraph (b) of Rule 485.
The registrant has included as an exhibit to this filing a newly
executed Fund Accounting Shareholder Recordkeeping and Custody Services
Procurement Agreement. Please note that the Registrant has chosen not to
file the fee schedule exhibit for this agreement as we are trying to
determine whether or not the fee schedule will be eligible for confidential
treatment.
If you have any questions regarding this filing, please call me at
(412) 288-8635.
Very truly yours,
/s/ Anne M. Nolf
Anne M. Nolf
Legal Assistant
Enclosures
-1-
Exhibit 1 under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
DECLARATION OF TRUST
FEDERATED U.S. GOVERNMENT BOND FUND
(Formerly, FEDERATED BOND FUND, which was
formerly CHOICE BOND FUND)
Dated May 24, 1985
As Amended and Restated August 30, 1993
DECLARATION OF TRUST made May 24, 1985, and amended and restated August
30, 1993, by John F. Donahue, John T. Conroy, Jr., William J. Copeland, James
E. Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Peter E. Madden,
Gregor F. Meyer, Wesley W. Posvar, Marjorie P. Smuts, and John A. Staley, IV,
and by the holders of shares of beneficial interest to be issued hereunder as
hereinafter provided.
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 "Federated U.S. Government Bond Fund," and
the Trustees may conduct the business of the Trust under that name or any
other name as they may determine from time to time.
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 Section 2(a)(42) of the 1940 Act, whichever may
be applicable) and "Principal Underwriter" shall have the meanings
given them in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to the Massachusetts Business
Trust established by this Declaration of Trust, as amended from time to
time, inclusive of each and every Series and Class established
hereunder.
(c) "Class" refers to a class of Shares established and
designated under or in accordance with the provisions of Article III;
(d) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article III;
(e) "Series Company" refers to the form of a registered
open-end investment company described in Section 18(f)(2) of the 1940
Act or in any successor statutory provision;
(f) "Shareholder" means a record owner of Shares of any
Series or Class;
(g) "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;
(h) "Shares" means the equal proportionate units of
interest into which the beneficial interest in the Trust shall be
divided from time to time, or if more than one Series or Class of
Shares is authorized by the Trustees, the equal proportionate units
into which each Series or Class of Shares shall be divided from time to
time and includes fractions of Shares as well as whole Shares;
(i) The "1940 Act" refers to the Investment Company Act
of 1940, and the Rules and Regulations thereunder, (including any
exemptions granted thereunder) as amended from time to time; and
(j) "By-Laws" shall mean the By-Laws of the Trust 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 by investing 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. Subject to the provisions of Section
5 of this Article III, each Share shall have voting rights as provided in
Article VIII hereof, and holders of the Shares of any Series shall be
entitled to receive dividends, when and as declared with respect thereto in
the manner provided in Article X, Section 1 hereof. The Shares of any Series
may be issued in two or more Classes, as the Trustees may authorize pursuant
to Article XII, Section 8 hereof. Unless the Trustees have authorized the
issuance of Shares of a Series in two or more Classes, each Share of a Series
shall represent an equal proportionate interest in the assets and liabilities
of the Series with each other Share of the same Series, none having priority
or preference over another. If the Trustees have authorized the issuance of
Shares of a Series in two or more Classes, then the Classes may have such
variations as to dividend, redemption, and voting rights, net asset values,
expenses borne by the Classes, and other matters as the Trustees have
authorized provided that each Share of a Class shall represent an equal
proportionate interest in the assets and liabilities of the Class with each
other Share of the same Class, none having priority or preference over
another. The number of Shares authorized shall be unlimited. The Trustees
may from time to time divide or combine the Shares of any Series or Class
into a greater or lesser number without thereby changing the proportionate
beneficial interests in the Series or Class.
Section 2. Ownership of Shares.
The ownership of Shares shall be recorded in the books of the Trust or
a transfer agent which books shall be maintained separately for the Shares of
each Series or Class. 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 Shareholders of each Series or Class and as to the number
of Shares of each Series or Class 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), 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 to be allocated among any Series or Classes in the manner described
in Section 5(a) of this Article. 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 relevant
Series or Class, as the case may be, before paying any taxes in connection
with such issue or sale, not less than the net asset value (as defined in
Article X, Section 3) 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.
Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional Series
or Class or to modify the rights and preferences of any existing Series or
Class, the initial Series shall be, and is established and designated as,
Federated U.S. Government Bond Fund.
Shares of any Series or Class established in this Section 5 shall have
the following relative rights and preferences:
(a) Assets belonging to Series or Class. All
consideration received by the Trust for the issue or sale of Shares of
a particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits,
and proceeds thereof from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, shall irrevocably
belong to that Series or Class for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits
and proceeds thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment
of such proceeds, in whatever form the same may be, are herein referred
to as "assets belonging to" that Series or Class. In the event that
there are any assets, income, earnings, profits and proceeds thereof,
funds or payments which are not readily identifiable as belonging to
any particular Series or Class (collectively "General Assets"), the
Trustees shall allocate such General Assets to, between or among any
one or more of the Series or Classes established and designated from
time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable, and any General Assets so
allocated to a particular Series or Class shall belong to that Series
or Class. Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all Series or Classes for all
purposes.
(b) Liabilities Belonging to Series or Class. The assets
belonging to each particular Series or Class shall be charged with the
liabilities of the Trust in respect to that Series or Class and all
expenses, costs, charges and reserves attributable to that Series or
Class, and any general liabilities of the Trust which are not readily
identifiable as belonging to any particular Series or Class shall be
allocated and charged by the Trustees to and among any one or more of
the Series or Classes established and designated from time to time in
such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs, charges and
reserves so charged to a Series or Class are herein referred to as
"liabilities belonging to" that Series or Class. Each allocation of
liabilities belonging to a Series or Class by the Trustees shall be
conclusive and binding upon the Shareholders of all Series or Classes
for all purposes.
(c) Dividends, Distributions, Redemptions, Repurchases
and Indemnification. Notwithstanding any other provisions of this
Declaration of Trust, including, without limitation, Article X, no
dividend or distribution (including, without limitation, any
distribution paid upon termination of the Trust or of any Series or
Class) with respect to, nor any redemption or repurchase of the Shares
of any Series or Class shall be effected by the Trust other than from
the assets belonging to such Series or Class, nor except as
specifically provided in Section 1 of Article XI hereof, shall any
Shareholder of any particular Series or Class otherwise have any right
or claim against the assets belonging to any other Series or Class
except to the extent that such Shareholder has such a right or claim
hereunder as a Shareholder of such other Series or Class.
(d) Voting. Notwithstanding any of the other provisions
of this Declaration of Trust, including, without limitation, Section 1
of Article VIII, only Shareholders of a particular Series or Class
shall be entitled to vote on any matters affecting such Series or
Class. Except with respect to matters as to which any particular
Series or Class is affected materially differently or as otherwise
required by applicable law, all of the Shares of each Series or Class
shall, on matters as to which such Series or Class is entitled to vote,
vote with other Series or Classes so entitled as a single class.
Notwithstanding the foregoing, with respect to matters which would
otherwise be voted on by two or more Series or Classes as a single
class, the Trustees may, in their sole discretion, submit such matters
to the Shareholders of any or all such Series or Classes, separately.
(e) Fraction. Any fractional Share of a Series or Class
shall carry proportionately all the rights and obligations of a whole
Share of that Series or Class, including rights with respect to voting,
receipt of dividends and distributions, redemption of Shares and
termination of the Trust or of any Series or Class.
(f) Exchange Privilege. The Trustees shall have the
authority to provide that the holders of Shares of any Series or Class
shall have the right to exchange said Shares for Shares of one or more
other Series or Classes in accordance with such requirements and
procedures as may be established by 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 otherwise provided in
this Article shall be John F. Donahue, John T. Conroy, Jr., William J.
Copeland, James E. Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Peter E. Madden, Gregor F. Meyer, Wesley W. Posvar, Marjorie P. Smuts, and
John A. Staley, IV.
Section 2. Election of Trustees by Shareholders.
Unless otherwise required by the 1940 Act, Massachusetts law, or any
court or regulatory body of competent jurisdiction, or unless the Trustees
determine otherwise, a Trustee shall be elected by the Trustees, and
Shareholders shall have no right to 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 office at any time 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. Any removals shall be effective as to the Trust and
each Series and Class hereunder.
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) nor 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 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, etc. of a Trustee.
The death, resignation, retirement, removal, or mental or physical
incapacity of the Trustees, or any one of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the terms of
this Declaration of Trust.
Section 8. Ownership of Assets.
The assets belonging to each Series or Class 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 belonging to each Series or Class or owned by the Trust shall at all
times be considered as vested in the Trustees. No Shareholder shall be
deemed to have a severable ownership interest in any individual asset
belonging to any Series or Class or owned by the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in a Series or Class.
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 or a Series or Class. 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
of indebtedness 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 foreign country, by any State of the United States, or by any
political subdivision or agency or instrumentality of any 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 an agreed time and price), or to retain assets belonging to
each and every Series or Class in cash, and from time to time to change
the investments of the assets belonging to each Series or Class;
(b) To adopt By-Laws of the Trust 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 of the Trust and
appoint and terminate such agents of the Trust as they consider
appropriate;
(d) To appoint or otherwise engage a bank or trust
company as custodian of any assets belonging to any Series or Class
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 any Shares of any
Series or Class 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
belonging to one or more Series or Classes, 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 person 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 belongs to any Series or Class; 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 which belongs to any Series or Class;
(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 belonging to any Series or Class 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;
(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 the total assets of a Series, or (b) in
any amount up to one-third of the value of the total assets of a
Series, including the amount borrowed, in order to meet redemption
requests without immediately selling any portfolio securities. The
Trustees shall not pledge, mortgage or hypothecate the assets of a
Series or Class, except in connection with any borrowing described
herein and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the total assets of a Series at the
time of such borrowing;
(q) From time to time to issue and sell the Shares of any
Series or Class either for cash or for property whenever and in such
amounts as the Trustees 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.
The Trustees shall have all of the powers set forth in this
Section 1 with respect to all assets and liabilities of each Series and
Class.
Section 2. Principal Transactions.
The Trustees shall not cause the Trust on behalf of any Series or Class
to buy any securities (other than Shares) from or sell any securities (other
than Shares) to, or lend any assets belonging to any Series or Class 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 any 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 or any Series or Class
may acquire, own and dispose of Shares of any Series or Class 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 any Series or Class 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
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 shareholders, Trustees, officers, employees or agents of the
Trust or any Series or Class or their affiliates 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 or any Series or Class 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 Article VII or Article IX or any other capacity not
prohibited by 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 assets belonging to each
particular Series or Class for all of such Trustees' expenses as such
expenses are allocated to and among any one or more of the Series or Classes
pursuant to Article III, Section 5(b), including, without limitation,
expenses of organizing the Trust or any Series or Class and continuing its or
their 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 Registration Statements under the
Securities Act of 1933 and the 1940 Act and any amendments thereto; expenses
of registering and qualifying the Trust and any Series or Class and the
Shares of any Series or Class under federal and state laws and regulations;
expenses of preparing, printing and distributing prospectuses and any
amendments thereto 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 or any Series or
Class as a broker-dealer and of its or their officers as agents and salesmen
under federal and state laws and regulations; interest expenses, taxes, fees
and commissions of every kind; expenses of issue (including cost of share
certificates), purchases, repurchases and redemptions 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 and any Series or Class, including
expenses incurred in connection with litigation, proceedings and claims and
the obligations of the Trust under Article XI hereof and/or the By-Laws 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 assets belonging to each
Series or Class prior to any rights or interests of the Shareholders of any
Series or Class. This section shall not preclude the Trust from directly
paying any of the aforementioned fees and expenses.
Section 2. Trustee Compensation.
The Trustees shall be entitled to compensation from the Trust from the
assets belonging to any Series or Class 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 out of the
assets belonging to any Series or Class any Trustee or any corporation, firm,
trust or other entity of which a Trustee is an interested person for services
rendered 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 by the relevant Series or Class
to the extent such vote is required by law, 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 for such Series or Class upon such
terms and conditions and for such compensation as the Trustees may in their
discretion determine. Subject to a Majority Shareholder Vote by the relevant
Series or Class to the extent such vote is required by law, 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 for such Series or Class upon such terms and conditions
and for such compensation as the Trustees, in their discretion, may agree.
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 belonging to a Series or Class 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 a
Series or Class 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 or a Series or Class 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 nonexclusive contract or contracts providing for the sale of the
Shares of a Series or Class to net such Series or Class not less than the
amount provided in Article III, Section 3 hereof, whereby a Series or Class
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 or sale of Shares of a Series or Class 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 a Series or Class.
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 a 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.
Subject to the provisions set forth in Article III, Section 5(d), 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 or the Securities and Exchange 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 of a Series or Class are
issued, the Trustees may exercise all rights of Shareholders of such Series
or Class with respect to matters affecting such Series or Class, and may take
any action with respect to the Trust or such Series or Class 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 of all Series and Classes 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-fourth of the total number of
Shares of the Trust or all Series and Classes then outstanding and entitled
to vote at such meeting. When any one or more Series or Classes is entitled
to vote as a single Series or Class, holders of one-fourth of the total
number of Shares of each such Series or Class entitled to vote shall
constitute a quorum at a Shareholders' meeting of that Series or Class. If a
quorum, as defined above, 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 such 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 cast 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
meetings 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 or any Series or Class and deliver the same upon written
order;
(2) To receive and receipt for any moneys due
to the Trust or any Series or Class and deposit the same in its own
banking department or elsewhere as the Trustees may direct;
(3) To disburse such funds upon orders or
vouchers;
(4) To keep the books and accounts of the Trust
and any Series or Class and furnish clerical and accounting services;
(5) To compute, if authorized to do so by the
Trustees, the net asset value of the Trust and net asset value of the
Shares of any Series or Class 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 States 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 Securities and
Exchange Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by any Series or Class of 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 Securities and Exchange Commission under the securities Exchange Act
of 1934, or such other person as may be permitted by the Securities and
Exchange 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 of 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 to the Shareholders of any Series or Class, and the amount of
such dividends and the payment of them shall be wholly in the
discretion of the Trustees. Such dividends may be accrued and
automatically reinvested in additional Shares (or fractions thereof) of
the relevant Series or Class or another Series or Class, or paid in
cash or additional Shares of the relevant Series or Class, all upon
such terms and conditions as the Trustees may prescribe.
(b) The Trustees may distribute in respect of any fiscal
year as dividends and as capital gains distributions, respectively,
amounts sufficient to enable any Series or Class to qualify as a
regulated investment company to avoid any liability for federal income
taxes in respect of that year.
(c) The decision of the Trustees as to what constitutes
income and what constitutes principal shall be final, and except as
specifically provided herein the decision of the Trustees as to what
expenses and charges of any Series or Class 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 any Series or Class.
(d) All dividends and distributions on Shares of a
particular Series or Class shall be distributed pro rata to the holders
of that Series or Class in proportion to the number of Shares of that
Series or Class held by such holders and recorded on the books of the
Trust or its transfer agent at the date and time of record established
for that payment.
(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 any Series or
Class at any time desires to dispose of Shares of such Series or Class
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 out of assets belonging to such
Series or Class. The purchase price shall be the net asset value of
his shares as the Trustees from time to time may determine.
Payment for such Shares shall be made by the Trust to the
Shareholder of record within that time period required under the 1940
Act after 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 4 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 4 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 the time
period required under the 1940 Act.
(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not exceeding the
net asset value per Share determined (1) next after the purchase or
contract of purchase is made or (2) 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) The Trust may pay the redemption price in whole or in
part by a distribution in kind of securities from the portfolio of the
relevant Series or Class, 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.
Section 3. Net Asset Value of Shares.
The net asset value of each Share of a Series or Class 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 or other person designated by the Trustees.
The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent) obtained
by dividing the value, as of such time, of the net assets belonging to such
Series or Class (i.e., the value of the assets belonging to such Series or
Class less the liabilities belonging to such Series or Class exclusive of
capital and surplus) by the total number of Shares outstanding of the Series
or Class (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 Trustees may declare a suspension of the determination of net asset
value for the whole or any part of any period in accordance with the 1940
Act.
Section 4. 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 1940 Act.
Section 5. Trust's Right to Redeem Shares.
The Trust shall have the right to cause the redemption of Shares of any
Series or Class in any Shareholder's account for their then current net asset
value and promptly make payment to the shareholder (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
Shares has or may become concentrated to an extent which would cause the
Trust or a Series or Class 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. Limitation of Personal Liability and Indemnification of
Shareholders.
The Trustees, officers, employees or agents of the Trust shall have no
power to bind any Shareholder of any Series or Class personally or to call
upon such 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 any Series or Class 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 or any Series
or Class arising out of any action taken or omitted for or on behalf of the
Trust or such Series or Class, and the Trust or such Series or Class shall be
solely liable therefor and resort shall be had solely to the property of the
relevant Series or Class of the Trust for the payment or performance thereof.
Each Shareholder or former Shareholder of any Series or Class (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 be indemnified and reimbursed by the Trust to the full extent of such
liability and the costs 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 or former Shareholder of such Series or Class shall be held to be
personally liable. Such indemnification and reimbursement shall come
exclusively from the assets of the relevant Series or Class.
The Trust shall, upon request by a Shareholder or former Shareholder,
assume the defense of any claim made against any Shareholder for any act or
obligation of the Trust or any Series or Class 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 or any Series or
Class shall have the power to bind any other Trustee, officer, employee or
agent of the Trust personally. The Trustees, officers, employees or agents
of the Trust or any Series or Class incurring any debts, liabilities or
obligations, or in taking or omitting any other actions for or in connection
with the Trust or any Series or Class are, and each shall be deemed to be,
acting as Trustee, officer, employee or agent of the Trust or such Series or
Class and not in his own individual capacity.
Provided they have acted under the belief that their actions are in the
best interest of the Trust or any Series or Class, the Trustee and officers
shall not be 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 Series or Class or of any entity provided
administrative services for the Trust or any Series or Class, but nothing
herein contained shall protect any Trustee or officer against liability to
which he would otherwise be subject for their 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 or any Series or Class shall be
informed that the property of the Shareholders and the Trustees, officers,
employees and agents of the Trust or any Series or Class shall not be subject
to claims against or obligations of the Trust or any other Series or Class 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 or any Series or Class (including certificates for Shares of any Series
or Class) an appropriate reference to the provisions of this Declaration of
Trust, providing that neither the Shareholders, the Trustees, the officers,
the employees nor any agent of the Trust or any Series or Class shall be
liable thereunder, and that the other parties to such instrument shall look
solely to the assets belonging to the relevant Series or Class 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, Trustee, officer, employee or agent liable, nor shall the
Trustee, or any officer, agent or employee of the Trust or any Series or
Class 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 or any Series or Class 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 or the relevant Series or
Class to the 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 any Series or
Class or of another corporation, partnerships, joint venture, trust or
other enterprise at the request of the Trust or any Series or Class 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 proceeding (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 any Series or Class or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his officer.
(d) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust or any Series or
Class, shall be severable, shall not affect any other rights to which
any Trustee, officer, employee or agent may not 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) In the absence of a final decision of the merits by a
court or other body before which such proceeding was brought, an
indemnification payment will not be made, except as provided in
paragraph (f) of this Section 4, unless in the absence of such a
decision, a reasonable determination based upon a factual review has
been made (i) by a majority vote of a quorum of non-party trustees who
are not interested persons of the Trust, or (ii) by independent legal
counsel in a written opinion that the indemnitee was not liable for an
act of willful misfeasance, bad faith, gross negligence, or reckless
disregard of duties.
(f) The Trust further undertakes that advancement of
expenses incurred in the defense of a proceeding (upon undertaking for
repayment unless it is ultimately determined that indemnification is
appropriate) against an officer, trustee or controlling person of the
Trust or any Series or Class will not be made absent the fulfillment of
at least one of the following conditions: (i) the indemnitee provides
security for his undertaking, (ii) the Trust or any Series or Class is
insured against losses arising by reason of any lawful advances or
(iii) a majority of a quorum of disinterested non-party trustees or
independent legal counsel in a written opinion makes a factual
determination that there is a reason to believe the indemnitee will be
entitled to indemnification.
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 Action Binding, Expert Advice, No Bond or Surety.
The exercise by the Trustees of their powers and discretion 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 or 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 maintained
with respect to any Series or Class for a period not exceeding sixty (60)
days preceding the date of any meeting of Shareholders of the Trust or any
Series or Class, 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 of any Series or
Class 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 of the Trust or any
Series or Class, or the date for the payment of any dividend or the making of
any distribution to Shareholders of any Series or Class, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares of any Series or Class shall go into effect, or the last day on which
the consent or dissent of Shareholders of any Series or Class 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, conversion or exchange of shares,
or to exercise the right to give such consent or dissent, and in such case
such Shareholders and only such Shareholders 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 change, convert or exchange Shares
of any Series or Class, or to exercise such rights, as the case may be,
notwithstanding, after such date fixed aforesaid, any transfer of any Shares
on the books of the Trust maintained with respect to any Series or Class.
Nothing in the foregoing sentence shall be construed as precluding the
Trustees from setting different record dates for different Series or Classes.
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 of each Series or Class, may
by unanimous action sell and convey the assets of the Trust or any
Series or Class 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 each Series or Class 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 belonging to each Series or Class ratably among the holders of
the Shares of that Series or Class of the Trust then outstanding.
(c) Subject to a Majority Shareholder Vote by such Series
or Class, the Trustees may at any time sell and convert into money all
the assets of the Trust or any Series or Class. Upon making provision
for the payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, belonging to each Series or Class
of the Trust, the Trustees shall distribute the remaining assets
belonging to each Series or Class of the Trust ratably among the
holders of the outstanding Shares of that Series or Class.
(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b) and (c),
the Trust or the applicable Series or Class shall terminate and the
Trustees shall be discharged of any and all further liabilities and
duties hereunder or with respect thereto and the right, title and
interest of all parties shall be canceled and discharged.
Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts.
The Trust shall maintain a usual place of business in Massachusetts,
which, currently is c/o Donnelly, Conroy & Gelhaar, One Post Office Square,
Boston, Massachusetts 02109-2105, 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 office where such filing may from
time to time be required. Anyone dealing with the Trust or any Series or
Class 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 with the Trust or any Series or Class hereunder, and
with the same effect as if it were the original, may rely on 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 under and is to be
governed by and construed 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 -- General.
Prior to the initial issuance of Shares pursuant to Section 3 of Article
III, 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 hereof. Subsequent to such
initial issuance of Shares, amendments or supplements to this instrument may
be authorized by a majority of the Trustees then in office and by a Majority
Shareholder Vote of all Series and Classes entitled to vote thereon (except
that any amendments or supplements changing the name of the Trust, or any
Series or Class, or pursuant to Section 8 of this Article XII may be made
without shareholder approval), or as otherwise provided by this Declaration
of Trust or applicable law, which amendment or supplement thereafter shall
form a part hereof. Any such amendment or supplement (which may be in the
form of a complete restatement) may be evidenced by either (i) a supplemental
Declaration of Trust signed by at least a majority of the Trustees then in
office or (ii) by a certificate of the President and Secretary of the Trust
setting forth such amendment or supplement and certifying that such amendment
or supplement has been duly authorized by the Trustees, and if required, by
the Shareholders. Copies of the supplemental Declaration of Trust or the
certificate of the President and Secretary, as the case may be, shall be
filed as specified in Section 5 of this Article XII.
Section 8. Amendments -- Series and Classes.
The establishment and designation of any Series or Class of Shares in
addition to those established and designated in Section 5 of Article III
hereof shall be effective upon the execution by a majority of the then
Trustees, without the need for Shareholder approval, of an amendment to this
Declaration of Trust, taking the form of a complete restatement or otherwise,
setting forth such establishment and designation and the relative rights and
preferences of any such Series or Class, or as otherwise provided in such
instrument.
Without limiting the generality of the foregoing, the Declaration of
the Trust may be amended to:
(a) create one or more Series or Classes of Shares (in
addition to any Series or Classes already existing or otherwise) with
such rights and preferences and such eligibility requirements for
investment therein as the Trustees shall determine and reclassify any
or all outstanding Shares as Shares of particular Series or Classes in
accordance with such eligibility requirements;
(b) combine two or more Series or Classes of Shares into
a single Series or Class on such terms and conditions as the Trustees
shall determine;
(c) change or eliminate any eligibility requirements for
investment in Shares of any Series or Class, including without
limitation the power to provide for the issue of Shares of any Series
or Class in connection with any merger or consolidation of the Trust
with another trust or company or any acquisition by the Trust of part
or all of the assets of another trust or company;
(d) change the designation of any Series or Class of
Shares;
(e) change the method of allocating dividends among the
various Series and Classes of Shares;
(f) allocate any specific assets or liabilities of the
Trust or any specific items of income or expense of the Trust to one or
more Series and Classes of Shares; and
(g) specifically allocate assets to any or all Series or
Classes of Shares or create one or more additional Series or Classes of
Shares which are preferred over all other Series or Classes of Shares
in respect of assets specifically allocated thereto or any dividends
paid by the Trust with respect to any net income, however determined,
earned from the investment and reinvestment of any assets so allocated
or otherwise and provide for any special voting or other rights with
respect to such Series or Classes.
Section 9. Use of Name.
The Trust acknowledges that Federated Investors has reserved the right
to grant the non-exclusive use of the name "Federated U.S. Government Bond
Fund" or any derivative thereof to any other investment company, investment
company portfolio, investment adviser, distributor, or other business
enterprise, and to withdraw from the Trust or one or more Series or Classes
any right to the use of the name "Federated U.S. Government Bond Fund."
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the day and year first above written.
/s/ John F. Donahue /s/ Peter E. Madden
John F. Donahue Peter E. Madden
/s/ John T. Conroy, Jr. /s/ Gregor F. Meyer
John T. Conroy, Jr. Gregor F. Meyer
/s/ William J. Copeland /s/ Wesley W. Posvar
William J. Copeland Wesley W. Posvar
/s/ James E. Dowd /s/ Marjorie P. Smuts
James E. Dowd Marjorie P. Smuts
/s/ Lawrence D. Ellis, M.D. /s/ John A. Staley, IV
Lawrence D. Ellis, M.D. John A. Staley, IV
/s/ Edward L. Flaherty, Jr.
Edward L. Flaherty, Jr.
COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )
I hereby certify that on August 30, 1993, before me, the subscriber, a
Notary Public of the Commonwealth of Pennsylvania, in for the County of
Allegheny, personally appeared JOHN F. DONAHUE, JOHN T. CONROY, JR., WILLIAM
J. COPELAND, JAMES E. DOWD, LAWRENCE D. ELLIS, M.D., EDWARD L. FLAHERTY, JR.,
PETER E. MADDEN, GREGOR F. MEYER, J. WESLEY W. POSVAR, MARJORIE P. SMUTS, AND
JOHN A. STALEY, IV, who acknowledged the foregoing Declaration of Trust to be
their act.
Witness my hand and notarial seal the day and year above written.
/s/ Nancy H. Beatty
Notary Public
Exhibit 2 under Form N-1A
Exhibit 3(b) Under Item 601 Reg. S-K
FEDERATED U.S. GOVERNMENT BOND FUND
BY-LAWS
AS RESTATED AND AMENDED
(Effective August 30, 1993)
FEDERATED U.S. GOVERNMENT BOND FUND
OUTLINE OF BY-LAWS
ARTICLE I 1
OFFICERS AND THEIR ELECTION 1
Officers 1
Election of Officers 1
Resignations and Removals and Vacancies 1
ARTICLE II 1
POWERS AND DUTIES OF TRUSTEES AND OFFICERS 1
Trustees 1
Chairman of the Trustees ("Chairman") 1
President 1
Vice President 1
Secretary 2
Treasurer 2
Assistant Vice President 2
Assistant Secretaries and Assistant Treasurers 2
Salaries 2
ARTICLE III 2
POWERS AND DUTIES OF THE 2
Executive and Other Committees 2
Vacancies in Executive Committee 2
Executive Committee to Report to Trustees 3
Procedure of Executive Committee 3
Powers of Executive Committee 3
Compensation 3
Informal Action by Executive Committee or Other
Committee 3
ARTICLE IV 3
SHAREHOLDERS' MEETINGS 3
Special Meetings 3
Notices 3
Place of Meetings 3
Action by Consent 4
Proxies 4
ARTICLE V 4
TRUSTEES' MEETINGS 4
Number and Qualifications of Trustees 4
Special Meetings 4
Regular Meetings 4
Quorum and Vote 4
Notices 4
Place of Meeting 4
Telephonic Meeting 5
Special Action 5
Action by Consent 5
Compensation of Trustees 5
ARTICLE VI 5
SHARES OF BENEFICIAL INTEREST 5
Certificates 5
Transfer of Shares 5
Equitable Interest Not Recognized 5
Lost, Destroyed or Mutilated Certificates 5
Transfer Agent and Registrar Regulations 6
ARTICLE VII 6
INSPECTION OF BOOKS 6
ARTICLE VIII 6
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC. 6
Agreements, Etc. 6
Checks, Drafts, Etc. 6
Endorsements, Assignments and Transfer of Securities 6
Evidence of Authority 6
ARTICLE IX 7
SEAL 7
ARTICLE X 7
FISCAL YEAR 7
ARTICLE XI 7
AMENDMENTS 7
ARTICLE XII 7
WAIVERS OF NOTICE 7
ARTICLE XIII 7
REPORT TO SHAREHOLDERS 7
ARTICLE XIV 8
BOOKS AND RECORDS 8
ARTICLE XV 8
TERMS 8
BY-LAWS
of
FEDERATED U.S. GOVERNMENT BOND FUND
ARTICLE IARTICLE I
OFFICERS AND THEIR ELECTIONOFFICERS 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 any Series or Class of 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 Removals 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 with 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 IIARTICLE II
POWERS AND DUTIES OF TRUSTEES AND OFFICERSPOWERS 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 or officer to preside at
such meetings in his absence.
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 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 of each Series or Class of the Trust, 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, Chairman 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 belonging to any Series or Class 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 for any Series or Class. 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 IIIARTICLE III
POWERS AND DUTIES OF THEPOWERS 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 fees 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 members of such committee and such consent is
filed with the records of the Trust.
ARTICLE IVARTICLE IV
SHAREHOLDERS MEETINGSSHAREHOLDERS MEETINGS
Section 1. Special Meetings. A special meeting of the
shareholders of the Trust or of a particular Series or Class 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 of the Trust, or a relevant Series or Class,
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 of the Trust or of a particular
Series or Class 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 Meetings. Meetings of the shareholders of
the Trust or of a particular Series or Class 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 VARTICLE V
TRUSTEES MEETINGSTRUSTEES 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 Meetings. 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 Meetings. 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 resolution 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 VIARTICLE VI
SHARES OF BENEFICIAL INTERESTSHARES OF BENEFICIAL INTEREST
Section 1. 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 for each Series or Class 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 2. Transfer of Shares. The shares of each Series and
Class of the Trust shall be transferable, so as to affect the rights of
the Trust or any Series or Class, only by transfer recorded on the books
of the Trust, in person or by attorney.
Section 3. Equitable Interest Not Recognized. The Trust shall be
entitled to treat the holder of record of any share or shares of a
Series or Class as the absolute owner thereof and shall not be bound to
recognize any equitable or other claim or interest in such share or
shares of a Series or Class on the part of any other person except as
may be otherwise expressly provided by law.
Section 4. 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
relevant Series or Class against loss and upon such other terms and
conditions as the Trustees may deem advisable.
Section 5. 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 of each Series or
Class, and may require all such share certificates to bear the signature
of such Transfer Agent and/or of such Registrar.
ARTICLE VIIARTICLE VII
INSPECTION OF BOOKSINSPECTION 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 maintained on behalf of
each Series or Class or any of them shall be open to the inspection of
the shareholders of any Series or Class; and no shareholder shall have
any right of inspecting any account or book or document of the Trust
except that, to the extent such account or book relates to the Series or
Class in which he is a shareholder or the Trust generally, such
shareholder shall have such right of inspection as conferred by laws or
authorized by the Trustees or by resolution of the shareholders of the
relevant Series or Class.
ARTICLE VIIIARTICLE VIII
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.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 the Trust on behalf of any Series or Class,
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 on behalf of any Series or
Class 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 or directions for the transfer of portfolio securities, whether
or not registered in nominee form, or belonging to any Series or Class
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 IXARTICLE IX
SEALSEAL
The seal of the Trust shall consist of a flat-faced die with the
word "Massachusetts", together with the name of the Trust and the year
of its organization cut or engraved thereon but, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf of the
Trust.
ARTICLE XARTICLE X
FISCAL YEARFISCAL YEAR
The fiscal year of the Trust and each Series or Class shall be the
period of twelve months ending on the last day of August in each
calendar year.
ARTICLE XIARTICLE XI
AMENDMENTSAMENDMENTS
These By-Laws may be amended by a majority vote of all of the
Trustees.
ARTICLE XIIARTICLE XII
WAIVERS OF NOTICEWAIVERS 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 by 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 XIIIARTICLE XIII
REPORT TO SHAREHOLDERSREPORT TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the
shareholders of each Series or Class a written financial report of the
transactions of that Series or Class, including financial statements
which shall at least annually be certified by independent public
accountants.
ARTICLE XIV
ARTICLE XIV
BOOKS AND RECORDSBOOKS AND RECORDS
The books and records of the Trust or any Series or Class,
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.
ARTICLE XVARTICLE XV
TERMSTERMS
Terms defined in the Declaration of Trust and not otherwise
defined herein are used herein with the meanings set forth or referred
to in the Declaration of Trust.
Exhibit 5 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
FEDERATED BOND FUND
INVESTMENT ADVISORY CONTRACT
This Contract is made between FEDERATED MANAGEMENT, a Delaware business
trust having its principal place of business in Pittsburgh, Pennsylvania
(hereinafter referred to as "Adviser'), and FEDERATED BOND FUND, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (hereinafter referred to as the "Fund"), and is
based on the following premises:
(a) That the Fund is an open-end management investment company as
that term is defined in the Investment Company Act of 1940 and is
registered as such with the Securities and Exchange Commission;
(b) That Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. The Fund hereby appoints Adviser as investment adviser and Adviser
accepts the appointment. Subject to the direction of the Trustees of the
Fund, Adviser shall provide investment research and supervision of the
investments of the Fund and conduct a continuous program of investment,
evaluation and of appropriate sale or other disposition and reinvestment of
the Fund portfolio.
2. Adviser, in its supervision of the investments of the Fund will be
guided by the Fund's fundamental investment policies and the provisions and
restrictions contained in the Declaration of Trust and By-Laws of the Fund
and as set forth in the Registration Statements and exhibits as may be on
file with the Securities and Exchange Commission.
3. The Fund shall pay all of its expenses, including, without
limitation, the expenses of organizing the Fund and continuing the Fund's
existence; fees and expenses of Trustees and officers of the Fund; fees for
investment advisory services and administrative personnel and services; 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 Fund and its
shares under Federal and State laws and regulations; expenses of preparing,
printing, and distributing prospectuses (and any amendments thereto) to
shareholders; expenses of registering, licensing or other authorization of
the Fund 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 Trustees and shareholders
and proxy solicitations therefor; insurance expenses; association membership
dues and such nonrecurring items as may arise, including all losses and
liabilities incurred in administering the Fund. The Fund will also pay
extraordinary expenses as may arise including expenses incurred in connection
with litigation, proceedings, and claims and the legal obligations of the
Fund to indemnify its Trustees, officers, employees, shareholders,
distributors, and agents with respect thereto.
4. For all services rendered by Adviser hereunder, the Fund shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual gross investment advisory fee equal to .60% of
the average daily net assets of the Fund. Such fee shall be accrued and paid
daily at the rate of 1/365th of .60% of the daily net assets of the Fund.
5. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
the Fund) to the extent that the Fund's expenses exceed such lower expense
limitation as the Adviser may, by notice to the Fund, voluntarily declare to
be effective.
6. The term of this Contract shall begin on the date of its execution
and shall continue in effect for two years from that date and from year to
year thereafter, subject to the provisions for termination and all of the
other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of Trustees
of the Fund, including a majority of the Trustees who are not parties to this
Contract or interested persons of any such party (other than as Trustees of
the Fund) cast in person at a meeting called for that purpose; and (b)
Adviser shall not have notified the Fund in writing at least sixty (60) days
prior to the anniversary date of this Contract in any year thereafter that it
does not desire such continuation.
7. Notwithstanding any provision in this Contract, it may be terminated
at any time, without the payment of any penalty, by the Trustees of the Fund
or by a vote of a majority of the outstanding voting securities of the Fund
on sixty (60) days' written notice to Adviser.
8. This Contract may not be assigned by Adviser and shall automatically
terminate in the event of any assignment. Adviser may employ or contract with
such other person, persons, corporation, or corporations at its own cost and
expense as it shall determine in order to assist it in carrying out this
Contract.
9. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties under this contract on the
part of Adviser, Adviser shall not be liable to the Fund or any shareholder
for any act or omission in the course of or connected in any way with
rendering services or for any losses that may be sustained in the purchase,
holding, or sale of any security.
10. This Contract may be amended at any time by agreement of the parties,
provided that the amendment shall be approved both by the vote of a majority
of the Trustees of the Fund, including a majority of the Trustees who are not
parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Fund) cast in person at a meeting
called for that purpose, and by the holders of a majority of the outstanding
voting securities of the Fund.
11. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations assumed by the Fund pursuant to this Contract be limited
in any case to the Fund and its assets and Adviser shall not seek
satisfaction of any such obligation from the shareholders of the Fund, the
Trustees, officers, employees, or agents of the Fund, or any of them.
12. The Fund is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration of Trust of the Adviser and agrees
that the obligations assumed by the Adviser pursuant to this Contract shall
be limited in any case to the Adviser and its assets and, except to the
extent expressly permitted by the Investment Company Act of 1940, the Fund
shall not seek satisfaction of any such obligation from the shareholders of
the Adviser, the Trustees, officers, employees or agents of the Adviser, or
any of them.
13. This Contract shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
14. The parties hereto acknowledge that Federated Investors 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 Fund the
use of the name "Federated." The name "Federated" will continue to be used by
the Fund so long as such use is mutually agreeable to Federated Investors and
the Fund.
IN WITNESS WHEREOF, the parties have caused this Contract to be executed
on their behalf by their duly authorized officers and their seals to be
affixed hereto this 1st day of August, 1989.
Attest: FEDERATED MANAGEMENT
/s/John W. McGonigle By:/s/Mark L. Mallon
Secretary Executive
Vice President
Attest: FEDERATED BOND FUND
/s/John W. McGonigle By:/s/Edward C.
Gonzales
Secretary Vice
President
-1-
Exhibit 6 under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
FEDERATED BOND FUND
DISTRIBUTOR'S CONTRACT
This Agreement is entered into this 1st day of _August , 1989,
between Federated Bond Fund (the "Fund"), a Massachusetts business trust, and
FEDERATED SECURITIES CORP. ("FSC"), a Pennsylvania corporation.
In consideration of the mutual covenants hereinafter contained, it
is hereby agreed by and among the parties hereto as follows:
1. The Fund hereby appoints FSC its agent to sell and distribute
shares of the Fund ("Shares") at the current offering price thereof as
described and set forth in the current prospectus of the Fund.
2. The sale of Shares may be suspended with or without prior
notice whenever in the judgment of the Fund it is in its best interest to do
so.
3. Neither FSC nor any other person is authorized by the Fund to
give any information or to make any representation relative to the Shares
other than those contained in the Registration Statement or Prospectus and
Statement of Additional Information filed with the Securities and Exchange
Commission as the same may be amended from time to time or in any
supplemental information to said Prospectus or Statement of Additional
Information approved by the Fund. FSC agrees that any other information or
representations, other than those specified above which it or any dealer or
other person who purchases Shares through FSC may make in connection with the
offer or sale of Shares, shall be made entirely without liability on the part
of the Fund. FSC agrees that in offering or selling Shares as agent of the
Fund, it will, in all respects, duly conform to all applicable state and
Federal laws and the rules and regulations of the National Association of
Securities Dealers, Inc., including its Rules of Fair Practice. FSC will
submit to the Fund copies of all sales literature before using the same and
will not use such sales literature if disapproved by the Fund.
4. This Agreement shall continue in effect for two years from the
date of its execution and thereafter for successive periods of one year if
such continuance is approved at least annually by the Trustees of the Fund
including a majority of the Trustees of the Fund who are not parties to this
Agreement or interested persons of any such party (other than as Trustees of
the Fund) cast in person at a meeting called for that purpose. This
Agreement may be terminated at any time by mutual consent of the Fund and
FSC.
5. This Agreement may not be assigned by FSC and shall
automatically terminate in the event of any assignment as defined in the
Investment Company Act of 1940, provided, however, that FSC may employ such
other person, persons, corporation or corporations as it shall determine in
order to assist in it carrying out its duties under this Agreement.
6. FSC shall not be liable to the Fund or any shareholder of the
Fund 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 by this Agreement.
7. This Agreement may be amended at any time by mutual agreement
in writing of all the parties hereto, provided that such amendment is
approved by the Trustees of the Fund including a majority of the Trustees of
the Fund who are not parties to this Agreement or interested persons of any
such party (other than as Trustees of the Fund) cast in person at a meeting
called for that purpose.
8. This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania.
9. (a) Subject to the conditions set forth below, the Fund agrees
to indemnify and hold harmless FSC and each person, if any, who controls FSC
within the meaning of Section 15 of the Securities Act of 1933 and Section 20
of the Securities Exchange Act of 1934, as amended, against any and all loss,
liability, claim, damage and expense whatsoever (including but not limited to
any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or
any claim whatsoever) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus and Statement of Additional Information (as from
time to time amended and supplemented) or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information
furnished to the Fund with respect to FSC by or on behalf of FSC expressly
for use in the Registration Statement or Prospectus and Statement of
Additional Information, or any amendment or supplement thereof.
(b) If any action is brought against FSC or any controlling
person thereof in respect of which indemnity may be sought against the Fund
pursuant to subsection (a), FSC shall promptly notify the Fund in writing of
the institution of such action and the Fund shall assume the defense of such
action, including the employment of counsel selected by the Fund and payment
of expenses. FSC or any such controlling person thereof shall have the right
to employ separate counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of FSC or such controlling person unless
the employment of such counsel shall have been authorized in writing by the
Fund in connection with the defense of such action or the Fund shall not have
employed counsel to have charge of the defense of such action, in any of
which events such fees and expenses shall be borne by the Fund. Anything in
this paragraph to the contrary notwithstanding, the Fund shall not be liable
for any settlement of any such claim or action effected without its written
consent. The Fund agrees promptly to notify FSC of the commencement of any
litigation or proceedings against the Fund or any of its officers or Trustees
or controlling persons in connection with the issue and sale of Shares or in
connection with such Registration Statement or Prospectus and Statement of
Additional Information.
(c) FSC agrees to indemnify and hold harmless the Fund, each
of its Trustees, each of its officers who have signed the Registration
Statement and each other person, if any, who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, but only with respect to
statements or omissions, if any, made in the Registration Statement or
Prospectus and Statement of Additional Information or any amendment or
supplement thereof in reliance upon, and in conformity with, information
furnished to the Fund with respect to FSC by or on behalf of FSC expressly
for use in the Registration Statement or Prospectus and Statement of
Additional Information or any amendment or supplement thereof. In case any
action shall be brought against the Fund or any other person so indemnified
based on the Registration Statement or Prospectus and Statement of Additional
Information, or any amendment or supplement thereof, and in respect of which
indemnity may be sought against FSC, FSC shall have the rights and duties
given to the Fund, and the Fund and each other person so indemnified shall
have the rights and duties given to FSC by the provisions of subsection (b)
above.
(d) Nothing herein contained shall be deemed to protect any
person against liability to the Fund or its shareholders to which such person
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of the duties of such person or by reason
of the reckless disregard by such person of the obligations and duties of
such person under this Agreement.
(e) Insofar as indemnification for liabilities may be
permitted pursuant to Section 17 of the Investment Company Act of 1940 for
FSC or Trustees, officers and controlling persons of the Fund by the Fund
pursuant to this Agreement, the Fund is aware of the position of the
Securities and Exchange Commission as set forth in the Investment Company Act
Release No. IC-11330. Therefore, the Fund undertakes that in addition to
complying with the applicable provisions of this Agreement, in the absence of
a final decision on the merits by a court or other body before which the
proceeding was brought, that an indemnification payment will not be made
unless in the absence of such a decision, a reasonable determination based
upon factual review has been made (i) by a majority vote of a quorum of non-
party Trustees who are not interested persons of the Fund or (ii) by
independent legal counsel in a written opinion that the indemnitee was not
liable for an act of willful misfeasance, bad faith, gross negligence or
reckless disregard of duties. The Fund further undertakes that advancement
of expenses incurred in the defense of a proceeding (upon undertaking for
repayment unless it is ultimately determined that indemnification is
appropriate) against FSC or an officer, Trustee or controlling person of the
Fund will not be made absent the fulfillment of at least one of the following
conditions: (i) the indemnitee provides security for his undertaking; (ii)
the Fund is insured against losses arising by reason of any lawful advances;
or (iii) a majority of a quorum of disinterested non-party Trustees or
independent legal counsel in a written opinion makes a factual determination
that there is reason to believe the indemnitee will be entitled to
indemnification.
10. FSC is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust of the Fund
and agrees that the obligations assumed by the Fund pursuant to this
Agreement shall be limited in any case to the Fund and its assets and FSC
shall not seek satisfaction of any such obligation from the shareholders of
the Fund, the Trustees, officers, advisers, employees or agents of the Fund,
or any of them.
IN WITNESS WHEREOF, this Agreement has been duly executed on the day
and year first above written.
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By: /s/ Richard B. Fisher
Secretary President
(SEAL)
ATTEST: FEDERATED BOND FUND
/s/ John W. McGonigle By:/s/ J. Christopher Donahue
Secretary Vice President
(SEAL)
Exhibit 8(i) 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 Authority14
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 Net Income
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 Amendment19
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.
2.10 Payments 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.
2.11 Appointment 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.
2.12 Deposit 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.
2.13 Segregated 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.
2.14 Joint 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.
2.15 Ownership 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.
2.16 Proxies. 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.
2.17 Communications 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.
2.18 Proper 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.
2.19 Actions 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.
2.20 Evidence 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.
2.21 Notice 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 (Except those
listed below)
By
/s/John G. McGonigle /s/John F. 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
Federated U.S. Government Bond Fund
-1-
Exhibit 8 (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 the 1st day of December, 1993, 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 wishes 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"), and
the Company is willing to furnish such services; and
WHEREAS, the Trust desires to appoint the Company as its transfer
agent, dividend disbursing agent, and agent in connection with certain
other activities, and the Company desires to accept such appointment;
and
WHEREAS, the Trust desires to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an
approved list of qualified banks 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 and 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 and 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;
B. Calculate the net income of each of the Funds, if any;
C. Calculate capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
D. 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;
E. 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;
F. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other
applicable laws and regulations; and
G. 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 set forth on Fee Schedules A ("A1, A2, A3 etc..."),
annexed hereto and incorporated herein, as may be added or
amended from time to time. 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 specified in Schedules B ("B1, B2, B3,
etc..."), annexed hereto and incorporated herein, as may be
added or amended from time to time. Schedules B may be
modified by the Company upon not less than thirty days' prior
written notice to the Trust.
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 Company will send an invoice to each of the Funds as soon
as practicable after the end of each month. Each invoice will
provide detailed information about the compensation and out-of-
pocket expenses in accordance with Schedules A and Schedules
B. The Funds and or the Classes will pay to the Company the
amount of such invoice within 30 days of receipt of the
invoices.
D. Any compensation agreed to hereunder may be adjusted from time
to time by attaching to Schedules A revised Schedules 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
confirmable 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 set
out in Schedules C ("C1, C2, C3 etc..."), attached hereto, as
may be added 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 fees set forth on Schedule C 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 set
out in Schedules D ("D1, D2, D3 etc..."), attached hereto, as
may be added 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 Company shall send an invoice with respect to fees and
reimbursable expenses to the Trust or each of the Funds as
soon as practicable at the end of each month. Each invoice
will provide detailed information about the Compensation and
out-of-pocket expenses in accordance with Schedules C and
Schedules D. The Trust or the Funds will pay to the Company
the amount of such invoice within 30 days following the
receipt of the invoices.
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.
(1) This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted
successors and assigns.
(2) 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
(3) 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:
(1) evaluate the nature and the quality of the custodial
services provided by the Eligible Custodian;
(2) 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;
(3) 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;
(4) establish procedures to monitor the nature and the
quality of the services provided by the Custodians;
(5) continuously monitor the nature and the quality of
services provided by the Custodians; and
(6) 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 set forth in Schedule E, attached
hereto.
B. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to each of the Trust/or Fund as soon as
practicable at the end of each month. Each invoice will
provide detailed information about the Compensation and out-of-
pocket expenses in occurrence with Schedule E. The Trust
and/or Fund will pay to the Company the amount of such invoice
within 30 days following the receipt of the invoice.
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. Indemnification.
A. 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,
(2) The Trust's or Fund's refusal or failure to comply with
the terms of this Agreement, or which arise out of the
Trust's or The Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of
any representation or warranty of the Trust or Fund
hereunder or otherwise.
(3) 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; or
(b) have been prepared and/or maintained by the Fund or
its affiliates or any other person or firm on
behalf of the Trust.
(4) The reliance on, or the carrying out by the Company or
its agents or subcontractors of Proper Instructions of
the Trust or the Fund.
(5) 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, gross negligence or reckless
disregard of its duties.
B. Indemnification by the Company
The Company shall indemnify and hold the Trust or each Fund
harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities
arising out of or attributable to any action or failure or
omission to act by the Company as a result of the Company's
willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties.
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
Federated U.S. Government Bond Fund
-1-
Exhibit 9 (i) 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 U.S. Government Bond Fund
-1-
Exhibit 9 (ii) 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 U.S. Government Bond Fund
-1-
Exhibit 9 (iii) 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 U.S. Government Bond Fund
FSS subcontract 1
Exhibit 9 (iv) 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.
The Trustees of
Federated Bond Fund Page 2 November 22, 1985
Exhibit 10 under Form N-1A
Exhibit 5 under Item 601/Reg. S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
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)
ROBERT CHARLES STODDART
November 22, 1985
The Trustees of
Federated Bond Fund
421 Seventh Avenue
Pittsburgh, PA 15219
Gentlemen:
Federated Bond Fund ("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 May 24, 1985,
("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 upon 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" in the prospectus filed as a part
of such amended Registration Statement, applications and registration
statements.
Very truly yours,
HOUSTON, HOUSTON & DONNELLY
By: /s/ William McC. Houston
William McC. Houston
TJD/WMH/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
November 18, 1985
Federated Bond Fund
Federated Investors Building
421 Seventh Avenue
Pittsburgh, Pennsylvania 15219
Gentlemen:
The Standard Fire Insurance Company agrees to purchase 10,000 shares of
Federated Bond Fund at the cost of $10.00 each. These shares are purchased
for investment purposes, and The Standard Fire Insurance Company has no
present intention of redeeming these shares.
Very truly yours,
/s/ John A. Staley
John A. Staley, IV
Vice President
sdm
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<INVESTMENTS-AT-COST> 142,242,874
<INVESTMENTS-AT-VALUE> 137,434,921
<RECEIVABLES> 1,228,421
<ASSETS-OTHER> 1,034
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 138,664,376
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 648,237
<TOTAL-LIABILITIES> 648,237
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 143,852,133
<SHARES-COMMON-STOCK> 14,199,325
<SHARES-COMMON-PRIOR> 7,497,305
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,028,041)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4,807,953)
<NET-ASSETS> 138,016,139
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,508,692
<OTHER-INCOME> 0
<EXPENSES-NET> 891,428
<NET-INVESTMENT-INCOME> 5,617,264
<REALIZED-GAINS-CURRENT> (1,028,041)
<APPREC-INCREASE-CURRENT> (9,813,977)
<NET-CHANGE-FROM-OPS> (5,224,754)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,617,264
<DISTRIBUTIONS-OF-GAINS> 2,249,765
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,322,697
<NUMBER-OF-SHARES-REDEEMED> 7,723,265
<SHARES-REINVESTED> 102,603
<NET-CHANGE-IN-ASSETS> (7,867,029)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,257,349
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 642,275
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,069,289
<AVERAGE-NET-ASSETS> 106,750,935
<PER-SHARE-NAV-BEGIN> 11.040
<PER-SHARE-NII> .540
<PER-SHARE-GAIN-APPREC> (1.090)
<PER-SHARE-DIVIDEND> .540
<PER-SHARE-DISTRIBUTIONS> .230
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.720
<EXPENSE-RATIO> 83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
