Reg. No. 333-____
811-4577
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FEDERATED INCOME SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
(412) 288-1900
(Area Code and Telephone Number)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
JOHN W. MCGONIGLE, ESQUIRE
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
Copies to:
C. Grant Anderson, Esquire Matthew G. Maloney, Esquire
Corporate Counsel Dickstein Shapiro Morin & Oshinsky LLP
Federated Investors, Inc. 2101 L Street, NW
Federated Investors Tower Washington, DC 20037
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Title of Securities Being Registered: shares of beneficial interest of
Federated Income Securities Trust.
It is proposed that this filing will become effective June 6, 1999 pursuant to
Rule 488(a) under the Securities Act of 1933, as amended.
No filing fee is required under the Securities Act of 1933, as amended, because
an indefinite number of shares of beneficial interest have previously been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended.
CCB BOND FUND
(FORMERLY, 111 CORCORAN BOND FUND),
A PORTFOLIO OF CCB FUNDS (FORMERLY, 111 CORCORAN FUNDS)
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
Dear Shareholder:
The Board of Directors and management of the CCB Funds are pleased to
submit for your vote a proposal to transfer all of the assets of the CCB Bond
Fund (the "CCB Bond Fund") to Federated Intermediate Income Fund (the "Federated
Fund"), a portfolio of Federated Income Securities Trust, a mutual fund advised
by Federated Investment Management Company. The Federated Fund has an investment
objective similar to that of the CCB Bond Fund in that it seeks to provide
current income by investing in a diversified portfolio of investment grade
securities. As part of the transaction, holders of shares in the CCB Bond Fund
would receive Institutional Shares of the Federated Fund equal in value to their
shares in the CCB Bond Fund and the CCB Bond Fund would be liquidated.
The Board of Directors of CCB Funds, as well as Central Carolina Bank
& Trust Company, the CCB Bond Fund's investment adviser, and Federated
Securities Corp., the CCB Bond Fund's distributor, believe the proposed
agreement and plan of reorganization is in the best interests of CCB Bond Fund
shareholders for the following reasons:
--The reorganization of the CCB Bond Fund into the Federated Fund may
provide operating efficiencies as a result of the size of the
Federated Fund which were not available to CCB Bond Fund
shareholders due to the smaller size of the CCB Bond Fund.
--The Federated Fund has an investment objective similar to that of
the CCB Bond Fund and offers an investment portfolio which invests
in a diversified portfolio of investment grade securities.
We believe the transfer of the CCB Bond Fund's assets in this
transaction presents an exciting investment opportunity for our shareholders.
Your vote on the transaction is critical to its success. The transfer will be
effected only if approved by a majority of all of the CCB Bond Fund's
outstanding shares on the record date voted in person or represented by proxy.
We hope you share our enthusiasm and will participate by casting your vote in
person, or by proxy if you are unable to attend the meeting. Please read the
enclosed prospectus/proxy statement carefully before you vote.
THE BOARD OF TRUSTEES BELIEVES THAT THE TRANSACTION IS IN THE BEST
INTERESTS OF THE CCB BOND FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR ITS APPROVAL.
Thank you for your prompt attention and participation.
Sincerely,
Edward C. Gonzales
President
<PAGE>
CCB BOND FUND
(FORMERLY, 111 CORCORAN BOND FUND),
A PORTFOLIO OF CCB FUNDS (FORMERLY, 111 CORCORAN FUNDS)
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF CCB BOND FUND:
A Special Meeting of Shareholders of CCB Bond Fund, a portfolio of CCB
Funds (the "CCB Bond Fund") will be held at 2:00 p.m. on July 22, 1999, at: 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7010, for the following
purposes:
1. To approve or disapprove a proposed Agreement and Plan of
Reorganization between the CCB Bond Fund and Federated Income Securities Trust,
on behalf of its portfolio, Federated Intermediate Income Fund (the "Federated
Fund"), whereby the Federated Fund would acquire all of the assets of the CCB
Bond Fund in exchange for the Federated Fund's Institutional Shares to be
distributed PRO RATA by the CCB Bond Fund to the holders of its shares in
complete liquidation of the CCB Bond Fund; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Dated: June 18, 1999 By Order of the Board of Directors,
John W. McGonigle
Secretary
<PAGE>
Shareholders of record at the close of business on June 7, 1999 are
entitled to vote at the meeting. Whether or not you plan to attend the meeting,
please sign and return the enclosed proxy card. Your vote is important.
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO SAVE THE EXPENSE OF FURTHER
MAILINGS, PLEASE MARK YOUR PROXY CARD, SIGN IT, AND RETURN IT IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY
REVOKE YOUR PROXY AT ANY TIME AT OR BEFORE THE MEETING OR VOTE IN PERSON IF YOU
ATTEND THE MEETING.
PROSPECTUS/PROXY STATEMENT
JUNE 18, 1999
Acquisition of the Assets of
CCB BOND FUND,
(formerly, 111 Corcoran Bond Fund),
a portfolio of
CCB FUNDS
(formerly, 111 Corcoran Funds)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Telephone Number: 1-800-245-5051, option one
By and in exchange for Institutional Shares of
FEDERATED INTERMEDIATE INCOME FUND,
a portfolio of
FEDERATED INCOME SECURITIES TRUST
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-245-5051, option one
This Prospectus/Proxy Statement describes the proposed Agreement and
Plan of Reorganization (the "Plan") whereby Federated Intermediate Income Fund
(the "Federated Fund"), a portfolio of Federated Income Securities Trust, a
Massachusetts business trust (the "Trust"), would acquire all of the assets of
CCB Bond Fund, a portfolio of CCB Funds, a Massachusetts business trust (the
"CCB Bond Fund"), in exchange for the Federated Fund's Institutional Shares to
be distributed PRO RATA by the CCB Bond Fund to the holders of its shares, in
complete liquidation of the CCB Bond Fund. As a result of the Plan, each
shareholder of the CCB Bond Fund will become the owner of the Federated Fund's
Institutional Shares having a total net asset value equal to the total net asset
value of his or her holdings in the CCB Bond Fund.
THE BOARD OF TRUSTEES OF THE CCB FUNDS UNANIMOUSLY RECOMMENDS
APPROVAL OF THE PLAN.
Each of the Federated Fund and the CCB Bond Fund is a diversified
portfolio of securities of an open-end management investment company. The
Federated Fund's investment objective is to provide current income which it
pursues by investing in a diversified portfolio of investment grade securities.
The CCB Bond Fund's investment objective is to achieve income, which it pursues
by purchasing portfolio securities which it deems to be undervalued in an effort
to obtain appreciation of capital. For a comparison of the investment policies
of the Federated Fund and the CCB Bond Fund, see "Summary - Investment
Objectives, Policies and Limitations."
This Prospectus/Proxy Statement should be retained for future
reference. It sets forth concisely the information about the Federated Fund that
a prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the Prospectus of the Federated Fund dated August
31, 1998, which is incorporated herein by reference. Statements of Additional
Information for the Federated Fund dated August 31, 1998 (relating to the
Federated Fund's Prospectus of the same date) and June 18, 1999 (relating to
this Prospectus/Proxy Statement) and the Annual Report to Shareholders dated
April 30, 1998, all containing additional information, have been filed with the
Securities and Exchange Commission and are incorporated herein by reference.
Copies of the Statements of Additional Information and the Annual Report may be
obtained without charge by writing or calling the Federated Fund at the address
and telephone number shown above.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES, OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE NO.
SUMMARY OF EXPENSES.................................................. 1
SUMMARY.............................................................. 3
About the Proposed Reorganization................................ 3
Investment Objectives, Policies and Limitations.................. 4
Advisory and Other Fees.......................................... 6
Distribution Arrangements........................................ 8
Purchase, Exchange and Redemption Procedures..................... 9
Dividends........................................................ 12
Tax Consequences................................................. 12
RISK FACTORS......................................................... 12
INFORMATION ABOUT THE REORGANIZATION................................. 13
Background and Reasons for the Proposed Reorganization........... 13
Description of the Plan of Reorganization........................ 14
Description of Federated Fund Shares............................. 15
Federal Income Tax Consequences.................................. 16
Comparative Information on Shareholder Rights and Obligations.... 17
Capitalization................................................... 20
INFORMATION ABOUT THE FEDERATED FUND, THE TRUST, THE CCB BOND FUND
AND THE CCB FUNDS
20
Federated Intermediate Income Fund, a portfolio of Federated
Income Securities
Trust......................................................... 20
CCB Bond Fund, a portfolio of CCB Funds.......................... 21
VOTING INFORMATION................................................... 22
Outstanding Shares and Voting Requirements....................... 23
Dissenter's Right of Appraisal................................... 24
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY...........
25
AGREEMENT AND PLAN OF REORGANIZATION -- EXHIBIT A.................... A-1
<PAGE>
SUMMARY OF EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the CCB Bond Fund and Federated Intermediate Income Fund's
Institutional Shares.
<TABLE>
<CAPTION>
FEDERATED FUND
(INSTITUTIONAL
SHARES) CCB BOND PRO FORMA
FUND COMBINED
--------------- ------------ -------------
SHAREHOLDER FEES
<S> <C> <C> <C>
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering None 4.50% None
price)...................................
Maximum Deferred Sales Charge (Load) (as a
percentage of original purchase price or
redemption proceeds, as applicable)...... None None None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends (as a percentage of
offering price).......................... None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable)(1).............. None None None
Exchange Fee................................ None None None
</TABLE>
ANNUAL OPERATING EXPENSES (BEFORE WAIVER/
REIMBURSEMENTS) (1)
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee (2).......................... 0.50% 0.75% 0.50%
Distribution (12b-1) Fees................... None None None
Shareholder Services Fee (3)................ 0.25% None 0.25%
Other Expenses.............................. 0.27% 0.31% 0.22%
Total Annual Operating Expenses... 1.02% 1.06% 0.97%
- ---------------------
(1) Although not contractually obligated to do so, the adviser and shareholder
services provider waived certain amounts during the year ended May 31, 1998
for the CCB Bond Fund and April 30, 1998 for the Federated Intermediate
Income Fund. These are shown below along with the net expenses the CCB Bond
Fund and Federated Intermediate Income Fund ACTUALLY PAID for the year
ending May 31, 1998 and April 30, 1998, respectively. In addition, the Pro
Forma Combined reflects the expenses which are anticipated to be paid by the
Federated Intermediate Income Fund's Institutional Shares pursuant to the
proposed transfer of assets from CCB Bond Fund into Federated Intermediate
Income Fund's Institutional Shares.
Total Waivers of Fund Expenses 0.75% 0.47% 0.42%
Total Actual Annual Fund Operating Expenses 0.31% 0.55% 0.55%
(after waivers)
(2) The adviser for CCB Bond Fund and Federated Intermediate Income Fund
voluntarily waived all or a portion of their management fees. The advisers
can terminate these voluntary waivers at any time. The management fees paid
by the CCB Bon d Fund and Federated Intermediate Income Fund (after
voluntary waivers) were 0.00% and 0.28%, respectively, for the year ended
May 31, 1998 and April 30, 1998, respectively.
(3) The shareholder services provider voluntarily waived the 0.25% shareholder
services fee for Federated Intermediate Income Fund's Institutional Shares.
The shareholder service provider can terminate this voluntary waiver at any
time in its sole discretion. The shareholder services fee paid by the
Federated Intermediate Income Fund's Institutional Shares was 0.00% for the
year ended April 30, 1998.
EXAMPLE
This following Example is intended to help you compare the cost of
investing in the CCB Bond Fund with the cost of investing in Federated
Intermediate Income Fund's Institutional Shares.
The Example assumes that you invest $10,000 in
CCB Bond Fund and Federated Intermediate Income Fund's Institutional Shares for
the time periods indicated and then redeem all of your Shares at the end of
those periods. The Example also assumes that you invest $10,000 in the Federated
Intermediate Income Fund's Institutional Shares subsequent to the transfer of
assets from the CCB Bond Fund into Federated Intermediate Income Fund's
Institutional Shares. The Example assumes that your investment has a 5% return
each year and that the CCB Bond Fund and Federated Intermediate Income Fund's
Institutional Shares operating expenses are BEFORE WAIVERS as shown above in the
Table and remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:.........................
1 year 3 years 5 years 10 years
--------- -------- -------- ----------
Federated Fund.......... $104 $325 $563 $1,248
CCB Bond Fund........... $553 $772 $1,008 $1,686
Pro Forma Combined...... $ 99 $309 $536 $1,190
<PAGE>
SUMMARY
This summary is qualified in its entirety by reference to the
additional information contained elsewhere in this Prospectus/Proxy Statement,
the Prospectus of the Federated Fund dated August 31, 1998, the Statement of
Additional Information of the Federated Fund dated August 31, 1998, the
Prospectus of the CCB Bond Fund dated July 31, 1998, the Statement of Additional
Information of the CCB Bond Fund dated July 31, 1998, and the Plan, a copy of
which is attached to this Prospectus/Proxy Statement as EXHIBIT A.
ABOUT THE PROPOSED REORGANIZATION
The Board of Directors of the CCB Bond Fund has voted to recommend to
holders of the shares of the CCB Bond Fund the approval of the Plan whereby the
Federated Fund, a portfolio of the Trust, would acquire all of the assets of the
CCB Bond Fund in exchange for the Federated Fund's Institutional Shares to be
distributed PRO RATA by the CCB Bond Fund to its shareholders in complete
liquidation and dissolution of the CCB Bond Fund (the "Reorganization"). As a
result of the Reorganization, each shareholder of the CCB Bond Fund will become
the owner of the Federated Fund's Institutional Shares having a total net asset
value equal to the total net asset value of his or her holdings in the CCB Bond
Fund on the date of the Reorganization, i.e., the Closing Date (as hereinafter
defined).
As a condition to the Reorganization transactions, the Trust and the
CCB Bond Fund will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), so that no gain or loss
will be recognized by either the Federated Fund or the CCB Bond Fund or the
shareholders of the CCB Bond Fund. The tax basis of the Federated Fund's
Institutional Shares received by CCB Bond Fund shareholders will be the same as
the tax basis of their shares in the CCB Bond Fund. After the acquisition is
completed, the CCB Bond Fund will be dissolved.
INVESTMENT OBJECTIVES, POLICIES AND LIMITATIONS
The investment objective of the Federated Fund is to provide current
income. This investment objective may not be changed without the affirmative
vote of a majority of the outstanding voting securities of the Federated Fund,
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
The Federated Fund pursues its investment objective by investing in a
diversified portfolio of investment grade securities, which are securities rated
in one of the four highest categories by a nationally recognized statistical
rating organization ("NRSRO") or are of comparable quality to securities having
such ratings. Under normal market conditions, the dollar-weighted average
portfolio maturity of the Federated Fund will be between three and ten years,
and the Federated Fund's average-weighted duration will be between three and
seven years. The Federated Fund invests primarily in a professionally managed,
diversified portfolio consisting of U.S. government obligations, corporate
obligations and asset-backed securities. The Federated Fund may also invest in
derivative instruments of such securities, including instruments with demand
features or credit enhancement, as well as money market instruments. Unless
otherwise designated, the investment policies of the Federated Fund may be
changed by the Board of Trustees without shareholder approval, although
shareholders will be notified before any material change becomes effective.
The investment objective of the CCB Bond Fund is to achieve income,
which it pursues by purchasing portfolio securities which it deems to be
undervalued in an effort to obtain appreciation of capital. This investment
objective may not be changed without the affirmative vote of a majority of the
outstanding voting securities of the CCB Bond Fund, as defined in the 1940 Act.
The CCB Bond Fund invests in a professionally managed portfolio consisting
primarily of bonds rated A or better. The average maturity of the CCB Bond Fund
is also three to ten years. As a matter of investment policy, which may be
changed without shareholder approval, the CCB Bond Fund will invest so that,
under normal circumstances, at least 65% of the value of its total assets are
invested in bonds rated A or better. The securities in which the CCB Bond Fund
invests include: domestic issues of corporate debt obligations; obligations of
the U.S. government; mortgage-backed securities and asset-backed securities;
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities; commercial paper; time and savings deposits; zero coupon
bonds; bankers' acceptances; repurchase agreements and foreign securities which
are traded publicly in the United States. Unless otherwise designated, the
investment policies of the CCB Bond Fund may be changed by the Board of
Directors without shareholder approval.
Both the Federated Fund and the CCB Bond Fund are subject to certain
investment limitations. For the Federated Fund, these include investment
limitations which prohibit it from (1) borrowing money directly or through
reverse repurchase agreements or pledging securities except, under certain
circumstances, the Federated Fund may borrow up to one-third of the value of its
total assets and pledge up to 15% of the value of its total assets to secure
such borrowings; and (2) with respect to 75% of the Federated Fund's assets,
investing more than 5% of the value of its total assets in securities of one
issuer (except U.S. government obligations), or purchasing more than 10% of the
outstanding voting securities of any one issuer. These investment limitations
cannot be changed without shareholder approval.
The CCB Bond Fund has investment limitations which prohibit it from
(1) borrowing money directly or through reverse repurchase agreements or
pledging securities except, under certain circumstances, the CCB Bond Fund may
borrow up to one-third of the value of its total assets and pledge up to 10% of
the value of its total assets to secure such borrowings; and (2) selling
securities short except, under strict limitations, it may maintain open short
positions so long as not more than 5% of the value of the CCB Bond Fund's net
assets is held as collateral for those positions. The above investment
limitations of the CCB Bond Fund cannot be changed without shareholder approval.
In addition to the policies and limitations set forth above, both the
Federated Fund and the CCB Bond Fund are subject to certain additional
investment policies and limitations, described in the Federated Fund's Statement
of Additional Information dated August 31, 1998, and the CCB Bond Fund's
Statement of Additional Information dated July 31, 1998. Reference is hereby
made to the Federated Fund's Prospectus and Statement of Additional Information,
each dated August 31, 1998, and to the CCB Bond Fund's Prospectus and Statement
of Additional Information, each dated July 31, 1998, which set forth in full the
investment objective, policies and investment limitations of each of the
Federated Fund and the CCB Bond Fund, all of which are incorporated herein by
reference thereto.
ADVISORY AND OTHER FEES
The annual investment advisory fee for the Federated Fund is 0.50 of
1% of the Federated Fund's average daily net assets. The investment adviser to
the Federated Fund, Federated Investment Management Company ("Federated
Investment Management Company"), a subsidiary of Federated Investors, may
voluntarily choose to waive a portion of its advisory fee or reimburse other
expenses of the Federated Fund. This voluntary waiver or reimbursement may be
terminated by Federated Investment Management Company at any time in its sole
discretion. The maximum annual management fee for the CCB Bond Fund is 0.75 of
1% of average daily net assets of the CCB Bond Fund. The CCB Bond Fund's
investment manager, Central Carolina Bank & Trust Company ("Central Carolina
Bank"), may similarly voluntarily choose to waive a portion of its advisory fee
or reimburse the CCB Bond Fund for certain expenses and may likewise terminate
such waiver or reimbursement at any time in its sole discretion.
Federated Services Company, an affiliate of Federated Investment
Management Company, provides certain administrative personnel and services
necessary to operate the Federated Fund. Federated Administrative Services, also
an affiliate of Federated Investment Management Company, provides certain
administrative personnel and services necessary to operate the CCB Bond Fund.
Federated Services Company provides these services at an annual rate based upon
the average aggregate daily net assets of all funds advised by Federated
Investment Management Company and its affiliates. Federated Administrative
Services provides these services at an annual rate based upon the average
aggregate daily net assets of the CCB Funds. For both Federated Services Company
and Federated Administrative Services, the rate charged is 0.15 of 1% on the
first $250 million of all such funds' average aggregate daily net assets, 0.125
of 1% on the next $250 million, 0.10 of 1% on the next $250 million and 0.075 of
1% of all such funds' average aggregate daily net assets in excess of $750
million. Federated Services Company's minimum annual administrative fee per
portfolio is $125,000 plus $30,000 for each additional class of shares of any
such portfolio, while the administrative fee received by Federated
Administrative Services during any fiscal year shall be at least $50,000 per
portfolio. Federated Services Company or Federated Administrative Services may
choose voluntarily to waive a portion of its respective fee. The administrative
fee expense for the Federated Fund's fiscal year ended April 30, 1998 was
$155,001. The administrative fee expense for the CCB Bond Fund's fiscal year
ended May 31, 1998 was $122,130.
The Federated Fund has entered into a Shareholder Services Agreement
under which it may make payments of up to 0.25 of 1% of the average daily net
asset value of the Institutional Shares to obtain certain personal services for
shareholders and the maintenance of shareholder accounts. The Shareholder
Services Agreement provides that Federated Shareholder Services ("FSS"), an
affiliate of Federated Investment Management Company, either will perform
shareholder services directly or will select financial institutions to perform
such services. Financial institutions will receive fees based upon shares owned
by their clients or customers. The schedule of such fees and the basis upon
which such fees will be paid is determined from time to time by the Federated
Fund and FSS. The CCB Bond Fund does not make payments to obtain similar
shareholder services.
The total annual operating expenses for Institutional Shares of the
Federated Fund were 0.55% of average daily net assets (after waivers) for the
fiscal year ended April 30, 1998. The total annual operating expenses for shares
of the CCB Bond Fund were 0.31% of average daily net assets (after waivers) for
the fiscal year ended May 31, 1998. Without such waivers, the expense ratio of
the Federated Fund and the CCB Bond Fund would be higher by 0.47% and 0.75%,
respectively, of average daily net assets.
DISTRIBUTION ARRANGEMENTS
Federated Securities Corp. ("FSC"), an affiliate of Federated
Investment Management Company, is the principal distributor for shares of both
the Federated Fund and the CCB Bond Fund. Institutional Shares of the Federated
Fund are sold at net asset value, without a sales charge, next determined after
an order is received. The Federated Fund does not have a Rule 12b-1 plan in
effect with respect to its Institutional Shares and, accordingly, does not, nor
does FSC, compensate brokers and dealers for sales and administrative services
performed in connection with sales of Institutional Shares of the Federated Fund
pursuant to a plan of distribution adopted pursuant to Rule 12b-1. However, FSC
and FSS, from their own assets, may pay financial institutions supplemental fees
as financial assistance for providing substantial sales services,
distribution-related support services or shareholder services with respect to
the Federated Fund. Such assistance will be predicated upon the amount of shares
the financial institution sells or may sell, and/or upon the type and nature of
sales or marketing support furnished by the financial institution. Any payments
made by FSC may be reimbursed by Federated Investment Management Company or its
affiliates.
Certain costs exist with respect to the purchase of CCB Bond Fund
shares. Except under certain circumstances, shares of the CCB Bond Fund are sold
at net asset value, next determined after an order is received, plus a maximum
sales charge of 4.50%. The CCB Bond Fund also does not have a Rule 12b-1 plan
and, accordingly, does not, nor does FSC, compensate brokers and dealers for
sales and administrative services performed in connection with sales of shares
of the CCB Bond Fund pursuant to a plan of distribution adopted pursuant to Rule
12b-1. However, for sales of shares of the CCB Bond Fund, a dealer will normally
receive up to 85% of the applicable sales charge. For shares sold with a sales
charge, Central Carolina Bank will receive 85% of the applicable sales charge
for purchases of shares of the CCB Bond Fund made directly through Central
Carolina Bank. The sales charge for shares sold other than through Central
Carolina Bank or registered broker/dealers will be retained by FSC. However, FSC
will, periodically, uniformly offer to pay to dealers additional amounts in the
form of cash or promotional incentives. Such payments, all or a portion of which
may be paid from the sales charge FSC normally retains or any other source
available to it, will be predicated upon the amount of shares of the CCB Bond
Fund that are sold by the dealer. For a complete description of sales charges
and exemptions from such charges, reference is hereby made to the Prospectus of
the CCB Bond Fund dated July 31, 1998, which is incorporated herein by reference
thereto.
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES
The transfer agent and dividend disbursing agent for each of the
Federated Fund and the CCB Bond Fund is Federated Shareholder Services Company.
Procedures for the purchase, exchange and redemption of the Federated Fund's
Institutional Shares differ slightly from procedures applicable to the purchase,
exchange and redemption of the CCB Bond Fund's shares. Reference is made to the
Prospectus of the Federated Fund dated August 31, 1998, and the Prospectus of
the CCB Bond Fund dated July 31, 1998, for a complete description of the
purchase, exchange and redemption procedures applicable to purchases, exchanges
and redemptions of Federated Fund and CCB Bond Fund shares, respectively, each
of which is incorporated herein by reference thereto.
Any questions about such procedures may be directed to, and
assistance in effecting purchases, exchanges or redemptions of the Federated
Fund's Institutional Shares or the CCB Bond Fund's shares may be obtained from
FSC, principal distributor for each of the Federated Fund and the CCB Bond Fund,
at 1-800-245-5051, option one. Set forth below is a brief listing of the
significant purchase, exchange and redemption procedures applicable to the
Federated Fund's Institutional Shares and the CCB Bond Fund's shares.
Purchases of Institutional Shares of the Federated Fund may be made
through FSC or, once an account has been established, by wire or check.
Purchases of shares of the CCB Bond Fund may be made through Central Carolina
Bank and through certain broker/dealers under contract with FSC or directly by
wire or check once an account has been established. The minimum initial
investment in the Federated Fund is $25,000; however, an account may be opened
with a smaller amount as long as the $25,000 minimum is reached within 90 days.
All accounts maintained by an institutional investor will be combined together
to determine whether such minimum investment requirement is met. For purposes of
the minimum initial investment, all CCB Bond Fund shareholder accounts
maintained by FSC will be combined to meet the minimum investment requirement.
The minimum initial investment in the CCB Bond Fund is $1,000. Subsequent
investments must be in amounts of at least $100. These minimums may be waived
for purchases by the Trust Division of Central Carolina Bank for its fiduciary
or custodial accounts. All accounts maintained by an institutional investor will
be combined together to determine whether such minimum investment requirement is
met. The Federated Fund and the CCB Bond Fund each reserves the right to reject
any purchase request. In connection with the sale of shares of the CCB Bond
Fund, FSC may from time to time offer certain items of nominal value to any
shareholder.
The purchase price of the Federated Fund's Institutional Shares is
based on net asset value, without a sales charge. The purchase price of the CCB
Bond Fund's shares is based on net asset value, plus a sales charge. Except in
limited circumstances, the net asset value per share for each of the Federated
Fund and the CCB Bond Fund is calculated as of the close of trading (normally
4:00 p.m., Eastern time) on the New York Stock Exchange, Inc. (the "NYSE") on
each day on which the NYSE is open for business. Federated Fund purchase orders
by wire are considered received immediately and payments must be received before
3:00 p.m. (Eastern time) on the next business day following the order and begin
earning dividends on the next business day. Federated Fund purchase orders
received by check are considered received after the check is converted into
federal funds, which normally occurs the business day after receipt, and shares
begin earning dividends the next day. Purchase orders for shares of the CCB Bond
Fund received from Central Carolina Bank and authorized brokers and dealers
before 4:00 p.m. (Eastern time) may be entered at that day's price. Payment is
normally required in three business days. If an order for shares of the CCB Bond
Fund is placed on the preceding business day, shares purchased by wire begin
earning dividends on the business day wire payment is received by the CCB Bond
Fund's custodian, Fifth Third 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 of the CCB Bond Fund purchased by check begin earning
dividends on the business day after the check is converted into federal funds.
Shares in certain of the funds for which subsidiaries or affiliates
of Federated Investors serve as investment adviser (collectively, the "Federated
Funds") may be exchanged for Institutional Shares of the Federated Fund at net
asset value. The exchange is subject to any initial or subsequent investment
amounts of the fund into which the exchange is being made. Holders of shares of
the CCB Bond Fund have exchange privileges with respect to shares in CCB Equity
Fund, CCB North Carolina Municipal Securities Fund, Liberty U.S. Government
Money Market Trust and Federated American Leaders Fund, Inc., each of which has
different investment objectives and policies. Holders of shares of the CCB Bond
Fund who exercise this exchange privilege must exchange shares having a net
asset value of at least $1,000. Exchanges are made at net asset value plus the
difference between the CCB Bond Fund's sales charge already paid and any
applicable sales charge on shares of the fund to be acquired in the exchange.
Exercise of the exchange privilege is treated as a redemption and new purchase
for federal income tax purposes and, accordingly, may have tax consequences for
the shareholder. Information on share exchanges may be obtained from the
Federated Fund or the CCB Bond Fund, as appropriate.
Redemptions of Federated Fund Institutional Shares may be made
through a financial institution, by telephone or by mailing a written request.
Redemptions of CCB Bond Fund shares may be made through Central Carolina Bank or
the CCB Bond Fund, by telephone or by mailing a written request, or through the
CCB Bond Fund's systematic withdrawal program. Institutional Shares of the
Federated Fund and shares of the CCB Bond Fund are each redeemed at their net
asset value next determined after the redemption request is received on each day
on which the Federated Fund computes its net asset value. Proceeds will
ordinarily be distributed by check within seven days after receipt of a
redemption request.
DIVIDENDS
Each of the Federated Fund's and the CCB Bond Fund's current policy
is to declare dividends daily and pay dividends monthly and to make annual
distributions of net realized capital gains, if any. With respect to both the
Federated Fund and the CCB Bond Fund, unless a shareholder otherwise instructs,
dividends and capital gain distributions will be reinvested automatically in
additional shares at net asset value.
Tax CONSEQUENCES
As a condition to the Reorganization transactions, the Trust and the
CCB Bond Fund will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the Code
so that no gain or loss will be recognized by either the Federated Fund or the
CCB Bond Fund or the shareholders of the CCB Bond Fund. The tax basis of the
Federated Fund shares received by CCB Bond Fund shareholders will be the same as
the tax basis of their shares in the CCB Bond Fund.
RISK FACTORS
As with other mutual funds that invest in U.S. government
obligations, corporate obligations and asset-backed securities, the Federated
Fund is subject to market risks. Although some obligations issued or guaranteed
by agencies or instrumentalities of the U.S. Government are backed by the full
faith and credit of the U.S. Treasury, no assurances can be given that the U.S.
Government will provide financial support to other agencies or
instrumentalities, since it is not obligated to do so. The prices of debt
obligations generally fluctuate inversely in relation to the direction of
interest rates. The prices of debt obligations with longer maturities fluctuate
more widely in response to market interest rate changes. Generally, the values
of the securities in which the Federated Fund will invest, and accordingly the
value of the Institutional Shares of the Federated Fund, will fall as interest
rates rise and rise as interest rates fall. Since the CCB Bond Fund also invests
in U.S. government obligations, corporate debt obligations, mortgage-backed
securities and asset-backed securities, as well as other similar instruments,
these risk factors are generally also present in an investment in the CCB Bond
Fund. A full discussion of the risks inherent in investment in the Federated
Fund and the CCB Bond Fund is set forth in the Federated Fund's Prospectus and
Statement of Additional Information, each dated August 31, 1998, and the CCB
Bond Fund's Prospectus and Statement of Additional Information, each dated July
31, 1998, each of which is incorporated herein by reference thereto.
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
The CCB Bond Fund was established in 1991 to provide investors with
an opportunity to invest in a professionally managed pool of portfolio
securities. Although the Board of Trustees of the CCB Funds has been satisfied
with the performance of the CCB Bond Fund, it, and Central Carolina Bank,
believe that economies of scale might be experienced by CCB Bond Fund
shareholders if they were to become shareholders of a larger fund.
The CCB Bond Fund currently has net assets of approximately $86.7
million, compared to the Federated Fund's net assets of $233.2 million. For the
last several years, in an effort to remain competitive with other investment
companies, Central Carolina Bank has waived all of its investment advisory fees
and reimbursed the CCB Bond Fund for certain operating expenses, resulting in
aggregate fee waivers and expense reimbursements of $635,044 for the CCB Bond
Fund's fiscal year ended May 31, 1998. Central Carolina Bank has concluded that
it will not be able to continue indefinitely to waive such investment advisory
fees and reimburse operating expenses in order to allow the CCB Bond Fund to
earn a return on its investments competitive with other investment companies
with similar investment objectives. As a result, Central Carolina Bank has
recommended to the Board of Trustees that it would be in the best interests of
all of the CCB Bond Fund's shareholders to combine its assets with those of the
Federated Fund. Such a combination may achieve operating efficiencies and
economies of scale as a result of the larger size of the Federated Fund while
allowing shareholders to maintain an investment in a fund whose investment
objective is to provide current income.
The Board of Trustees, including a majority of the independent
Trustees, determined that participation in the Reorganization is in the best
interests of the CCB Bond Fund and that the interests of CCB Bond Fund
shareholders would not be diluted as a result of its effecting the
Reorganization. Based upon the foregoing considerations, and the fact that
shareholders of the CCB Bond Fund will not suffer any adverse tax consequences
as a result of the Reorganization, the Board of Trustees unanimously voted to
approve, and recommend to CCB Bond Fund shareholders the approval of, the
Reorganization.
The Board of Trustees of the Federated Fund, including the
independent Trustees, have unanimously concluded that consummation of the
Reorganization is in the best interests of the Federated Fund and the
shareholders of the Federated Fund and that the interests of Federated Fund
shareholders would not be diluted as a result of effecting the Reorganization
and have unanimously voted to approve the Plan.
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Plan provides that the Federated Fund will acquire all of the
assets of the CCB Bond Fund in exchange for the Federated Fund's Institutional
Shares to be distributed PRO RATA by the CCB Bond Fund to its shareholders in
complete liquidation of the CCB Bond Fund on or about July 23, 1999 (the
"Closing Date"). The value of the CCB Bond Fund's assets to be acquired by the
Federated Fund shall be the value of such assets computed as of the close of the
New York Stock Exchange (normally 4:00 p.m. Eastern time) on the Closing Date
(the "Closing"). Shareholders of the CCB Bond Fund will become shareholders of
the Federated Fund as of the Closing, and will be entitled to the Federated
Fund's next dividend distribution.
On or before the Closing, the CCB Bond Fund will declare and pay a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its shareholders all of its net investment
income and realized net capital gain, if any, for all taxable years ending on or
before the Closing Date..
Consummation of the Reorganization is subject to the conditions set
forth in the Plan, including receipt of an opinion in form and substance
satisfactory to the CCB Bond Fund and the Trust, on behalf of the Federated
Fund, as described under the caption "Federal Income Tax Consequences" below.
The Plan may be terminated and the Reorganization may be abandoned at any time
before or after approval by shareholders of the CCB Bond Fund prior to the
Closing Date by either party if it believes that consummation of the
Reorganization would not be in the best interests of its shareholders.
Federated Investment Management Company is responsible for the
payment of substantially all of the expenses of the Reorganization incurred by
either party, whether or not the Reorganization is consummated. Such expenses
include, but are not limited to, accountants' fees, legal fees, registration
fees, transfer taxes (if any), the fees of banks and transfer agents and the
costs of preparing, printing, copying and mailing proxy solicitation materials
to the CCB Bond Fund shareholders and the costs of holding the Special Meeting
(as hereinafter defined).
The foregoing description of the Plan entered into between the Trust,
on behalf of the Federated Fund and the CCB Bond Fund, is qualified in its
entirety by the terms and provisions of the Plan, a copy of which is attached
hereto as EXHIBIT A and incorporated herein by reference thereto.
DESCRIPTION OF FEDERATED FUND SHARES
Full and fractional Institutional Shares of the Federated Fund will
be issued without the imposition of a sales charge or other fee to the
shareholders of the CCB Bond Fund in accordance with the procedures described
above. Institutional Shares of the Federated Fund to be issued to shareholders
of the CCB Bond Fund under the Plan will be fully paid and nonassessable when
issued and transferable without restriction and will have no preemptive or
conversion rights. Reference is hereby made to the Prospectus of the Federated
Fund dated August 31, 1998, provided herewith for additional information about
Institutional Shares of the Federated Fund.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization, the Trust, on behalf of the
Federated Fund, and the CCB Bond Fund will receive an opinion from Dickstein
Shapiro Morin & Oshinsky LLP, counsel to the Trust and the CCB Bond Fund, to the
effect that, on the basis of the existing provisions of the Code, current
administrative rules and court decisions, for federal income tax purposes: (1)
the Reorganization as set forth in the Plan will constitute a tax-free
"reorganization" under Section 368(a)(1)(C) of the Code and the Federated Fund
and the CCB Bond Fund each will be "a party to a reorganization" within the
meaning of Section 368(b) of the Code; (2) no gain or loss will be recognized by
the Federated Fund upon its receipt of the CCB Bond Fund's assets solely in
exchange for Federated Fund Institutional Shares; (3) no gain or loss will be
recognized by the CCB Bond Fund upon the transfer of its assets to the Federated
Fund in exchange for Federated Fund Institutional Shares or upon the
distribution (whether actual or constructive) of the Federated Fund
Institutional Shares to the CCB Bond Fund shareholders in exchange for their
shares of the CCB Bond Fund; (4) no gain or loss will be recognized by
shareholders of the CCB Bond Fund upon the exchange of their CCB Bond Fund
shares for Federated Fund Institutional Shares; (5) the tax basis of the CCB
Bond Fund's assets acquired by the Federated Fund will be the same as the tax
basis of such assets to the CCB Bond Fund immediately prior to the
Reorganization; (6) the tax basis of Federated Fund Institutional Shares
received by each shareholder of the CCB Bond Fund pursuant to the Plan will be
the same as the tax basis of CCB Bond Fund shares held by such shareholder
immediately prior to the Reorganization; (7) the holding period of the assets of
the CCB Bond Fund in the hands of the Federated Fund will include the period
during which those assets were held by the CCB Bond Fund; and (8) the holding
period of Federated Fund Institutional Shares received by each shareholder of
the CCB Bond Fund will include the period during which the CCB Bond Fund shares
exchanged therefor were held by such shareholder, provided the CCB Bond Fund
shares were held as capital assets on the date of the Reorganization.
Shareholders should recognize that an opinion of counsel is not
binding on the Internal Revenue Service ("IRS") or any court. The CCB Bond Fund
does not expect to obtain a ruling from the IRS regarding the consequences of
the Reorganization. Accordingly, if the IRS sought to challenge the tax
treatment of the Reorganization and was successful, neither of which is
anticipated, the Reorganization would be treated as a taxable sale of assets of
the CCB Bond Fund, followed by the taxable liquidation of the CCB Bond Fund.
The Federated Fund does not anticipate that taxable sales involving
significant amounts of securities of the combined portfolio will have to be made
after the Reorganization to effect a realignment with the policies and
investment practices of the Federated Fund.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
GENERAL. Both the Trust and the CCB Bond Fund are open-end,
diversified management investment companies registered under the 1940 Act, which
continuously offer to sell shares at their current net asset value. Each of the
Trust and the CCB Funds is organized as a business trust pursuant to a
Declaration of Trust under the laws of the Commonwealth of Massachusetts. Each
of the Trust and the CCB Funds is governed by its respective Declaration of
Trust, Bylaws and Board of Trustees, in addition to applicable state and federal
law. The rights of shareholders of the Trust and shareholders of the CCB Funds
as set forth in the applicable Declaration of Trust and By-laws are
substantially identical. Set forth below is a brief summary of the significant
rights of shareholders of the Trust and shareholders of the CCB Bond Fund.
SHARES OF THE TRUST AND THE CCB BOND FUND. The Trust is authorized to
issue an unlimited number of shares of beneficial interest which have no par
value. The Federated Fund is a separate series of the Trust. The Board of
Trustees has established two classes of shares of the Federated Fund, known as
Institutional Shares and Institutional Service Shares. The CCB Bond Fund is
authorized to issue an unlimited number of shares of beneficial interest which
have no par value. The CCB Bond Fund is a portfolio of the CCB Funds and has
only one class of shares. Issued and outstanding shares of both the Federated
Fund and CCB Bond Fund are fully paid and nonassessable, and freely
transferable.
VOTING RIGHTS. Neither the Trust nor the CCB Bond Fund is required to
hold annual meetings of shareholders, except as required under the 1940 Act.
Shareholder approval is necessary only for certain changes in operations or the
election of trustees under certain circumstances. Each of the Trust and the CCB
Funds requires that a special meeting of shareholders be called for any
permissible purpose upon the written request of the holders of at least 10% of
the outstanding shares of the series or class of the Trust or the CCB Funds, as
the case may be, entitled to vote. Each share of the Federated Fund and of the
CCB Bond Fund gives the shareholder one vote in trustee elections and other
matters submitted to shareholders for vote. All shares of each portfolio or
class in each of the Trust and the CCB Funds have equal voting rights except
that in matters affecting only a particular portfolio or class, only shares of
that portfolio or class are entitled to vote.
TRUSTEES. The Declaration of Trust of the Trust and the Declaration
of Trust of the CCB Funds each provides that the term of office of each Trustee
shall be for the lifetime of the Trust or the CCB Funds, as the case may be, or
the earlier of his or her death, resignation, retirement, removal or mental or
physical incapacity. A Trustee of the Trust or the CCB Funds may be removed by:
(i) written instrument signed by at least two-thirds of the Trustees, (ii) a
majority vote of the Trustees if the Trustee has become mentally or physically
incapacitated or (iii) a vote of two-thirds of the outstanding shares at any
special meeting of shareholders. A vacancy on the Board may be filled by the
Trustees remaining in office. A meeting of shareholders will be required for the
purpose of electing additional Trustees whenever fewer than a majority of the
Trustees then in office were elected by shareholders.
LIABILITY OF TRUSTEES AND OFFICERS. Under both the Declaration of
Trust of the Trust and the Declaration of Trust of the CCB Funds, a Trustee or
officer will be personally liable only for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office. The Declaration of Trust of the Trust and the
By-Laws of the CCB Funds each further provides that Trustees and officers will
be indemnified by the Trust or the CCB Funds, as the case may be, to the fullest
extent permitted by law against liability and against all expenses of litigation
unless the person's conduct is determined to constitute willful misfeasance, bad
faith, gross negligence or reckless disregard of the person's duties.
SHAREHOLDER LIABILITY. Under certain circumstances, shareholders of
the Federated Fund may be held personally liable as partners under Massachusetts
law for obligations of the Trust on behalf of the Federated Fund. To protect its
shareholders, the Trust has filed legal documents with the Commonwealth of
Massachusetts that expressly disclaim the liability of its shareholders for such
acts or obligations of the Trust. These documents require that notice of this
disclaimer be given in each agreement, obligation or instrument that the Trust
or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations on behalf of the Federated Fund, the Trust is required to
use its property to protect or compensate the shareholder. On request, the Trust
will defend any claim made and pay any judgment against a shareholder for any
act or obligation of the Trust on behalf of the Federated Fund. Therefore,
financial loss resulting from liability as a shareholder will occur only if the
Trust itself cannot meet its obligations to indemnify shareholders and pay
judgments against them from assets of the Federated Fund
Shareholders of the CCB Bond Fund have the same potential liability
under Massachusetts law.
TERMINATION. In the event of the termination of the Trust or any
portfolio or class of the Trust or of the termination of the CCB Bond Fund, the
shareholders of the respective portfolio or class are entitled to receive, when
and as declared by its Trustees, the excess of the assets belonging to the
respective portfolio or class over the liabilities belonging to the respective
portfolio or class. In either case, the assets belonging to the portfolio or
class will be distributed among the shareholders in proportion to the number of
shares of the respective portfolio or class held by them.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the
Institutional Shares of the Federated Fund and the shares of the CCB Bond Fund
as of April 27, 1999 and on a PRO FORMA combined basis as of that date:
FEDERATED FUND
(INSTITUTIONAL CCB BOND PRO FORMA
SHARES) FUND COMBINED
--------------------------------- -----------------
Net Assets............... $ 220,156,513 $86,860,364 $307,016,877
Net Asset Value Per Share $10.13 $10.17 $10.17
Shares Outstanding....... $21,733,120.73 $ 8,537,821 $ 30,270,942
INFORMATION ABOUT THE FEDERATED FUND, THE TRUST
AND THE CCB BOND FUND
FEDERATED INTERMEDIATE INCOME FUND, A PORTFOLIO OF FEDERATED INCOME
SECURITIES TRUST
Information about the Trust and the Federated Fund is contained in
the Federated Fund's current Prospectus dated August 31, 1998, a copy of which
is included herewith and incorporated herein by reference. Additional
information about the Federated Fund is included in the Federated Fund's
Statement of Additional Information dated August 31, 1998, and the Statement of
Additional Information dated June 18, 1998 (relating to this Prospectus/Proxy
Statement) and the Annual Report to Shareholders dated April 30, 1998, each of
which is incorporated herein by reference. Copies of the Statements of
Additional Information and the Annual Report, which have been filed with the
Securities and Exchange Commission (the "SEC"), may be obtained upon request and
without charge by contacting the Federated Fund at 1-800-245-5051, option one,
or by writing the Federated Fund at Federated Investors Funds, 5800 Corporate
Drive, Pittsburgh, PA 15237-7000. The Trust is subject to the informational
requirements of the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act
and in accordance therewith files reports and other information with the SEC.
Reports, proxy and information statements, charter documents and other
information filed by the Trust or the Federated Fund can be obtained by calling
or writing the Federated Fund and can also be inspected and copied by the public
at the public reference facilities maintained by the SEC in Washington, D.C.
located at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
certain of its regional offices located at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, IL 60661 and 13th Floor, Seven World
Trade Center, New York, NY 10048. Copies of such material can be obtained from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates or from the SEC's Internet site at http://www.sec.gov.
This Prospectus/Proxy Statement, which constitutes part of a
Registration Statement filed by the Trust with the SEC under the 1933 Act, omits
certain of the information contained in the Registration Statement. Reference is
hereby made to the Registration Statement and to the exhibits thereto for
further information with respect to the Trust and the Federated Fund and the
shares offered hereby. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each such statement
is qualified in its entirety by reference to the copy of the applicable document
filed with the SEC.
CCB BOND FUND, A PORTFOLIO OF CCB FUNDS
Information about the CCB Bond Fund and the CCB Funds is contained in
the CCB Bond Fund's current Prospectus dated July 31, 1998, the Annual Report to
Shareholders dated May 31, 1998, the Statement of Additional Information dated
July 31, 1998, and the Statement of Additional Information dated June 18, 1999
(relating to this Prospectus/Proxy Statement), each of which is incorporated
herein by reference. Copies of such Prospectus, Annual Report, and Statements of
Additional Information, which have been filed with the SEC, may be obtained upon
request and without charge from the CCB Bond Fund by calling 1-800-245-5051,
option one, or by writing to the CCB Bond Fund at 5800 Corporate Drive,
Pittsburgh, PA 15237-7010. The CCB Bond Fund is subject to the informational
requirements of the 1933 Act, the 1934 Act and the 1940 Act and in accordance
therewith files reports and other information with the SEC. Reports, proxy and
information statements, charter documents and other information filed by CCB
Funds or its portfolio, the CCB Bond Fund, can be obtained by calling or writing
the CCB Bond Fund and can also be inspected at the public reference facilities
maintained by the SEC or obtained at prescribed rates at the addresses listed in
the previous section or from the SEC's Internet site at http://www.sec.gov.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of the CCB Bond Fund of proxies for use
at the Special Meeting of Shareholders (the "Special Meeting") to be held at
2:00 p.m. on July 22, 1999 at: 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7010, and at any adjournments thereof. The proxy confers discretionary
authority on the persons designated therein to vote on other business not
currently contemplated which may properly come before the Special Meeting. A
proxy, if properly executed, duly returned and not revoked, will be voted in
accordance with the specifications thereon; if no instructions are given, such
proxy will be voted in favor of the Plan. A shareholder may revoke a proxy at
any time prior to use by filing with the Secretary of the CCB Funds an
instrument revoking the proxy, by submitting a proxy bearing a later date or by
attending and voting at the Special Meeting.
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by Federated Investment Management Company. In
addition to solicitations through the mails, proxies may be solicited by
officers, employees and agents of the CCB Bond Fund, Federated Investment
Management Company and their respective affiliates at no additional cost to the
CCB Bond Fund. Such solicitations may be by telephone, telegraph or personal
contact. Federated Investment Management Company will reimburse custodians,
nominees and fiduciaries for the reasonable costs incurred by them in connection
with forwarding solicitation materials to the beneficial owners of shares held
of record by such persons.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees of the CCB Funds has fixed the close of
business on June 7, 1999, as the record date for the determination of
shareholders of the CCB Bond Fund entitled to notice of and to vote at the
Special Meeting and any adjournments thereof. As of the record date, there were
________ shares of the CCB Bond Fund outstanding. Each of the CCB Bond Fund's
shares is entitled to one vote and fractional shares have proportionate voting
rights. On the record date, the Trustees and officers of the CCB Funds as a
group owned less than 1% of the outstanding shares of the CCB Bond Fund. To the
best knowledge of Central Carolina Bank, as of the record date, no person,
except as set forth in the table below, owned beneficially or of record 5% or
more of the CCB Bond Fund's outstanding shares.
PERCENT OF
NAME AND ADDRESS SHARES OWNED OUTSTANDING SHARES
- ---------------------------------------------------------- ------------------
Central Carolina Bank & Trust Company __.__%
Durham, North Carolina
As of the record date, there were ____________ Institutional Service
and _____ Institutional Service Shares of the Federated Fund outstanding. On the
record date, the Trustees and officers of the Trust as a group owned less than
1% of the outstanding Institutional and Institutional Service Shares of the
Federated Fund. To the best knowledge of Federated Investment Management
Company, as of the record date, no person, except as set forth in the table
below, owned beneficially or of record 5% or more of the Federated Fund's
outstanding Institutional or Institutional Service Shares.
PERCENT OF
INSTITUTIONAL OUTSTANDING SHARES
SHARES NAME AND ADDRESS SHARES OWNED
- ------------------------------------------------------ -------------------
<PAGE>
INSTITUTIONAL PERCENT OF
SERVICE SHARES OUTSTANDING SHARES
NAME AND ADDRESs SHARES OWNED
- ------------------------------------------------------ -------------------
Approval of the Plan requires the affirmative vote of a majority of
the outstanding shares of the CCB Bond Fund. The votes of shareholders of the
Federated Fund are not being solicited since their approval is not required in
order to effect the Reorganization.
One-half of the issued and outstanding shares of the CCB Bond Fund,
represented in person or by proxy, will be required to constitute a quorum at
the Special Meeting for the purpose of voting on the proposed Reorganization.
For purposes of determining the presence of a quorum, shares represented by
abstentions and "broker non-votes" will be counted as present, but not as votes
cast, at the Special Meeting. Under the 1940 Act, however, which governs this
transaction, matters subject to the requirements of the 1940 Act, including the
Reorganization, are determined on the basis of a percentage of votes present at
the Special Meeting, which would have the effect of treating abstentions and
"broker non-votes" as if they were votes against the Reorganization.
DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the CCB Bond Fund objecting to the Reorganization
have no appraisal rights under the CCB Funds' Declaration of Trust or
Massachusetts law. Under the Plan, if approved by CCB Bond Fund shareholders,
each shareholder will become the owner of Institutional Shares of the Federated
Fund having a total net asset value equal to the total net asset value of his or
her holdings in the CCB Bond Fund at the Closing Date.
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY
Management of the CCB Funds knows of no other matters that may
properly be, or which are likely to be, brought before the Special Meeting.
However, if any other business shall properly come before the Special Meeting,
the persons named in the proxy intend to vote thereon in accordance with their
best judgment.
If at the time any session of the Special Meeting is called to order,
a quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Special Meeting to a
later date. In the event that a quorum is present but sufficient votes in favor
of one or more of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote those proxies which they are
entitled to vote in favor of the proposal, in favor of such an adjournment, and
will vote those proxies required to be voted against the proposal, against any
such adjournment.
Whether or not shareholders expect to attend the Special Meeting, all
shareholders are urged to sign, fill in and return the enclosed proxy form
promptly.
<PAGE>
990341 v4; L85H04!.DOC
A-21
EXHIBIT A
990341 v4; L85H04!.DOC
A-1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated May __, 1999 (the
"Agreement"), between FEDERATED INCOME SECURITIES TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its portfolio FEDERATED INTERMEDIATE
INCOME FUND (hereinafter called the "Acquiring Fund"), and CCB FUNDS, a
Massachusetts business trust (hereinafter called "CCB") on behalf of its
portfolio CCB BOND FUND (hereinafter called the "Acquired Fund").
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Acquired Fund in exchange solely for Institutional Shares of the
Acquiring Fund (the "Acquiring Fund Shares") and the distribution, after the
Closing Date hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, CCB and the Trust are registered open-end management
investment companies and the Acquired Fund owns securities in which the
Acquiring Fund is permitted to invest;
WHEREAS, both the Acquired Fund and the Acquiring Fund are authorized to
issue shares of beneficial interest;
WHEREAS, the Board of Trustees, including a majority of the trustees
who are not "interested persons" (as defined under the Investment Company Act of
1940, as amended (the "1940 Act")), of the Trust has determined that the
exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares is
in the best interests of the Acquiring Fund shareholders and that the interests
of the existing shareholders of the Acquiring Fund would not be diluted as a
result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the trustees
who are not "interested persons" (as defined under the 1940 Act), of CCB has
determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares is in the best interests of the Acquired Fund shareholders
and that the interests of the existing shareholders of the Acquired Fund would
not be diluted as a result of this transaction;
NOW THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE
ACQUIRING FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND. 1.1
Subject to the terms and conditions contained herein, the Acquired
Fund agrees to assign, transfer and convey to the Acquiring Fund all
of the assets of
the Acquired Fund, including all securities and cash beneficially owned by the
Acquired Fund, and the Acquiring Fund agrees in exchange therefor to deliver to
the Acquired Fund the number of Acquiring Fund Shares, including fractional
Acquiring Fund Shares, determined as set forth in paragraph 2.3. Such
transaction shall take place at the closing (the "Closing") on the closing date
(the "Closing Date") provided for in paragraph 3.1. In lieu of delivering
certificates for the Acquiring Fund Shares, the Acquiring Fund shall credit the
Acquiring Fund Shares to the Acquired Fund's account, for the benefit of its
shareholders on the stock record books of the Acquiring Fund and shall deliver a
confirmation thereof to the Acquired Fund.
1.2 The Acquired Fund will discharge all of its liabilities and obligations
prior to the Closing Date.
1.3 Delivery of the assets of the Acquired Fund to be transferred
shall be made on the Closing Date and shall be delivered to State Street Bank
and Trust Company (hereinafter called "State Street"), Boston, Massachusetts,
the Acquiring Fund's custodian (the "Custodian"), for the account of the
Acquiring Fund, together with proper instructions and all necessary documents to
transfer to the account of the Acquiring Fund, free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered shall be in
the form of currency and immediately available funds payable to the order of the
Custodian for the account of the Acquiring Fund.
1.4 The Acquired Fund will pay or cause to be paid to the Acquiring
Fund any dividends or interest received on or after the Closing Date with
respect to assets transferred to the Acquiring Fund thereunder. The Acquired
Fund will transfer to the Acquiring Fund any distributions, rights or other
assets received by the Acquired Fund after the Closing Date as distributions on
or with respect to the securities transferred. Such assets shall be deemed
included in assets transferred to the Acquiring Fund on the Closing Date and
shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable,
the Acquired Fund will liquidate and distribute pro rata to the Acquired Fund's
shareholders of record, determined as of the Valuation Time (as hereinafter
defined in Section 2.1) (the "Acquired Fund Shareholders"), the Acquiring Fund
Shares received by the Acquired Fund pursuant to paragraph 1.1. Such liquidation
and distribution will be accomplished by the transfer of the Acquiring Fund
Shares then credited to the account of the Acquired Fund on the books of the
Acquiring Fund to open accounts on the share record books of the Acquiring Fund
in the names of the Acquired Fund Shareholders and representing the respective
pro rata number of Acquiring Fund Shares due such shareholders, based on their
ownership of shares of the Acquired Fund at the Valuation Time. All issued and
outstanding shares of the Acquired Fund will simultaneously be canceled on the
books of the Acquired Fund. Share certificates representing interests in the
Acquired Fund will represent a number of Acquiring Fund Shares after the Closing
Date as determined in accordance with Section 2.3. The Acquiring Fund shall not
issue certificates representing Acquiring Fund Shares in connection with such
exchange.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued
in the manner described in the Acquiring Fund's current prospectus and statement
of additional information.
1.7 Any transfer taxes payable upon issuance of Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund Shares
are to be issued and transferred.
1.8 Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of CCB.
2. VALUATION.
2.1 The value of the Acquired Fund's net assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of the
close of the New York Stock Exchange (normally 4:00 p.m. Eastern time) on the
Closing Date (such time and date being hereinafter called the "Valuation Time"),
using the valuation procedures set forth in the Acquiring Fund's then-current
prospectus or statement of additional information.
2.2 The net asset value of each Acquiring Fund Share shall be the net
asset value per share computed as of the Valuation Time, using the valuation
procedures set forth in the Acquiring Fund's then-current prospectus or
statement of additional information.
2.3 The number of Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's net assets shall
be determined by dividing the value of the net assets of the Acquired Fund,
determined using the same valuation procedures referred to in paragraph 2.1, by
the net asset value of one Acquiring Fund Share as determined in accordance with
paragraph 2.2.
2.4 All computations of value shall be made in accordance with the regular
practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be July 23, 1999 or such later date as the
parties may mutually agree. All acts taking place at the Closing on the Closing
Date shall be deemed to take place simultaneously as of the Valuation Time
unless otherwise provided. The Closing shall be held at the offices of the
Acquiring Fund's investment adviser, Federated Investors Tower, Pittsburgh, PA
15222-3779, or such other place as the parties may mutually agree.
3.2 If at the Valuation Time (a) the primary trading market for
portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed
to trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have been
restored.
3.3 Federated Shareholder Services Company, as transfer agent for
each of the Acquired Fund and the Acquiring Fund, shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the names
and addresses of the Acquired Fund Shareholders and the number and percentage
ownership of outstanding shares owned by each such shareholder at the Valuation
Time. The Acquiring Fund shall issue and deliver a confirmation evidencing the
Acquiring Fund Shares to be credited on the Closing Date to the Secretary of the
Acquired Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, assumption agreements, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 CCB represents and warrants to the Trust as follows:
(a) CCB is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts and has
power to own all of its properties and assets and to carry out this Agreement.
(b) CCB is registered under the 1940 Act, as an open-end,
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.
(c) CCB is not, and the execution, delivery and performance of
this Agreement will not result, in material violation of CCB's Declaration of
Trust or By-Laws or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquired Fund is a party or by which it is bound.
(d) The Acquired Fund has no material contracts or other commitments
outstanding (other than this Agreement) which will result in liability to it
after the Closing Date.
(e) No litigation or administrative proceeding or investigation
of or before any court or governmental body is currently pending or to its
knowledge threatened against the Acquired Fund or any of its properties or
assets which, if adversely determined, would materially and adversely affect its
financial condition or the conduct of its business. The Acquired Fund knows of
no facts which might form the basis for the institution of such proceedings, and
is not a party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein contemplated.
(f) The current prospectus and statement of additional
information of the Acquired Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder and do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) The Statements of Assets and Liabilities of the Acquired
Fund at May 31, 1997 and 1998 have been audited by Arthur Andersen LLP,
independent auditors, and have been prepared in accordance with generally
accepted accounting principles, consistently applied, and such statements
(copies of which have been furnished to the Acquiring Fund) fairly reflect the
financial condition of the Acquired Fund as of such dates, and there are no
known contingent liabilities of the Acquired Fund as of such dates not disclosed
therein.
(h) The Statements of Assets and Liabilities of the Acquired
Fund at November 30, 1997 and 1998 have been prepared in accordance with
generally accepted accounting principles, consistently applied, and such
statements (copies of which have been furnished to the Acquiring Fund) fairly
present the financial condition of the Acquired Fund as of such dates, and there
are no known contingent liabilities of the Acquired Fund as of such dates not
disclosed therein.
(i) Since November 30, 1998, there has not been any material
adverse change in the Acquired Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund.
(j) At the Closing Date, all Federal and other tax returns and
reports of the Acquired Fund required by law to have been filed by such dates
shall have been filed, and all Federal and other taxes shall have been paid so
far as due, or provision shall have been made for the payment thereof, and to
the best of the Acquired Fund's knowledge no such return is currently under
audit and no assessment has been asserted with respect to such returns.
(k) For each fiscal year of its operation, the Acquired Fund has met the
requirements of the Code for qualification and treatment as a regulated
investment company.
(l) All issued and outstanding shares of the Acquired Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable. All of the issued and outstanding shares of the
Acquired Fund will, at the time of the Closing, be held by the persons and in
the amounts set forth in the records of the transfer agent as provided in
paragraph 3.3. The Acquired Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Acquired Fund shares,
nor is there outstanding any security convertible into any Acquired Fund shares.
(m) On the Closing Date, the Acquired Fund will have full right, power and
authority to sell, assign, transfer and deliver the assets to be transferred by
it hereunder.
(n) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary action
on the part of the CCB's trustees and, subject to the approval of the Acquired
Fund Shareholders, this Agreement will constitute the valid and legally binding
obligation of the Acquired Fund enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and to general
principles of equity and the discretion of the court (regardless of whether the
enforceability is considered in a proceeding in equity or at law).
(o) The prospectus/proxy statement of the Acquired Fund (the
"Prospectus/Proxy Statement") to be included in the Registration Statement
referred to in paragraph 5.5 (other than information therein that relates to the
Acquiring Fund) will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not misleading.
(p) The Acquired Fund has entered into an agreement under which
Federated Investment Management Company will assume the expenses of the
reorganization including accountants' fees, legal fees, registration fees,
transfer taxes (if any), the fees of banks and transfer agents and the costs of
preparing, printing, copying and mailing proxy solicitation materials to the
Acquired Fund's shareholders and the costs of holding the Special Meeting of
Shareholders.
4.2 The Trust represents and warrants to CCB as follows:
(a) The Trust is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has the power to carry on its business as it is now being
conducted and to carry out this Agreement.
(b) The Trust is registered under the 1940 Act as an open-end,
diversified, management investment company, and such registration has not been
revoked or rescinded and is in full force and effect.
(c) The Trust is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of the
Trust's Declaration of Trust or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
(d) No litigation or administrative proceeding or investigation
of or before any court or governmental body is currently pending or to its
knowledge threatened against the Acquiring Fund or any of its properties or
assets which, if adversely determined, would materially and adversely affect its
financial condition or the conduct of its business. The Acquiring Fund knows of
no facts which might form the basis for the institution of such proceedings, and
is not a party to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.
(e) The current prospectus and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(f) The Statement of Assets and Liabilities of the Acquiring
Fund at April 30, 1997 and 1998, have been audited by Ernst & Young LLP,
independent auditors, and have been prepared in accordance with generally
accepted accounting principles, consistently applied, and such statements
(copies of which have been furnished to the Acquired Fund) fairly reflect the
financial condition of the Acquiring Fund as of such dates, and there are no
known contingent liabilities of the Acquiring Fund as of such dates not
disclosed therein.
(g) The Statements of Assets and Liabilities of the Acquiring
Fund at October 31, 1997 and 1998 have been prepared in accordance with
generally accepted accounting principles, consistently applied, and such
statements (copies of which have been furnished to the Acquired Fund) fairly
reflect the financial condition of the Acquiring Fund as of such dates, and
there are no known contingent liabilities of the Acquiring Fund as of such dates
not disclosed therein.
(g) Since October 31, 1998, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as disclosed to and
accepted by the Acquired Fund.
(i) At the Closing Date, all Federal and other tax returns and
reports of the Acquiring Fund required by law to have been filed by such date
shall have been filed, and all Federal and other taxes shall have been paid so
far as due, or provision shall have been made for the payment thereof, and to
the best of the Acquiring Fund's knowledge no such return is currently under
audit and no assessment has been asserted with respect to such returns.
(j) For each fiscal year of its operation, the Acquiring Fund has met the
requirements of the Code for qualification and treatment as a regulated
investment company.
(k) All issued and outstanding Shares of the Acquiring Fund
are, and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable. The Acquiring Fund does not have outstanding any
options, warrants or other rights to subscribe for or purchase any of Acquiring
Fund Shares, nor is there outstanding any security convertible into any
Acquiring Fund Shares.
(l) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the Trust's Trustees, and this Agreement will
constitute the valid and legally binding obligation of the Acquiring Fund
enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto, and to general principles of equity and the discretion of
the court (regardless of whether the enforceability is considered in a
proceeding in equity or at law).
(m) The Prospectus/Proxy Statement to be included in the
Registration Statement (only insofar as it relates to the Acquiring Fund) will,
on the effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading.
(n) The Acquiring Fund has entered into an agreement under
which Federated Investment Management Company will assume the expenses of the
reorganization including accountants' fees, legal fees, registration fees,
transfer taxes (if any), the fees of banks and transfer agents and the costs of
preparing, printing, copying and mailing proxy solicitation materials to the
Acquired Fund's shareholders and the costs of holding the Special Meeting of
Shareholders.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
5.1 The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include customary
dividends and distributions.
5.2 CCB will call a meeting of the Acquired Fund Shareholders to
consider and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund
and the Acquired Fund will each take, or cause to be taken, all action, and do
or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days
after the Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in
such form as is reasonably satisfactory to the Acquiring Fund, a statement of
the earnings and profits of the Acquired Fund for Federal income tax purposes
which will be carried over to the Acquiring Fund as a result of Section 381 of
the Code and which will be certified by the Corporation's President and its
Treasurer.
5.5 The Acquired Fund will provide the Acquiring Fund with
information reasonably necessary for the preparation of the Prospectus/Proxy
Statement, referred to in paragraph 4.1(o), all to be included in a Registration
Statement on Form N-14 of the Acquiring Fund (the "Registration Statement"), in
compliance with the 1933 Act, the Securities Exchange Act of 1934, as amended,
and the 1940 Act in connection with the meeting of the Acquired Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
5.7 At or before the Valuation Time, the Acquired Fund shall have
declared and paid a dividend or dividends, with a record date and ex-dividend
date at or before the Valuation Time, which, together with all previous
dividends, shall have the effect of distributing to its shareholders all of its
investment company taxable income (computed without regard to any deduction for
dividends paid), if any, plus the excess of its interest income, if any,
excludable from gross income under Section 103(a) of the Code over its
deductions disallowed under Sections 265 and 171(a)(2) of the Code for the
taxable periods or years ended on or before May 31, 1999 and for the period from
said date to and including the Closing Date, and all of its net capital gain
realized (after reduction for any capital loss carryforward), if any, in taxable
periods or years ended on or before May 31, 1999 and in the period from said
date to and including the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Corporation contained
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets, together with a list of the Acquired
Fund's portfolio securities showing the tax costs of such securities by lot and
the holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Acquired Fund.
6.3 The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer, in form and substance satisfactory to the Acquiring
Fund, to the effect that the representations and warranties of CCB made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as the Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the
transactions provided herein shall be subject, at its election, to the
performance by the Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date and, in addition thereto, the following
conditions:
7.1 All representations and warranties of the Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
7.2 The Acquiring Fund shall have delivered to the Acquired Fund on
the Closing Date a certificate executed in its name by its President or Vice
President and its Treasurer, in form and substance satisfactory to the Acquired
Fund, to the effect that the representations and warranties of the Trust made in
this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement, and as
to such other matters as the Acquired Fund shall reasonably request.
7.3 There shall not have been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities or business since the
date hereof other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of any indebtedness, except as otherwise
disclosed to and accepted by the Acquired Fund.
8. FURTHER CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRING
FUND AND THE ACQUIRED FUND.
If any of the conditions set forth below do not exist on or
before the Closing Date with respect to the Acquired Fund or the Acquiring Fund,
the other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement.
8.1 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of CCB's Declaration of
Trust and the 1940 Act.
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by the Acquiring Fund or the Acquired Fund to permit consummation, in
all material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or properties of
the Acquiring Fund or the Acquired Fund, provided that either party hereto may
for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5 The Trust and CCB shall have received an opinion of Dickstein
Shapiro Morin & Oshinsky LLP substantially to the effect that
for Federal income tax purposes: (a) The transfer of all of
the Acquired Fund assets to the Acquiring Fund in exchange for
the Acquiring Fund Shares and the distribution of the
Acquiring
Fund Shares to the Acquired Fund Shareholders in liquidation of the Acquired
Fund will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code, and the Acquiring Fund and the Acquired Fund each will
be "a party to a reorganization" within the meaning of Section 368(b) of the
Code; (b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the Acquiring
Fund Shares; (c) No gain or loss will be recognized by the Acquired Fund upon
the transfer of the Acquired Fund assets to the Acquiring Fund in exchange for
the Acquiring Fund Shares or upon the distribution (whether actual or
constructive) of the Acquiring Fund Shares to Acquired Fund Shareholders in
exchange for their shares of the Acquired Fund; (d) No gain or loss will be
recognized by the Acquired Fund Shareholders upon the exchange of their Acquired
Fund shares for the Acquiring Fund Shares; (e) The tax basis of the Acquired
Fund assets acquired by the Acquiring Fund will be the same as the tax basis of
such assets to the Acquired Fund immediately prior to the Reorganization; (f)
The tax basis of the Acquiring Fund Shares received by each of the Acquired Fund
Shareholders pursuant to the Reorganization will be the same as the tax basis of
the Acquired Fund shares held by such shareholder immediately prior to the
Reorganization; (g) The holding period of the assets of the Acquired Fund in the
hands of the Acquiring Fund will include the period during which those assets
were held by the Acquired Fund; and (h) The holding period of the Acquiring Fund
Shares to be received by each Acquired Fund Shareholder will include the period
during which the Acquired Fund shares exchanged therefor were held by such
shareholder (provided the Acquired Fund shares were held as capital assets on
the date of the Reorganization).
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees of CCB or the
Board of Trustees of the Trust at any time prior to the Closing Date (and
notwithstanding any vote of the Acquired Fund Shareholders) if circumstances
should develop that, in the opinion of either of the parties' Board, make
proceeding with the Agreement inadvisable.
9.2 If this Agreement is terminated and the exchange contemplated
hereby is abandoned pursuant to the provisions of this Section 9, this Agreement
shall become void and have no effect, without any liability on the part of any
party hereto or the trustees or officers of CCB or the Trust or the shareholders
of the Acquiring Fund or of the Acquired Fund, in respect of this Agreement.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing
conditions may be waived by the Board of Trustees of the Trust or the Board of
Trustees of CCB, if, in the judgment of either, such waiver will not have a
material adverse effect on the benefits intended under this Agreement to the
shareholders of the Acquiring Fund or of the Acquired Fund, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided
for herein shall survive consummation of the transactions
contemplated hereby. 11.2 This Agreement contains the entire
agreement and understanding between the parties hereto with respect
to the subject matter hereof, and merges and
supersedes all prior discussions, agreements, and understandings of every kind
and nature between them relating to the subject matter hereof. Neither party
shall be bound by any condition, definition, warranty or representation, other
than as set forth or provided in this Agreement or as may be set forth in a
later writing signed by the party to be bound thereby.
11.3 This Agreement shall be governed and construed in accordance
with the internal laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflicts of laws.
11.4 This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be deemed to be an
original. 11.5 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns, but
no assignment or transfer hereof
of any rights or obligations hereunder shall be made by any party without the
written consent of the other party. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
11.6 The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the Declaration of Trust
of the Trust and agrees that the obligations assumed by the Acquiring Fund
pursuant to this Agreement shall be limited in any case to the Acquiring Fund
and its assets and the Acquired Fund shall not seek satisfaction of any such
obligation from the shareholders of the Acquiring Fund, the trustees, officers,
employees or agents of the Trust or any of them.
11.7 The Acquiring Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the Declaration of Trust
of CCB and agrees that the obligations assumed by the Acquired Fund pursuant to
this Agreement shall be limited in any case to the Acquired Fund and its assets
and the Acquiring Fund shall not seek satisfaction of any such obligation from
the shareholders of the Acquired Fund, the trustees, officers, employees or
agents of the Trust or any of them.
<PAGE>
IN WITNESS WHEREOF, the Acquired Fund and the Acquiring Fund have
each caused this Agreement and Plan of Reorganization to be executed and
attested on its behalf by its duly authorized representatives as of the date
first above written.
Acquired Fund:
CCB FUNDS, on behalf of its portfolio,
Attest: CCB BOND FUND
By:/S/ By:
Name:
Title:
/S/
Assistant Secretary
Acquiring Fund:
FEDERATED INCOME SECURITIES TRUST, on behalf
of its portfolio,
FEDERATED INTERMEDIATE INCOME
Attest: FUND
By:/S/ By:
Name:
Title:
/S/
Assistant Secretary
STATEMENT OF ADDITIONAL INFORMATION
JUNE 18, 1999
Acquisition of the Assets of
CCB BOND FUND,
(formerly, 111 Corcoran Bond Fund)
a portfolio of
CCB FUNDS
(formerly, 111 Corcoran Funds)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Telephone Number: 1-800-245-5051, option one
By and in exchange for Institutional Shares of
FEDERATED INTERMEDIATE INCOME FUND,
a portfolio of
FEDERATED INCOME SECURITIES TRUST
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-245-5051, option one
This Statement of Additional Information dated June 18, 1999 is not a
prospectus. A Prospectus/Proxy Statement dated June 18, 1999 related to the
above-referenced matter may be obtained from Federated Income Securities Trust,
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. This Statement of
Additional Information should be read in conjunction with such Prospectus/Proxy
Statement.
<PAGE>
TABLE OF CONTENTS
1. Statement of Additional Information of Federated Intermediate Income Fund, a
portfolio of Federated Income Securities Trust, dated August 31, 1998.
2. Statement of Additional Information of CCB Bond Fund, a portfolio of CCB
Funds, dated July 31, 1998.
3. Financial Statements of Federated Intermediate Income Fund, a portfolio of
Federated Income Securities Trust, dated April 30, 1998.
4. Financial Statements of CCB Bond Fund, a portfolio of CCB Funds, dated May
31, 1998.
5. Financial Statements (unaudited) of Federated Intermediate Income Fund, a
portfolio of Federated Income Securities Trust, dated October 31, 1998.
6. Financial Statements (unaudited) of CCB Bond Fund, a portfolio of CCB Funds,
dated November 30, 1998.
7. Pro Forma Financial Information of Federated Intermediate Income Fund, a
portfolio of Federated Income Securities Trust, dated April 30, 1998.
<PAGE>
The Statement of Additional Information of Federated Intermediate
Income Fund (the "Federated Fund"), a portfolio of Federated Income Securities
Trust (the "Trust") dated August 31, 1998, is incorporated herein by reference
to Post-Effective Amendment No. 30 to the Trust's Registration Statement on Form
N-1A (File Nos. 33-3164 and 811-4577) which was filed with the Securities and
Exchange Commission on or about June 29, 1998. A copy may be obtained, upon
request and without charge, from the Federated Fund at 5800 Corporate Drive,
Pittsburgh, PA 15237-7000; telephone number: 1-800-245-5051, option one.
The Statement of Additional Information of CCB Bond Fund (the "CCB
Bond Fund"), a portfolio of CCB Funds (the "CCB Funds"), dated July 31, 1998, is
incorporated herein by reference to Post-Effective Amendment No. 12 to the CCB
Funds' Registration Statement on Form N-1A (File Nos. 33-45753 and 811-6561)
which was filed with the Securities and Exchange Commission on or about July 21,
1998. A copy may be obtained, upon request and without charge, from the CCB Bond
Fund at 5800 Corporate Drive, Pittsburgh, PA 15237-7010; telephone number:
1-800-245-5051, option one.
The audited financial statements of the Federated Fund, dated April
30, 1998, are incorporated herein by reference to the Federated Fund's Annual
Report to Shareholders dated April 30, 1998 which was filed with the Securities
and Exchange Commission on or about June 25, 1998. A copy may be obtained, upon
request and without charge, from the Federated Fund at 5800 Corporate Drive,
Pittsburgh, PA 15237-7000; telephone number: 1-800-245-5051, option one.
The audited financial statements of the CCB Bond Fund, dated May 31,
1998, are incorporated herein by reference to the CCB Bond Fund's Annual Report
to Shareholders dated May 31, 1998, which was filed with the Securities and
Exchange Commission on or about July 29, 1998. A copy may be obtained, upon
request and without charge, from the CCB Bond Fund at 5800 Corporate Drive,
Pittsburgh, PA 15237-7010; telephone number: 1-800-245-5051, option one.
The unaudited financial statements of the Federated Fund, dated
October 31, 1999, are incorporated herein by reference to the Federated Fund's
Semi-Annual Report to Shareholders, dated October 31, 1998, which was filed with
the Securities and Exchange Commission on or about December 30, 1998. A copy may
be obtained, upon request and without charge, from the Federated Fund at 5800
Corporate Drive, Pittsburgh, PA 15237-7000; telephone number: 1-800-245-5051,
option one.
The unaudited financial statements of the CCB Bond Fund, dated
November 30, 1998, are incorporated herein by reference to the CCB Bond Fund's
Semi-Annual Report to Shareholders, dated November 30, 1998, which was filed
with the Securities and Exchange Commission on or about January 22, 1999. A copy
may be obtained, upon request and without charge, from the CCB Bond Fund at 5800
Corporate Drive, Pittsburgh, PA 15237-7010; telephone number: 1-800-245-5051,
option one
The pro forma financial information of the Federated Fund, dated
April 30, 1998 is included herein.
<PAGE>
FEDERATED INTERMEDIATE INCOME FUND
CCB BOND FUND
INTRODUCTION TO PROPOSED MERGER
APRIL 30, 1998 (UNAUDITED)
The accompanying unaudited Pro Forma Combining Portfolio of Investments,
Statement of Assets and Liabilities and Statement of Operations reflect the
accounts of Federated Intermediate Income Fund and CCB Bond Fund, collectively
("the Funds"), at and for the year ended April 30, 1998, the most recent fiscal
year-end of Federated Intermediate Income Fund. The accounts reflected on CCB
Bond Fund's Statement of Operations reflect a twelve month reporting period
ending April 30, 1998. This updating was accomplished by deducting the results
for the period from May 1, 1998 through May 31, 1998 from its fiscal year-end
Statement of Operations, and adding its results from May 1, 1997 through May 31,
1997. The Pro Forma financial statements give effect to the proposed transfer of
assets from CCB Bond Fund in exchange for Institutional Shares of Federated
Intermediate Income Fund. These statements have been derived from the books and
records utilized in calculating daily net asset values at April 30, 1998
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
APRIL 30, 1998 ( UNAUDITED)
CCB FEDERATED CCB FEDERATED
BOND PRO FORMA BOND PRO FORMA
INTERMEDIATE INTERMEDIATE
FUND INCOME FUND COMBINED FUND INCOME FUND COMBINED
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
PRINCIPAL
AMOUNT AMOUNT AMOUNT VALUE VALUE VALUE
- -------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 1.28%
- -------------------------------------------------------------------------
STRUCTURED PRODUCTS .52%
- -------------------------------------------------------------------------
$- $500,000 Discover Card Trust 1996-3, $- $497,370
$500,000 Class B, 6.25%, 8/18/2008 $497,370
----------------------------------
- 500,000 500,000 Residential Funding Corp. - 516,905 516,905
1993-S26, Class A10, 7.50%,
7/25/2023
----------------------------------
- 300,000 300,000 Residential Funding Corp. - 288,639 288,639
1993-S31, Class A7, 7.00%,
9/25/2023
----------------------------------
- 83,969 83,969 The Money Store Home Equity - 84,155 84,155
Trust 1992-B, Class A, 6.90%,
7/15/2007
----------------------------------------------------------------------
Total 889,699
497,370 1,387,069
----------------------------------------------------------------------
UTILITIES .76%
- -------------------------------------------------------------------------
- 2,000,000 2,000,000 California Infrastructure &
Economic Development Bank
Special Purpose Trust PG&E-1,
Class A8, 6.48%, 12/26/2009 - 2,027,180
2,027,180
----------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES 2,916,879
497,370 3,414,249
----------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS 13.57%
- -------------------------------------------------------------------------
FINANCE 12.97%
- -------------------------------------------------------------------------
- 1,000,000 Federal Home Loan Mortgage -
1,000,000 Corp., Series 1033G, 8.00%, 1,036,120 1,036,120
1/15/2006
----------------------------------
- 4,000,000 Federal Home Loan Mortgage -
4,000,000 Corp., Series 1171G, 8.00%, 4,195,240 4,195,240
11/15/2006
----------------------------------
- 1,000,000 Federal Home Loan Mortgage -
1,000,000 Corp., Series 1187H, 7.00%, 1,018,980 1,018,980
12/15/2006
----------------------------------
39,468 - 39,468 Federal Home Loan Mortgage - 39,255
Corp., Series 1194F, 5.00%, 39,255
11/15/2005
----------------------------------
- 1,011,000 Federal Home Loan Mortgage -
1,011,000 Corp., Series 1228H, 7.00%, 1,029,289 1,029,289
8/15/2008
----------------------------------
- 400,000 Federal Home Loan Mortgage - 409,180
400,000 Corp., Series 1324VE, 7.00%, 409,180
8/15/2007
----------------------------------
- 1,000,000 Federal Home Loan Mortgage -
1,000,000 Corp., Series 1341K, 7.00%, 1,019,050 1,019,050
8/15/2007
----------------------------------
84,445 - 84,445 Federal Home Loan Mortgage - 84,521
Corp., Series 1422E, 6.50%, 84,521
2/15/2007
----------------------------------
- 176,459 Federal Home Loan Mortgage - 174,774
176,459 Corp., Series 1452C, 6.50%, 174,774
12/15/2007
----------------------------------
- 1,470,000 Federal Home Loan Mortgage -
1,470,000 Corp., Series 1468M, 7.00%, 1,517,849 1,517,849
1/15/2010
----------------------------------
- 1,000,000 Federal Home Loan Mortgage -
1,000,000 Corp., Series 1477ID, 7.00%, 1,023,590 1,023,590
11/15/2009
----------------------------------
- 1,000,000 Federal Home Loan Mortgage - 994,005
1,000,000 Corp., Series 1808VB, 6.85%, 994,005
10/15/2010
----------------------------------
- 1,000,000 Federal Home Loan Mortgage - 983,500
1,000,000 Corp., Series 24VB, 6.50%, 983,500
7/25/2010
----------------------------------
- 942,240 Federal National Mortgage - 972,816
942,240 Association, Series 1991-150G, 972,816
8.00%, 11/25/2006
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1992-124D, 1,027,870 1,027,870
7.00%, 4/25/2010
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1992-50J, 1,016,500 1,016,500
7.25%, 12/25/2006
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1992-53G, 1,015,140 1,015,140
7.00%, 4/25/2007
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1992-70H, 1,009,260 1,009,260
7.00%, 4/25/2006
----------------------------------
- 2,000,000 Federal National Mortgage -
2,000,000 Association, Series 1993-139KD, 2,021,895 2,021,895
7.00%, 7/25/2006
----------------------------------
- 1,500,000 Federal National Mortgage -
1,500,000 Association, Series 1993-181O, 1,470,975 1,470,975
6.50%, 9/25/2008
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1993-33H, 1,007,800 1,007,800
6.75%, 9/25/2008
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1993-36J, 1,036,930 1,036,930
7.50%, 5/25/2006
----------------------------------
- 996,078 Federal National Mortgage - 947,798
996,078 Association, Series 1993-76B, 947,798
6.00%, 6/25/2008
----------------------------------
- 2,500,000 Federal National Mortgage -
2,500,000 Association, Series 1994-27CB, 2,494,223 2,494,223
6.50%, 9/25/2008
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1994-79G, 1,023,740 1,023,740
7.00%, 11/25/2004
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series 1996-68VC, 1,005,890 1,005,890
6.50%, 9/18/2010
----------------------------------
- 1,500,000 Federal National Mortgage -
1,500,000 Association, Series 1997-26AC, 1,511,940 1,511,940
6.50%, 3/25/2012
----------------------------------
- 2,500,000 Federal National Mortgage -
2,500,000 Association, Series 1997-67PL, 2,464,325 2,464,325
6.50%, 10/18/2012
----------------------------------
- 1,000,000 Federal National Mortgage -
1,000,000 Association, Series G93-31H, 1,029,870 1,029,870
7.00%, 2/25/2013
----------------------------------------------------------------------
Total -
34,582,325 34,582,325
----------------------------------------------------------------------
STRUCTURED PRODUCTS .60%
- -------------------------------------------------------------------------
- 1,250,000 CMC Securities Corp. III, -
1,250,000 Series 1994-C, Class A14, 5.42%, 1,198,281 1,198,281
3/25/2024
----------------------------------
- 394,257 394,257 Prudential Bache CMO Trust - 402,107 402,107
Series 8, Class F, 7.965%,
3/1/2019
----------------------------------------------------------------------
Total 402,107
1,198,281 1,600,388
----------------------------------------------------------------------
TOTAL COLLATERALIZED 402,107
MORTGAGE OBLIGATIONS 35,780,606 36,182,713
----------------------------------------------------------------------
CORPORATE BONDS 48.78%
- -------------------------------------------------------------------------
AEROSPACE & DEFENSE 1.14%
- -------------------------------------------------------------------------
- 600,000 600,000 Boeing Co., Unsecured Note, - 609,444 609,444
6.35%, 6/15/2003
----------------------------------
- 1,500,000 1,500,000 (1) British Aerospace Finance, - 1,614,168
Inc. 7.50%, 7/1/2027 1,614,168
----------------------------------
- 800,000 800,000 McDonnell Douglas Finance - 805,976 805,976
Corp., Medium Term Note, 6.375%,
7/15/1999
----------------------------------------------------------------------
Total - 3,029,588
3,029,588
----------------------------------------------------------------------
AIR TRANSPORTATION .46%
- -------------------------------------------------------------------------
- 1,150,000 1,150,000 Southwest Airlines Co., Deb., - 1,224,877
7.375%, 3/1/2027 1,224,877
----------------------------------------------------------------------
AUTOMOBILE .76%
- -------------------------------------------------------------------------
- 2,000,000 2,000,000 Dana Corp., Note, 7.00%, - 2,016,780
3/15/2028 2,016,780
----------------------------------------------------------------------
BANKING 6.32%
- -------------------------------------------------------------------------
- 1,250,000 1,250,000 ABN-AMRO Bank NV, Chicago, Sub. - 1,251,950
Deb., 7.30%, 12/1/2026 1,251,950
----------------------------------
- 40,000 40,000 Banc One Corp., Sub. Note, - 41,700 41,700
7.25%, 8/1/2002
----------------------------------
- 2,000,000 2,000,000 Banco Santander, Bank - 2,159,140
Guarantee, 7.875%, 4/15/2005 2,159,140
----------------------------------
- 200,000 200,000 BankAmerica Corp., Sub. Note, - 211,644 211,644
7.75%, 7/15/2002
----------------------------------
- 1,000,000 1,000,000 Barclays North America, Deb., - 1,126,240
9.75%, 5/15/2021 1,126,240
----------------------------------
- 10,000 10,000 Boatmen's Bancshares, Inc., - 10,984 10,984
Sub. Note, 9.25%, 11/1/2001
----------------------------------
- 2,100,000 2,100,000 (1)CIBC Capital Funding LP, - 2,113,650
Bank Guarantee, 6.40%, 2,113,650
12/17/2004
----------------------------------
- 30,000 30,000 Central Fidelity Banks, Inc., - 32,400 32,400
Sub. Note, 8.15%, 11/15/2002
----------------------------------
- 920,000 920,000 Chase Manhattan Corp., Sub. - 921,205 921,205
Note, 8.00%, 5/1/2005
----------------------------------
- 40,000 40,000 Corestates Capital Corp., Sub. - 39,393 39,393
Note, 5.875%, 10/15/2003
----------------------------------
- 1,000,000 1,000,000 (1)Den Danske Bank, Note, - 1,044,030
7.40%, 6/15/2010 1,044,030
----------------------------------
- 250,000 250,000 First Chicago NBD Corp., Sub. - 265,145 265,145
Note 8.10%, 3/1/2002
----------------------------------
- 30,000 30,000 First Union Corp., Sub Note, - 32,176 32,176
8.00% 11/15/2002
----------------------------------
- 2,000,000 2,000,000 National Australia Bank, Ltd., - 2,025,320
Melbourne, Sub. Note, Series B, 2,025,320
6.60%, 12/10/2007
----------------------------------
- 3,000,000 3,000,000 National Bank of Canada, - 3,258,510
Montreal, Sub. Note, 8.125%, 3,258,510
8/15/2004
----------------------------------
- 15,000 15,000 NationsBank Corp., Sub. Note, - 16,064 16,064
7.625%, 4/15/2005
----------------------------------
- 300,000 300,000 Northern Trust Corp., Sub. - 300,483 300,483
Note, 9.00%, 5/15/1998
----------------------------------
- 430,000 430,000 PNC Funding Corp., Sub. Note, - 443,670 443,670
6.875%, 7/15/2007
----------------------------------
- 30,000 30,000 Republic New York Corp., Sub. - 32,050 32,050
Note, 8.25%, 11/1/2001
----------------------------------
- 10,000 10,000 Sovran Financial, Deb., 9.75%, - 10,423 10,423
6/15/1999
----------------------------------
- 200,000 200,000 SunTrust Bank, Central Florida, - 208,296 208,296
Sub. Note, 6.90%, 7/1/2007
----------------------------------
- 255,000 255,000 SunTrust Banks, Inc., Note, - 266,829 266,829
7.375%, 7/1/2002
----------------------------------
- 15,000 15,000 SunTrust Banks, Inc., Sub. - 14,924 14,924
Note, 6.125%, 2/15/2004
----------------------------------
- 1,000,000 1,000,000 (1)Swedbank, Sub., 7.50%, - 1,023,340
11/29/2049 1,023,340
----------------------------------------------------------------------
Total -
16,849,566 16,849,566
----------------------------------------------------------------------
BEVERAGE & TOBACCO .13% -
- -------------------------------------------------------------------------
- 350,000 350,000 American Brands, Inc., Medium - 353,398 353,398
Term Note, 8.87%, 8/10/1998
----------------------------------------------------------------------
CHEMICALS & PLASTICS .60% -
- -------------------------------------------------------------------------
- 1,500,000 1,500,000 (1)Bayer Corp., Deb., 6.50%, - 1,530,165
10/1/2002 1,530,165
----------------------------------
- 40,000 40,000 Du Pont (E.I.) de Nemours & - 43,930 43,930
Co., Note, 8.125%, 3/15/2004
----------------------------------
- 30,000 30,000 PPG Industries, Inc., Note, - 30,744 30,744
6.50%, 11/1/2007
----------------------------------------------------------------------
Total - 1,604,839
1,604,839
----------------------------------------------------------------------
CONGLOMERATES .42%
- -------------------------------------------------------------------------
- 1,250,000 1,250,000 (1)Hutchison Whampoa Finance, - 1,118,475
Company Guarantee, 7.50%, 1,118,475
8/1/2027
----------------------------------------------------------------------
CONSUMER PRODUCTS .80%
- -------------------------------------------------------------------------
- 50,000 50,000 CPC International, Inc., Note, - 50,153 50,153
6.15%, 9/18/1998
----------------------------------
- 1,000,000 Philip Morris Cos., Inc., Note, -
1,000,000 7.125%, 8/15/2002 1,024,230 1,024,230
----------------------------------
- 1,000,000 Philip Morris Cos., Inc., -
1,000,000 Unsecd. Note, 9.00%, 1/1/2001 1,063,020 1,063,020
----------------------------------------------------------------------
Total 50,153
2,087,250 2,137,403
----------------------------------------------------------------------
----------------------------------
ECOLOGICAL SERVICES & EQUIPMENT .84%
- -------------------------------------------------------------------------
2,000,000 2,000,000 WMX Technologies, Inc., Deb., - 2,245,960
8.75%, 5/1/2018 2,245,960
----------------------------------------------------------------------
EDUCATION 1.73%
- -------------------------------------------------------------------------
- 1,975,000 1,975,000 Boston University, 7.625%, - 2,231,643
7/15/2097 2,231,643
----------------------------------
- 1,150,000 1,150,000 Columbia University, Medium - 1,230,557
Term Note, 8.62%, 2/21/2001 1,230,557
----------------------------------
- 1,000,000 1,000,000 Harvard University, Revenue - 1,144,010
bonds, 8.125% Bonds, 4/15/2007 1,144,010
----------------------------------------------------------------------
Total - 4,606,210
4,606,210
----------------------------------------------------------------------
ELECTRONICS 1.74%
- -------------------------------------------------------------------------
- 1,500,000 1,500,000 General Electric Financial - 1,835,445
Services, Inc., Medium Term 1,835,445
Note, 9.18%, 12/30/2008
----------------------------------
- 2,590,000 2,590,000 Harris Corp., Deb., 10.375%, - 2,782,256
12/1/2018 2,782,256
----------------------------------
- 15,000 15,000 Rockwell International Corp., - 15,413 15,413
Unsecured Note, 6.625%, 6/1/2005
----------------------------------------------------------------------
Total - 4,633,114
4,633,114
----------------------------------------------------------------------
FINANCE - AUTOMOTIVE 2.34%
- -------------------------------------------------------------------------
- 1,750,000 1,750,000 Chrysler Financial Corp., Deb., - 1,934,537
13.25%, 10/15/1999 1,934,537
----------------------------------
- 2,000,000 2,000,000 Ford Capital BV, Note, 9.375%, - 2,175,880
5/15/2001 2,175,880
----------------------------------
- 250,000 Ford Motor Credit Corp., Note, - 259,515
250,000 7.50%, 4/25/2011 259,515
----------------------------------
- 35,000 35,000 Ford Motor Credit Corp., Note, - 37,645 37,645
7.75%, 3/15/2005
----------------------------------
- 20,000 20,000 Ford Motor Credit Corp., - 20,509 20,509
Unsecured Note, 7.75%, 10/1/1999
----------------------------------
- 1,000,000 1,000,000 Ford Motor Credit Corp., Unsub, - 1,015,370
6.875%, 6/5/2001 1,015,370
----------------------------------
- 485,000 485,000 General Motors Acceptance - 498,648 498,648
Corp., Medium Term Note, 7.50%,
5/25/2000
----------------------------------
- 45,000 45,000 General Motors Acceptance - 45,210 45,210
Corp., Note, 6.25%, 1/11/2000
----------------------------------
- 155,000 155,000 General Motors Acceptance - 159,982 159,982
Corp., Note, 7.00%, 9/15/2002
----------------------------------
- 100,000 100,000 General Motors Acceptance - 101,446 101,446
Corp., Unsecured Note, 7.75%,
1/15/1999
----------------------------------------------------------------------
Total 5,989,227
259,515 6,248,742
----------------------------------------------------------------------
FINANCE - INSURANCE .58%
- -------------------------------------------------------------------------
500,000 - 500,000 CIGNA Corp., Sr. Note, 7.40%, - 519,450
1/15/2003 519,450
----------------------------------
- 1,000,000 Continental Corp., Unsec.. -
1,000,000 Note, 7.25%, 3/1/2003 1,036,270 1,036,270
----------------------------------------------------------------------
Total -
1,555,720 1,555,720
----------------------------------------------------------------------
FINANCE - RETAIL .02%
- -------------------------------------------------------------------------
- 50,000 50,000 Commercial Credit Co., Note, - 49,362 49,362
5.55%, 2/15/2001
----------------------------------
- 15,000 15,000 Commercial Credit Co., Note, - 15,170 15,170
6.70%, 8/1/1999
----------------------------------------------------------------------
Total - 64,532 64,532
----------------------------------------------------------------------
FINANCIAL INTERMEDIARIES 4.40%
- -------------------------------------------------------------------------
- 2,000,000 2,000,000 (1)Amvescap PLC, Sr. Note, - 1,996,960
6.60%, 5/15/2005 1,996,960
----------------------------------
- 50,000 50,000 Avco Financial Services, Inc., - 51,753 51,753
Sr. Note, 8.50%, 10/15/1999
----------------------------------
- 40,000 40,000 CIT Group Holdings, Inc. Sr. - 40,279 40,279
Note, 6.375%, 5/21/1999
----------------------------------
- 1,500,000 1,500,000 Donaldson, Lufkin and Jenrette - 1,532,085
Securities Corp., Note, 6.875%, 1,532,085
11/1/2005
----------------------------------
- 15,000 15,000 Equitable Cos., Inc., Sr. Note, - 15,220 15,220
6.75%, 12/1/2000
----------------------------------
- 2,000,000 2,000,000 Lehman Brothers, Inc., Sr. Sub. - 2,103,940
Note, 7.375%, 1/15/2007 2,103,940
----------------------------------
- 500,000 500,000 Merrill Lynch & Co., Inc., - 514,150 514,150
Note, 6.875%, 3/1/2003
----------------------------------
- 1,000,000 Merrill Lynch & Co., Inc., -
1,000,000 Note, 7.20%, 10/15/2012 1,040,400 1,040,400
----------------------------------
- 15,000 15,000 Merrill Lynch & Co., Inc., - 15,977 15,977
Note, 7.375%, 5/15/2006
----------------------------------
- 100,000 100,000 Merrill Lynch & Co., Inc., - 108,229 108,229
Note, 8.30%, 11/1/2002
----------------------------------
- 65,000 65,000 Merrill Lynch & Co., Inc., - 67,673 67,673
Note, 8.375%, 2/9/2000
----------------------------------
- 1,000,000 Merrill Lynch & Co., Inc., -
1,000,000 note, Series MTNB, 7.19%, 1,026,630 1,026,630
8/7/2012
----------------------------------
- 20,000 20,000 Morgan Stanley Group, Inc., - 21,806 21,806
Deb., 9.375%, 6/15/2001
----------------------------------
- 30,000 30,000 Norwest Corp., Note, 5.75%, - 29,517 29,517
2/1/2003
----------------------------------
- 1,050,000 1,050,000 Norwest Financial, Inc., Note, - 1,053,265
6.23%, 9/1/1998 1,053,265
----------------------------------
- 5,000 5,000 Salomon, Inc., Note, 6.375%, - 5,012 5,012
10/1/2004
----------------------------------
- 10,000 10,000 Salomon, Inc., Note, 6.625%, - 10,151 10,151
11/15/2003
----------------------------------
- 1,000,000 Salomon Smith Barney holdings, -
1,000,000 Inc., Note, 7.375%, 5/15/2007 1,062,510 1,062,510
----------------------------------
- 986,574 986,574 (1)World Financial, Pass Thru - 1,033,150
Cert., Series 96 WFP-B, 6.91%, 1,033,150
9/1/2013
----------------------------------------------------------------------
Total 8,599,167
3,129,540 11,728,707
----------------------------------------------------------------------
FINANCIAL SERVICES .92%
- -------------------------------------------------------------------------
- 250,000 250,000 American Express Credit Corp., - 257,487 257,487
Deb., 8.50%, 6/15/1999
----------------------------------
- 20,000 20,000 Associates Corp. of North - 20,035 20,035
America, Sr. Note, 6.00%,
6/15/2000
----------------------------------
- 2,000,000 2,000,000 Associates Corp. of North - 2,022,460
America, Sr. Note, 6.68%, 2,022,460
9/17/1999
----------------------------------
- 35,000 35,000 Associates Corp. of North - 35,447 35,447
America, Sr. Note, 6.75%,
10/15/1999
----------------------------------
- 50,000 50,000 Caterpillar Financial Services - 50,475 50,475
Corp., Note, 6.77%, 3/15/1999
----------------------------------
- 30,000 30,000 John Deere Capital Corp., Sr. - 30,287 30,287
Note, 6.50%, 9/20/1999
----------------------------------
- 15,000 15,000 John Deere Capital Corp., Sr. - 15,404 15,404
Note, 7.52%, 3/6/2000
----------------------------------
- 10,000 10,000 Paccar Financial Corp., Sr. - 10,012 10,012
Note, 6.18%, 2/15/2001
----------------------------------------------------------------------
Total - 2,441,607
2,441,607
----------------------------------------------------------------------
FOOD PRODUCTS .13%
- -------------------------------------------------------------------------
- 5,000 5,000 Grand Metropolitan Investment - 6,124 6,124
Corp., 9.00%, 8/15/2011
----------------------------------
- 5,000 5,000 Grand Metropolitan Investment - 5,041 5,041
Corp., Unsecured Note, 6.50%,
9/15/1999
----------------------------------
- 300,000 300,000 Kraft General Foods, Inc., - 298,977 298,977
Deb., 6.00%, 6/15/2001
----------------------------------
- 25,000 25,000 Union Camp Corp., Note, 6.50%, - 25,352 25,352
11/15/2007
----------------------------------------------------------------------
Total - 335,494 335,494
----------------------------------------------------------------------
FOREST PRODUCTS .01%
- -------------------------------------------------------------------------
- 25,000 25,000 Weyerhaeuser Co., Deb., 9.05%, - 27,823 27,823
2/1/2003
----------------------------------------------------------------------
HEALTH SERVICES .38%
- -------------------------------------------------------------------------
- 1,000,000 1,000,000 Aetna Services, Inc., Company - 1,018,240
Guarantee, 6.75%, 8/15/2001 1,018,240
----------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT .14%
- -------------------------------------------------------------------------
- 10,000 10,000 Air Products & Chemicals, Inc., - 10,613 10,613
Note, 7.375%, 5/1/2005
----------------------------------
- 30,000 30,000 Dresser Industries, Inc., Note, - 30,116 30,116
6.25%, 6/1/2000
----------------------------------
- 300,000 300,000 Illinois Tool Works, Inc., - 300,840 300,840
Note, 5.875%, 3/1/2000
----------------------------------
- 25,000 25,000 Ingersoll-Rand Co., Note, - 25,419 25,419
6.51%, 12/1/2004
----------------------------------
- 10,000 10,000 Ingersoll-Rand Co., Note, - 10,137 10,137
6.60%, 8/1/2000
----------------------------------------------------------------------
Total - 377,125 377,125
----------------------------------------------------------------------
INSURANCE 5.55%
- -------------------------------------------------------------------------
- 2,500,000 2,500,000 Allmerica Financial Corp., Sr. - 2,650,525
Note, 7.625%, 10/15/2025 2,650,525
----------------------------------
- 2,000,000 2,000,000 CAN Financial Corp., Deb., - 2,027,780
7.25%, 11/15/2023 2,027,780
----------------------------------
- 2,000,000 2,000,000 (1)Equitable Life, Note, 7.70%, - 2,159,520
12/1/2015 2,159,520
----------------------------------
- 1,000,000 1,000,000 GEICO Corp., Deb., 9.15%, - 1,124,510
9/15/2021 1,124,510
----------------------------------
- 25,000 25,000 ITT Hartford Group, Inc., Note, - 26,699 26,699
8.30%, 12/1/2001
----------------------------------
- 15,000 15,000 Lincoln National Corp., Note, - 15,798 15,798
7.625%, 7/15/2002
----------------------------------
- 250,000 250,000 MBIA, Deb., 9.00%, 2/15/2001 - 269,202 269,202
----------------------------------
- 900,000 900,000 Provident Cos., Inc., Bond, - 916,809 916,809
7.405%m 3/15/2038
----------------------------------
- 2,000,000 2,000,000 (1)Reinsurance Group of - 2,091,400
America, Sr. Note, 7.25%, 2,091,400
4/1/2006
----------------------------------
- 1,500,000 1,500,000 SunAmerica, Inc., Medium Term - 1,590,217
Note, 7.34%, 8/30/2005 1,590,217
----------------------------------
- 1,400,000 1,400,000 SunAmerica, Inc., Sr. Note, - 1,403,584
6.20%, 10/31/1999 1,403,584
----------------------------------
- 500,000 500,000 SunAmerica, Inc., Sr. Note, - 511,005 511,005
9.00%, 1/15/1999
----------------------------------------------------------------------
Total -
14,787,049 14,787,049
----------------------------------------------------------------------
LEISURE & ENTERTAINMENT .02%
- -------------------------------------------------------------------------
- 40,000 40,000 Disney (Walt) Co., Bond, 40,513 40,513
6.375%, 3/30/2001
----------------------------------------------------------------------
MACHINERY & EQUIPMENT .62%
- -------------------------------------------------------------------------
- 1,600,000 1,600,000 Continental Airlines, Inc., 1,643,888
Pass Thru Cert., Series 1997-4 1,643,888
B, 6.90%, 7/2/2019
----------------------------------------------------------------------
METAL & MINING 1.20%
- -------------------------------------------------------------------------
- 2,500,000 2,500,000 Barrick Gold Corp., Deb., - 2,642,075
7.50%, 5/1/2007 2,642,075
----------------------------------
- 500,000 Reynolds Metals Co., Deb., - 556,620
500,000 9.00%, 8/15/2003 556,620
----------------------------------------------------------------------
Total 2,642,075
556,620 3,198,695
----------------------------------------------------------------------
MULTI-INDUSTRY .33%
- -------------------------------------------------------------------------
- 750,000 Loews Corp., Deb., 8.875%, - 881,985
750,000 4/15/2011 881,985
----------------------------------------------------------------------
MUNICIPAL SERVICES 3.52%
- -------------------------------------------------------------------------
- 1,250,000 1,250,000 Atlanta & Fulton County, GA
Recreation Authority, Taxable
Revenue Bonds, Series 1997,
7.00% Bonds (Downtown Arena - 1,251,862
Project)/(FSA INS), 12/1/2028 1,251,862
----------------------------------
- 1,325,000 1,325,000 Kansas City, MO Redevelopment - 1,432,590
Authority, 7.65% Bonds (FSA 1,432,590
LOC), 11/1/2018
----------------------------------
- 2,000,000 2,000,000 McKeesport, PA, Taxable G.O. - 2,044,440
Series B 1997, 7.30% Bonds (MBIA 2,044,440
INS), 3/1/2020
----------------------------------
- 1,000,000 1,000,000 Miami Florida Revenue Pension - 1,021,440
Obligation, 7.20% Bonds (AMBAC 1,021,440
LOC), 12/1/2025
----------------------------------
- 1,250,000 1,250,000 Minneapolis/St. Paul, MN -
Airport Commission, UT GO
Taxable Revenue Bonds, (Series
9),
8.95% Bonds (Minneapolis/St. - 1,397,250
Paul, MD), 1/1/2022 1,397,250
----------------------------------
- 1,000,000 1,000,000 Pittsburgh, PA Urban - 1,147,770
Redevelopment Authority, 9.07% 1,147,770
Bonds (CGIC GTD), 9/1/2014
----------------------------------
- 1,000,000 1,000,000 St. Johns County, FL Convention -
Center, Taxable Municipal
Revenue Bonds, 8.00% Bonds
(FSA INS), 1/1/2026 - 1,101,300
1,101,300
----------------------------------------------------------------------
Total - 9,396,652
9,396,652
----------------------------------------------------------------------
OIL & GAS .83%
- -------------------------------------------------------------------------
- 10,000 10,000 Atlantic Richfield Co., Deb., - 12,507 12,507
9.125%, 3/1/2011
----------------------------------
- 1,750,000 1,750,000 Phillips Petroleum Co., Deb., - 1,959,860
9.18%, 9/15/2021 1,959,860
----------------------------------
- 250,000 250,000 Shell Oil Co., Deb., 6.95%, - 252,202 252,202
12/15/1998
----------------------------------------------------------------------
Total - 2,224,569
2,224,569
----------------------------------------------------------------------
PHARMACEUTICAL .30%
- -------------------------------------------------------------------------
- 500,000 500,000 American Home Products Corp., - 515,240 515,240
Note, 7.70%, 2/15/2000
----------------------------------
- 250,000 250,000 American Home Products Corp., - 272,660 272,660
Note, 7.90%, 2/15/2005
----------------------------------------------------------------------
Total - 787,900 787,900
----------------------------------------------------------------------
RAIL INDUSTRY .38%
- -------------------------------------------------------------------------
- 1,000,000 1,000,000 Atchison Topeka & Santa Fe RR, - 1,007,960
Equip. Trust, 6.55%, 1/6/2013 1,007,960
----------------------------------------------------------------------
RETAILERS 2.80%
- -------------------------------------------------------------------------
- 15,000 15,000 Dillard Investment, Deb., - 16,141 16,141
9.25%, 2/1/2001
----------------------------------
- 1,874,000 1,874,000 Eckerd Corp., Sr. Sub. Note, - 2,002,538
9.25%, 2/15/2004 2,002,538
----------------------------------
- 2,000,000 2,000,000 May Department Stores Co., - 2,210,980
Deb., 8.125%, 8/15/2035 2,210,980
----------------------------------
- 2,250,000 2,250,000 Penney (J.C.) Co., Inc., Deb., - 2,423,678
7.65%, 8/15/2016 2,423,678
----------------------------------
- 300,000 300,000 Sears, Roebuck & Co., Deb., - 304,293 304,293
8.45%, 11/1/1998
----------------------------------
- 500,000 500,000 Sears, Roebuck & Co., Medium - 512,205 512,205
Term Note, 7.32%, 4/24/2000
----------------------------------------------------------------------
Total - 7,469,835
7,469,835
----------------------------------------------------------------------
SOVEREIGN GOVERNMENT 2.35%
- -------------------------------------------------------------------------
- 1,000,000 1,000,000 Quebec, Province of, Deb., - 1,137,250
13.25%, 9/15/2014 1,137,250
----------------------------------
- 1,500,000 1,500,000 Quebec, Province of, Deb., - 1,634,670
7.50%, 7/15/2023 1,634,670
----------------------------------
- 1,000,000 1,000,000 Quebec, Province of, Deb., - 1,080,000
9.125%, 8/22/2001 1,080,000
----------------------------------
- 1,000,000 1,000,000 Sweden, Kingdom of, Deb., - 1,342,300
10.25%, 11/1/2015 1,342,300
----------------------------------
- 1,000,000 1,000,000 Victoria Public Authority, - 1,065,625
Local Gov't. Guarantee, 8.25%, 1,065,625
1/15/2002
----------------------------------------------------------------------
Total - 6,259,845
6,259,845
----------------------------------------------------------------------
SURFACE TRANSPORTATION 1.28%
- -------------------------------------------------------------------------
- 3,000,000 3,000,000 Trans Ocean Container Corp., - 3,399,810
Sr. Sub. Note, 12.25%, 7/1/2004 3,399,810
----------------------------------------------------------------------
TECHNOLOGY SERVICES .01%
- -------------------------------------------------------------------------
- 35,000 35,000 Lucent Technologies, Inc., - 35,931 35,931
Note, 6.90%, 7/15/2001
----------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR .89%
- -------------------------------------------------------------------------
- 1,500,000 1,500,000 Cox Communications, Inc., - 1,520,760
Medium Term Note, 6.69%, 1,520,760
9/20/2004
----------------------------------
- 800,000 800,000 New England Telephone & - 862,408 862,408
Telegraph, Deb., 8.625%,
8/1/2001
----------------------------------------------------------------------
Total - 2,383,168
2,383,168
----------------------------------------------------------------------
UTILITIES 4.85%
- -------------------------------------------------------------------------
- 2,000,000 2,000,000 Big Rivers Electric Corp., - 2,101,540
9.52%, 3/15/2019 2,101,540
----------------------------------
- 250,000 250,000 Central Illinois Public, 1st - 250,595 250,595
Mtg. Bond, 6.00%, 4/1/2000
----------------------------------
- 250,000 250,000 Consolidated Edison Co., Deb., - 267,518 267,518
Series 92B, 7.625%, 3/1/2004
----------------------------------
- 60,000 60,000 Duke Energy Corp., 1st Ref. - 60,452 60,452
Mtg., 6.25%, 8/12/1999
----------------------------------
- 1,250,000 1,250,000 Enersis S.A., Note, 7.40%, - 1,246,538
12/1/2016 1,246,538
----------------------------------
- 1,000,000 Gulf States Utilities, 1st Mtg. -
1,000,000 Bond, Series 2005B, 6.77%, 1,002,570 1,002,570
8/1/2005
----------------------------------
- 1,500,000 1,500,000 (1)Israel Electric Corp. Ltd., - 1,542,165
Sr. Note, 7.875%, 12/15/2026 1,542,165
----------------------------------
- 30,000 30,000 Michigan Consolidated Gas, 1st - 30,845 30,845
Mtg. Bond, 6.80%, 6/15/2003
----------------------------------
- 300,000 300,000 Midwest power Systems, Inc., - 304,323 304,323
Mtg. Bond, 6.75%, 2/1/2000
----------------------------------
- 180,000 180,000 Minnesota Power and Light Co., - 191,187 191,187
1st Mtg. Bond, 7.75%, 6/1/2007
----------------------------------
- 1,000,000 Pacific Gas & Electric Co., -
1,000,000 Unsecd. Note, Series B, 7.75%, 1,078,480 1,078,480
6/30/2004
----------------------------------
- 1,000,000 1,000,000 Puget Sound Energy, Inc., - 1,017,180
Medium Term Note, 7.02%, 1,017,180
12/1/2027
----------------------------------
- 5,000 5,000 Sonat, Inc., Note, 6.875%, - 5,105 5,105
6/1/2005
----------------------------------
- 1,500,000 Southwestern Bell Telephone -
1,500,000 Co., Deb., 7.375%, 5/1/2012 1,527,000 1,527,000
----------------------------------
- 500,000 500,000 (1) Tenaga Nasional Berhad, - 378,765 378,765
Deb., 7.50%, 1/15/2096
----------------------------------
- 400,000 400,000 Virginia Electric Power Co., - 401,308 401,308
Mtg. Bond, Series A, 9.375%,
6/1/1998
----------------------------------
- 1,000,000 West Penn Power Co., 1st Mtg. -
1,000,000 Bond, 7.875%, 12/1/2004 1,031,730 1,031,730
----------------------------------
- 500,000 500,000 Wisconsin Tel Co., Deb., 6.25%, - 497,365 497,365
8/1/2004
----------------------------------------------------------------------
Total 8,294,886
4,639,780 12,934,666
----------------------------------------------------------------------
TOTAL CORPORATE BONDS
13,110,410 116,960,256 130,070,666
----------------------------------------------------------------------
GOVERNMENT AGENCIES 16.63%
- -------------------------------------------------------------------------
- 2,000,000 Federal Farm CreditBank, Note, -
2,000,000 5.875%, 1/21/2005 1,977,818 1,977,818
----------------------------------
- 100,000 100,000 Federal Farm CreditBank, Note, - 100,683 100,683
7.30%, 9/11/2001
----------------------------------
- 500,000 Federal Farm CreditBank, Note, - 536,140
500,000 9.20%, 9/27/2005 536,140
----------------------------------
- 1,550,000 (3)Federal Home Loan Bank, -
1,550,000 Bond, 5.20%, 10/20/2000 1,547,722 1,547,722
----------------------------------
- 1,000,000 Federal Home Loan Bank, Bond, -
1,000,000 5.644%, 2/23/1999 1,001,310 1,001,310
----------------------------------
- 2,000,000 Federal Home Loan Bank, Bond, -
2,000,000 6.06%, 4/27/2004 1,989,380 1,989,380
----------------------------------
- 1,000,000 Federal Home Loan Bank, Bond, - 997,360
1,000,000 6.10%, 4/7/2003 997,360
----------------------------------
- 1,000,000 Federal Home Loan Bank, Bond, - 996,560
1,000,000 6.11%, 4/17/2003 996,560
----------------------------------
- 1,000,000 Federal Home Loan Bank, Bond, - 996,410
1,000,000 6.11%, 5/15/2003 996,410
----------------------------------
- Federal Home Loan Bank, Bond, - 993,280
10,000,000 10,000,000 6.14%, 5/11/2005 993,280
----------------------------------
- 1,000,000 Federal Home Loan Bank, Bond, -
1,000,000 6.25%, 5/11/1998 1,000,750 1,000,750
----------------------------------
- 3,000,000 Federal Home Loan Bank, Bond, -
3,000,000 6.25%, 5/19/2004 2,993,430 2,993,430
----------------------------------
- 1,000,000 Federal Home Loan Bank, Bond, -
1,000,000 6.335%, 10/22/2002 1,000,045 1,000,045
----------------------------------
- 1,000,000 Federal Home Loan Bank, Bond, -
1,000,000 7.00%, 12/15/2009 1,001,630 1,001,630
----------------------------------
- 245,000 245,000 Federal Home Loan Bank, Bond, - 244,192 244,192
7.04%, 1/24/2011
----------------------------------
- 250,000 250,000 Federal Home Loan Bank, Deb., - 250,528 250,528
6.178%, 1/10/2001
----------------------------------
- 325,000 325,000 Federal Home Loan Bank, Note, - 325,718 325,718
6.11%, 1/19/2001
----------------------------------
- 2,000,000 Federal Home Loan Bank, Note, -
2,000,000 6.385%, 11/5/2002 2,005,504 2,005,504
----------------------------------
- 750,000 Federal Home Loan Bank, - 748,244
750,000 Structured Note, 3.01%, 6/2/1998 748,244
----------------------------------
- 1,000,000 Federal Home Loan Bank, - 993,135
1,000,000 Structured Note, 3.015%, 993,135
8/25/1998
----------------------------------
- 1,250,000 Federal Home Loan Bank, -
1,250,000 Structured Note, 4.914%, 1,241,598 1,241,598
12/2/1998
----------------------------------
- 500,000 Federal Home Loan Bank, - 499,195
500,000 Structured Note, 5.05%, 499,195
3/29/2000
----------------------------------
- 1,000,000 Federal Home Loan Mortgage - 994,860
1,000,000 Corp., 5.69%, 11/29/2000 994,860
----------------------------------
- 1,000,000 Federal Home Loan Mortgage - 999,910
1,000,000 Corp., 5.90%, 4/21/2000 999,910
----------------------------------
- 75,000 75,000 Federal Home Loan Mortgage - 74,865 74,865
Corp., Deb., 4.77%, 9/14/1998
----------------------------------
- 300,000 300,000 Federal Home Loan Mortgage - 299,280 299,280
Corp., Deb., 6.28%, 7/15/2003
----------------------------------
- 100,000 100,000 Federal Home Loan Mortgage - 100,291 100,291
Corp., Deb., 7.318%, 6/18/2001
----------------------------------
- 50,000 50,000 Federal Home Loan Mortgage - 50,341 50,341
Corp., Note, 6.93%, 3/17/2004
----------------------------------
- 3,000,000 Federal Home Loan Mortgage -
3,000,000 Corp., Structured Note, 5.00%, 2,990,400 2,990,400
3/10/2000
----------------------------------
- 1,000,000 Federal Home Loan Mortgage -
1,000,000 Corp., Structured Note, 5.50%, 1,000,530 1,000,530
9/20/2000
----------------------------------
- 500,000 500,000 Federal National Mortgage - 529,915 529,915
Association, 8.25%, 12/18/2000
----------------------------------
- 2,500,000 Federal National Mortgage -
2,500,000 Association, Medium Term Note, 2,515,375 2,515,375
6.65%, 3/8/2006
----------------------------------
- 1,650,000 1,650,000 Federal National Mortgage - 1,694,072
Association, Medium Term Note, 1,694,072
6.71%, 7/24/2001
----------------------------------
- 750,000 750,000 Federal National Mortgage - 753,728 753,728
Association, Medium Term Note,
7.43%, 8/4/2005
----------------------------------
- 1,500,000 Federal National Mortgage - 506,505
1,500,000 Association, Medium Term Note, 506,505
Series B, 7/9/2012
----------------------------------
- 100,000 100,000 Federal National Mortgage - 101,084 101,084
Association, Note, 7.17%,
1/20/2004
----------------------------------
- 1,500,000 Federal National Mortgage
1,500,000 Association, Principal STRIPS,
7.16% - 7.23%, 4/12/2006
- (Callable 4/12/1999 @ 100) -
1,422,915 1,422,915
----------------------------------
- 1,500,000 1,500,000 Student Loan Marketing -
Association, Medium Term Note, 1,500,933 1,500,933
6.38%, 12/11/2001
----------------------------------
- 1,800,000 1,800,000 Tennessee Valley Authority, - 1,713,258
8.625%, 11/15/2029 1,713,258
----------------------------------
- 500,000 500,000 Tennessee Valley Authority, - 498,970 498,970
6.125%, 7/15/2003
----------------------------------
- 3,305,000 3,305,000 Tennessee Valley Authority, - 3,145,732
Note, 8.625%, 11/15/2029 3,145,732
----------------------------------------------------------------------
TOTAL GOVERNMENT AGENCIES 9,882,657
34,450,939 44,333,596
----------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 8.50%
- -------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION 2.34%
- -------------------------------------------------------------------------
- 912,910 912,910 Pool E66857, 6.50%, 5/1/2012 - 918,041 918,041
----------------------------------
- 3,663,000 3,663,000 Pool E70007, 6.00%, 4/1/2013 - 3,613,769
3,613,769
----------------------------------
- 1,682,000 1,682,000 (2)Pool TBA, 7.00%, 6/1/2099 - 1,703,866
1,703,866
---------------------------------- --------------------------
Total - 6,235,676
6,235,676
----------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION 2.78%
- -------------------------------------------------------------------------
- 1,055,403 1,055,403 Pool 250412, 7.00%, 12/1/2010 - 1,075,519
1,075,519
----------------------------------
- 898,180 898,180 Pool 267905, 7.00%, 2/1/2024 - 915,865 915,865
----------------------------------
- 1,672,289 1,672,289 Pool 354370, 6.50%, 8/1/2003 - 1,679,613
1,679,613
----------------------------------
- 1,807,105 1,807,105 Pool 421090, 6.50%, 4/1/2028 - 1,789,034
1,789,034
----------------------------------
- 1,980,000 1,980,000 Pool 421590, 6.50%, 4/1/2028 - 1,960,200
1,960,200
---------------------------------- --------------------------
Total - 7,420,231
7,420,231
----------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 3.38%
- -------------------------------------------------------------------------
- 54,108 54,108 Pool 1851, 7.50%, 6/20/2007 - 55,664 55,664
----------------------------------
- 1,102,478 1,102,478 Pool 312595, 8.00%, 1/15/2022 - 1,147,261
1,147,261
----------------------------------
- 874,212 874,212 Pool 379983, 7.50%, 2/15/2024 - 901,260 901,260
----------------------------------
- 2,005,438 2,005,438 Pool 468686, 7.50%, 2/15/2028 - 2,061,209
2,061,209
----------------------------------
- 779,367 779,367 Pool 780204, 7.00%, 7/15/2025 - 790,043 790,043
----------------------------------
- 2,452,089 2,452,089 Pool 780359, 7.50%, 12/15/2023 - 2,527,172
2,527,172
----------------------------------
- 1,500,000 1,500,000 Pool TBA, 7.00%, 5/1/2099 - 1,518,285
1,518,285
---------------------------------- --------------------------
Total - 9,000,894
9,000,894
----------------------------------------------------------------------
TOTAL MORTGAGE-BACKED -
SECURITIES 22,656,801 22,656,801
----------------------------------------------------------------------
PREFERRED STOCKS 1.01%
- -------------------------------------------------------------------------
TECHNOLOGY SERVICES 1.01%
- -------------------------------------------------------------------------
- 29,000 29,000 Microsoft Corp., Cumulative - 2,700,625
Conv. Pfd., Series A, $2.20 2,700,625
(identified cost $2,580,544)
----------------------------------------------------------------------
U.S.TREASURY BONDS 4.70%
- -------------------------------------------------------------------------
- $3,800,000 3,800,000 Bond, 6.00%, 2/15/2026 - 3,790,120
3,790,120
----------------------------------
- 1,200,000 1,200,000 Bond, 6.125%, 11/15/2027 - 1,229,052
1,229,052
----------------------------------
- 2,500,000 2,500,000 Bond, 6.375%, 8/15/2027 - 2,637,050
2,637,050
----------------------------------
- 255,000 255,000 Bond, 7.125%, 2/15/2023 - 290,412 290,412
----------------------------------
- 140,000 140,000 Bond, 7.875%, 2/15/2021 - 171,443 171,443
----------------------------------
- 265,000 265,000 Bond, 9.875%, 11/15/2015 - 375,492 375,492
----------------------------------
- 1,500,000 1,500,000 Bond, 10.75%, 8/15/2005 - 1,939,755
1,939,755
----------------------------------
- 1,500,000 1,500,000 Bond, 11.625%, 11/15/2004 - 1,975,695
1,975,695
----------------------------------
- 75,000 75,000 Bond, 12.00%, 8/15/2013 - 109,859 109,859
----------------------------------------------------------------------
Total -
12,518,878 12,518,878
----------------------------------------------------------------------
U.S. TREASURY NOTES 1.85%
- -------------------------------------------------------------------------
- 2,500,000 2,500,000 Note, 5.625%, 12/31/2002 - 2,495,950
2,495,950
----------------------------------
5,000 255,000 Note, 5.75%, 8/15/2003 5,014 255,737
250,000 250,723
----------------------------------
- 50,000 50,000 Note, 6.375%, 7/15/1999 - 50,511 50,511
----------------------------------
- 20,000 20,000 Note, 6.50%, 4/30/1999 - 20,199 20,199
----------------------------------
- 5,000 5,000 Note, 7.50%, 2/15/2005 - 5,492 5,492
----------------------------------
- 2,000,000 2,000,000 Note, 7.75%, 11/30/1999 - 2,066,440
2,066,440
----------------------------------
- 25,000 25,000 Note, 7.875%, 11/15/1999 - 25,856 25,856
----------------------------------------------------------------------
Total 4,669,462
250,723 4,920,185
----------------------------------------------------------------------
TOTAL TREASURY SECURITIES
250,723 17,188,340 17,439,063
----------------------------------------------------------------------
(4)REPURCHASE AGREEMENTS 4.39%
- -------------------------------------------------------------------------
- 1,682,000 1,682,000 Goldman Sachs Group, LP, 5.48%, - 1,682,000
dated 4/17/1998, due 6/10/1998 1,682,000
----------------------------------
- 8,345,000 8,345,000 BT Securities Corp., 5.53%, - 8,345,000
dated 4/30/1998, due 5/1/1998 8,345,000
----------------------------------
- 1,682,000 1,682,000 Credit Suisse First Boston, - 1,682,000
Inc., 5.47%, dated 4/3/1998, due 1,682,000
5/13/1998
----------------------------------------------------------------------
TOTAL REPURCHASE -
AGREEMENTS (at amortized cost) 11,709,000 11,709,000
----------------------------------------------------------------------
INVESTMENT COMPANIES 1.11%
- -------------------------------------------------------------------------
- 2,968,122 Goldman Sachs Government Income -
2,968,122 Fund 2,968,122 2,968,122
----------------------------------------------------------------------
TOTAL INVESTMENTS
(identified cost $266,612,799) 87,058,170 184,416,665 271,474,835
----------------------------------------------------------------------
</TABLE>
(1) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At April 30, 1998, these securities amounted to
$17,645,788 which represents 6.62% of net assets.
(2) Indicates a security subject to dollar roll transactions. (3) Current rate
and next reset date shown.
(4) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the portfolio.
The investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(5) The cost of investment for federal tax purposes amounts to $266,612,799.
The net unrealized appreciation/depreciation of investments on a federal tax
basis amounts to 5,162,037 which is comprised of $5,881,425 appreciation and
$719,581 depreciation at April 30, 1998.
The following acronyms are used throughout this proforma:
AMBAC American Municipal Bond Assurance Corporation
CGIC Capital Guaranty Insurance Corporation
CMO Collateralized Mortgage Obligation
FSA Financial Security Assurance
GO General Obligation
GTD Guaranty
INS Insured
LOC Letter of Credit
LP Limited Partnership
MBIA Municipal Bond Investors Assurance
PLC Public Limited Company
STRIPS Separate Trading of Registered Interest and Principal Securities
TBA To Be Announced
UT Unlimited Tax
See Notes to the Proforma Financial Statements
<TABLE>
<CAPTION>
CCB BOND FUND
FEDERATED INTERMEDIATE INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CCB FEDERATED
BOND INTERMEDIATE PRO FORMA PRO FORMA
FUND INCOME FUND ADJUSTMENT COMBINED
----------- -------------- ----------- ----------------
ASSETS:
- ----------------------------------
Investments in securities, at $ 87,058,170 $ 184,416,665 --- $ 271,474,835
value (identified cost,
$85,808,533, $180,504,266 &
$266,312,799 respectively)
- ----------------------------------
Cash 83 --- --- 83
- ----------------------------------
Income receivable 792,975 3,173,445 --- 3,966,420
- ----------------------------------
Receivable for investments sold 3,010,688 --- --- 3,010,688
- ----------------------------------
Receivable for shares sold --- 1,764,867 --- 1,764,867
- ----------------------------------
Prepaid assets --- 8,891 8,891
- ----------------------------------
----------- ------------- ------------ ----------------
Total assets 90,861,916 189,363,868 --- 280,225,784
- ----------------------------------
LIABILITIES:
- ----------------------------------
Payable to Bank --- 211,772 --- 211,772
- ----------------------------------
Payable for investments purchased 4,997,500 5,201,377 --- 10,198,877
- ----------------------------------
Income distributions payable 425,964 694,296 --- 1,120,260
- ----------------------------------
Payable for shares redeemed --- 318,023 --- 318,023
- ----------------------------------
Payable for dollar roll --- 1,704,107 1,704,107
transactions
- ----------------------------------
Accrued expenses 33,163 --- --- 33,163
- ----------------------------------
----------- ------------- ------------ ----------------
Total liabilities 5,456,627 8,129,575 --- 13,586,202
- ---------------------------------- ----------- ------------- ------------ ----------------
NET ASSETS $ 85,405,289 $ 181,234,293 --- $ 266,639,582
- ---------------------------------- ----------- ------------- ------------ ----------------
NET ASSETS CONSISTS OF:
- ----------------------------------
Paid in capital $ 87,698,010 $ 177,190,229 --- 264,888,239
- ----------------------------------
Net unrealized appreciation of 1,249,637 3,912,399 --- 5,162,036
investments
- ----------------------------------
Accumulated net realized loss on (3,542,358) 87,749 --- (3,454,609)
investments
- ----------------------------------
Undistributed net investment --- 43,916 --- 43,916
income
- ----------------------------------
----------- ------------- ------------ ----------------
Total Net Assets $ 85,405,289 $ 181,234,293 --- $ 266,639,582
- ---------------------------------- ----------- ------------- ------------ ----------------
NET ASSETS:
- ----------------------------------
Institutional Shares $ 85,405,289 $ 176,712,153 --- $ 262,117,442
- ----------------------------------
Institutional Service Shares --- 4,522,140 --- 4,522,140
- ---------------------------------- ------------
----------- ------------- ----------------
Total Net Assets $ 85,405,289 $ 181,234,293 --- $ 266,639,582
- ---------------------------------- ----------- ------------- ------------ ----------------
SHARES OUTSTANDING:
- ----------------------------------
Institutional Shares 8,402,070 17,378,600 (8,261) (a) 25,772,409
- ----------------------------------
Institutional Service Shares --- 444,701 --- 444,701
- ---------------------------------- ------------
----------- ------------- ----------------
Total shares outstanding 8,402,070 17,823,301 (8,261) 26,217,110
- ---------------------------------- ----------- ------------- ------------ ----------------
NET ASSET VALUE, OFFERING PRICE,
AND REDEMPTION PROCEEDS PER
SHARE:
- ----------------------------------
INSTITUTIONAL SHARES
- ----------------------------------
Net Asset Value Per Share $ 10.16 $ 10.17 --- $ 10.17
- ----------------------------------
----------- ------------- ------------ ----------------
Offering Price Per Share * $ 10.64 $ 10.17 --- $ 10.17
- ----------------------------------
----------- ------------- ------------ ----------------
Redemption Proceeds Per Share $ --- $ 10.17 --- $ 10.17
- ---------------------------------- ----------- ------------- ------------ ----------------
INSTITUTIONAL SERVICE SHARES:
- ----------------------------------
Net Asset Value Per Share $ --- $ 10.17 --- $ 10.17
- ---------------------------------- -----------
------------- ------------ ----------------
Offering Price Per Share $ --- $ 10.17 --- $ 10.17
- ---------------------------------- -----------
------------- ------------ ----------------
Redemption Proceeds Per Share $ --- $ 10.17 --- $ 10.17
- ---------------------------------- ----------- ------------- ------------ ----------------
</TABLE>
(a) Adjustment to reflect share balance as a result of the combination.
* Computation of Offering Price per Share: ( 100/95.50 of $10.16)
(See Notes to Pro Forma Financial Statements)
<PAGE>
<TABLE>
<CAPTION>
CCB BOND FUND
FEDERATED INTERMEDIATE INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CCB FEDERATED
BOND INTERMEDIATE PRO FORMA PRO FORMA
FUND INCOME FUND ADJUSTMENT COMBINED
------------- ------------- ----------- ----------------
- ----------------------------------------
INVESTMENT INCOME:
- ----------------------------------------
- ----------------------------------------
Interest ( net of dollar roll expense) $ 5,660,633 $ 10,060,944 --- $ 15,721,577$
- ----------------------------------------
- ----------------------------------------
Dividend 25,034 --- 25,034
- ---------------------------------------- ------------- ------------- ----------- ----------------
- ----------------------------------------
Total income 5,660,633 10,085,978 --- 15,746,611
- ----------------------------------------
- ----------------------------------------
EXPENSES:
- ----------------------------------------
- ----------------------------------------
Investment advisory fee 635,505 736,045 (202,505) a 1,169,045
- ----------------------------------------
- ----------------------------------------
Administrative personnel and services 122,468 155,001 (101,177) b 176,292
fee
- ----------------------------------------
- ----------------------------------------
Transfer agent and dividend disbursing 34,653 35,753 (4,406) c 66,000
agent fees and expenses
- ----------------------------------------
- ----------------------------------------
Directors'/Trustees fees 4,778 5,002 (3,280) d 6,500
- ----------------------------------------
- ----------------------------------------
Accounting and custodian fees 55,147 61,799 (30,124) e 86,822
- ----------------------------------------
- ----------------------------------------
Professional Fees 16,573 20,530 (15,303) f 21,800
- ----------------------------------------
- ----------------------------------------
Distribution services fee - --- 4,643 --- 4,643
Institutional Service Shares
- ----------------------------------------
- ----------------------------------------
Shareholder services fee - --- 363,384 216,495 g 579,879
Institutional Shares
- ----------------------------------------
- ----------------------------------------
Shareholder services fee - --- 4,643 --- 4,643
Institutional Service Shares
- ----------------------------------------
- ----------------------------------------
Share registration costs 12,813 47,375 15,812 h 76,000
- ----------------------------------------
- ----------------------------------------
Printing and postage 11,895 24,938 (9,833) i 27,000
- ----------------------------------------
- ----------------------------------------
Other expenses 11,249 49,621 (8,370) j 52,500
- ---------------------------------------- ------------- ------------- ----------- ----------------
- ----------------------------------------
Total expenses 905,081 1,508,734 (142,691) 2,271,124
- ----------------------------------------
- ----------------------------------------
Waivers-
- ----------------------------------------
- ----------------------------------------
Waiver of investment advisory fee (635,505) (319,611) 569,394 (385,722)
- ----------------------------------------
- ----------------------------------------
Waiver of distribution services fee - --- (1,671) --- (1,671)
Institutional Service Shares
- ----------------------------------------
- ----------------------------------------
Waiver of shareholder services fee- --- (363,384) (216,495) (579,879)
Institutional Shares
- ----------------------------------------
- ----------------------------------------
Waiver of shareholder services fee - --- (2,971) --- (2,971)
Institutional Service Shares
- ---------------------------------------- ------------- ------------- ----------- ----------------
- ---------------------------------------- ------------- ------------- ----------- ----------------
Total waivers (635,505) (687,637) 352,899 (970,243)
- ---------------------------------------- ------------- ------------- ----------- ----------------
- ---------------------------------------- ------------- ------------- ----------- ----------------
Net expenses 269,576 821,097 210,208 1,300,881
- ---------------------------------------- ------------- ------------- ----------- ----------------
- ---------------------------------------- ------------- ------------- ----------- ----------------
Net investment income 5,391,057 9,264,881 (210,208) 14,445,730
- ---------------------------------------- ------------- ------------- ----------- ----------------
- ----------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
- ----------------------------------------
- ----------------------------------------
Net realized gain on investments 479,462 468,050 --- 947,512
- ----------------------------------------
- ----------------------------------------
Net change in unrealized appreciation 1,824,163 4,611,356 --- 6,435,519
(depreciation) of investments
- ----------------------------------------
- ---------------------------------------- ------------- ------------- ----------- ----------------
Net realized and unrealized gain 2,303,625 5,079,406 --- 7,383,031
(loss) on investments
------------- ------------- ----------- ----------------
- ---------------------------------------- ------------- ------------- ----------- ----------------
Change in net assets resulting $ 7,694,682 $ 14,344,287 (210,208) $ 21,828,761
from operations
- ---------------------------------------- ------------- ------------- ----------- ----------------
</TABLE>
(See Legend to Pro Forma Adjustments on the following page)
(See Notes to Pro Forma Financial Statements)
FEDERATED INTERMEDIATE INCOME FUND
CCB BOND FUND
NOTES TO PRO FORMA COMBINING STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998 (UNAUDITED)
a) Federated Management (the "Adviser") receives for its services an annual
investment advisory fee equal to 0.50% of the Federated Intermediate Income
Fund's (the "Fund") 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.
b) Federated Administrative Services ("FAS") provides the Fund with certain
administrative personnel and services. The FAS fee is based on the level of
average aggregate net assets of the fund for the period.
c) Federated Shareholder Services Company serves as transfer and dividend
disbursing agent for the Fund. The fee is based on the size, type, and
number of accounts and transactions made by shareholders.
d) Adjustment to reflect the elimination of the Directors/Trustees fees for the
CCB Bond Fund .
e) Fees reflect custodian costs for the Fund paid to State Street Bank and
Trust Company. The custodian fee is based on a percentage of assets, plus
out-of-pocket expenses. Federated Shareholder Services Company 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.
f) Adjustment to reflect the audit fee and legal fee reductions due to the
combining of two portfolios into one.
g) Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS") the Federated Intermediate Income Fund will pay
FSS up to 0.25% of average daily net assets of the Fund for the period. The
fee paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive a portion
of its fee. FSS can modify or terminate this voluntary waiver at any time at
its sole discretion.
h) Adjustment to reflect state registration costs for Federated Intermediate
Income Fund only.
i) Printing and postage expenses are adjusted to reflect estimated savings to be
realized by combining three portfolios into a single portfolio.
j) Insurance premiums are allocated from a group coverage. The allocation is
comprised of a base amount, plus a portion based on average net assets. The
pro forma combined insurance premium equals the fixed base premium for a
single portfolio, plus its allowable portion which is based on its
percentage of the combined fund complex assets.
<PAGE>
FEDERATED INTERMEDIATE INCOME FUND
CCB BOND FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 1998
1. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolio of Investments,
Statement of Assets and Liabilities and Statement of Operations (" Pro Forma
Financial Statements") reflect the accounts of Federated Intermediate Income
Fund and CCB Bond Fund, collectively ("the Funds"), for the year ended April 30,
1998. These statements have been derived from the books and records utilized in
calculating daily net asset values at April 30, 1998.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of the Funds which have been incorporated by
reference in the Statement of Additional Information. The Funds follow generally
accepted accounting principles applicable to management investment companies
which are disclosed in the historical financial statements of each fund.
The Pro Forma Financial Statements give effect to the proposed transfer of
assets of CCB Bond Fund in exchange for Institutional Shares of Federated
Intermediate Income Fund. Under generally accepted accounting principles,
Federated Intermediate Income Fund will be the surviving entity for accounting
purposes with its historical cost of investment securities and results of
operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the anticipated
advisory and administrative fee arrangements for the surviving entity. Certain
other operating costs have also been adjusted to reflect anticipated expenses of
the combined entity. Other costs which may change as a result of the
reorganization are currently undeterminable.
For the year ended April 30, 1998, Federated Intermediate Income Fund and
CCB Bond Fund paid investment advisory fees computed at the annual rate of 0.50%
and 0.75%, respectively, as a percentage of average daily net assets.
SHARES OF BENEFICIAL INTEREST
The Pro Forma net asset value per share assumes the issuance of 8,393,809
Institutional Shares of the Federated Intermediate Income Fund in exchange for
8,402,070 shares from CCB Bond Fund which would have been issued at April 30,
1998, in connection with the proposed reorganization.
<PAGE>
FEDERATED INTERMEDIATE INCOME FUND
CCB BOND FUND
INTRODUCTION TO PROPOSED MERGER
OCTOBER 31, 1998 (UNAUDITED)
The accompanying unaudited Pro Forma Combining Portfolio of Investments,
Statement of Assets and Liabilities and Statement of Operations reflect the
accounts of Federated Intermediate Income Fund and CCB Bond Fund, collectively
("the Funds"), at and for the six month period ended October 31, 1998, the most
recent semi-annual report date for Federated Intermediate Income Fund. The
accounts reflected on CCB Bond Fund's Statement of Operations reflect a six
month reporting period ending October 31, 1998. This updating was accomplished
by deducting the results for the period from November 1, 1998 through November
30, 1998 from its semi-annual report Statement of Operations, and adding its
results from May 1, 1998 through May 31, 1998. The Pro Forma financial
statements give effect to the proposed transfer of assets from CCB Bond Fund in
exchange for Institutional Shares of Federated Intermediate Income Fund. These
statements have been derived from the books and records utilized in calculating
daily net asset values at October 31, 1998
<PAGE>
PRO FORMA COMBINING PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
OCTOBER
31, 1998 (unaudited)
CCB PRO CCB
FEDERATED FEDERATED
BOND INTERMEDIATE FORMA BOND PRO FORMA
INTERMEDIATE
FUND INCOME FUND INCOME COMBINED
FUND COMBINED FUND
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PRINCIPAL
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT AMOUNT VALUE VALUE VALUE
- ----------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 2.6%
- ---------------------------------------------------------------
HOME EQUITY LOAN 0.7%
- ---------------------------------------------------------------
$2,000,000 New Century Home Equity Loan $- 0.70%
Trust 1997-NC5, Class M2, $1,974,380 1,974,380
7.24%, 10/25/2028
--------------------------------------------------------------------
STRUCTURED PRODUCTS 1.2%
- ---------------------------------------------------------------
- 125 Home Loan Owner Trust -
2,000,000 2,000,0001998-1A. Class M2, 7.75%, 1,930,000 1,930,000
2/15/2029
-------------------------------
500,000 - Discover Card Trust 1996-3, 515,880 - 515,880
500,000 Class B, 6.25%, 8/18/2008
-------------------------------
- Residential Funding Corp. - 502,375
500,000 500,000 1993-S26, Class A10, 7.50%, 502,375
7/25/2023
-------------------------------
- Residential Funding Corp. - 287,823
300,000 300,000 1993-S31, Class A7, 7.00%, 287,823
9/25/2023
-------------------------------
- 66,897 The Money Store Home Equity - 69,486 69,486
66,897 Trust 1992-B, Class A, 6.90%,
7/15/2007
--------------------------------------------------------------------
Total 515,880 1.17%
2,789,684 3,305,564
--------------------------------------------------------------------
UTILITIES 0.7%
- ---------------------------------------------------------------
- California Infrastructure &
2,000,000 2,000,000Economic Development Bank
Special Purpose Trust PG&E-1,
Class A8, 6.48%, 12/26/2009 -
2,035,700 2,035,700
--------------------------------------------------------------------
TOTAL ASSET-BACKED 515,880 2.58%
SECURITIES 6,799,764 7,315,644
--------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS 13.0%
- ---------------------------------------------------------------
FINANCE 12.5%
- ---------------------------------------------------------------
974,837 - Federal Home Loan Mortgage 1,005,379 -
974,837 Corp., Series 1033G, 8.00%, 1,005,379
1/15/2006
-------------------------------
- Federal Home Loan Mortgage 4,156,520 -
4,000,000 4,000,000Corp., Series 1171G, 8.00%, 4,156,520
11/15/2006
-------------------------------
- Federal Home Loan Mortgage 1,055,050 -
1,000,000 1,000,000Corp., Series 1187H, 7.00%, 1,055,050
12/15/2006
-------------------------------
- Federal Home Loan Mortgage 1,379,615 -
1,333,000 1,333,000Corp., Series 1228H, 7.00%, 1,379,615
8/15/2008
-------------------------------
400,000 - Federal Home Loan Mortgage 423,736 - 423,736
400,000 Corp., Series 1324VE, 7.00%,
8/15/2007
-------------------------------
- Federal Home Loan Mortgage 1,080,850 -
1,000,000 1,000,000Corp., Series 1341K, 7.00%, 1,080,850
8/15/2007
-------------------------------
66,713 - Federal Home Loan Mortgage 66,751 - 66,751
66,713 Corp., Series 1422E, 6.50%,
2/15/2007
-------------------------------
176,459 - Federal Home Loan Mortgage 179,900 - 179,900
176,459 Corp., Series 1452C, 6.50%,
12/15/2007
-------------------------------
- Federal Home Loan Mortgage 1,637,801 -
1,470,000 1,470,000Corp., Series 1468M, 7.00%, 1,637,801
1/15/2010
-------------------------------
- Federal Home Loan Mortgage 1,011,730 -
1,000,000 1,000,000Corp., Series 1477ID, 7.00%, 1,011,730
11/15/2009
-------------------------------
- Federal Home Loan Mortgage 1,014,930 -
1,000,000 1,000,000Corp., Series 1808VB, 6.85%, 1,014,930
10/15/2010
-------------------------------
- Federal Home Loan Mortgage 1,011,930 -
1,000,000 1,000,000Corp., Series 24VB, 6.50%, 1,011,930
7/25/2010
-------------------------------
777,113 - Federal National Mortgage 805,602 - 805,602
777,113 Association, Series
1991-150G, 8.00%, 11/25/2006
-------------------------------
- Federal National Mortgage 1,034,970 -
1,000,000 1,000,000Association, Series 1,034,970
1992-124D, 7.00%, 4/25/2010
-------------------------------
- Federal National Mortgage 1,024,990 -
1,000,000 1,000,000Association, Series 1992-50J, 1,024,990
7.25%, 12/25/2006
-------------------------------
- Federal National Mortgage 1,063,280 -
1,000,000 1,000,000Association, Series 1992-53G, 1,063,280
7.00%, 4/25/2007
-------------------------------
- Federal National Mortgage 1,014,170 -
1,000,000 1,000,000Association, Series 1992-70H, 1,014,170
7.00%, 4/25/2006
-------------------------------
- Federal National Mortgage 2,059,576 -
2,000,000 2,000,000Association, Series 2,059,576
1993-139KD, 7.00%, 7/25/2006
-------------------------------
- Federal National Mortgage 1,496,670 -
1,500,000 1,500,000Association, Series 1,496,670
1993-181O, 6.50%, 9/25/2008
-------------------------------
- Federal National Mortgage 1,050,580 -
1,000,000 1,000,000Association, Series 1993-33H, 1,050,580
6.75%, 9/25/2008
-------------------------------
- Federal National Mortgage 1,040,860 -
1,000,000 1,000,000Association, Series 1993-36J, 1,040,860
7.50%, 5/25/2006
-------------------------------
996,078 - Federal National Mortgage 998,569 - 998,569
996,078 Association, Series 1993-76B,
6.00%, 6/25/2008
-------------------------------
- Federal National Mortgage 2,563,976 -
2,500,000 2,500,000Association, Series 2,563,976
1994-27CB, 6.50%, 9/25/2008
-------------------------------
- Federal National Mortgage 1,063,830 -
1,000,000 1,000,000Association, Series 1994-79G, 1,063,830
7.00%, 11/25/2004
-------------------------------
- Federal National Mortgage 1,050,075 -
1,000,000 1,000,000Association, Series 1,050,075
1996-68VC, 6.50%, 9/18/2010
-------------------------------
- Federal National Mortgage 1,512,975 -
1,500,000 1,500,000Association, Series 1,512,975
1997-26AC, 6.50%, 3/25/2012
-------------------------------
- Federal National Mortgage 2,537,410 -
2,500,000 2,500,000Association, Series 2,537,410
1997-67PL, 6.50%, 10/18/2012
-------------------------------
- Federal National Mortgage 1,024,430 -
1,000,000 1,000,000Association, Series G93-31H, 1,024,430
7.00%, 2/25/2013
--------------------------------------------------------------------
Total - 12.49%
35,366,155 35,366,155
--------------------------------------------------------------------
STRUCTURED PRODUCTS 0.5%
- ---------------------------------------------------------------
- CMC Securities Corp. III, 1,210,856 -
1,250,000 1,250,000Series 1994-C, Class A14, 1,210,856
5.42%, 3/25/2024
-------------------------------
- Prudential Bache CMO Trust - 323,387
316,479 316,479 Series 8, Class F, 7.965%, 323,387
3/1/2019
--------------------------------------------------------------------
Total 1,210,856 0.54%
323,387 1,534,243
--------------------------------------------------------------------
TOTAL COLLATERALIZED 13.04%
MORTGAGE OBLIGATIONS 36,577,011 323,387 36,900,398
--------------------------------------------------------------------
CORPORATE BONDS 48.3%
- ---------------------------------------------------------------
AEROSPACE & DEFENSE 1.1%
- ---------------------------------------------------------------
- Boeing Co., Unsecured Note, - 630,132
600,000 600,000 6.35%, 6/15/2003 630,132
-------------------------------
- British Aerospace Finance, -
1,500,000 1,500,000Inc. 7.50%, 7/1/2027 1,670,444 1,670,444
-------------------------------
- McDonnell Douglas Finance - 805,880
800,000 800,000 Corp., Medium Term Note, 805,880
6.375%, 7/15/1999
--------------------------------------------------------------------
Total - 1.10%
3,106,456 3,106,456
--------------------------------------------------------------------
AIR TRANSPORTATION 0.4%
- ---------------------------------------------------------------
- Southwest Airlines Co., - 0.42%
1,150,000 1,150,000Deb., 7.375%, 3/1/2027 1,193,217 1,193,217
--------------------------------------------------------------------
AUTOMOBILE 1.2%
- ---------------------------------------------------------------
- Dana Corp., Note, 7.00%, -
2,000,000 2,000,0003/15/2028 2,020,960 2,020,960
-------------------------------
- Hertz Corp., Sr. Note, -
1,400,000 1,400,0007.00%, 1/15/2028 1,355,284 1,355,284
--------------------------------------------------------------------
Total - 1.19%
3,376,244 3,376,244
--------------------------------------------------------------------
BANKING 6.4%
- ---------------------------------------------------------------
- ABN-AMRO Bank NV, Chicago, -
1,250,000 1,250,000Sub. Deb., 7.30%, 12/1/2026 1,254,950 1,254,950
-------------------------------
- 40,000 Banc One Corp., Sub. Note, - 42,716 42,716
40,000 7.25%, 8/1/2002
-------------------------------
- Banc One Corp., Sub. Note, - 270,038
250,000 250,000 8.10%, 3/1/2002 270,038
-------------------------------
- Banco Santander, Bank -
2,000,000 2,000,000Guarantee, 7.875%, 4/15/2005 2,137,380 2,137,380
-------------------------------
- BankAmerica Corp., Sub. - 213,618
200,000 200,000 Note, 7.75%, 7/15/2002 213,618
-------------------------------
- Barclays North America, -
1,000,000 1,000,000Deb., 9.75%, 5/15/2021 1,159,970 1,159,970
-------------------------------
- 10,000 Boatmen's Bancshares, Inc., - 11,139 11,139
10,000 Sub. Note, 9.25%, 11/1/2001
-------------------------------
- Chase Manhattan Corp., Note, 1,016,400 -
1,000,000 1,000,0007.25%, 2/15/2008 1,016,400
-------------------------------
- CIBC Capital Funding LP, -
2,100,000 2,100,000Bank Guarantee, 6.40%, 2,167,956 2,167,956
12/17/2004
-------------------------------
- 30,000 Central Fidelity Banks, - 32,929 32,929
30,000 Inc., Sub. Note, 8.15%,
11/15/2002
-------------------------------
- 40,000 Corestates Capital Corp., - 40,311 40,311
40,000 Sub. Note, 5.875%, 10/15/2003
-------------------------------
- Den Danske Bank, Note, -
1,000,000 1,000,0007.40%, 6/15/2010 1,056,030 1,056,030
-------------------------------
- 30,000 First Union Corp., Sub Note, - 32,768 32,768
30,000 8.00% 11/15/2002
-------------------------------
- National Australia Bank, -
2,000,000 2,000,000Ltd., Melbourne, Sub. Note, 2,027,500 2,027,500
Series B, 6.60%, 12/10/2007
-------------------------------
- National Bank of Canada, -
3,000,000 3,000,000Montreal, Sub. Note, 8.125%, 3,450,930 3,450,930
8/15/2004
-------------------------------
- 15,000 NationsBank Corp., Sub. - 16,369 16,369
15,000 Note, 7.625%, 4/15/2005
-------------------------------
- PNC Funding Corp., Sub. - 458,230
430,000 430,000 Note, 6.875%, 7/15/2007 458,230
-------------------------------
- Republic New York Corp., -
2,000,000 2,000,000Sub. Note, 7.75%, 5/15/2009 2,270,200 2,270,200
-------------------------------
- 30,000 Republic New York Corp., - 32,227 32,227
30,000 Sub. Note, 8.25%, 11/1/2001
-------------------------------
- 10,000 Sovran Financial, Deb., - 10,258 10,258
10,000 9.75%, 6/15/1999
-------------------------------
- SunTrust Bank, Central - 212,179
200,000 200,000 Florida, Sub. Note, 6.90%, 212,179
7/1/2007
-------------------------------
- SunTrust Banks, Inc., Note, - 274,311
255,000 255,000 7.375%, 7/1/2002 274,311
-------------------------------
- 15,000 SunTrust Banks, Inc., Sub. - 15,540 15,540
15,000 Note, 6.125%, 2/15/2004
-------------------------------
- Swedbank, Sub., 7.50%, - 970,870
1,000,000 1,000,00011/1/2006 970,870
--------------------------------------------------------------------
Total - 6.41%
18,158,419 18,158,419
--------------------------------------------------------------------
CHEMICALS & PLASTICS 0.9% -
- ---------------------------------------------------------------
- Bayer Corp., Deb., 6.50%, -
1,500,000 1,500,00010/1/2002 1,566,120 1,566,120
-------------------------------
- 40,000 Du Pont (E.I.) de Nemours & - 45,630 45,630
40,000 Co., Note, 8.125%, 3/15/2004
-------------------------------
- 30,000 PPG Industries, Inc., Note, - 31,801 31,801
30,000 6.50%, 11/1/2007
--------------------------------------------------------------------
Total 1,016,400 0.94%
1,643,551 2,659,951
--------------------------------------------------------------------
COMMERCIAL SERVICES 0.2%
- ---------------------------------------------------------------
500,000 - Olsten Corp., Sr. Note, 497,925 - 497,925 0.18%
500,000 7.00%, 3/15/2006
--------------------------------------------------------------------
CONSUMER PRODUCTS 0.8%
- ---------------------------------------------------------------
- Philip Morris Cos., Inc., 1,057,330 -
1,000,000 1,000,000Note, 7.125%, 8/15/2002 1,057,330
-------------------------------
- Philip Morris Cos., Inc., 1,075,010 -
1,000,000 1,000,000Unsecd. Note, 9.00%, 1/1/2001 1,075,010
--------------------------------------------------------------------
Total 2,132,340 - 0.75%
2,132,340
--------------------------------------------------------------------
-------------------------------
ECOLOGICAL SERVICES & EQUIPMENT 0.8%
- ---------------------------------------------------------------
WMX Technologies, Inc., - 0.79%
2,000,000 2,000,000Deb., 8.75%, 5/1/2018 2,238,280 2,238,280
--------------------------------------------------------------------
EDUCATION 1.6%
- ---------------------------------------------------------------
- Boston University, 7.625%, -
1,975,000 1,975,0007/15/2097 2,145,067 2,145,067
-------------------------------
- Columbia University, Medium -
1,150,000 1,150,000Term Note, 8.62%, 2/21/2001 1,238,746 1,238,746
-------------------------------
- Harvard University, Revenue -
1,100,000 1,100,000Bonds, 8.125% Bonds, 1,302,653 1,302,653
4/15/2007
--------------------------------------------------------------------
Total - 1.66%
4,686,466 4,686,466
--------------------------------------------------------------------
ELECTRONICS 1.6%
- ---------------------------------------------------------------
- General Electric Financial -
1,500,000 1,500,000Services, Inc., Medium Term 1,918,350 1,918,350
Note, 9.18%, 12/30/2008
-------------------------------
- Harris Corp., Deb., 10.375%, -
2,590,000 2,590,00012/1/2018 2,737,993 2,737,993
-------------------------------
- 15,000 Rockwell International - 16,034 16,034
15,000 Corp., Unsecured Note,
6.625%, 6/1/2005
--------------------------------------------------------------------
Total - 1.65%
4,672,377 4,672,377
--------------------------------------------------------------------
FINANCE - AUTOMOTIVE 2.7%
- ---------------------------------------------------------------
- Chrysler Financial Corp., -
1,750,000 1,750,000Deb., 13.25%, 10/15/1999 1,882,457 1,882,457
-------------------------------
- Ford Capital BV, Note, -
2,000,000 2,000,0009.375%, 5/15/2001 2,180,240 2,180,240
-------------------------------
- Ford Motor Credit Corp., 1,486,365 -
1,500,000 1,500,000Bond, 5.375%m, 10/15/2002 1,486,365
-------------------------------
250,000 - Ford Motor Credit Corp., 268,070 - 268,070
250,000 Note, 7.50%, 4/25/2011
-------------------------------
- 35,000 Ford Motor Credit Corp., - 38,895 38,895
35,000 Note, 7.75%, 3/15/2005
-------------------------------
- 20,000 Ford Motor Credit Corp., - 20,426 20,426
20,000 Unsecured Note, 7.75%,
10/1/1999
-------------------------------
- Ford Motor Credit Corp., -
1,000,000 1,000,000Unsub, 6.875%, 6/5/2001 1,036,810 1,036,810
-------------------------------
- General Motors Acceptance - 501,456
485,000 485,000 Corp., Medium Term Note, 501,456
7.50%, 5/25/2000
-------------------------------
- 45,000 General Motors Acceptance - 45,528 45,528
45,000 Corp., Note, 6.25%, 1/11/2000
-------------------------------
- General Motors Acceptance - 163,138
155,000 155,000 Corp., Note, 7.00%, 9/15/2002 163,138
-------------------------------
- General Motors Acceptance - 100,514
100,000 100,000 Corp., Unsecured Note, 7.75%, 100,514
1/15/1999
--------------------------------------------------------------------
Total 1,754,435 2.73%
5,969,464 7,723,899
--------------------------------------------------------------------
FINANCE - INSURANCE 0.6%
- ---------------------------------------------------------------
500,000 - CIGNA Corp., Sr. Note, 527,810 - 527,810
500,000 7.40%, 1/15/2003
-------------------------------
- Continental Corp., Unsec.. 1,051,730 -
1,000,000 1,000,000Note, 7.25%, 3/1/2003 1,051,730
--------------------------------------------------------------------
Total 1,579,540 - 0.56%
1,579,540
--------------------------------------------------------------------
FINANCE - RETAIL 0.2%
- ---------------------------------------------------------------
- 50,000 Commercial Credit Co., Note, - 50,167 50,167
50,000 5.55%, 2/15/2001
-------------------------------
- 15,000 Commercial Credit Co., Note, - 15,162 15,162
15,000 6.70%, 8/1/1999
-------------------------------
- Sears Roebuck Acceptance - 403,338
395,000 395,000 Corp., Medium Term Note, 403,338
6.56%, 9/5/2000
--------------------------------------------------------------------
Total - 468,667 0.17%
468,667
--------------------------------------------------------------------
FINANCIAL INTERMEDIARIES 5.4%
- ---------------------------------------------------------------
- Amvescap PLC, Sr. Note, -
2,000,000 2,000,0006.60%, 5/15/2005 2,041,340 2,041,340
-------------------------------
- 40,000 CIT Group Holdings, Inc. Sr. - 40,224 40,224
40,000 Note, 6.375%, 5/21/1999
-------------------------------
- Donaldson, Lufkin and 990,250 - 990,250
1,000,000 1,000,000Jenrette Securities Corp.,
Sr. Note, 6.50%, 6/1/2008
-------------------------------
- Donaldson, Lufkin and -
1,500,000 1,500,000Jenrette Securities Corp., 1,534,410 1,534,410
Note, 6.875%, 11/1/2005
-------------------------------
- 15,000 Equitable Cos., Inc., Sr. - 15,421 15,421
15,000 Note, 6.75%, 12/1/2000
-------------------------------
- J.P. Morgan & Co., Inc., 1,020,460 -
1,000,000 1,000,000Sub. Note, 6.70%, 11/1/2007 1,020,460
-------------------------------
- Lehman Brothers Holdings, - 627,656
625,000 625,000 Inc., Note, 6.90%, 1/29/2001 627,656
-------------------------------
- Lehman Brothers Holdings, -
2,000,000 2,000,000Inc., Sr. Sub. Note, 7.375%, 2,024,840 2,024,840
1/15/2007
-------------------------------
- Merrill Lynch & Co., Inc., - 521,080
500,000 500,000 Note, 6.875%, 3/1/2003 521,080
-------------------------------
- Merrill Lynch & Co., Inc., 1,076,520 -
1,000,000 1,000,000Note, 7.20%, 10/15/2012 1,076,520
-------------------------------
- 15,000 Merrill Lynch & Co., Inc., - 16,052 16,052
15,000 Note, 7.375%, 5/15/2006
-------------------------------
- Merrill Lynch & Co., Inc., - 108,843
100,000 100,000 Note, 8.30%, 11/1/2002 108,843
-------------------------------
- 65,000 Merrill Lynch & Co., Inc., - 67,308 67,308
65,000 Note, 8.375%, 2/9/2000
-------------------------------
- Merrill Lynch & Co., Inc., 1,084,360 -
1,000,000 1,000,000Note, Series MTNB, 7.19%, 1,084,360
8/7/2012
-------------------------------
- Morgan Stanley Group, Inc., -
920,000 920,000 Deb., 9.375%, 6/15/2001 1,004,014 1,004,014
-------------------------------
- 30,000 Norwest Corp., Note, 5.75%, - 30,158 30,158
30,000 2/1/2003
-------------------------------
- 5,000 Salomon, Inc., Note, 6.375%, - 5,091 5,091
5,000 10/1/2004
-------------------------------
- 10,000 Salomon, Inc., Note, 6.625%, - 10,293 10,293
10,000 11/15/2003
-------------------------------
- Salomon Smith Barney 2,120,300 -
2,000,000 2,000,000Holdings, Inc., Note, 7.375%, 2,120,300
5/15/2007
-------------------------------
- World Financial, Pass Thru - 998,708
979,702 979,702 Cert., Series 96 WFP-B, 998,708
6.91%, 9/1/2013
--------------------------------------------------------------------
Total 6,291,890 5.42%
9,045,438 15,337,328
--------------------------------------------------------------------
FINANCIAL SERVICES 0.9%
- ---------------------------------------------------------------
- American Express Credit - 255,420
250,000 250,000 Corp., Deb., 8.50%, 6/15/1999 255,420
-------------------------------
- 20,000 Associates Corp. of North - 20,221 20,221
20,000 America, Sr. Note, 6.00%,
6/15/2000
-------------------------------
- Associates Corp. of North -
2,000,000 2,000,000America, Sr. Note, 6.68%, 2,022,720 2,022,720
9/17/1999
-------------------------------
- 35,000 Associates Corp. of North - 35,457 35,457
35,000 America, Sr. Note, 6.75%,
10/15/1999
-------------------------------
- 50,000 AVCO Financial Services, - 51,514 51,514
50,000 Inc., Sr. Note, 8.50%,
10/15/1999
-------------------------------
- 50,000 Caterpillar Financial - 50,363 50,363
50,000 Services Corp., Note, 6.77%,
3/15/1999
-------------------------------
- 30,000 John Deere Capital Corp., - 30,343 30,343
30,000 Sr. Note, 6.50%, 9/20/1999
-------------------------------
- 15,000 John Deere Capital Corp., - 15,398 15,398
15,000 Sr. Note, 7.52%, 3/6/2000
-------------------------------
- 10,000 Paccar Financial Corp., Sr. - 10,208 10,208
10,000 Note, 6.18%, 2/15/2001
--------------------------------------------------------------------
Total - 0.88%
2,491,644 2,491,644
--------------------------------------------------------------------
FOOD PRODUCTS 0.1%
- ---------------------------------------------------------------
- 5,000 Grand Metropolitan - 6,355 6,355
5,000 Investment Corp., 9.00%,
8/15/2011
-------------------------------
- 5,000 Grand Metropolitan - 5,067 5,067
5,000 Investment Corp., Unsecured
Note, 6.50%, 9/15/1999
-------------------------------
- Kraft General Foods, Inc., - 300,444
300,000 300,000 Deb., 6.00%, 6/15/2001 300,444
-------------------------------
- 25,000 Union Camp Corp., Note, - 26,218 26,218
25,000 6.50%, 11/15/2007
--------------------------------------------------------------------
Total - 338,084 0.12%
338,084
--------------------------------------------------------------------
FOREST PRODUCTS 0.0%
- ---------------------------------------------------------------
- 25,000 Weyerhaeuser Co., Deb., - 28,027 28,027 0.00%
25,000 9.05%, 2/1/2003
--------------------------------------------------------------------
HEALTH SERVICES 0.4%
- ---------------------------------------------------------------
- Aetna Services, Inc., - 0.36%
1,000,000 1,000,000Company Guarantee, 6.75%, 1,021,380 1,021,380
8/15/2001
--------------------------------------------------------------------
INDUSTRIAL PRODUCTS & EQUIPMENT 0.1%
- ---------------------------------------------------------------
- 10,000 Air Products & Chemicals, - 10,951 10,951
10,000 Inc., Note, 7.375%, 5/1/2005
-------------------------------
- 30,000 Dresser Industries, Inc., - 30,740 30,740
30,000 Note, 6.25%, 6/1/2000
-------------------------------
- Illinois Tool Works, Inc., - 305,046
300,000 300,000 Note, 5.875%, 3/1/2000 305,046
-------------------------------
- 25,000 Ingersoll-Rand Co., Note, - 26,542 26,542
25,000 6.51%, 12/1/2004
-------------------------------
- 10,000 Ingersoll-Rand Co., Note, - 10,247 10,247
10,000 6.60%, 8/1/2000
--------------------------------------------------------------------
Total - 383,526 0.14%
383,526
--------------------------------------------------------------------
INSURANCE 5.2%
- ---------------------------------------------------------------
- Allmerica Financial Corp., -
2,500,000 2,500,000Sr. Note, 7.625%, 10/15/2025 2,590,725 2,590,725
-------------------------------
- CAN Financial Corp., Deb., -
2,000,000 2,000,0007.25%, 11/15/2023 1,919,520 1,919,520
-------------------------------
- Equitable Life, Note, -
2,000,000 2,000,0007.70%, 12/1/2015 2,156,560 2,156,560
-------------------------------
- GEICO Corp., Deb., 9.15%, -
1,000,000 1,000,0009/15/2021 1,133,740 1,133,740
-------------------------------
- 25,000 ITT Hartford Group, Inc., - 27,032 27,032
25,000 Note, 8.30%, 12/1/2001
-------------------------------
- 15,000 Lincoln National Corp., - 15,987 15,987
15,000 Note, 7.625%, 7/15/2002
-------------------------------
- MBIA, Deb., 9.00%, 2/15/2001 - 270,430
250,000 250,000 270,430
-------------------------------
- Provident Cos., Inc., Bond, - 871,011
900,000 900,000 7.405% 3/15/2038 871,011
-------------------------------
- Reinsurance Group of -
2,000,000 2,000,000America, Sr. Note, 7.25%, 2,181,280 2,181,280
4/1/2006
-------------------------------
- SunAmerica, Inc., Medium -
1,500,000 1,500,000Term Note, 7.34%, 8/30/2005 1,660,335 1,660,335
-------------------------------
- SunAmerican, Inc., Note, -
1,000,000 1,000,000Series 2, 6.20%, 10/31/1999 1,011,680 1,011,680
-------------------------------
- SunAmerica, Inc., Sr. Note, - 403,716
400,000 400,000 6.20%, 10/31/1999 403,716
-------------------------------
- SunAmerica, Inc., Sr. Note, - 503,920
500,000 500,000 9.00%, 1/15/1999 503,920
--------------------------------------------------------------------
Total - 5.21%
14,745,936 14,745,936
--------------------------------------------------------------------
LEISURE & ENTERTAINMENT 0.0%
- ---------------------------------------------------------------
- 40,000 Disney (Walt) Co., Bond, 41,388 41,388 0.01%
40,000 6.375%, 3/30/2001
--------------------------------------------------------------------
MACHINERY & EQUIPMENT 0.6%
- ---------------------------------------------------------------
- Continental Airlines, Inc., 0.60%
1,600,000 1,600,000Pass Thru Cert., Series 1,687,408 1,687,408
1997-4 B, 6.90%, 1/2/2017
--------------------------------------------------------------------
METAL & MINING 1.0%
- ---------------------------------------------------------------
- Barrick Gold Corp., Deb., - 0.97%
2,500,000 2,500,0007.50%, 5/1/2007 2,751,575 2,751,575
-------------------------------
MULTI-INDUSTRY 0.3%
- ---------------------------------------------------------------
750,000 - Loews Corp., Deb., 8.875%, 893,580 - 893,580 0.32%
750,000 4/15/2011
--------------------------------------------------------------------
MUNICIPAL SERVICES 3.5%
- ---------------------------------------------------------------
- Atlanta & Fulton County, GA
1,250,000 1,250,000Recreation Authority, Taxable
Revenue Bonds, Series 1997,
7.00% Bonds (Downtown Arena -
Project)/(FSA INS), 12/1/2028 1,333,363 1,333,363
-------------------------------
- Kansas City, MO -
1,325,000 1,325,000Redevelopment Authority, 1,526,268 1,526,268
7.65% Bonds (FSA LOC),
11/1/2018
-------------------------------
- McKeesport, PA, Taxable G.O. -
2,000,000 2,000,000Series B 1997, 7.30% Bonds 2,111,860 2,111,860
(MBIA INS), 3/1/2020
-------------------------------
- Miami Florida Revenue -
1,000,000 1,000,000Pension Obligation, 7.20% 1,039,100 1,039,100
Bonds (AMBAC LOC), 12/1/2025
-------------------------------
- Minneapolis/St. Paul, MN -
1,250,000 1,250,000Airport Commission, UT GO
Taxable Revenue Bonds,
(Series 9),
8.95% Bonds (Minneapolis/St. -
Paul, MD), 1/1/2022 1,435,000 1,435,000
-------------------------------
- Pittsburgh, PA Urban -
1,000,000 1,000,000Redevelopment Authority, 1,244,600 1,244,600
9.07% Bonds (CGIC GTD),
9/1/2014
-------------------------------
- St. Johns County, FL -
1,000,000 1,000,000Convention Center, Taxable
Municipal Revenue Bonds,
8.00% Bonds
(FSA INS), 1/1/2026 -
1,135,290 1,135,290
--------------------------------------------------------------------
Total - 3.47%
9,825,481 9,825,481
--------------------------------------------------------------------
OIL & GAS 0.8%
- ---------------------------------------------------------------
- 10,000 Atlantic Richfield Co., - 12,804 12,804
10,000 Deb., 9.125%, 3/1/2011
-------------------------------
- Phillips Petroleum Co., -
1,750,000 1,750,000Deb., 9.18%, 9/15/2021 1,981,420 1,981,420
-------------------------------
- Shell Oil Co., Deb., 6.95%, - 250,618
250,000 250,000 12/15/1998 250,618
--------------------------------------------------------------------
Total - 0.79%
2,244,842 2,244,842
--------------------------------------------------------------------
PHARMACEUTICAL 0.3%
- ---------------------------------------------------------------
- American Home Products - 517,320
500,000 500,000 Corp., Note, 7.70%, 2/15/2000 517,320
-------------------------------
- American Home Products - 283,125
250,000 250,000 Corp., Note, 7.90%, 2/15/2005 283,125
--------------------------------------------------------------------
Total - 800,445 0.28%
800,445
--------------------------------------------------------------------
PROCESS INDUSTRIES 0.3%
- ---------------------------------------------------------------
750,000 - Westvaco Corp., Deb., 7.75%, 821,175 - 821,175 0.29%
750,000 2/15/2023
--------------------------------------------------------------------
RAIL INDUSTRY 0.4%
- ---------------------------------------------------------------
- Atchison Topeka & Santa Fe - 0.37%
1,000,000 1,000,000RR, Equip. Trust, 6.55%, 1,049,200 1,049,200
1/6/2013
--------------------------------------------------------------------
RETAILERS 3.0%
- ---------------------------------------------------------------
- Dayton-Hudson Corp., Deb., -
1,000,000 1,000,00010.00%, 12/1/2000 1,096,230 1,096,230
-------------------------------
- 15,000 Dillard Investment, Deb., - 16,198 16,198
15,000 9.25%, 2/1/2001
-------------------------------
- Eckerd Corp., Sr. Sub. Note, -
1,874,000 1,874,0009.25%, 2/15/2004 1,981,605 1,981,605
-------------------------------
- May Department Stores Co., -
2,000,000 2,000,000Deb., 8.125%, 8/15/2035 2,334,980 2,334,980
-------------------------------
- Penney (J.C.) Co., Inc., -
2,250,000 2,250,000Deb., 7.65%, 8/15/2016 2,370,960 2,370,960
-------------------------------
- Sears, Roebuck & Co., Deb., - 300,144
300,000 300,000 8.45%, 11/1/1998 300,144
-------------------------------
- Sears, Roebuck & Co., Medium - 518,630
500,000 500,000 Term Note, 7.32%, 4/24/2000 518,630
--------------------------------------------------------------------
Total - 3.04%
8,618,747 8,618,747
--------------------------------------------------------------------
SOVEREIGN GOVERNMENT 1.7%
- ---------------------------------------------------------------
- Quebec, Province of, Deb., -
1,000,000 1,000,0009.125%, 8/22/2001 1,112,690 1,112,690
-------------------------------
- Quebec, Province of, Deb., -
1,000,000 1,000,00013.25%, 9/15/2014 1,115,500 1,115,500
-------------------------------
- Sweden, Kingdom of, Deb., -
1,000,000 1,000,00010.25%, 11/1/2015 1,429,770 1,429,770
-------------------------------
- Victoria Public Authority, -
1,000,000 1,000,000Local Gov't. Guarantee, 1,107,970 1,107,970
8.25%, 1/15/2002
--------------------------------------------------------------------
Total - 1.68%
4,765,930 4,765,930
--------------------------------------------------------------------
SURFACE TRANSPORTATION 1.2%
- ---------------------------------------------------------------
- Trans Ocean Container Corp., - 1.17%
3,000,000 3,000,000Sr. Sub. Note, 12.25%, 3,326,040 3,326,040
7/1/2004
--------------------------------------------------------------------
TECHNOLOGY SERVICES 0.0%
- ---------------------------------------------------------------
- 35,000 Lucent Technologies, Inc., - 36,681 36,681 0.01%
35,000 Note, 6.90%, 7/15/2001
--------------------------------------------------------------------
TELECOMMUNICATIONS & CELLULAR 1.5%
- ---------------------------------------------------------------
- BellSouth -
1,750,000 1,750,000Telecommunications, Inc., 1,905,365 1,905,365
Deb., 7.00%, 12/1/2095
-------------------------------
- Cox Communications, Inc., -
1,500,000 1,500,000Medium Term Note, 6.69%, 1,581,060 1,581,060
9/20/2004
-------------------------------
- New England Telephone & - 870,512
800,000 800,000 Telegraph, Deb., 8.625%, 870,512
8/1/2001
--------------------------------------------------------------------
Total - 1.54%
4,356,937 4,356,937
--------------------------------------------------------------------
UTILITIES 3.1%
- ---------------------------------------------------------------
- Central Illinois Public, 1st - 254,323
250,000 250,000 Mtg. Bond, 6.00%, 4/1/2000 254,323
-------------------------------
- Consolidated Edison Co., - 276,797
250,000 250,000 Deb., Series 92B, 7.625%, 276,797
3/1/2004
-------------------------------
- 60,000 Duke Energy Corp., 1st Ref. - 60,711 60,711
60,000 Mtg., 6.25%, 8/12/1999
-------------------------------
- Enersis S.A., Note, 7.40%, - 976,388
1,250,000 1,250,00012/1/2016 976,388
-------------------------------
- Gulf States Utilities, 1st 1,061,220 -
1,000,000 1,000,000Mtg. Bond, Series 2005B, 1,061,220
6.77%, 8/1/2005
-------------------------------
- Israel Electric Corp. Ltd., -
1,500,000 1,500,000Sr. Note, 7.875%, 12/15/2026 1,493,460 1,493,460
-------------------------------
- 30,000 Michigan Consolidated Gas, - 32,574 32,574
30,000 1st Mtg. Bond, 6.80%,
6/15/2003
-------------------------------
- Midwest Power Systems, Inc., - 306,324
300,000 300,000 Mtg. Bond, 6.75%, 2/1/2000 306,324
-------------------------------
- Minnesota Power and Light - 199,933
180,000 180,000 Co., 1st Mtg. Bond, 7.75%, 199,933
6/1/2007
-------------------------------
- Pacific Gas & Electric Co., 1,114,540 -
1,000,000 1,000,000Unsecd. Note, Series B, 1,114,540
7.75%, 6/30/2004
-------------------------------
- Puget Sound Energy, Inc., -
1,200,000 1,200,000Medium Term Note, 7.02%, 1,247,760 1,247,760
12/1/2027
-------------------------------
- 5,000 Sonat, Inc., Note, 6.875%, - 5,286 5,286
5,000 6/1/2005
-------------------------------
- Tenaga Nasional Berhad, - 208,180
500,000 500,000 Deb., 7.50%, 1/15/2096 208,180
-------------------------------
- West Penn Power Co., 1st 1,032,030 -
1,000,000 1,000,000Mtg. Bond, 7.875%, 12/1/2004 1,032,030
-------------------------------
- Wisconsin Tel Co., Deb., - 501,569
500,000 500,000 6.25%, 8/1/2004 501,569
--------------------------------------------------------------------
Total 3,207,790 3.10%
5,563,305 8,771,095
--------------------------------------------------------------------
TOTAL CORPORATE BONDS 48.34%
18,195,075 118,635,155136,830,230
--------------------------------------------------------------------
GOVERNMENT AGENCIES 15.3%
- ---------------------------------------------------------------
- Federal Farm CreditBank, 997,650 - 997,650
1,000,000 1,000,000Note, 11/19/1998
-------------------------------
- Federal Farm CreditBank, 2,063,380 -
2,000,000 2,000,000Note, 5.875%, 1/21/2005 2,063,380
-------------------------------
- Federal Farm CreditBank, -
1,250,000 1,250,000Note, 5.93%, 8/7/2008 1,304,525 1,304,525
-------------------------------
500,000 - Federal Farm CreditBank, 539,285 - 539,285
500,000 Note, 9.20%, 9/27/2005
-------------------------------
- Federal Home Loan Bank, 1,001,820 -
1,000,000 1,000,000Bond, 5.644%, 2/23/1999 1,001,820
-------------------------------
- Federal Home Loan Bank, -
1,500,000 1,500,000Bond, 5.905%, 7/22/2008 1,561,260 1,561,260
-------------------------------
- Federal Home Loan Bank, 1,018,110 -
1,000,000 1,000,000Bond, 6.00%, 7/7/2004 1,018,110
-------------------------------
- Federal Home Loan Bank, 2,012,280 -
2,000,000 2,000,000Bond, 6.06%, 4/27/2004 2,012,280
-------------------------------
- Federal Home Loan Bank, 1,019,180 -
1,000,000 1,000,000Bond, 6.10%, 4/7/2003 1,019,180
-------------------------------
- Federal Home Loan Bank, 1,019,730 -
1,000,000 1,000,000Bond, 6.11%, 4/17/2003 1,019,730
-------------------------------
- Federal Home Loan Bank, 1,020,430 -
1,000,000 1,000,000Bond, 6.11%, 5/15/2003 1,020,430
-------------------------------
- Federal Home Loan Bank, 1,026,810 -
1,000,000 1,000,000Bond, 6.14%, 5/11/2005 1,026,810
-------------------------------
- Federal Home Loan Bank, 2,058,660 -
1,000,000 1,000,000Bond, 6.23%, 6/1/2005 2,058,660
-------------------------------
- Federal Home Loan Bank, 3,062,970 -
3,000,000 3,000,000Bond, 6.25%, 5/19/2004 3,062,970
-------------------------------
- Federal Home Loan Bank, 1,021,330 -
1,000,000 1,000,000Bond, 7.00%, 12/15/2009 1,021,330
-------------------------------
- Federal Home Loan Bank, -
1,500,000 1,500,000Note, Series HH07, 6.90%, 1,670,100 1,670,100
2/7/2007
-------------------------------
- Federal Home Loan Bank, Sr. -
3,500,000 3,500,000Note, 5.80%, 9/2/2008 3,643,535 3,643,535
-------------------------------
- Federal Home Loan Bank, 1,248,868 -
1,250,000 1,250,000Structured Note, 4.914%, 1,248,868
12/2/1998
-------------------------------
500,000 - Federal Home Loan Bank, 505,175 - 505,175
500,000 Structured Note, 5.05%,
3/29/2000
-------------------------------
- Federal Home Loan Mortgage 2,552,125 -
2,500,000 2,500,000Corp., Note, 6.35%, 7/17/2008 2,552,125
-------------------------------
- 50,000 Federal Home Loan Mortgage - 50,404 50,404
50,000 Corp., Note, 6.93%, 3/17/2004
-------------------------------
- Federal Home Loan Mortgage 3,026,280 -
3,000,000 3,000,000Corp., Structured Note, 3,026,280
5.00%, 3/10/2000
-------------------------------
- Federal National Mortgage - 536,095
500,000 500,000 Association, 8.25%, 536,095
12/18/2000
-------------------------------
- Federal National Mortgage -
1,650,000 1,650,000Association, Medium Term 1,735,272 1,735,272
Note, 6.71%, 7/24/2001
-------------------------------
- Federal National Mortgage 525,975 - 525,975
1,500,000 1,500,000Association, Medium Term
Note, Series B, 7/9/2012
-------------------------------
- Federal National Mortgage - 100,518 0.04%
100,000 100,000 Association, Note, 7.17%, 100,518
1/20/2004
-------------------------------
- Federal National Mortgage
1,500,000 1,500,000Association, Principal
STRIPS, 7.16% - 7.23%,
4/12/2006
- (Callable 4/12/1999 @ 100) 1,470,510 -
1,470,510
-------------------------------
- Tennessee Valley Authority, - 511,555
500,000 500,000 6.125%, 7/15/2003 511,555
-------------------------------
- Tennessee Valley Authority, -
1,800,000 1,800,0008.625%, 11/15/2029 1,788,102 1,788,102
-------------------------------
- Tennessee Valley Authority, -
3,305,000 3,305,000Note, 8.625%, 11/15/2029 3,339,240 3,339,240
--------------------------------------------------------------------
TOTAL GOVERNMENT 15.34%
AGENCIES 27,190,568 16,240,606 43,431,174
--------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 7.9%
- ---------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION 2.5%
- ---------------------------------------------------------------
- Pool C00622, 7.00%, 6/1/2028 - 668,817
655,703 655,703 668,817
-------------------------------
- Pool C11040, 7.00%, 6/1/2028 - 961,191
942,344 942,344 961,191
-------------------------------
- Pool E66857, 6.50%, 5/1/2012 - 853,533
841,177 841,177 853,533
-------------------------------
- Pool E70007, 6.00%, 4/1/2013 -
3,502,524 3,502,524 3,517,865 3,517,865
-------------------------------
- Pool TBA, 6.50%, 11/1/2099 -
1,000,000 1,000,000 1,008,130 1,008,130
--------------------------------------------------------------------
Total - 2.48%
7,009,536 7,009,536
--------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION 2.1%
- ---------------------------------------------------------------
- Pool 267905, 7.00%, 2/1/2024 - 832,514
814,194 814,194 832,514
-------------------------------
- Pool 354370, 6.50%, 8/1/2003 -
1,352,817 1,352,817 1,371,418 1,371,418
-------------------------------
- Pool 421090, 6.50%, 4/1/2028 -
1,795,897 1,795,897 1,809,923 1,809,923
-------------------------------
- Pool 421590, 6.50%, 4/1/2028 -
1,956,124 1,956,124 1,972,008 1,972,008
--------------------------------------------------------------------
Total - 2.11%
5,985,863 5,985,863
--------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 3.3%
- ---------------------------------------------------------------
- 47,145 Pool 1851, 7.50%, 6/20/2007 - 48,619 48,619
47,145
-------------------------------
- Pool 312595, 8.00%, - 955,975
921,422 921,422 1/15/2022 955,975
-------------------------------
- Pool 379983, 7.50%, - 832,763
807,527 807,527 2/15/2024 832,763
-------------------------------
- Pool 447986, 7.00%,6/15/2028 -
1,479,943 1,479,943 1,514,633 1,514,633
-------------------------------
- Pool 468686, 7.50%, -
1,949,172 1,949,1722/15/2028 2,008,856 2,008,856
-------------------------------
- Pool 780204, 7.00%, - 737,852
779,367 720,735 7/15/2025 737,852
-------------------------------
- Pool 780359, 7.50%, -
2,452,089 2,164,71512/15/2023 2,232,362 2,232,362
-------------------------------
- Pool TBA, 7.00%, 11/1/2099 -
1,000,000 1,000,000 1,023,440 1,023,440
--------------------------------------------------------------------
Total - 3.30%
9,354,500 9,354,500
--------------------------------------------------------------------
TOTAL MORTGAGE-BACKED - 7.90%
SECURITIES 22,349,899 22,349,899
--------------------------------------------------------------------
PREFERRED STOCKS 0.8%
- ---------------------------------------------------------------
TECHNOLOGY SERVICES 0.8%
- ---------------------------------------------------------------
- 21,103 Microsoft Corp., Cumulative - 0.73%
21,103 Conv. Pfd., Series A, $2.20 2,062,818 2,062,818
--------------------------------------------------------------------
<PAGE>
U.S.TREASURY BONDS 4.8%
- ---------------------------------------------------------------
- $3,800,000 Bond, 6.00%, 2/15/2026 -
3,800,000 4,145,382 4,145,382
-------------------------------
- Bond, 6.125%, 11/15/2027 -
1,200,000 1,200,000 1,349,112 1,349,112
-------------------------------
- Bond, 6.375%, 8/15/2027 -
2,500,000 2,500,000 2,880,650 2,880,650
-------------------------------
- Bond, 7.125%, 2/15/2023 - 314,476
255,000 255,000 314,476
-------------------------------
- Bond, 7.875%, 2/15/2021 - 184,348
140,000 140,000 184,348
-------------------------------
- Bond, 9.875%, 11/15/2015 - 401,136
265,000 265,000 401,136
-------------------------------
- Bond, 10.75%, 8/15/2005 -
1,500,000 1,500,000 2,028,840 2,028,840
-------------------------------
- Bond, 11.625%, 11/15/2004 -
1,500,000 1,500,000 2,051,475 2,051,475
-------------------------------
- 75,000 Bond, 12.00%, 8/15/2013 - 115,823
75,000 115,823
--------------------------------------------------------------------
Total - 4.76%
13,471,242 13,471,242
--------------------------------------------------------------------
U.S. TREASURY NOTES 3.3%
- ---------------------------------------------------------------
- Note, 5.625%, 5/15/2008 -
3,300,000 3,300,000 3,555,750 3,555,750
-------------------------------
250,000 5,000 Note, 5.75%, 8/15/2003 264,965 5,299 270,264
255,000
-------------------------------
- 50,000 Note, 6.375%, 7/15/1999 - 50,663 50,663
50,000
-------------------------------
- 20,000 Note, 6.50%, 4/30/1999 - 20,202 20,202
20,000
-------------------------------
- Note, 6.50%, 8/15/2005 -
1,860,000 1,860,000 2,076,671 2,076,671
-------------------------------
- Note, 7.75%, 11/30/1999 -
3,240,000 3,240,000 3,352,558 3,352,558
-------------------------------
- 25,000 Note, 7.875%, 11/15/1999 - 25,872 25,872
25,000
--------------------------------------------------------------------
Total 264,965 3.30%
9,087,015 9,351,980
--------------------------------------------------------------------
TOTAL TREASURY 264,965 8.06%
SECURITIES 22,558,257 22,823,222
--------------------------------------------------------------------
(1)REPURCHASE AGREEMENTS 2.7%
- ---------------------------------------------------------------
- Westdeutsche Landesbank - 2.72%
7,705,000 7,705,000Girozentrale, 5.42%, dated 7,705,000 7,705,000
10/30/1998, due 11/2/1998
--------------------------------------------------------------------
INVESTMENT COMPANIES 1.0%
- ---------------------------------------------------------------
- Goldman Sachs Government 2,801,722 - 0.99%
2,801,722 2,801,722Income Fund ( at net asset 2,801,722
value)
--------------------------------------------------------------------
TOTAL INVESTMENTS 282,220,107 283,085,483
(identified cost 85,545,221 196,674,886
$273,203,963)(2)
--------------------------------------------------------------------
99.7%
</TABLE>
(1) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in joint
accounts with other Federated funds.
(2) The cost of investment for federal tax purposes amounts to $273,203,963.
The net unrealized appreciation of investments on a federal tax basis amounts to
$9,016,144 which is comprised of $10,223,320 appreciation and $1,207,176
depreciation at October 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($283,085,483) at October 31, 1998.
The following acronyms are used throughout this proforma:
<TABLE>
<CAPTION>
<S> <C> <C>
AMBAC American Municipal Bond Assurance Corporation LP Limited Partnership
CGIC Capital Guaranty Insurance Corporation MBIA Municipal Bond Investors Assurance
CMO Collateralized Mortgage Obligation PLC Public Limited Company
FSA Financial Security Assurance Separate Trading of Registered Interest
STRIPS and Principal Securities
GO General Obligation SA Support Agreement
GTD Guaranty TBA To Be Announced
INS Insured UT Unlimited Tax
LOC Letter of Credit
</TABLE>
See Notes to the Proforma Financial Statements
<PAGE>
<TABLE>
<CAPTION>
CCB BOND FUND
FEDERATED INTERMEDIATE INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
OCTOCTOBER 31, 1998 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CCB FEDERATED
BOND INTERMEDIATE PRO FORMA PRO FORMA
FUND INCOME ADJUSTMENT COMBINED
FUND
---------- ----------- ----------- -----------
ASSETS:
- -------------------------------------------
Investments in securities, at value $ 85,545,218 $ 196,674,886 --- $ 282,220,104
(identified cost, $83,232,318,
$189,971,645 & 273,203,963 respectively)
- -------------------------------------------
- -------------------------------------------
Income receivable 905,476 3,492,993 --- 4,398,469
- -------------------------------------------
- -------------------------------------------
Receivable for shares sold --- 314,786 --- 314,786
- -------------------------------------------
- -------------------------------------------
---------- ----------- ----------- -----------
Total assets 86,450,694 200,482,665 --- 286,933,359
- -------------------------------------------
LIABILITIES:
- -------------------------------------------
Payable to Bank 341,260 --- 341,260
- -------------------------------------------
Payable for investments purchased --- 2,037,635 --- 2,037,635
- -------------------------------------------
Income distributions payable 435,178 940,511 --- 1,375,689
- -------------------------------------------
Payable for shares redeemed --- 62,440 --- 62,440
- -------------------------------------------
- -------------------------------------------
Accrued expenses 27,622 3,230 --- 30,852
- -------------------------------------------
---------- ----------- ----------- -----------
Total liabilities 462,800 3,385,076 --- 3,847,876
- ------------------------------------------- ---------- ----------- ----------- -----------
NET ASSETS $ 85,987,894 $ 197,097,589 --- $ 283,085,483
- ------------------------------------------- ---------- ----------- ----------- -----------
NET ASSETS CONSISTS OF:
- -------------------------------------------
Paid in capital $ 86,729,748 $ 190,372,445 --- 277,102,193
- -------------------------------------------
Net unrealized appreciation of 2,312,900 6,703,244 --- 9,016,144
investments
- -------------------------------------------
Accumulated net realized loss on (3,054,754) (26,651) --- (3,081,405)
investments
- -------------------------------------------
Undistributed net investment income --- 48,551 --- 48,551
- -------------------------------------------
---------- ----------- ----------- -----------
Total Net Assets $ 85,987,894 $ 197,097,589 --- $ 283,085,483
- ------------------------------------------- ---------- ----------- ----------- -----------
NET ASSETS:
- -------------------------------------------
Institutional Shares $ 85,987,894 $ 187,906,574 --- $ 273,894,468
- -------------------------------------------
Institutional Service Shares --- 9,191,015 --- 9,191,015
- ------------------------------------------- -----------
---------- ----------- -----------
Total Net Assets $ 85,987,894 $ 197,097,589 --- $ 283,085,483
- ------------------------------------------- ---------- ----------- ----------- -----------
SHARES OUTSTANDING:
- -------------------------------------------
Institutional Shares 8,304,548 18,210,881 27,612 (a) 26,543,041
- -------------------------------------------
Institutional Service Shares --- 890,749 --- 890,749
- ------------------------------------------- -----------
---------- ----------- -----------
Total shares outstanding 8,304,548 19,101,630 27,612 27,433,790
- ------------------------------------------- ---------- ----------- ----------- -----------
NET ASSET VALUE, OFFERING PRICE, AND
REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------
INSTITUTIONAL SHARES:
- -------------------------------------------
Net Asset Value Per Share $ 10.35 $ 10.32 --- $ 10.32
- -------------------------------------------
---------- ----------- ----------- -----------
Offering Price Per Share * $ 10.84 $ 10.32 --- $ 10.32
- -------------------------------------------
---------- ----------- ----------- -----------
Redemption Proceeds Per Share $ 10.35 $ 10.32 --- $ 10.32
- ------------------------------------------- ---------- ----------- ----------- -----------
INSTITUTIONAL SERVICE SHARES:
- -------------------------------------------
Net Asset Value Per Share $ --- $ 10.32 --- $ 10.32
- ------------------------------------------- ----------
----------- ----------- -----------
Offering Price Per Share $ --- $ 10.32 --- $ 10.32
- ------------------------------------------- ----------
----------- ----------- -----------
Redemption Proceeds Per Share $ --- $ 10.32 --- $ 10.32
- ------------------------------------------- ---------- ----------- ----------- -----------
</TABLE>
(a) Adjustment to reflect share balance as a result of the combination.
* Computation of Offering Price per Share ( 100/95.50 of $10.35).
(See Notes to Pro Forma Financial Statements)
<PAGE>
<TABLE>
<CAPTION>
CCB BOND FUND
FEDERATED INTERMEDIATE INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CCB FEDERATED
BOND INTERMEDIATE PRO FORMA PRO FORMA
FUND (A) INCOME FUND ADJUSTMENT COMBINED
---------- ------------- ------------ -----------
- ---------------------------------------
INVESTMENT INCOME:
- ---------------------------------------
- ---------------------------------------
Interest $ 2,924,688 6,063,240 $ --- $ 8,987,928 $
- ---------------------------------------
- ---------------------------------------
Dividend 35,191 --- 35,191
- --------------------------------------- ---------- ------------- ------------ -----------
- ---------------------------------------
Total income 2,924,688 6,098,431 --- 9,023,119
- ---------------------------------------
- ---------------------------------------
EXPENSES:
- ---------------------------------------
- ---------------------------------------
Investment advisory fee 321,745 473,831 (206,249) a 589,327
- ---------------------------------------
- ---------------------------------------
Administrative personnel and services 61,482 78,137 (50,749) b 88,870
fee
- ---------------------------------------
- ---------------------------------------
Transfer agent and dividend 23,769 30,704 (21,202) c 33,271
disbursing agent fees and expenses
- ---------------------------------------
- ---------------------------------------
Directors'/Trustees fees 770 3,532 (1,025) d 3,277
- ---------------------------------------
- ---------------------------------------
Accounting and custodian fees 33,435 48,286 (37,953) e 43,768
- ---------------------------------------
- ---------------------------------------
Professional Fees 8,457 11,401 (8,868) f 10,990
- ---------------------------------------
- ---------------------------------------
Distribution services fee - --- 8,257 --- 8,257
Institutional Service Shares
- ---------------------------------------
- ---------------------------------------
Shareholder services fee - --- 228,659 63,664 g 292,323
Institutional Shares
- ---------------------------------------
- ---------------------------------------
Shareholder services fee - --- 8,257 --- 8,257
Institutional Service Shares
- ---------------------------------------
- ---------------------------------------
Share registration costs 6,964 17,881 13,467 h 38,312
- ---------------------------------------
- ---------------------------------------
Printing and postage 3,305 13,630 (3,324) i 13,611
- ---------------------------------------
- ---------------------------------------
Other expenses 2,288 18,822 5,356 j 26,466
- --------------------------------------- ---------- ------------- ------------ -----------
- ---------------------------------------
Total expenses 462,215 941,397 (246,883) 1,156,729
- ---------------------------------------
- ---------------------------------------
Waivers-
- ---------------------------------------
- ---------------------------------------
Waiver of investment advisory fee (321,745) (170,842) 298,109 (194,478)
- ---------------------------------------
- ---------------------------------------
Waiver of distribution services fee - --- (2,972) --- (2,972)
Institutional Service Shares
- ---------------------------------------
- ---------------------------------------
Waiver of shareholder services fee- --- (228,659) (63,664) (292,323)
Institutional Shares
- ---------------------------------------
- ---------------------------------------
Waiver of shareholder services fee - --- (5,284) --- (5,284)
Institutional Service Shares
- --------------------------------------- ---------- ------------- ------------ -----------
- --------------------------------------- ---------- ------------- ------------ -----------
Total waivers (321,745) (407,757) 234,445 (495,057)
- --------------------------------------- ---------- ------------- ------------ -----------
- --------------------------------------- ---------- ------------- ------------ -----------
Net expenses 140,470 533,640 (12,438) 661,672
- --------------------------------------- ---------- ------------- ------------ -----------
- --------------------------------------- ---------- ------------- ------------ -----------
Net investment income 2,784,218 5,564,791 12,438 8,361,447
- --------------------------------------- ---------- ------------- ------------ -----------
- ---------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
- ---------------------------------------
- ---------------------------------------
Net realized gain on investments 304,580 (114,400) --- 190,180
- ---------------------------------------
- ---------------------------------------
Net change in unrealized appreciation 1,063,263 2,790,845 --- 3,854,108
(depreciation) of investments
- ---------------------------------------
- --------------------------------------- ---------- ------------- ------------ -----------
Net realized and unrealized gain 1,367,843 2,676,445 --- 4,044,288
(loss) on investments
---------- ------------- ------------ -----------
- --------------------------------------- ---------- ------------- ------------ -----------
Change in net assets resulting $ 4,152,061 8,241,236 $ 12,438 $ 12,405,735 $
from operations
- --------------------------------------- ---------- ------------- ------------ -----------
(a) Represents the period for the six months ended October 31, 1998.
</TABLE>
(See Legend to Pro Forma Adjustments on following page)
(See Notes to Pro Forma Financial Statements)
<PAGE>
FEDERATED INTERMEDIATE INCOME FUND
CCB BOND FUND
NOTES TO PRO FORMA COMBINING STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED)
a) Federated Management (the "Adviser") receives for its services an annual
investment advisory fee equal to 0.50% of the Federated Intermediate Income
Fund's (the "Fund") average daily net assets. Central Carolina Bank & Trust
Company receives for its services an annual investment advisory fee equal to
0.75% of the CCB Bond Fund's average daily net assets. The reduction in the
investment advisory fee reflects the decrease in advisory fees imposed by
the Adviser. 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.
b) Federated Administrative Services ("FAS") provides the Fund with certain
administrative personnel and services. The FAS fee is based on the level of
average aggregate net assets of the fund for the period.
c) Federated Shareholder Services Company serves as transfer and dividend
disbursing agent for the Fund. The fee is based on the size, type, and number of
accounts and transactions made by shareholders.
d) Adjustment to reflect the elimination of the Directors/Trustees fees for the
CCB Bond Fund .
e) Fees reflect custodian costs for the Fund paid to State Street Bank and
Trust Company. The custodian fee is based on a percentage of assets, plus
out-of-pocket expenses. Federated Shareholder Services Company 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.
f) Adjustment to reflect the audit fee and legal fee reductions due to the
combining of two portfolios into one.
g) Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS") the Federated Intermediate Income Fund will pay
FSS up to 0.25% of average daily net assets of the Fund for the period. The
fee paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive a portion
of its fee. FSS can modify or terminate this voluntary waiver at any time at
its sole discretion.
h) Adjustment to reflect state registration costs for Federated Intermediate
Income Fund only.
i) Printing and postage expenses are adjusted to reflect estimated savings to be
realized by combining three portfolios into a single portfolio.
j) Insurance premiums are allocated from a group coverage. The allocation is
comprised of a base amount, plus a portion based on average net assets. The
pro forma combined insurance premium equals the fixed base premium for a
single portfolio, plus its allowable portion which is based on its
percentage of the combined fund complex assets.
<PAGE>
990341 v4; L85H04!.DOC
FEDERATED INTERMEDIATE INCOME FUND
CCB BOND FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Portfolio of Investments,
Statement of Assets and Liabilities, and Statement of Operations reflect
the accounts of Federated Intermediate Income Fund and CCB Bond Fund,
collectively ("the Funds"), for the six month period ended October 31,
1998. These statements have been derived from the books and records
utilized in calculating daily net asset values at October 31, 1998. The
accompanying unaudited Pro Forma Combining Statement of Operations
reflects the accounts of the Funds, for the six month period ended
October 31, 1998, the most recent semi-annual report date of the
Federated Intermediate Income Fund, the acquiring Fund.
The Pro Forma Combining Portfolio of Investments, Statement of Assets
and Liabilities, and Statement of Operations ("Pro Forma Financial
Statements") should be read in conjunction with the historical financial
statements of the Funds which have been incorporated by reference in the
Statement of Additional Information. The Funds follow generally accepted
accounting principles applicable to management investment companies
which are disclosed in the historical financial statements of each fund.
The Pro Forma Financial Statements give effect to the proposed transfer
of the assets of CCB Bond Fund in exchange for Institutional Shares of
Federated Intermediate Income Fund. Under generally accepted accounting
principles, Federated Intermediate Income Fund will be the surviving
entity for accounting purposes with its historical cost of investment
securities and results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the
anticipated advisory and administration fee arrangements for the
surviving entity. Certain other operating costs have also been adjusted
to reflect anticipated expenses of the combined entity. Other costs
which may change as a result of the reorganization are currently
undeterminable.
For the six month period ended October 31, 1998, Federated Intermediate
Income Fund and CCB Bond Fund paid investment advisory fees computed at
the annual rate of 0.50% and 0.75%, respectively, as a percentage of
average daily net assets.
The Adviser may voluntarily choose to waive all or portion of their fees
and reimburse certain operating expenses of the Funds.
SHARES OF BENEFICIAL INTEREST
The Pro Forma net asset value per share assumes the issuance of
8,332,160 Institutional Shares of the Federated Intermediate Income Fund
in exchange for 8,304,548 shares from CCB Bond Fund which would have
been issued at October 31, 1998, in connection with the proposed
reorganization.
<PAGE>
PART C - OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Indemnification is provided to trustees and officers of the
Registrant pursuant to the Registrant's Declaration of Trust, except where such
indemnification is not permitted by law. However, the Declaration of Trust does
not protect the trustees or officers from liability based on willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.
Trustees and officers of the Registrant are insured against certain
liabilities, including liabilities arising under the Securities Act of 1933 (the
"Act").
Insofar as indemnification for liabilities arising under the Act may
be permitted to trustees, officers, and controlling persons of the Registrant by
the Registrant pursuant to the Declaration of Trust or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by trustees, officers, or controlling persons of the Registrant in
connection with the successful defense of any act, suit, or proceeding) is
asserted by such trustees, officers, or controlling persons in connection with
the shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Insofar as indemnification for liabilities may be permitted pursuant
to Section 17 of the Investment Company Act of 1940, as amended, for trustees,
officers, or controlling persons of the Registrant by the Registrant pursuant to
the Declaration of Trust or otherwise, the Registrant is aware of the position
of the Securities and Exchange Commission as set forth in Investment Company Act
Release No. IC-11330. Therefore, the Registrant undertakes that in addition to
complying with the applicable provisions of the Declaration of Trust or
otherwise, 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 Registrant
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 Registrant 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 Registrant 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 Registrant 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.
<PAGE>
ITEM 16. EXHIBITS
1.1 Conformed copy of Declaration of Trust of the Registrant(1)
1.2 Conformed copy of Amendment No. 1 to the Declaration of Trust(9)
1.3 Conformed copy of Amendment No. 2 to the Declaration of Trust(4)
1.4 Conformed copy of Amendment No. 3 to the Declaration of Trust(7)
1.5 Conformed copy of Amendment No. 5 to the Declaration of Trust(9)
1.6 Conformed copy of Amendment No. 6 to the Declaration of Trust(9)
1.7 Conformed copy of Amendment No. 7 to the Declaration of Trust(9)
2.1 Copy of Amended and Restated By-Laws of the Registrant as of
December 31, 1991(4)
2.2 Copy of Amendment No. 4 to the By-Laws(9)
2.3 Copy of Amendment No. 5 to the By-Laws(9)
2.3 Copy of Amendment No. 6 to the By-Laws(9)
2.4 Copy of Amendment No. 7 to the By-Laws(9)
3 Not Applicable
4 Form of Agreement and Plan of Reorganization, between CCB Funds, on
behalf of its portfolio CCB Bond Fund, and Federated Income Securities
Trust, on behalf of its portfolio Federated Intermediate Income Fund, is
included as Exhibit A to the Combined Prospectus/Proxy Statement of this
Registration Statement*
5 Copy of Specimen Certificate for Shares of Beneficial Interest of the
Registrant(6)
6.1 Conformed copy of Investment Advisory Contract of the Registrant(3) 6.2
Conformed copy of Exhibit to Investment Advisory Contract of the Registrant(7)
7.1 Conformed copy of Distributor's Contract of the Registrant, through and
including Exhibit B(2)
7.2 Conformed copy of Exhibit C to Distributor's Contract(5)
7.3 Conformed copy of Exhibit D to Distributor's Contract(5)
7.4 The Registrant hereby incorporates the conformed copy of the specimen
Mutual Funds Sales and Service Agreement; Mutual Funds Service
Agreement; and Plan Trustee/Mutual Funds Service Agreement from
Item 24(b)(6) of the Cash Trust Series II Registration Statement on
Form N-1A, filed with the Commission on July 24, 1995.
(File Nos. 33-38550 and 811-6269).
8 Not Applicable
9.1 Conformed Copy of Custodian Contract of the Registrant(8) 9.2 Conformed copy
of Domestic Custody Fee Schedule(9)
10.1 Conformed copy of Rule 12b-1 Distribution Plan of the Registrant(3) 10.2
Conformed copy of Exhibit B to Rule 12b-1 Distribution Plan of the Registrant(5)
10.3 The Registrant hereby incorporates the conformed copy of the specimen
Multiple Class Plan from Item 24(b)(18) of the World Investment Series,
Inc. Registration Statement on Form N-1A, filed with the Commission on
January 26, 1996. (File Nos. 33-52149 and 811-07141).
10.4 The responses described in Item 16 (7.4) are hereby incorporated by
reference
11 Form of Opinion and Consent of Counsel regarding legality of shares being
issued*
12 Opinion of Dickstein Shapiro Morin & Oshinsky LLP regarding tax consequences
of Reorganization(10)
13.1 Conformed Copy of Agreement for Fund Accounting Services,
Administrative Services, Transfer Agency Services and Custody Services
Procurement(9) 13.2 Conformed Copy of Amended and Restated Shareholder Services
Agreement(9) 13.3 The responses described in Item 16 (7.4) and Item 16 (10.3)
are hereby incorporated by reference. 13.4 The Registrant hereby incorporates
the conformed copy of the Shareholder Services Sub-Contract between Fidelity and
Federated Shareholder Services from Item 24(b)(9)(iii) of the Federated GNMA
Trust Registration Statement on Form N-1A, filed with the Commission on March
25, 1996. (File Nos. 2-75670 and 811-3375).
14.1 Conformed Copy of Consent of Independent Auditors of Federated Intermediate
Income Fund, Ernst & Young LLP* 14.2 Conformed Copy of Consent of Independent
Auditors of CCB Bond Fund, Arthur Andersen LLP*
15 Not Applicable
16 Conformed Copy of Power of Attorney*
17 Form of Proxy of CCB Bond Fund*
- ------------------------------
* Filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed February 6, 1986. (File Nos. 33-3164 and
811-4577).
2. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed April 25, 1990. (File Nos. 33-3164 and
811-4577).
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed December 9, 1991. (File Nos. 33-3164
and 811-4577).
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 15 on Form N-1A filed April 30, 1993. (File Nos. 33-3164 and
811-4577).
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed October 12, 1993. (File Nos. 33-3164
and 811-4577).
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed June 7, 1994. (File Nos. 33-3164 and
811-4577).
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 on Form N-1A filed June 24, 1994. (File Nos. 33-3164 and
811-4577).
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed June 23, 1995. (File Nos. 33-3164 and
811-4577).
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 30 on Form N-1A filed June 29, 1998. (File Nos. 33-3164 and
811-4577).
10. To be filed by Post-Effective Amendment pursuant to "Dear Registrant"
letter dated February 15, 1996.
<PAGE>
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file by Post-Effective
Amendment the opinion of counsel regarding the tax consequences of the proposed
reorganization required by Item 16 (12) of Form N-14 within a reasonable time
after receipt of such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Federated Income Securities Trust, has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pittsburgh, Commonwealth of Pennsylvania on the 7th
day of May, 1999.
FEDERATED INCOME SECURITIES TRUST
(Registrant)
By: *
Glen R. Johnson
President
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on May 7, 1999:
* Chairman and Trustee
John F. Donahue
(Chief Executive Officer)
* President
Glen R. Johnson
* Chief Investment Officer
William D. Dawson III
* Treasurer
Richard J. Thomas
(Principal Financial and Accounting Officer)
* Trustee
Thomas G. Bigley
* Trustee
John T. Conroy, Jr.
* Trustee
Nicholas P. Constantakis
* Trustee
John F. Cunningham
* Trustee
Lawrence D. Ellis, M.D.
* Trustee
Peter E. Madden
* Trustee
John E. Murray, Jr., J.D., S.J.D.
* Trustee
Marjorie P. Smuts
1*By:/S/ ANTHONY R. BOSCH
Attorney in Fact
EXHIBIT 17
CCB BOND FUND,
(formerly, 111 Corcoran Bond Fund)
a Portfolio of
CCB FUNDS,
(formerly, 111 Corcoran Funds)
SPECIAL MEETING OF SHAREHOLDERS
July 22, 1999
CCB BOND FUND,
(formerly, 111 Corcoran Bond Fund)
a Portfolio of
CCB FUNDS,
(formerly, 111 Corcoran Funds)
CUSIP NO. 682365200
The undersigned shareholder(s) of the CCB Bond Fund, a portfolio of CCB
Funds (the "CCB Bond Fund"), hereby appoint(s) C. Grant Anderson,
Patricia F. Conner, Antoinette D. Brkovich, Susan M. Jones, and Ann M.
Scanlon or any of them true and lawful proxies, with power of
substitution of each, to vote all shares of the CCB Bond Fund which the
undersigned is entitled to vote, at the Special Meeting of Shareholders
to be held on July 22, 1999, at 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7010 at 2:00 p.m. (local time) and at any adjournment
thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The proxies named
will vote the shares represented by this proxy in accordance with the
choice made on this ballot. IF NO CHOICE IS INDICATED, THIS PROXY WILL
BE VOTED AFFIRMATIVELY ON THAT MATTER.
PROPOSAL
TO APPROVE OR DISAPPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN THE CCB
FUNDS, ON BEHALF OF ITS PORTFOLIO CCB BOND FUND, AND FEDERATED INCOME SECURITIES
TRUST, ON BEHALF OF ITS PORTFOLIO FEDERATED INTERMEDIATE INCOME FUND
<PAGE>
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS X
KEEP THIS PORTION FOR YOUR RECORDS.
- --------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY.
CCB BOND FUND,
a portfolio of
CCB FUNDS
RECORD DATE SHARES: _________________
VOTE ON THE PROPOSAL
FOR AGAINST ABSTAIN
-------- --------- ---------
Please sign EXACTLY as your name(s) appear(s) above. When signing as attorney,
executor, administrator, guardian, trustee, custodian, etc., please give your
full title as such. If a corporation or partnership, please sign the full name
by an authorized officer or partner. If stock is owned jointly, all owners
should sign.
- -----------------------------------
- -----------------------------------
Signature(s) of Shareholder(s)
Date: _________________________________
Exhibit 11
FEDERATED INTERMEDIATE INCOME FUND
A PORTFOLIO OF FEDERATED INCOME SECURITIES TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
MAY __, 1999
The Trustees of
Federated Income Securities Trust
Federated Investors Tower
Pittsburgh, PA 15222-3779
Ladies and Gentlemen:
Federated Income Securities Trust, a Massachusetts business trust
("Trust"), proposes to issue shares of beneficial interest representing
interests in the Institutional Shares of a separate portfolio of securities
known as "Federated Intermediate Income Fund" (such shares of beneficial
interest being herein referred to as "Shares") in connection with the
acquisition of the assets of CCB Bond Fund, a portfolio of CCB Funds, pursuant
to the Agreement and Plan of Reorganization dated May __, 1999 ("Agreement"),
filed as an exhibit to the registration statement of the Trust filed on Form
N-14 (Securities Act of 1933 No. to be assigned) under the Securities Act of
1933, as amended ("N-14 Registration").
As counsel I have participated in the organization of the Trust, its
registration under the Investment Company Act of 1940, as amended, the
registration of its securities on Form N-1A under the Securities Act of 1933 and
its N-14 Registration. I have examined and am familiar with the written Amended
and Restated Declaration of Trust dated December 31, 1991 ("Declaration of
Trust"), the Bylaws of the Trust and such other documents and records deemed
relevant. I have also reviewed questions of law and consulted with counsel
thereon as deemed necessary or appropriate by me for the purposes of this
opinion.
Based upon the foregoing, it is my 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 N-14
Registration may be legally and validly issued in accordance with the Agreement
and 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 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.
I hereby consent to the filing of this opinion as an exhibit to the N-14
Registration referred to above and to any application or registration statement
filed under the securities laws of any of the states of the United States.
Very truly yours,
FEDERATED INTERMEDIATE INCOME
FUND - A PORTFOLIO OF FEDERATED
SECURITIES TRUST
BY: C. GRANT ANDERSON
TITLE: ASSISTANT SECRETARY
Exhibit 14.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated July 9, 1998 on the financial statements as of May 31, 1998 of CCB Bond
Fund, included in or made a part of this registration statement File No.
33-45753.
By: /s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
May 6, 1999
Exhibit 14.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Representations and
Warranties" in the Agreement and Plan of Reorganization in the Prospectus/Proxy
Statement, dated June 18, 1999, in this Registration Statement (File No.
33-45753), of Federated Income Securities Trust with respect to the Federated
Intermediate Income Fund (a portfolio of Federated Income Securities Trust).
We also consent to the incorporation by reference of our report dated June 19,
1998, with respect to the financial statements and financial highlights of the
Federated Intermediate Income Fund for the year ended April 30, 1998 in the
Statement of Additional Information included in this Registration Statement.
By: /s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
May 6, 1999
EXHIBIT (16) UNDER FORM N-14
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of FEDERATED INCOME SECURITIES
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ WILLIAM D. DAWSON, III Chief Investment Officer April 8, 1999
- --------------------------
William D. Dawson, III
Sworn to and subscribed before me this 8th day of April, 1999.
/S/ CHERI S. GOOD
Notary Public
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of FEDERATED INCOME SECURITIES
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ JOHN F. CUNNINGHAM Trustee April 8, 1999
- -------------------------
John F. Cunningham
Sworn to and subscribed before me this 8th day of April, 1999.
/S/ CHERI S. GOOD
Notary Public
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of FEDERATED INCOME SECURITIES
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ JOHN F. DONAHUE Chairman and Trustee April 8, 1999
John F. Donahue (Chief Executive Officer)
/S/ GLEN R. JOHNSON President April 8, 1999
- ----------------------
Glen R. Johnson
/S/ RICHARD J. THOMAS Treasurer April 8, 1999
- ------------------------
Richard J. Thomas (Principal Financial and
Accounting Officer)
/S/ THOMAS G. BIGLEY Trustee April 8, 1999
- -----------------------
Thomas G. Bigley
/S/ NICHOLAS P. CONSTANTAKIS Trustee April 8, 1999
- ----------------------------
Nicholas P. Constantakis
/S/ JOHN T. CONROY, JR. Trustee April 8, 1999
- --------------------------
John T. Conroy, Jr.
/S/ LAWRENCE D. ELLIS, M.D. Trustee April 8, 1999
Lawrence D. Ellis, M.D.
/S/ PETER E. MADDEN Trustee April 8, 1999
- ----------------------
Peter E. Madden
/S/ JOHN E. MURRAY, JR. Trustee April 8, 1999
- --------------------------
John E. Murray, Jr.
/S/ MARJORIE P. SMUTS Trustee April 8, 1999
- ------------------------
Marjorie P. Smuts
Sworn to and subscribed before me this 8th day of April, 1999.
/S/ CHERI S. GOOD
Notary Public
