SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [ X ] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
FEDERATED MUNICIPAL TRUST
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ]No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Connecticut Municipal Cash Trust hereby appoint Anthony R. Bosch, Patricia F.
Conner, Catherine C. Ryan, Carol B. Kayworth, and Elisabeth A. Miller, or any
one of them, true and lawful attorneys, with the power of substitution of each,
to vote all Shares of Connecticut Municipal Cash Trust which the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held on April 23,
1998, at Federated Investors Tower, Pittsburgh, Pennsylvania, at 2:30 p.m., and
at any adjournment thereof.
The attorneys named will vote the Shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Special Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF CONNECTICUT
MUNICIPAL CASH TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS.
PROPOSAL 1 TO ELECT THOMAS G. BIGLEY, JOHN T. CONROY, JR., PETER E. MADDEN
AND JOHN E. MURRAY, JR., AS TRUSTEES OF THE TRUST
FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]
If you do not wish your Shares to be voted "FOR" a particular
nominee, mark the "For All Except" box and strike a line
through the nominee(s') name. Your Shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE OR DISAPPROVE AN AMENDMENT TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICY ON DIVERSIFICATION OF ITS INVESTMENTS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 3 TO APPROVE OR DISAPPROVE CHANGING FROM FUNDAMENTAL TO AN
OPERATING POLICY THE FUND'S ABILITY TO INVEST IN RESTRICTED SECURITIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT
Please complete, sign and return _____________________
this card as soon as possible. Date
Mark with an X in the box. _____________________
Signature
------------------------
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Massachusetts Municipal Cash Trust hereby appoint Anthony R. Bosch, Patricia F.
Conner, Catherine C. Ryan, Carol B. Kayworth, and Elisabeth A. Miller, or any
one of them, true and lawful attorneys, with the power of substitution of each,
to vote all Shares of Massachusetts Municipal Cash Trust which the undersigned
is entitled to vote at the Special Meeting of Shareholders to be held on April
23, 1998, at Federated Investors Tower, Pittsburgh, Pennsylvania, at 2:30 p.m.,
and at any adjournment thereof.
The attorneys named will vote the Shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Special Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF MASSACHUSETTS
MUNICIPAL CASH TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS.
PROPOSAL 1 TO ELECT THOMAS G. BIGLEY, JOHN T. CONROY, JR., PETER E. MADDEN
AND JOHN E. MURRAY, JR., AS TRUSTEES OF THE TRUST
FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]
If you do not wish your Shares to be voted "FOR" a particular
nominee, mark the "For All Except" box and strike a line
through the nominee(s') name. Your Shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE OR DISAPPROVE AN AMENDMENT TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICY ON DIVERSIFICATION OF ITS INVESTMENTS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 3 TO APPROVE OR DISAPPROVE CHANGING FROM FUNDAMENTAL TO AN
OPERATING POLICY THE FUND'S ABILITY TO INVEST IN RESTRICTED SECURITIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT
Please complete, sign and return _____________________
this card as soon as possible. Date
Mark with an X in the box. _____________________
Signature
------------------------
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Pennsylvania Municipal Cash Trust hereby appoint Anthony R. Bosch, Patricia F.
Conner, Catherine C. Ryan, Carol B. Kayworth, and Elisabeth A. Miller, or any
one of them, true and lawful attorneys, with the power of substitution of each,
to vote all Shares of Pennsylvania Municipal Cash Trust which the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held on April 23,
1998, at Federated Investors Tower, Pittsburgh, Pennsylvania, at 2:30 p.m., and
at any adjournment thereof.
The attorneys named will vote the Shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Special Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF PENNSYLVANIA
MUNICIPAL CASH TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS.
PROPOSAL 1 TO ELECT THOMAS G. BIGLEY, JOHN T. CONROY, JR., PETER E. MADDEN
AND JOHN E. MURRAY, JR., AS TRUSTEES OF THE TRUST
FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]
If you do not wish your Shares to be voted "FOR" a particular
nominee, mark the "For All Except" box and strike a line
through the nominee(s') name. Your Shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE OR DISAPPROVE AN AMENDMENT TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICY ON DIVERSIFICATION OF ITS INVESTMENTS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 3 TO APPROVE OR DISAPPROVE THE REMOVAL OF THE FUNDAMENTAL
INVESTMENT POLICY, OF THE FUND ON ITS INTENTION TO ENGAGE IN PORTFOLIO TRADING
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 4 TO APPROVE OR DISAPPROVE CHANGING FROM FUNDAMENTAL TO AN
OPERATING POLICY THE FUND'S ABILITY TO INVEST IN RESTRICTED SECURITIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT
Please complete, sign and return _____________________
this card as soon as possible. Date
Mark with an X in the box. _____________________
Signature
------------------------
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Ohio
Municipal Cash Trust hereby appoint Anthony R. Bosch, Patricia F. Conner,
Catherine C. Ryan, Carol B. Kayworth, and Elisabeth A. Miller, or any one of
them, true and lawful attorneys, with the power of substitution of each, to vote
all Shares of Ohio Municipal Cash Trust which the undersigned is entitled to
vote at the Special Meeting of Shareholders to be held on April 23, 1998, at
Federated Investors Tower, Pittsburgh, Pennsylvania, at 2:30 p.m., and at any
adjournment thereof.
The attorneys named will vote the Shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Special Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF OHIO MUNICIPAL
CASH TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE PROPOSALS.
PROPOSAL 1 TO ELECT THOMAS G. BIGLEY, JOHN T. CONROY, JR., PETER E. MADDEN
AND JOHN E. MURRAY, JR., AS TRUSTEES OF THE TRUST
FOR [ ]
AGAINST [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
FOR ALL EXCEPT [ ]
If you do not wish your Shares to be voted "FOR" a particular
nominee, mark the "For All Except" box and strike a line
through the nominee(s') name. Your Shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE OR DISAPPROVE AN AMENDMENT TO THE FUND'S FUNDAMENTAL
INVESTMENT POLICY ON DIVERSIFICATION OF ITS INVESTMENTS
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
PROPOSAL 3 TO APPROVE OR DISAPPROVE CHANGING FROM FUNDAMENTAL TO AN
OPERATING POLICY THE FUND'S ABILITY TO INVEST IN RESTRICTED SECURITIES
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT
Please complete, sign and return _____________________
this card as soon as possible. Date
Mark with an X in the box. _____________________
Signature
------------------------
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
PRELIMINARY PROXY STATEMENT
FEDERATED MUNICIPAL TRUST
CONNECTICUT MUNICIPAL CASH TRUST
MASSACHUSETTS MUNICIPAL CASH TRUST
OHIO MUNICIPAL CASH TRUST
PENNSYLVANIA MUNICIPAL CASH TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1998
A special meeting of the shareholders of Federated Municipal Trust (the
"Trust") will be held at Federated Investors Tower, 19th Floor, 1001 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3779, at 2:30 p.m. (Eastern time), on
April 23, 1998, for the following purposes:
(1) TO ELECT FOUR TRUSTEES.
(2) TO MAKE CHANGES TO THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES:
(A) TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICY ON DIVERSIFICATION OF
ITS INVESTMENTS;
(B) TO CHANGE FROM A FUNDAMENTAL TO AN OPERATING POLICY THE
ABILITY OF PENNSYLVANIA MUNICIPAL CASH TRUST TO ENGAGE IN
PORTFOLIO TRADING; AND
(C) TO AMEND AND TO CHANGE FROM A FUNDAMENTAL TO AN OPERATING
POLICY THE FUNDS' ABILITY TO INVEST IN RESTRICTED SECURITIES.
(3) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
The Board of Trustees has fixed February 24, 1998, as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Trustees
John W. McGonigle
Secretary
March 9, 1998
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY TO AVOID ADDITIONAL
EXPENSE.
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE
ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT THE NECESSARY
QUORUM MAY BE REPRESENTED AT THE SPECIAL MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
PRELIMINARY PROXY STATEMENT
FEDERATED MUNICIPAL TRUST
CONNECTICUT MUNICIPAL CASH TRUST
MASSACHUSETTS MUNICIPAL CASH TRUST
OHIO MUNICIPAL CASH TRUST
PENNSYLVANIA MUNICIPAL CASH TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING
The enclosed proxy is solicited on behalf of the Board of Trustees of the Trust
(the "Board" or "Trustees"). The proxies will be voted at the special meeting of
shareholders of the funds listed above (each fund individually referred to as a
"Fund" or collectively as the "Funds") to be held on April 23, 1998, at
Federated Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779, at 2:30 p.m. (such special meeting and any adjournment
or postponement thereof are referred to as the "Special Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Funds. In addition to solicitations through the
mails, proxies may be solicited by officers, employees, and agents of the Funds
or, if necessary, a communications firm retained for this purpose. Such
solicitations may be by telephone, telegraph, or otherwise. Any telephonic
solicitations will follow procedures designed to ensure accuracy and prevent
fraud, including requiring identifying shareholder information, recording the
shareholder's instructions, and confirming to the shareholder after the fact.
Shareholders who communicate proxies by telephone or by other electronic means
have the same power and authority to issue, revoke, or otherwise change their
voting instruction as currently exists for instructions communicated in written
form. The Funds will reimburse custodians, nominees, and fiduciaries for the
reasonable costs incurred by them in connection with forwarding solicitation
materials to be beneficial owners of shares held of record by such persons.
At its meeting on November 20, 1997, the Board reviewed both the Declaration of
Trust and the investment policies of the Funds and approved changes to them,
subject to shareholder approval. The purposes of the Special Meeting are set
forth in the accompanying Notice. The Trustees know of no business other than
that mentioned in the Notice that will be presented for consideration at the
Special Meeting. Should other business properly be brought before the Special
Meeting, proxies will be voted in accordance with the best judgment of the
persons named as proxies. This proxy statement and the enclosed proxy card are
expected to be mailed on or about March 9, 1998, to shareholders of record at
the close of business on February 24, 1998 (the "Record Date").
<PAGE>
The following table sets forth the number of shares of beneficial interest
("Shares") of each Fund, by class, which were outstanding as of the Record Date,
each Share being entitled to one vote.
NUMBER OF SHARES
___OUTSTANDING___
CONNECTICUT MUNICIPAL CASH TRUST
Institutional Service Shares
MASSACHUSETTS MUNICIPAL CASH TRUST
Boston 1784 Funds Shares
Institutional Service Shares
OHIO MUNICIPAL CASH TRUST
Cash II Shares
Institutional Service Shares
Institutional Shares
PENNSYLVANIA MUNICIPAL CASH TRUST
Cash Series Shares
Institutional Service Shares
Institutional Shares
The Trust's annual prospectuses, which include audited financial
statements for the fiscal year ended October 31, 1997, were previously mailed to
shareholders. Requests for reports or other information may be made in writing
to the Trust's principal executive offices located at Federated Investors Funds,
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000 or by calling
toll-free 1-800-341-7400.
ELECTION OF FOUR TRUSTEES
The persons named as proxies intend to vote in favor of the election of
Thomas G. Bigley, John T. Conroy, Jr., Peter E. Madden and John E. Murray, Jr.
as Trustees of the Trust. All of the nominees are presently serving as Trustees.
Please see "Information about the Trust" for current biographical information
about Messrs. Bigley, Conroy, Madden and Murray.
Messrs. Conroy and Madden were appointed Trustees on August 21, 1991, to
fill vacancies created by the resignation of Mr. Joseph Maloney and the decision
to expand the size of the Board. Messrs. Bigley and Murray were appointed
Trustees on February 14, 1995, also to fill vacancies resulting from the
decision to expand the size of the Board.
All Nominees have consented to continue to serve if elected. If elected,
the Trustees will hold office without limit in time until death, resignation,
retirement, or removal or until the next meeting of shareholders to elect
Trustees and the election and qualification of their successors. Election of a
Trustee requires the affirmative vote of a plurality of the votes cast at the
Special Meeting. A "plurality" is defined as more votes cast for than against
each Nominee.
If any nominee for election as a Trustee named above shall by reason of
death or for any other reason become unavailable as a candidate at the Special
Meeting, votes pursuant to the enclosed proxy will be cast for a substitute
candidate by the proxies named on the proxy card, or their substitutes, present
and acting at the Special Meeting. Any such substitute candidate for election as
an interested Trustee shall be nominated by the Executive Committee. The
selection of any substitute candidate for election as a Trustee who is not an
interested person shall be made by a majority of the Trustees who are not
interested persons of the Trust. The Board has no reason to believe that any
nominee will become unavailable for election as a Trustee.
<PAGE>
APPROVAL OR DISAPPROVAL OF CHANGES TO THE TRUST'S
FUNDAMENTAL INVESTMENT POLICIES
The Investment Company Act of 1940 (the "1940 Act") requires investment
companies such as the Trust to adopt certain specific investment policies that
can be changed only by shareholder vote. An investment company may also elect to
designate other policies that may be changed only by shareholder vote. Both
types of policies are often referred to as "fundamental policies." Certain of
the Funds' fundamental policies have been adopted in the past to reflect
regulatory, business or industry conditions that are no longer in effect.
Accordingly, the Trustees have approved, and have authorized the submission to
the Funds' shareholders for their approval, the removal, amendment, and/or
reclassification of certain of the Funds' fundamental policies.
The proposed amendments would:
(i) simplify and modernize the policies that are required to be fundamental
by the 1940 Act;
(ii) reclassify as operating policies those fundamental policies that are
not required to be fundamental by the 1940 Act; and
(iii) remove those fundamental policies which are no longer required by
the securities laws of individual states as a result of the National
Securities Markets Improvement Act ("NSMIA"), dated October 11,
1996.
By reducing to a minimum those policies that can be changed only by
shareholder vote, the Trustees believe that the Funds would be able to minimize
the costs and delay associated with holding frequent shareholder meetings. The
Trustees also believe that the investment adviser's ability to manage the Funds'
assets in a changing investment environment will be enhanced and that investment
management opportunities will be increased by these changes.
TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICY ON
DIVERSIFICATION OF ITS INVESTMENTS
THIS PROPOSAL IS TO BE CONSIDERED ONLY BY SHAREHOLDERS OF CONNECTICUT
MUNICIPAL CASH TRUST, MASSACHUSETTS MUNICIPAL CASH TRUST, AND PENNSYLVANIA
MUNICIPAL CASH TRUST
Each of the Funds is currently bound by a fundamental investment policy
that limits their investments so that no one investment exceeds a specific
percentage of Fund assets at the end of any fiscal quarter as follows:
o with respect to the Funds' total assets, no more than 25% of those assets
may be invested in the securities of a single issuer; and
o with respect to at least 50% of the Funds' assets, no more than 5% of
those assets may be invested in the securities of a single issuer.
When the current policy was adopted, the Funds were classified as
non-diversified portfolios since they had to be invested more heavily in the
securities of fewer issuers.
In 1996, the SEC amended Rule 2a-7, under the 1940 Act, which governs the
operations of money market funds. The amendments established specific
diversification requirements for money market funds which are more restrictive
than, and supersede, the Funds' current policies. Since the Funds are money
market funds which rely on amortized cost valuation of their portfolio
securities to attempt to maintain a $1.00 net asset value, they have complied
with the Rule 2a-7 diversification requirements since their adoption and intend
to continue to comply with them. Therefore, the Trustees propose to remove the
Funds' current diversification policies because they are obsolete in light of
the requirements of Rule 2a-7 and follow the investment policy that the Funds
will comply with Rule 2a-7.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
TO REMOVE THE FUNDAMENTAL INVESTMENT POLICY OF
PENNSYLVANIA MUNICIPAL CASH TRUST ON ITS INTENTION
TO ENGAGE IN PORTFOLIO TRADING
The Fund's current fundamental investment policy regarding portfolio
trading is as follows:
"The Fund will invest in securities for income earnings rather than
trading for profit. The Fund will not vary its investments, except to: (i)
eliminate unsafe investments and investments not consistent with the
preservation of the capital or the tax status of the investments of the
Fund; (ii) honor redemption orders, meet anticipated redemption
requirements, and negate gains from discount purchases; (iii) maintain a
constant net asset value per unit pursuant to, and in compliance with, an
order or rule of the United States Securities and Exchange Commission;
(iv) reinvest the earnings from securities in like securities; or (v)
defray normal administrative expenses (the "Pennsylvania Investment
Restrictions")."
When the Trust adopted this investment policy, it was done to ensure that
the tax-exempt status of interest earned on investments in the Trust would
flow-through to its shareholders. On February 1, 1994, Pennsylvania enacted
legislation which clearly addressed the flow-through status of interest and,
thus, eliminated the need for the above policy. Therefore, the Trustees are
recommending that the policy be removed.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
REMOVAL OF CERTAIN OF THE TRUST'S
FUNDAMENTAL INVESTMENT POLICIES
The Board has determined that certain of the current fundamental
investment policies are unnecessary and should be removed. Until NSMIA, the
securities laws of several states had prohibited an investment company whose
shares would be sold in those states from investing in certain securities. As a
consequence of those restrictions, the Funds adopted the investment policies
described below which can be changed only upon the approval of shareholders.
Since these prohibitions are no longer required under state law, the management
of the Funds has recommended, and the Board has determined, that these policies
should be removed. The removal of these policies would provide greater
flexibility in the management of the Funds by permitting the Funds to purchase a
broader range of securities which are permitted investments and which are
consistent with its investment objective and policies.
TO AMEND AND TO CHANGE FROM FUNDAMENTAL TO AN OPERATING POLICY THE FUNDS'
ABILITY TO INVEST IN RESTRICTED SECURITIES
Each Fund's current policy on restricted securities reads as follows:
"The Fund will not invest more than 10% of its net assets in securities
subject to restrictions on resale under the Securities Act of 1933."
This policy was adopted because historically, restricted securities were
viewed as illiquid since they could not be sold within seven days. Investment
companies, such as the Funds, are required to meet a shareholder's redemption
request at the current net asset value within seven days of receiving the
request for redemption. In order to do this, some portion of the securities in
the Funds' portfolio must be "liquid" so that the securities can be sold in
sufficient time to obtain the necessary cash to meet redemption requests. It is
important to note that many restricted securities are, in fact, quite LIQUID,
and can be purchased without jeopardizing the liquidity of the Funds' portfolio.
Certain state securities regulators previously required mutual funds to
have a fundamental policy limiting investment in restricted securities. Since
the enactment of NSMIA, states no longer have such jurisdiction. Futhermore,
rules adopted by the Securities and Exchange Commission have substantially
increased the number of restricted securities that can now be considered liquid
and, in addition, have given to the Trustees the ability to determine, under
specific guidelines, that a security is liquid. The Trustees may delegate this
duty to the investment adviser provided the Adviser's determination of liquidity
is made in accordance with the guidelines established and monitored by the
Trustees.
The Funds' current policy prevents the Funds from acquiring a restricted
security that may be viewed by the adviser as liquid, other than Section 4(2)
commercial paper. If this proposal is approved, the Funds will be able to invest
to an unlimited extent in restricted securities as long as they meet the
Trustees' guidelines for liquidity and each Fund's operating policy on
restricted securities would read substantially as follows:
"The Fund may invest in restricted securities. Restricted securities are
any securities in which the Fund may invest pursuant to its investment
objective and policies but which are subject to restrictions on resale
under federal securities law. Under criteria established by the Trustees
certain restricted securities are determined to be liquid. To the extent
that restricted securities are not determined to be liquid the Fund will
limit their purchase, together with other illiquid securities, to 10% of
its net assets."
If a restricted security is determined not to be liquid, the purchase of that
security, together with other illiquid securities, may not exceed 10% of the
Funds' net assets in accordance with the Funds' current policy on investing in
illiquid securities.
If shareholders do not approve the removal of the policy on restricted
securities, the Funds will continue to invest no more than 10% of the value of
its total assets in restricted securities of any kind, except Section 4(2)
commercial paper.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
<PAGE>
INFORMATION ABOUT THE TRUST
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
The favorable vote of: (a) the holders of 67% or more of the outstanding
voting securities present at the meeting, if the holders of 50% or more of the
outstanding voting securities of the Trust are present or represented by proxy;
or (b) the vote of the holders of more than 50% of the outstanding voting
securities, whichever is less, is required to approve all of the proposals
except for the election of Trustees.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Funds. In addition, although mere attendance
at the Special Meeting will not revoke a proxy, a shareholder present at the
Special Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Special Meeting will be
voted in accordance with the instructions contained in the proxies. IF NO
INSTRUCTION IS GIVEN ON THE PROXY, THE PERSONS NAMED AS PROXIES WILL VOTE THE
SHARES REPRESENTED THEREBY IN FAVOR OF THE MATTERS SET FORTH IN THE ATTACHED
NOTICE.
In order to hold the Special Meeting, a "quorum" of shareholders must be
present. Holders of more than fifty percent of the total number of outstanding
Shares of the Funds, present in person or by proxy, shall be required to
constitute a quorum for the purpose of voting on the proposals made.
For purposes of determining a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote Shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as Shares that are PRESENT but which have
not been VOTED. For this reason, abstentions and broker non-votes will have the
effect of a "no" vote for purposes of obtaining the requisite approval of the
proposals.
If a quorum is present, the persons named as proxies will vote those
proxies which they are entitled to vote FOR the proposal in favor of such an
adjournment, and will vote those proxies required to be voted AGAINST the
proposal against any adjournment. If a quorum is not present, or in the event
that a quorum is present but sufficient votes to approve the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Special Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a plurality of those Shares
affected by the adjournment represented at the Special Meeting in person or by
proxy. A shareholder vote may be taken on the proposals in this proxy statement
prior to any such adjournment if sufficient votes have been received for
approval.
ABOUT THE ELECTION OF TRUSTEES
When elected, the Trustees will hold office during the lifetime of the
Trust except that: (a) any Trustee may resign; (b) any Trustee may be removed by
written instrument signed by at least two-thirds of the number of Trustees prior
to such removal; (c) any Trustee who requests to be retired or who has become
mentally or physically incapacitated may be retired by written instrument signed
by a majority of the other Trustees; and (d) a Trustee may be removed at any
special meeting of the shareholders by a vote of two-thirds of the outstanding
Shares of the Trust. In case a vacancy shall exist for any reason, the remaining
Trustees will fill such vacancy by appointment of another Trustee. The Trustees
will not fill any vacancy by appointment if, immediately after filling such
vacancy, less than two-thirds of the Trustees then holding office would have
been elected by the shareholders. If, at any time, less than a majority of the
Trustees holding office have been elected by the shareholders, the Trustees then
in office will call a shareholders' meeting for the purpose of electing Trustees
to fill vacancies. Otherwise, there will normally be no meeting of shareholders
called for the purpose of electing Trustees.
Trustees standing for election and Trustees previously elected are listed below
with their addresses, birthdates, present positions with the Trust, and
principal occupations during the past five years.
TRUSTEES STANDING FOR ELECTION
THOMAS G. BIGLEY
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member of
Executive Committee, University of Pittsburgh; Director or Trustee of the Funds.
JOHN T. CONROY, JR.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
<PAGE>
PETER E. MADDEN
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street Boston
Corporation; Director or Trustee of the Funds.
JOHN E. MURRAY, JR., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
PREVIOUSLY ELECTED TRUSTEES
JOHN F. DONAHUE#*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated Research
Corp. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
Chief Executive Officer and Director or Trustee of the Funds. Mr. Donahue is the
father of J. Christopher Donahue, Executive Vice President of the Company.
GLEN R. JOHNSON
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 29, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp.
WILLIAM J. COPELAND
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.; Director, Ryan
Homes, Inc.; Director or Trustee of the Funds.
JAMES E. DOWD
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
LAWRENCE D. ELLIS, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director, University of
Pittsburgh Medical Center--Downtown; Member, Board of Directors, University of
Pittsburgh Medical Center; formerly, Hematologist, Oncologist, and Internist,
Presbyterian and Montefiore Hospitals; Director or Trustee of the Funds.
EDWARD L. FLAHERTY, JR.#
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western Region;
Director or Trustee of the Funds.
WESLEY W. POSVAR
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.
MARJORIE P. SMUTS
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
* This Trustee is deemed to be an "interested person" as defined in the
1940 Act.
# Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board between meetings of the
Board.
As referred to in the preceding table, "The Funds" or "Funds" includes the
following investment companies: 111 Corcoran Funds; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund, Inc.;
Cash Trust Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government
Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund;
Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund for
U.S. Government Securities, Inc.; Federated GNMA Trust; Federated Government
Income Securities, Inc.; Federated Government Trust; Federated High Income Bond
Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds;
Fixed Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government Money
Market Trust; Liquid Cash Trust; Managed Series Trust; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; RIMCO Monument
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; The Planters Funds;
The Virtus Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP OF THE TRUST
Officers and Trustees of the Trust owns less than 1% of the Trust's outstanding
Shares.
At the close of business on the Record Date, the following persons owned, to the
knowledge of management, more than 5% of the outstanding Shares of each Fund:
<PAGE>
<TABLE>
<CAPTION>
TRUSTEE COMPENSATION
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX
<S> <C> <C>
John F. Donahue, $0 $-0- for the Trust and
Chairman and Trustee 56 other investment companies in the Complex
Glen R. Johnson $0 $0 for the Trust and
President and Trustee 18 other investment companies in the Complex
Thomas G. Bigley $4,038 $111,222 for the Trust and
Trustee 56 other investment companies in the Complex
John T. Conroy $4,443 $122,362 for the Trust and
Trustee 56 other investment companies in the Complex
William J. Copeland $4,443 $122,362 for the Trust and
Trustee 56 other investment companies in the Complex
James E. Dowd $4,443 $122,362 for the Trust and
Trustee 56 other investment companies in the Complex
Lawrence D. Ellis, M.D. $4,038 $111,222 for the Trust and
Trustee 56 other investment companies in the Complex
Edward L. Flaherty, Jr. $4,443 $122,362 for the Trust and
Trustee 56 other investment companies in the Complex
Peter E. Madden $4,038 $111,222 for the Trust and
Trustee 56 other investment companies in the Complex
John E. Murray, Jr. $4,038 $111,222 for the Trust and
Trustee 56 other investment companies in the Complex
Wesley W. Posvar $4,038 $111,222 for the Trust and
Trustee 56 other investment companies in the Complex
Marjorie P. Smuts $4,038 $111,222 for the Trust and
Trustee 56 other investment companies in the Complex
</TABLE>
* Information is furnished for the fiscal year ended October 31, 1997.
# The aggregate compensation is provided for the Trust which is comprised of 16
portfolios.
The information is provided for the last calendar year.
During the fiscal year ended October 31, 1997, there were four meetings of
the Board of Trustees. The interested Trustees, other than Dr. Ellis, do not
receive fees from the Trust. Dr. Ellis is an interested person by reason of the
employment of his son-in-law by Federated Securities Corp. All Trustees were
reimbursed for expenses for attendance at Board of Trustees meetings.
Other than its Executive Committee, the Trust has one Board committee, the
Audit Committee. Generally, the function of the Audit Committee is to assist the
Board of Trustees in fulfilling its duties relating to the Funds' accounting and
financial reporting practices and to serve as a direct line of communication
between the Board of Trustees and the independent auditors. The specific
functions of the Audit Committee include recommending the engagement or
retention of the independent auditors, reviewing with the independent auditors
the plan and the results of the auditing engagement, approving professional
services provided by the independent auditors prior to the performance of such
services, considering the range of audit and non-audit fees, reviewing the
independence of the independent auditors, reviewing the scope and results of the
Funds' procedures for internal auditing, and reviewing the Funds' system of
internal accounting controls.
Messrs. Flaherty, Conroy, Copeland, and Dowd serve on the Audit Committee.
These Trustees are not interested Trustees of the Trust. During the fiscal year
ended October 31, 1997, there were four meetings of the Audit Committee. All of
the members of the Audit Committee were present for each meeting. Each member of
the Audit Committee receives an annual fee of $100 plus $25 for attendance at
each meeting and is reimbursed for expenses of attendance.
OFFICERS OF THE TRUST
The executive officers of the Trust are elected annually by the Board of
Trustees. Each officer holds the office until qualification of his successor.
The names and birthdates of the executive officers of the Trust and their
principal occupations during the last five years are as follows:
GLEN R. JOHNSON
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the Funds;
staff member, Federated Securities Corp.
J. CHRISTOPHER DONAHUE
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated Research
Corp. and Federated Global Research Corp.; President, Passport Research, Ltd.;
Trustee, Federated Shareholder Services Company and Federated Shareholder
Services; Director, Federated Services Company; President or Executive Vice
President of the Funds; Director or Trustee of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Company.
EDWARD C. GONZALES
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of some of the Funds;
President, Executive Vice President and Treasurer of some of the Funds.
<PAGE>
JOHN W. MCGONIGLE
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors; Trustee,
Federated Advisers, Federated Management, and Federated Research; Director,
Federated Research Corp. and Federated Global Research Corp.; Trustee, Federated
Shareholder Services Company; Director, Federated Services Company; President
and Trustee, Federated Shareholder Services; Director, Federated Securities
Corp.; Executive Vice President and Secretary of the Funds; Treasurer of some of
the Funds.
RICHARD B. FISHER
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds.
None of the Officers of the Trust received salaries from the Trust during the
fiscal year ended October 31, 1997.
Officers and Trustees own less than 1% of the Trust's outstanding Shares.
Federated Services Company, a subsidiary of Federated Investors, is the
Funds' administrator and provides administrative personnel and services to the
Funds for a fee as described in the prospectus. For the fiscal year ended
October 31, 1997, Federated Services Company earned the amounts set forth below:
Connecticut Municipal Cash Trust $199,252
Massachusetts Municipal Cash Trust $158,069
Ohio Municipal Cash Trust $273,333
Pennsylvania Municipal Cash Trust $251,689
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Funds is not required, and do not intend, to hold annual meetings of
shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for the next meeting of shareholders should send
their written proposals to Federated Municipal Trust, Federated Investors Funds,
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, so that they are
received within a reasonable time before any such meeting.
No business other than the matter described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the Funds.
SHAREHOLDERS ARE REQUESTED TO
COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD
AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE IF
MAILED IN THE UNITED
STATES.
By Order of the Trustees
John W. McGonigle
Secretary
March 9, 1998
Cusip 314229105 Cusip 314229303 Cusip 314229832 Cusip 314229659 Cusip 314229840
Cusip 314229857 Cusip 314229881 Cusip 314229204 Cusip 314229717
_____________ (3/98)
FEDERATED MUNICIPAL TRUST
CONNECTICUT MUNICIPAL CASH TRUST
MASSACHUSETTS MUNICIPAL CASH TRUST
OHIO MUNICIPAL CASH TRUST
PENNSYLVANIA MUNICIPAL CASH TRUST
IMPORTANT INFORMATION
FOR FEDERATED SHAREHOLDERS
Dear Fellow Shareholder:
Federated Municipal Trust will hold a special meeting of shareholders on April
23, 1998. It is important for you to vote on the issues described in this Proxy
Statement. We recommend that you read the Proxy in its entirety; the
explanations it includes will help you decide upon the issues.
YOUR PARTICIPATION IN THIS PROCESS IS IMPORTANT! BE SURE TO COMPLETE AND RETURN
YOUR PROXY CARD PROMPTLY.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like those included in this Proxy. You have a right to vote on these
changes.
WHAT ISSUES AM I BEING ASKED TO VOTE ON?
The proposals include the election of Trustees and changes to the Funds'
fundamental investment policies.
WHY ARE INDIVIDUALS RECOMMENDED FOR ELECTION TO THE BOARD OF TRUSTEES?
The Trustees are devoted to serving the needs of its shareholders, and the Board
is responsible for managing the Funds' business affairs to meet those needs. The
Board represents the shareholders of the Funds and can exercise all of the
Funds' powers, except those reserved only for shareholders.
Trustees are selected on the basis of their education and professional
experience. As candidates for election, individuals are chosen who have a
distinct interest in, and capacity for understanding the complexities of, the
operation of a mutual fund. These individuals bring considerable experience to
the impartial oversight of a fund's operation, with the best interest of the
Funds' shareholders in mind.
The Proxy includes a brief description of each nominee's background and current
position with the Funds.
WHY ARE THE FUNDS' "FUNDAMENTAL POLICIES" BEING CHANGED OR REMOVED?
Every mutual fund has certain investment policies that can be changed only with
the approval of its shareholders. These are referred to as "fundamental"
investment policies.
In the past, these policies were adopted to reflect regulatory, business, or
industry conditions that no longer exist or no longer are necessary.
By reducing the number of "fundamental policies," the Funds may be able to
minimize the costs and delays associated with frequent shareholder meetings.
Also, the investment adviser's ability to manage the Funds' assets can be
enhanced and investment opportunities increased.
The proposed amendments will:
i. simplify and modernize the policies that are required to be
"fundamental" by the Investment Company Act of 1940;
ii. reclassify fundamental policies no longer required by the 1940 Act as
operating policies, which do not require a vote of shareholders to change; and
iii. remove any fundamental policies that are no longer required by the
securities laws of individual states.
Federated is a conservative money manager. Our highly trained professionals are
dedicated to making investment decisions in the best interest of the Funds and
their shareholders.
WHY ARE SOME "FUNDAMENTAL POLICIES" BEING CHANGED TO "OPERATING" POLICIES?
Operating policies do not require shareholder approval to be changed. This
permits the Funds' Board additional flexibility in determining whether to
participate in new investment opportunities and to meet industry changes
promptly.
HOW DO I VOTE MY SHARES?
You may vote in person at the special meeting of shareholders or, if you are
unable to attend, simply vote, sign, and return the enclosed Proxy Card. It is
important that your vote be received by DATE.
WHOM DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT? Call your
Fund Representative or a Federated Client Service Representative. The toll-free
number is 1-800-341-7400.
After careful consideration, the Board of
Trustees has unanimously approved these
proposals. The Board recommends that you read
the enclosed materials
carefully and vote FOR all proposals.
