FEDERATED INVESTORS LEHMAN BROTHERS
Federated Investors Tower Three World Financial Center
Pittsburgh, PA 15222-3779 New York, NY 10285
October 18, 1996
Dear Shareholder,
Enclosed please find proxy materials relating to the proposed asset management
alliance between Federated Investors and Lehman Brothers Global Asset
Management. As announced in a press release dated September 6, 1996,
Federated Investors and Lehman Brothers have reached a definitive agreement
enabling Federated to assume the investment management responsibilities for
the six institutional money market funds of Lehman Brothers Institutional
Funds Group Trust. The funds encompassed within this agreement are as
follows:
Prime Value Money Market Fund
Prime Money Market Fund
Municipal Money Market Fund
Tax-Free Money Market Fund
Government Obligations Money Market Fund
Treasury Instruments Money Market Fund II
The management teams at both Federated Investors and Lehman Brothers believe
that
an affirmative reply will best serve the interests of the shareholders of
Lehman Brothers Institutional Funds Group Trust. The shareholder benefits
which may be realized as a
result of the proposed alliance are many and include: increased economies of
scale, an extended array of available investment products and the expanded
services of a company whose core capabilities lie in managing money market
funds.
MATERIALS CONTAINED WITHIN THE ENCLOSED ENVELOPE(S) DESCRIBE THE PROPOSED
TRANSACTION IN DETAIL AND ASK YOU TO VOTE IN TIME FOR A SHAREHOLDER MEETING ON
NOVEMBER 13, 1996. PLEASE BE SURE TO RESPOND AT YOUR EARLIEST CONVENIENCE IN
ORDER TO ENSURE THAT YOUR VOTE IS REGISTERED AT THE SHAREHOLDER MEETING.
PROXY CARDS MAY BE RETURNED VIA FAX AT (617)573-1985 OR IN THE ENCLOSED
POSTAGE PAID ENVELOPE.
Again, we encourage you to vote as soon as possible. Please do not hesitate
to call us
directly at 1(800)245-5000 for Federated or (212)526-7496 for Lehman Brothers
with
any questions or comments.
Sincerely,
/s/ John B. Fisher /s/ Andrew D. Gordon
John B. Fisher Andrew D. Gordon
President, Institutional Sales Managing Director
Federated Investors Lehman Brothers
/s/ Mark Gensheimer
Mark Gensheimer
Executive Vice President, Bank Marketing
Federated Investors
LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST{PRIVATE }
TREASURY INSTRUMENTS MONEY MARKET FUND II
ONE EXCHANGE PLACE
53 STATE STREET
BOSTON, MASSACHUSETTS 02109-2873
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF TREASURY INSTRUMENTS MONEY MARKET FUND II, A
PORTFOLIO OF LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST: A Special
Meeting of Shareholders of Treasury Instruments Money Market Fund II (the
"Fund") will be held at 11:00 a.m. on November 13, 1996, at the offices of
Lehman Brothers Inc., 3 World Financial Center-26th Floor, New York, New York
10285, for the following purposes:
To approve a proposed Agreement and Plan of Reorganization between Lehman
Brothers Institutional Funds Group Trust, on behalf of the Fund, and Money
Market Obligations Trust (the "Trust"), on behalf of its portfolio, Treasury
Obligations Fund (the "Portfolio"), whereby the Trust would acquire all of the
assets and known liabilities of the Fund in exchange for Institutional Shares
and Institutional Service Shares of the Portfolio to be distributed pro rata
by the Fund to holders of Class A Shares and Class B Shares, respectively, in
complete liquidation of the Fund;
2. Election of thirteen Trustees to serve until the next Annual Meeting
of Shareholders and until their successors have been elected and qualified;
and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
By Order of the Board of Trustees
Patricia L. Bickimer
Secretary
Dated: October 15, 1996
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON OCTOBER 11, 1996
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.
1
PROSPECTUS/PROXY STATEMENT
OCTOBER 15, 1996
ACQUISITION OF THE ASSETS OF
TREASURY INSTRUMENTS MONEY MARKET FUND II,
A PORTFOLIO OF LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST
One Exchange Place
53 State Street
Boston, Massachusetts 02109-2873
Telephone Number: 1-800-851-3134
BY AND IN EXCHANGE FOR SHARES OF
TREASURY OBLIGATIONS FUND,
A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone Number: 1-800-245-5000
This Prospectus/Proxy Statement describes the proposed Agreement and Plan
of Reorganization (the "Plan") whereby Money Market Obligations Trust, a
Massachusetts business trust (the "Trust"), on behalf of its portfolio,
Treasury Obligations Fund (the "Portfolio"), would acquire all of the assets
and known liabilities of Treasury Instruments Money Market Fund II (the
"Fund"), a portfolio of Lehman Brothers Institutional Funds Group Trust, in
exchange for Portfolio shares to be distributed pro rata by the Fund to its
shareholders in complete liquidation of the Fund. As a result of the Plan,
each shareholder of the Fund will become the owner of Portfolio shares having
a total net asset value equal to the total net asset value of his or her
holdings in the Fund. This Prospectus/Proxy Statement also describes a
proposal to elect Trustees of Lehman Brothers Institutional Funds Group Trust,
in connection with certain related transactions.
The Trust is among over 100 funds managed by subsidiaries of Federated
Investors, including 48 money market funds with assets of $43 billion.
Federated Investors is one of the largest institutional service providers in
the United States. It has been providing advisory services for over 41 years
and has been managing the short-term assets of institutional investors for
over 20 years, having created one of the first institutional money market
funds in 1976.
The Trust is an open-end, diversified management investment company which
currently includes six portfolios: Automated Cash Management Trust, Government
Obligations Tax Managed Fund, Prime Obligations Fund, Tax-Free Obligations
Fund and Treasury Obligations Fund. The investment objective of the Portfolio
is current income consistent with stability of principal. The investment
objective of the Fund is current income with liquidity and security of
principal. The Portfolio and the Fund pursue their investment objectives by
investing primarily in short-term U.S. Treasury securities and repurchase
agreements. Both the Portfolio and the Fund are money market mutual funds
which seek to stabilize their offering and redemption prices at $1.00 per
share. There can be no assurance that the Portfolio or the Fund will be able
to do so. Shares in the Portfolio and the Fund are not insured or guaranteed
by the U.S. government or any agency thereof. For a comparison of the
investment policies of the Portfolio and the Fund, see "Comparison of
Investment Policies and Risk Factors."
The Portfolio is offered with two classes of shares: Institutional Shares
and Institutional Service Shares. Holders of Class A Shares of the Fund will
receive Institutional Shares of the Portfolio and holders of Class B Shares of
the Fund will receive Institutional Service Shares of the Portfolio if the
Reorganization is approved by shareholders. Information concerning
Institutional Shares and Institutional Service Shares of the Portfolio, as
compared to Class A Shares and Class B Shares of the Fund, is included in this
Prospectus/Proxy Statement in the sections entitled "SUMMARY - Comparative Fee
Tables" and "INFORMATION ABOUT THE REORGANIZATION - Description of the Plan of
Reorganization."
This Prospectus/Proxy Statement should be retained for future reference.
It sets forth concisely the information about the Trust and the Portfolio
that a prospective investor should know before investing. This
Prospectus/Proxy Statement is accompanied by the Prospectus of the Portfolio
dated September 30, 1996, which is incorporated herein by reference.
Statements of Additional Information for the Portfolio dated September 30,
1996 (relating to the Portfolio's prospectus of the same date) and October 15,
1996 (relating to this Prospectus/Proxy Statement) containing additional
information have been filed by the Trust with the Securities and Exchange
Commission and are incorporated herein by reference. Copies of the Statements
of Additional Information may be obtained without charge by writing or by
calling the Trust at the address and telephone number shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND OR THE PORTFOLIO.
SHARES OF THE PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. SHARES OF THE PORTFOLIO ARE NOT FEDERALLY INSURED
BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE PORTFOLIO
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED. THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
TABLE OF CONTENTS
PAGE
PROPOSAL 1. REORGANIZATION 1
SUMMARY 1
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS 6
INFORMATION ABOUT THE REORGANIZATION 7
INFORMATION ABOUT THE PORTFOLIO AND THE FUND 10
PROPOSAL 2. ELECTION OF TRUSTEES 11
VOTING INFORMATION 18
AGREEMENT AND PLAN OF REORGANIZATION Exhibit A
PROPOSAL 1. REORGANIZATION
SUMMARY
ABOUT THE PROPOSED REORGANIZATION
The Board of Trustees of Lehman Brothers Institutional Funds Group Trust,
including its members who are not "interested persons" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of
one of its portfolios, Treasury Instruments Money Market Fund II (the "Fund"),
has voted to recommend to shareholders of the Fund the approval of an
Agreement and Plan of Reorganization (the "Plan"), whereby Money Market
Obligations Trust, a Massachusetts business trust (the "Trust"), on behalf of
its portfolio, Treasury Obligations Fund (the "Portfolio"), would acquire all
of the assets and known liabilities of the Fund in exchange for Portfolio
shares to be distributed pro rata by the Fund to its shareholders in complete
liquidation and dissolution of the Fund (the "Reorganization"). As a result
of the Reorganization, each shareholder of Class A Shares or Class B Shares of
the Fund will become the owner of Institutional Shares or Institutional
Service Shares, respectively, of the Portfolio having a total net asset value
equal to the total net asset value of his or her holdings in the Fund on the
date of the Reorganization (the "Closing Date").
The Reorganization is undertaken as part of a business agreement by and
between Federated Investors and Lehman Brothers Global Asset Management, Inc.
("Lehman") pursuant to which Lehman has entered into a non-compete agreement
whereby Lehman will discontinue advising money market funds, subject to
certain conditions. Following the transactions, Lehman will assist Federated
Investors in providing services to shareholders for which Lehman will receive
fees paid by Federated Investors and/or mutual funds in which the shareholders
are invested.
As a condition to the Reorganization transactions, the Trust and the 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, so that no gain or loss will be recognized
by either the Trust or the Fund or their respective shareholders. The tax
cost basis of the Portfolio shares received by Fund shareholders will be the
same as the tax cost-basis of their shares in the Fund.
After the acquisition is completed, the Fund will no longer be available as
an investment portfolio of Lehman Brothers Institutional Funds Group Trust.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Portfolio is to provide current income with
stability of principal while the Fund's investment objective is to provide
current income with liquidity and security of principal. Both the Portfolio
and the Fund pursue their respective investment objectives by investing in a
portfolio consisting of short-term U.S. Treasury bills, notes and other
obligations issued or guaranteed by the U.S. Government and repurchase
agreements relating to such obligations. Since the Portfolio and the Fund
invest in similar securities, an investment in the Portfolio presents similar
investment risks as investing in the Fund.
ADVISORY FEES AND EXPENSE RATIOS
The maximum annual investment advisory fee for the Portfolio is 0.20% of
average daily net assets. The maximum annual investment advisory fee for the
Fund is also 0.20% of average daily net assets.
For its fiscal year ended July 31, 1996, the Portfolio's ratio of expenses
to average daily net assets was 0.20% for Institutional Shares and 0.45% for
Institutional Service Shares. During this period the Portfolio's investment
adviser, Federated Management ("Federated"), voluntarily waived a portion of
its management fees and reimbursed the Portfolio for certain operating
expenses. Absent such waiver and reimbursement, the ratio of expenses to
average daily net assets would have been 0.31% for Institutional Shares of the
Portfolio and 0.56% for Institutional Service Shares of the Portfolio. This
undertaking to waive management fees and/or reimburse operating expenses may
be terminated by Federated at any time in its discretion. If the proposals
described in this Prospectus/Proxy Statement are approved by shareholders of
the Fund, Federated has undertaken to waive its fee and/or reimburse the
Portfolio's total operating expenses in excess of .35% and .60% of average
daily net assets of Institutional Shares and Institutional Service Shares,
respectively, for a period of two years following completion of the
Reorganization, which is equal to the current contractual caps on total Fund
operating expenses of Class A Shares and Class B Shares of the Fund.
For its fiscal year ended January 31, 1996, the Fund's ratio of expenses to
average daily net assets was 0.18% for Class A Shares and 0.43% for Class B
Shares. During this period the Fund's investment adviser, Lehman, voluntarily
waived a portion of its management fees and reimbursed the Fund for certain
operating expenses. Absent such waiver and reimbursement, the ratio of
expenses to average daily net assets would have been 0.27% for Class A Shares
of the Fund and 0.52% for Class B Shares of the Fund. This undertaking to
waive management fees and/or reimburse operating expenses may be terminated by
Lehman at any time in its discretion.
SERVICES PROVIDERS TO THE TRUST AND PORTFOLIO
Administrative services to the Trust and Portfolio are provided by
Federated Administrative Services ("FAS"). FAS is a wholly-owned subsidiary
of Federated Services Company which, in turn, is a wholly-owned subsidiary of
Federated Investors. For its services to the Portfolio, FAS receives as fee
at an annual rate which relates to the average aggregate daily net assets of
the Portfolio, determined as follows: 0.15% on the first $250 million in
assets; 0.125% of 1% on the next $250 million in assets; 0.10% of 1% on the
next $250 million in assets; and 0.075% of 1% on assets in excess of $750
million. The minimum annual administrative fee for the Portfolio is $125,000
plus $30,000 per each additional class of shares. For the fiscal year ended
July 31, 1996, FAS received administrative fees at the effective rate of .08%
of the average daily net assets of the Portfolio.
Federated Services Company ("Federated Services") serves as the Portfolio's
transfer agent and dividend disbursing agent. Federated Services also
provides certain accounting and recordkeeping services with respect to the
portfolio investments of the Portfolio.
Federated Securities Corp. ("FSC"), a wholly-owned subsidiary of Federated
Investors, is the principal distributor of the Trust and Portfolio. Under the
distribution agreement, FSC acts as the Trust's agent in connection with the
offering of shares of the Portfolio.
RISKS
An investment in the Fund and an investment in the Portfolio present
substantially similar risks. Neither the Fund nor the Portfolio invests in
securities or participates in investment techniques that present significant
additional risk as compared to the other. Of course, shares of neither the
Fund nor the Portfolio are federally insured by, guaranteed by, or supported
by the U.S. government, the Federal Deposit Insurance Corporation, or any
other government agency. Although the Fund and the Portfolio both attempt to
maintain a stable net asset value of $1.00 per share, there can be no
assurance that either will do so.
COMPARATIVE FEE TABLES
Set forth in the tables below is information regarding the fees and
expenses paid by the separate classes of the Fund and the Portfolio as of July
31, 1996, and pro forma information for the Portfolio assuming that the
Reorganization had taken place on July 31, 1996.
Treasury
Instruments Treasury
Money Obligations Pro Forma
Market Fund Fund Combined Fund
II
Class A Institutional Institutional
Shares Shares Shares
(as a percentage
of average net
assets)
Management
Fees/Advisory .10%(1) .09%(1) .09%(1)
Fees (after fee
waivers)
12b-1 Fees None None None
Shareholder
Services Fee None .00%(2) .00%(2)
(after waiver)
Other Expenses
(after fee
waivers and/or .08% .11% .11%
expense
reimbursements)
Total Operating
Expenses (after
fee waivers .18%(3) .20%(4) .20%(4)
and/or expense
reimbursements)
(1) The management fee has been reduced to reflect the voluntary waiver of
a portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.20%.
(2) The maximum shareholder services fee is .25%.
(3) The total operating expenses would have been .35% absent the voluntary
waiver of a portion of the management fee and the reimbursement of certain
expenses.
(4) The total operating expenses would have been .31% absent the voluntary
waiver of a portion of the management fee and the shareholder services fee.
Federated has undertaken to waive its fee and/or reimburse the Portfolio's
total operating expenses in excess of .35% of average daily net assets of the
Portfolio for a period of two years following completion of the
Reorganization, which is equal to the current contractual cap on Class A
Shares expenses of the Fund.
Treasury
Instruments Treasury
Money Obligations Pro Forma
Market Fund Fund Combined Fund
II
Class B Institutional Institutional
Shares Service Service
Shares Shares
ANNUAL FUND
OPERATING
EXPENSES
(as a percentage
of average net
assets)
Management
Fees/Advisory .10%(1) .09%(1) .09%(1)
Fees (after fee
waivers)
12b-1 Fees .25% None None
Shareholder
Services Fee None .25% .25%
(after waiver)
Other Expenses
(after fee
waivers and/or .08% .11% .11%
expense
reimbursements)
Total Operating
Expenses (after
fee waivers .43%(2) .45%(3) .45%(3)
and/or expense
reimbursements)
(1) The management fee has been reduced to reflect the voluntary waiver of
a portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
.20%.
(2) The total operating expenses would have been .60% absent the voluntary
waiver of a portion of the management fee and the reimbursement of certain
expenses.
(3) The total operating expenses would have been .56% absent the voluntary
waiver of a portion of the management fee and the shareholder services fee.
Federated has undertaken to waive its fee and/or reimburse the Portfolio's
total operating expenses in excess of .60% of average daily net assets of the
Portfolio for a period of two years following completion of the
Reorganization, which is equal to the current contractual cap on Class B
Shares expenses of the Fund.
EXAMPLE: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the following
periods:
1 Year 3 Years 5 Years 10 Years
Treasury Instruments Money
Market Fund II
Class A Shares $2 $6 $10 $23
Class B Shares $4 $6 $24 $54
Treasury Obligations Fund
Institutional Shares $2 $6 $11 $26
Institutional Service Shares $5 $14 $25 $57
Pro Forma Combined
Institutional Shares $2 $6 $11 $26
Institutional Service Shares $5 $14 $25 $57
As a result of the Reorganization, the expense ratio of the Fund will
increase by .02%, although the contractual advisory fee of Federated
Management is the same as that of Lehman.
PURCHASE AND REDEMPTION PROCEDURES
Procedures for the purchase and redemption of Portfolio shares are similar,
but not identical, to procedures applicable to the purchase and redemption of
Fund shares. In anticipation that the Reorganization will be consummated,
shareholders of the Fund will receive information with respect to the various
services provided by the Portfolio, as well as a detailed explanation of the
options available to shareholders for effecting purchases and redemptions of
Portfolio shares. Any questions about such procedures may be directed to, and
assistance in effecting purchases or redemptions of Portfolio shares may be
obtained from Federated at 1-800-245-5000.
Reference is made to the Prospectuses of the Portfolio dated September 30,
1996, and the Prospectuses of the Fund for a complete description of the
purchase and redemption procedures applicable to purchases and redemptions of
Portfolio and Fund shares, respectively, each of which is incorporated herein
by reference thereto. Set forth below is a brief listing of the more
significant differences between the purchase and redemption procedures of the
Portfolio as compared to the Fund.
The minimum initial investment in the Portfolio is $25,000. The minimum
initial investment by an institution in the Lehman Brothers Institutional
Funds Group Trust is $1 million, with not less than $25,000 invested in any
one of its portfolios, including the Fund. The minimum aggregate initial
investment by a high net worth investor in the Lehman Brothers Institutional
Funds Group Trust is $5 million. To meet the minimum investment requirements,
purchases of shares of the Lehman Brothers Institutional Funds Group Trust may
be aggregated over a period of six months.
Both the Portfolio's and the Fund's net asset values are calculated at
12:00 noon (Eastern time), 3:00 p.m. (Eastern time) and 4:00 p.m. (Eastern
time), on each day on which the Portfolio computes its net asset value.
Purchase orders received by either the Portfolio or the Fund by wire before
5:00 p.m. (Eastern time) begin earning dividends that day. Purchase orders
received by check by either the Portfolio or the Fund begin earning dividends
the day after such check is converted into federal funds, which ordinarily
occurs one day after receipt by State Street Bank and Trust Company, the
Portfolio's custodian (in the case of the Portfolio), or by Boston Safe
Deposit and Trust Company, the Fund's custodian (in the case of the Fund).
Shares of both the Portfolio and the Fund may be redeemed by mail or by
telephone. Shares of the Portfolio and the Fund are redeemed at the net asset
value per share next determined after receiving the redemption order.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The Portfolio and the Fund have similar investment objectives. The
Portfolio seeks to provide current income consistent with stability of
principal, while the Fund seeks to provide current income with liquidity and
security of principal. Both the Portfolio and the Fund are money market
mutual funds.
Both the Portfolio and the Fund invest in short-term U.S. Treasury
securities which are fully guaranteed as to principal and interest by the
United States. Additionally, each of the Portfolio and the Fund may invest in
repurchase agreements relating to U.S. Treasury securities, provided that no
more than 10% of their respective assets are invested in repurchase agreements
whose terms exceed seven days. For the Fund, only cash, letters of credit,
and securities issued or guaranteed by the U.S. government or its agencies are
acceptable repurchase agreement collateral. The Portfolio and the Fund both
require borrowers to pledge additional collateral if the value of existing
collateral declines. Lending of portfolio securities is permitted by both the
Portfolio and the Fund, provided that each receives collateral equal to at
least 100% of the value of securities owned.
For both the Portfolio and the Fund, borrowings, including reverse
repurchase agreements, must not exceed one-third of total assets and may only
be used for temporary purposes. Both the Portfolio and the Fund also impose
the additional restriction that no purchases of securities may be made while
outstanding borrowings exceed 5% of total assets.
Permissible investments of both the Portfolio and the Fund include when-
issued (delayed delivery) securities, although the Portfolio limits such
purchases to no more than 20% of the value of its total assets, while the Fund
limits such purchases to no more than 25% of the value of its total assets,
absent unusual market conditions. The Fund, but not the Portfolio, is also
specifically authorized to invest in Treasury STRIPS with maturities of 13
months or less, zero coupon and capital appreciation bonds, obligations issued
in reliance upon Section 4(2) ("Section 4(2) obligations") of the Securities
Act of 1933, as amended (the "Securities Act") and securities not registered
under the Securities Act, but which can be sold to qualified institutional
buyers, so-called "Rule 144A securities."
The Portfolio's investment objective and policies are more fully described
in its current Prospectus dated September 30, 1995, a copy of which
accompanies this Prospectus/Proxy Statement. The Portfolio's investment
objective, as described in its current Prospectus, may not be changed without
the approval of the Portfolio's shareholders.
The investment restrictions and investment policies of the Portfolio and
the Fund are similar. The significant differences are as follows. Although
neither the Portfolio nor the Fund will knowingly invest more than 10% of its
assets in securities that may be illiquid because of the legal or contractual
restrictions on resale ("restricted securities") or securities for which there
are no readily available market quotations, only the Portfolio requires
majority shareholder approval in order to change the limitation relating to
restricted securities. Even though the Fund is not required to seek
shareholder approval to change its limitation relating to restricted
securities, it could not do so at the present time under interpretations of
the Securities and Exchange Commission. While both the Portfolio and the Fund
may not mortgage, pledge or hypothecate assets, except in connection with
borrowing for temporary or emergency purposes and executing reverse repurchase
agreements, the Fund provides that no more than one-third of the Fund's assets
may be so committed. The Portfolio, by contrast, may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15% of
the value of the total assets of the Portfolio at the time of the pledge.
In addition to the Portfolio's and the Fund's shared investment
limitations, the Fund may not invest in warrants. The Portfolio will not
invest in securities of a company for the purpose of exercising control or
management. The Portfolio also will not purchase or retain the securities of
any issuer if the officers or trustees of the Trust or the Portfolio's
investment adviser, owning more than 1/2 of 1% of the issuer's securities,
together own more than 5% of the issuer's securities. Furthermore, the
Portfolio will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest or sponsor such programs.
Reference is hereby made to the Portfolio's Statement of Additional
Information dated September 30, 1996, and the Fund's Statement of Additional
Information dated May 30, 1996, for a complete description of the investment
practices and restrictions of the Portfolio and the Fund. Copies of such
Statements are available upon request at no charge. See ``Information About
the Portfolio and the Fund.''
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE PROPOSED ACQUISITION
The Fund commenced operations on February 8, 1993, in order to provide
institutional and high net worth individuals (through Class A Shares) and
institutions purchasing on behalf of individuals (through Class B Shares) with
an investment vehicle which provided current income with liquidity and
security of principal. Federated Securities Corp. (``FSC''), the distributor
of shares of the Portfolio, has proposed to representatives of the Fund that
the Fund consider a sale of all of the Fund's assets to the Trust, acting on
behalf of the Portfolio.
In considering the proposed Reorganization, the Board took into
consideration a number of factors, including (1) the comparatively larger size
of the Portfolio, (2) the capabilities and resources of Federated, (3) expense
ratios and published information regarding the fees and expenses of the
Portfolio in relation to similar funds, (4) the comparative investment
performance of the Portfolio and the Fund as well as the performance of
similar funds, (5) the terms and conditions of the Reorganization and whether
the Reorganization would result in the dilution of shareholder interests, (6)
the tax consequences of the Reorganization, (7) the compatibility of the
Portfolio's and the Fund's investment objectives, policies, restrictions and
portfolios, as well as service features available to shareholders in the
respective funds, (8) the commitment of Federated to maintain and enhance its
position in the money fund business and (9) the decision by Lehman to seek to
discontinue managing money market funds.
The Board concluded to recommend that the shareholders of the Portfolio
vote to approve the Reorganization. This conclusion was based on a number of
factors, including the following:
1. The Reorganization would permit the shareholders of the Fund to pursue
substantially the same investment goals in a larger fund. A larger fund
should enhance the ability of portfolio managers to effect their portfolio
transactions on more favorable terms and give portfolio managers greater
investment flexibility and the ability to select a larger number of portfolio
securities, with the attendant ability to spread investment risks over a
larger number of portfolio issues. In addition, the larger aggregate net
assets should enable the Portfolio to obtain the benefits of economies of
scale. However, there is no assurance that larger portfolios will result in
economies of scale.
2. The Reorganization would secure for the shareholders of the Fund the
investment advisory services of Federated. Federated manages over 100 mutual
funds, including 48 money market funds with assets of $43 billion. It is one
of the largest institutional service providers in the United States.
Federated has been providing advisory services for over 41 years and has been
managing the short-term assets of institutional investors for over 20 years,
having created one of the first institutional money market funds in 1976.
3. As stated above, the contractual fees for investment advice payable to
Federated are the same as those for the Fund. The actual expense ratio for
the Portfolio for its most recent fiscal year was .02% higher than that for
the Fund for its most recent fiscal year. The differential in expense ratios
between the Portfolio and the Fund is due to the differing waivers of fees by
the advisers to the Portfolio and the Fund, which waivers were done on a
voluntary basis and could have been terminated by the relevant adviser at any
time. Federated has undertaken to cap the Portfolio's total operating expense
ratio after the Reorganization at .20% which could be changed at any time.
Federated has agreed, however, for the two-year period following the
Reorganization to cap the Portfolio's expense ratio (other than the
Shareholder Services Fee applicable to Institutional Service Shares) at .35%,
which is equal to the current contractual cap on Class A expenses of the Fund.
4. The seven-day net yields of the Insitutional Shares and Institutional
Service Shares of the Portfolio for the seven-day period ended July 31, 1996
were 5.17% and 4.92%, respectively. The seven-day net yields of the Class A
Shares and Class B Shares of the Fund for the seven-day period ended July 31,
1996 were 5.04% and 4.79%, respectively. Over other periods the performance
of the Portfolio and the Fund in relation to each other have varied, in part
due to differing expense waivers by Federated and Lehman.
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Plan provides that the Trust, on behalf of the Portfolio, will
acquire all of the assets and known liabilities of the Fund in exchange for
Institutional Shares and Institutional Service Shares of Portfolio to be
distributed pro rata by the Fund to the holders of Class A Shares and Class B
Shares, respectively, in complete liquidation of the Fund on or about November
15, 1996. Because both the Portfolio and the Fund seek to maintain a constant
net asset value of $1.00 per share, it is expected that Fund shareholders will
receive the same number of shares in the Portfolio as they held in the Fund
immediately prior to the Closing. Shareholders of the Fund will become
shareholders of the Portfolio as of 12:00 Noon (Eastern time) on the Closing
Date and will begin accruing dividends as of such day. Shareholders of the
Fund will earn their last dividend from the Fund on the day preceding the
Closing Date, which Closing Date is expected to be November 15, 1996.
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 Lehman Brothers Institutional Funds Group Trust, on behalf of
the Fund, and the Trust, on behalf of the Portfolio, 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 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 is responsible for the payment of all expenses of the
Reorganization, whether or not the Reorganization is consummated. Such
expenses include, but are not limited to, certain 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 Fund's shareholders and the costs of holding the Special
Meeting of Shareholders.
The foregoing description of the Plan entered into between the Trust, on
behalf of the Portfolio, and Lehman Brothers Institutional Funds Group Trust,
on behalf of the 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.
DESCRIPTION OF PORTFOLIO SHARES
Shares of the Portfolio to be issued to shareholders of the Fund under the
Plan will be fully paid and nonassessable when issued and transferable without
restrictions and will have no preemptive or conversion rights. Reference is
hereby made to the Prospectus of the Portfolio provided herewith for
additional information about Portfolio shares.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization transactions, the Trust, on behalf of
the Portfolio, and Lehman Brothers Institutional Funds Group Trust, on behalf
of the Fund, will receive an opinion from Howard & Howard Attorneys, P.C., to
the effect that, on the basis of the existing provisions of the Internal
Revenue Code of 1986, as amended (the ``Code''), current administrative rules
and court decisions, for federal income tax purposes: (1) the Reorganization
as set forth in the Plan will constitute a tax-free reorganization under
section 368(a)(1)(C) of the Code; (2) no gain or loss will be recognized by
the Portfolio upon its receipt of the Fund's assets in exchange for Portfolio
shares; (3) the holding period and basis for the Fund's assets acquired by the
Portfolio will be the same as the holding period and the basis to the Fund
immediately prior to the Reorganization; (4) no gain or loss will recognized
by the Fund upon transfer of its assets to the Portfolio in exchange for
Portfolio shares or upon the distribution of the Portfolio shares to the
Fund's shareholders in exchange of their Fund shares; (5) no gain or loss will
be recognized by shareholders of the Fund upon exchange of their Fund shares
for Portfolio shares; (6) the holding period of Portfolio shares received by
shareholders of the Fund pursuant to the Plan will be the same as the holding
period of Fund shares held immediately prior to the Reorganization, provided
the Fund shares were held as capital assets on the date of the Reorganization;
and (7) the basis of Portfolio shares received by shareholders of the Fund
pursuant to the Plan will be the same as the basis of Fund shares held
immediately prior to the Reorganization.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
The Trust is organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated October 3, 1988, under the laws of the Commonwealth
of Massachusetts. Lehman Brothers Institutional Funds Group Trust is also
organized as a Massachusetts business trust under a Declaration of Trust dated
November 16, 1992. The rights of shareholders of the Trust and of Lehman
Brothers Institutional Funds Group Trust are similar, although not identical.
Set forth below is a brief summary of the more significant similarities and
differences between rights of shareholders of the Fund and the Portfolio.
Special meetings of both the Fund's and the Portfolio's shareholders may be
called for any purpose on the written request of shareholders entitled to cast
at least ten percent (10%) of all votes entitled to be cast at the meeting.
Special meetings of the Fund's shareholders may also be called at any time by
the Chairman of the Board of Trustees, the President, or upon the request of a
majority of the Trustees of Lehman Brothers Institutional Funds Group Trust.
Special meetings of the Portfolio's shareholders may also be called by the
Trustees or the Chief Executive Officer of the Trust. Shareholders of the
Portfolio are entitled to at least fifteen days' notice of any meeting.
The Declaration of Trust of both Lehman Brothers Institutional Funds Group
Trust and the Trust provide that shareholders shall have the following voting
powers: (i) to vote for the election of Trustees; (ii) to vote with respect
to any investment advisory or sub-advisory contract entered into on behalf of
any series; (iii) to vote to the same extent as shareholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding, or claim should or should not be brought derivatively or as a
class action on behalf of the trust, any series, or the shareholders; and (iv)
to vote on such additional matters as required by the Declaration of Trust,
the By-laws, the registration statement, or the Securities and Exchange
Commission.
Shareholders of the Fund, but not of the Portfolio, are also specifically
provided with the following voting rights under the Declaration of Trust: (i)
to vote on the termination of Lehman Brothers Institutional Funds Group Trust
or any of its series; (ii) to vote on any amendment to the Declaration of
Trust that materially affects the rights of shareholders; (iii) to vote with
respect to any merger, consolidation, or sale of assets; (iv) to vote with
respect to the incorporation of Lehman Brothers Institutional Funds Group
Trust; and (v) to vote with respect to the adoption of a plan under Rule 12b-1
of the 1940 Act and related matters.
Shareholders of the Portfolio, but not of the Fund, are also specifically
provided with the power to vote for the removal of Trustees and with respect
to amendments or supplements to the Trust's Declaration of Trust.
Although there are some differences in the enumerated list of shareholder
voting powers between the Fund and the Portfolio, the 1940 Act and the
Securities and Exchange Commission impose requirements that would eliminate
most of the variations in shareholder rights described above.
Under certain circumstances, shareholders of the Fund or the Portfolio may
be held personally liable as partners under Massachusetts law for acts or
obligations of Lehman Brothers Institutional Funds Group Trust or the Trust,
respectively. To protect shareholders of the Fund and the Portfolio, the
Declarations of Trust expressly disclaim the liability of shareholders for
acts or obligations of the Fund and the Portfolio. The Declarations of Trust
provide that a notice of the disclaimer of liability may be included in each
agreement, obligation, or instrument that either Lehman Brothers Institutional
Funds Group Trust or the Trust may enter into.
In the unlikely event that a shareholder of either the Fund or the
Portfolio is held personally liable for obligations of the Fund or the
Portfolio, the Declarations of Trust provide that property of the Fund or the
Portfolio will be used to protect or compensate the shareholder. On request,
claims are defended and judgments against shareholders are paid that arise out
of any act or obligation of Lehman Brothers Institutional Funds Group Trust or
the Trust on behalf of the Fund or the Portfolio, respectively. Therefore,
financial loss resulting from liability as a shareholder will occur only if
Lehman Brothers Institutional Funds Group Trust or the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from the
assets of the Fund or the Portfolio, respectively.
CAPITALIZATION
The following table shows the capitalization of the Portfolio and the Fund
as of July 31, 1996, and on a pro forma basis as of that date:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Portfolio Fund Pro Forma Combined
Institutional Institutional Class A Class B Institutional Institutional
Shares Service Shares Shares Shares Shares
Net Assets $4,649,870,283 $1,516,839,394 $111,066,603 $18,393,500 $4,760,936,886 $1,535,232,894
Price Per Share $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Shares Outstanding $4,649,870,283 $1,516,839,394 $111,066,603 $18,393,500 $4,760,936,886 $1,535,232,894
</TABLE>
INFORMATION ABOUT THE PORTFOLIO AND THE FUND
TREASURY OBLIGATIONS FUND, A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
Information about the Trust and the Portfolio is contained in the
Portfolio's current Prospectuses for Institutional Shares and Institutional
Service Shares. A copy of either prospectus is included herewith and
incorporated by reference herein. Additional information about the Trust and
the Portfolio is included in the Portfolio's Combined Statement of Additional
Information dated September 30, 1995, which is incorporated herein by
reference. Copies of the Combined Statement of Additional Information, which
has been filed with the Securities and Exchange Commission, may be obtained
without charge by contacting the Trust at 1-800-245-5000 or by writing to the
Trust at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The
Trust, on behalf of the Portfolio, is subject to the
informational requirements of the Securities Act, the Securities Exchange Act
of 1934, as amended, and the Investment Company Act of 1940, as amended, and
in accordance therewith files reports and other information with the
Securities and Exchange Commission. Reports, proxy and information
statements, and other information filed by the Trust, on behalf of the
Portfolio, can be obtained by calling or writing the Trust and can also be
inspected and copied by the public at the public reference facilities
maintained by the Securities and Exchange Commission 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 Room 1204, Everett McKinley Dirksen
Building, 219 South Dearborn Street, Chicago, Illinois 60604 and 14th Floor,
75 Park Place, New York, NY 10007. Copies of such material can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, Washington D.C.
20549.
This Prospectus/Proxy Statement, which constitutes part of a Registration
Statement filed by the Trust, on behalf of the Portfolio, with the Securities
and Exchange Commission under the Securities 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, the Portfolio 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 documents
filed with the Securities and Exchange Commission.
TREASURY INSTRUMENTS MONEY MARKET FUND II, A PORTFOLIO OF LEHMAN BROTHERS
INSTITUTIONAL FUNDS GROUP TRUST
Information about the Fund may be found in the Fund's current Prospectuses
dated May 30, 1996, and its Statement of Additional Information dated May 30,
1996, which are incorporated herein by reference. Financial Statements for
the Fund for the year ended January 31, 1996, may be found in the Statement of
Additional Information dated October 15, 1996, relating to this
Prospectus/Proxy Statement, which has been filed by the Trust with the
Securities and Exchange Commission. Copies of the Fund's Prospectuses and
Statement of Additional Information may be obtained without charge from the
Fund by calling 1-800-851-3134 or by writing to the Fund at One Exchange
Place, 53 State Street, Boston, Massachusetts 02109-2873. A copy of the
Statement of Additional Information relating to this Prospectus/Proxy
Statement may be obtained without charge from Lehman Brothers Institutional
Funds Group Trust by calling or by writing to Lehman Brothers Institutional
Funds Group Trust at One Exchange Place, 53 State Street, Boston,
Massachusetts 02109-2873. The Fund is subject to the information requirements
of the Securities Act, the Securities Exchange Act of 1934, as amended, and
the Investment Company Act of 1940, as amended, and in accordance therewith
files reports and other information with the Securities and Exchange
Commission. Reports, proxy and information statements, and other information
filed by the Fund can be obtained by calling or writing the Fund and can also
be inspected at the public reference facilities maintained by the Securities
and Exchange Commission at the addresses listed in the previous section.
PROPOSAL 2. ELECTION OF TRUSTEES
The Board of Trustees currently consists of six Trustees serving until the
election and qualification of their successors. In connection with the
proposed business agreement between Federated Investors and Lehman described
above, it is proposed that thirteen Trustees be elected to the Board of Lehman
Brothers Institutional Funds Group Trust in connection with the change of the
investment adviser of certain portfolios to Federated Management.None of the
current Trustees will stand for re-election. Three of the nominees are
affiliated with Federated Investors as discussed further below. All of the
other nominees are Trustees or Directors of other investment companies managed
by Federated Management.
NOMINEES, TRUSTEES AND EXECUTIVE OFFICERS OF THE FUND
The following is a list of the nominees, Trustees and executive officers of
the Fund. Information provided regarding the name, age, current position with
the Fund and term of office, if any, principal occupation during the past five
years, family relationships and directorships is required by law.
NOMINEES FOR TRUSTEES
NAME, AGE AND RELATION TO FEDERATED INVESTORS
FAMILY RELATIONSHIPS OR ANY OF ITS SUBSIDIARIES
John F. Donahue
Age 71
Father of J. Christopher Donahue,
President of the Trust Trustee and Chairman of the Board of the Trust;
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management; Chairman and Director, Federated Research Corp. and Federated
Global Research Corp.; Chairman, Passport Research Ltd.; Chief Executive
Officer and Director, Trustee or Managing General Partner of 74 investment
companies for which subsidiaries of Federated Investors serve as investment
adviser, administrator and/or distributor (the ``Federated Fund Complex'').
Thomas G. Bigley*
Age 61 Trustee of the Trust; Director, Ober Manufacturing Co.; Chairman of
the Board, Children's Hospital of Pittsburgh; Director, Trustee, or Managing
General Partner of 74 investment companies within the Federated Fund Complex;
formerly, Senior Partner Ernst & Young LLP.
John T. Conroy, Jr.*
Age 58 Trustee of the Trust; President, Investment Properties Corporation;
Senior Vice President, John R. Wood and Associates, Inc., Realtors; President,
Northgate Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing General
Partner of 74 investment companies within the Federated Fund Complex;
formerly, President Naples Property Management, Inc.
William J. Copeland*
Age 77 Trustee of the Trust; Director and member of the Executive Committee,
Michael Baker, Inc.; Director, Trustee or Managing General Partner of 74
investment companies within the Federated Fund Complex; formerly, Vice
Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and Director, Ryan
Homes, Inc.
J. Christopher Donahue
Age 46
Son of John F. Donahue,
Chairman of the Trust Trustee and President of the Trust, 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 Administrative Services, Federated Services Company, and Federated
Shareholder Services; President or Executive Vice President of the Funds;
Director, Trustee, or Managing General Partner of certain investment companies
within the Federated Fund Complex.
James E. Dowd*
Age 73 Trustee of the Trust; Attorney-at-law; Director, The Emerging Germany,
Inc., Director, Trustee, or Managing General Partner of 74 investment
companies within the Federated Fund Complex.
Lawrence D. Ellis, M.D.
Age 62 Trustee of the Trust; Professor of Medicine and Member Board of
Trustees, University of Pittsburgh Medical Center-Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly Hematologist,
Oncologist, and Internist, Presbyertain and Montefiore Hospitals; Director,
Trustee, or Managing General Partner of 74 investment companies within the
Federated Fund Complex.
Edward L. Flaherty, Jr.*
Age 71 Trustee of the Trust; Attorney-at-law; Shareholder, Henny, Kochuba,
Meyer and Flaherty; Director, Eat `N Park Restaurants, Inc., and Statewide
Settlement Agency, Inc.; Director, Trustee, or Managing General Partner of 74
investment companies within the Federated Fund Complex; formerly, Counsel,
Horizon Financial, F.A., Western Region.
Peter E. Madden*
Age 53 Trustee of the Trust; Consultant; State Representative, Commonwealth
of Massachusetts; Director, Trustee, or Managing General Partner of 74
investment companies within the Federated Fund Complex; formerly President,
State Street Bank and Trust Company and State Street Boston Corporation.
Gregor F. Meyer*
Age 68 Trustee of the Trust; Attorney-at-law; Shareholder, Henny, Kochuba,
Meyer and Flaherty; Chairman, Meritcare, Inc.; Director, Eat `N Park
Restaurants, Inc.; Director, Trustee or Managing General Partner of 74
investment companies within the Federated Fund Complex.
John E. Murray, Jr.*
Age 62 Trustee of the Trust; President and Law Professor, Duquesne
University; Consulting Partner, Mollica, Murray and Hogue; Director, Trustee
or Managing General Partner of 74 investment companies within the Federated
Fund Complex.
Wesley W. Posvar*
Age 70 Trustee of the Trust; Professor, International Politics and Management
Consultant; Trustee, Carnegie Endowment for International Peace, RAND
Corporation, Online Computer Library Center, Inc., and U.S. Space Foundation;
Chairman, Czecho Management Center; Director, Trustee or Managing General
Partner of 74 investment companies within the Federated Fund Complex;
President Emeritus, University of Pittsburgh, founding Chairman, National
Advisory Council for Environmental Policy and Technology and Federal Emergency
Management Advisory Board.
Marjorie P. Smuts*
Age 60 Trustee of the Trust; Public relations/marketing consultant;
Conference Coordinator, Non-profit entities; Director, Trustee, or Managing
General Partner of 74 investment companies within the Federated Fund Complex.
* Independent Trustee
The foregoing individuals are being nominated as trustees in connection
with the transaction between Federated Investors and Lehman referred to under
Proposal 1 whereby Federated Management would assume the role of the
investment adviser of certain other portfolios of Lehman Brothers
Institutional Funds Group Trust. If Federated Management becomes the
investment adviser to such portfolios, the Trustees believe that appointing
representatives from other areas within the Federated Investors' organization
would help the transition run smoothly. Furthermore, the Trustees consider
the addition of personnel of Federated Investors to be a means of facilitating
day-to-day management of the Lehman Brothers Institutional Funds Group Trust.
Federated Management has been recommended to assume the role of investment
adviser with respect to three portfolios of Lehman Brothers Institutional
Funds Group Trust, the Prime Money Market Fund, the Prime Value Money Market
Fund and the Municipal Money Market Fund. Also pursuant to that agreement,
the assets of three other portfolios of Lehman Brothers Institutional Funds
Group Trust, the Government Obligations Money Market Fund, Tax-Free Money
Market Fund and the Fund, are proposed to be reorganized into Federated
Investors portfolios which are part of its Money Market Obligations Trust. A
third part of the transaction involves the transfer of assets from Lehman
Brothers' retail money market funds to funds of Federated Investors with
similar objectives through a negative consent process.
Because the Reorganization is part of a business agreement between Lehman
and Federated Investors that includes the election of new Trustees of Lehman
Brothers Institutional Funds Group Trust, and because all shareholders of the
Trust, including those of the Fund, are entitled to elect Trustees of Lehman
Brothers Institutional Funds Group Trust, shareholders of the Fund are asked
to vote for the election of the nominees for Trustee of Lehman Brothers
Institutional Funds Group Trust even though the consummation of the
Reorganization would result in the Fund's shareholders receiving shares of the
Portfolio and becoming shareholders of another entity.
ome of the nominees for election as Trustees are executive officers of
and employed by Federated Investors. To the extent that employees of
Federated will benefit from the entire transaction with Lehman, the nominees
may be deemed to have an indirect material interest in such arrangement.
Similarly, Mr. Gordon, Trustee, and Messrs. Winters and Rabiecki, Executive
Officers, are employees of Lehman Brothers and Lehman, respectively, and as
such may be deemed to have an indirect material interest in the transaction.
TRUSTEES NOT STANDING FOR ELECTION
NAME AND AGE POSITIONS WITH REGISTRANT AND
BUSINESS EXPERIENCE RELATION TO FEDERATED INVESTORS
OR ANY OF ITS SUBSIDIARIES
Andrew Gordon, 42 Chairman of the Board, Trustee and
President of Lehman Brothers Institutional
Funds Group Trust; Managing Director,Lehman Brothers None
Charles Barber,* 79 Trustee*, Lehman Brothers Institutional
Funds Group Trust; former Chairman of the
Board, ASARCO, Inc. None
Burt N. Dorsett,* 65 Trustee*, Lehman Brothers Institutional Funds
Group Trust; Trustee*, Lehman Brothers Institutional
Funds Group Trust; Managing Partner, Dorsett McCabe
Capital Management, Inc., an investment counseling firm;
Director, Research Corporation Technologies, a non-profit
patent-clearing and licensing operation; formerly President,
Westinghouse Pension Investments Corporation; formerly
Executive Vice President and Trustee, College Retirement
Equities Fund, Inc., a variable annuity fund; and formerly
Investment Officer, University of Rochester None
Edward J. Kaier,* 50 Trustee*, Lehman Brothers Institutional Funds Group
Trust; Partner with the law firm of Hepburn, Willcox,
Hamilton & Putnam None
S. Donald Wiley,* 69 Trustee*, Lehman Brothers Institutional Funds Group
Trust; Vice Chairman and Trustee, H.J. Heinz Company Foundation None
* Independent Trustee
None of the nominees and none of the current Trustees, except Mr.
Gordon, have any material direct or indirect interest in the Fund's current
principal underwriter or administrator. Except as described above, none of
the nominees has any material direct or indirect interest in the investment
adviser or any person controlling, controlled by, or under common control with
the investment adviser.
During the fiscal year ended January 31, 1996, the Trust's Board met four
times. All Trustees attended at least 75 percent of the meetings.
The Trust has a standing Audit Committee which consists of Messrs. Barber,
Dorsett, Kaier and Wiley, all of whom are Independent Trustees. The function
of the Audit Committee is to meet annually with the Trust's independent
auditors to review the financial statements of the Trust's portfolios. The
Audit Committee met one time during the fiscal year ended January 31, 1996.
The Trust also has a Nominating Committee consisting of Messrs. Barber,
Dorsett, Kaier and Wiley. Its function is to nominate independent trustees to
fill vacancies that occur on the Board of Trustees of Lehman Brothers
Institutional Funds Group Trust. The Committee did not meet during the fiscal
year ended January 31, 1996.
EXECUTIVE OFFICERS
NAME AND AGE POSITIONS WITH REGISTRANT AND
BUSINESS EXPERIENCE RELATION TO FEDERATED INVESTORS
OR ANY OF ITS SUBSIDIARIES
John M. Winters, 46 Vice President and Investment Officer, Lehman
Brothers Institutional Funds Group Trust;
Investment Officer, Senior Vice President
and Senior Money Market Portfolio Manager,
Lehman Brothers Global Asset Management, Inc.;
formerly Product Manager with Lehman Brothers
Capital Markets Group None
Nicholas Rabiecki III, 39 Vice President and Investment Officer, Lehman
Brothers Institutional Funds Group Trust; Vice
President and Senior Portfolio Manager, Lehman
Brothers Global Asset Management, Inc.; formerly
Senior Fixed-Income Portfolio Manager with
Chase Private Banking None
Michael C. Kardok, 36 Treasurer, Lehman Brothers Institutional funds
Group Trust; Vice President, First Data Investor
Services Group, Inc.; prior to May 1994, Vice
President, The Boston Company Advisors, Inc. None
Patricia L. Bickimer, 42 Secretary, Lehman Brothers Institutional Funds
Group Trust; Vice President and Associate General
Counsel, First Data Investor Services Group, Inc.;
prior to May 1994, Vice President and Associate
General Counsel, The Boston Company Advisors, Inc. None
None of the executive officers was selected as such pursuant to any
agreements nor has any executive officer entered into an employment contract
or other compensatory agreement with the Fund.
The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with
the Fund unless it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in their offices.
The following table describes the compensation paid during the fiscal year
ending January 31, 1996, to each member of the Board of Trustees of the Trust.
COMPENSATION TABLE
The following table presents, for the fiscal year ended January 31, 1996,
the compensation paid to, or accrued for, each of the Trust's Trustees. None
of the Fund's most highly compensated executive officers had aggregate
compensation of over $60,000 during this period.
Total
Compensation
Pension or from Fund
Retirement Estimated and Fund
Beneifts Annual Complex
Aggregate Accrued Benefits (10 Funds)
Compensation as part of Upon Paid to
Name and Position From Fund Fund Expenses Retirement Directors
Andrew Gordon
Trustee, Chairman of the
Board and President $0 $0 N/A $0
Charles Barber
Trustee $25,000 $0 N/A $25,000
Burt N. Dorsett
Trustee $25,000 $0 N/A $52,500
Edward J. Kaier
Trustee $25,000 $0 N/A $25,000
S. Donald Wiley
Trustee $25,000 $0 N/A $25,000
The Fund does not have any compensation plans, including pension or
retirement plans or any other defined benefit or actuarial plan in place.
Trustees who are "interested persons" receive no compensation from the Fund
for service as Trustees. Independent Trustees receive $20,000 in retainer
fees per year, plus $1,250 per regular or special Board meeting attended.
Trustees are also reimbursed for travel and out-of-pocket expenses.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees of the Fund of proxies for use at the
Special Meeting of Shareholders (the "Meeting") to be held on November 13,
1996 and at any adjournment 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 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 Fund an instrument
revoking the proxy, or by submitting a proxy bearing a later date, or by
attending and voting at the Meeting.
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by Federated. In addition to solicitations through
the mails, proxies may be solicited by officers, employees, and agents of the
Fund and Lehman at no additional costs to the Fund. Such solicitations may be
by telephone, telegraph, or otherwise. Federated 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 Fund has fixed the close of business on
October 11, 1996, as the record date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting of Shareholders and
any adjournment thereof. As of the record, date, there were 111,815,225
shares of the Fund outstanding, constituting 103,014,466 Class A Shares and
8,800,543 Class B Shares. Each Fund share is entitled to one vote and
fractional shares have proportionate voting rights. On the record date, the
following shareholders of record owned 5% or more of the outstanding Class A
Shares of the Portfolio: Health Care Service Corporation owned approximately
56,201,532 (54.5%) shares, Naban & Co. owned approximately 9,406,708 (9.1%)
shares, Harris Trust Company of New York owned approximately 9,000,000 (8.7%)
shares, and LBF as pledge for Nelson Partners owned approximately 6,415,857
(6.2%) shares. On such date, no other person owned of record, or to the
knowledge of Lehman, beneficially owned, 5% or more of the Fund's outstanding
shares. On the record date, the Trustees and officers of the Fund as a group
owned less than 1% of the outstanding shares of the Fund.
On the record date the following shareholders of record owned 5% or more of
the Portfolio's outstanding Institutional Shares: Var & Co. owned
approximately 723,156,873 (15.19%) shares, Fleet Securities Corp. owned
approximately 670,564,666 (14.08%) shares, and First Union National Bank owned
approximately 242,597,295 (5.09%) shares. On the record date, the following
shareholders of record owned 5% or more of the Portfolio's outstanding
Institutional Service Shares: Var & Co. owned approximately 310,921,879
(13.86%) shares, DC Financial Responsibility & Mgmt. owned approximately
246,092,669 (10.97%) shares, and The Chase Manhattan Bank NA owned
approximately 178,108,433 (7.94%) shares. On the record date, the Trustees
and officers of the Trust as a group owned less than 1% of the outstanding
shares of the Portfolio.
The votes of shareholders of the Portfolio are not being solicited since
their approval is not required in order to effect the Reorganization.
Approval of Proposal 1, relating to the Reorganization, requires the
affirmative vote of a majority of the Fund's outstanding shares. Approval of
Proposal 2, relating to the election of Trustees, requires the affirmative
vote of a majority of the outstanding shares of Lehman Brothers Institutional
Funds Group Trust and is conditioned upon shareholder approval of Proposal 1.
In determining whether the required vote is obtained, shares of the Fund are
voted in the aggregate, without regard to the designated class of shares of
the Fund, with regard to Proposal 1, and shares of Lehman Brothers
Institutional Funds Group Trust are voted in the aggregate, without regard to
the designated series or class of any shares, with regard to Proposal 2. As
used herein, the term "majority of the Fund's outstanding shares" means the
lesser of: (a) 67% of the shares of the Fund or Lehman Brothers Institutional
Funds Group Trust, as the case may be, present at the Special Meeting if the
holders of more than 50% of the outstanding shares of the Fund, or Lehman
Brothers Institutional Funds Group Trust, as the case may be, are present in
person or by proxy, or (b) more than 50% of the outstanding shares of the
Fund, or Lehman Brothers Institutional Funds Group Trust, as the case may be.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees that cannot be voted on a
proposal because instructions have been received from the beneficial owners)
will be counted for purposes of determining whether or not a quorum is present
for purposes of convening the meeting. On each proposal, broker non-votes
will be considered to be abstentions on the vote regarding each proposal.
NO DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the Fund objecting to the Reorganization have no appraisal
rights under the Fund's Declaration of Trust or under the laws of the
Commonwealth of Massachusetts. Shareholders have the right, however, to
redeem their Fund shares at net asset value until the Closing Date, and
thereafter shareholders may redeem Portfolio shares acquired by them in the
Reorganization at net asset value.
QUORUM
In the event that a quorum is not present at the Special Meeting, or in the
event that a quorum is present at the Special Meeting, but sufficient votes to
approve the Plan and the transactions contemplated thereby 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 majority of shares that are
represented at the Meeting in person or by proxy. If a quorum is present, the
persons named as proxies will vote those proxies which they are entitled to
vote FOR the Plan in favor of such adjournments, and will vote those proxies
required to be voted AGAINST such proposal against any adjournment. A quorum
is constituted with respect to the Fund by the presence in person or by proxy
of the holders of more than 50% of the outstanding shares of the Fund entitled
to vote at the Meeting. Proxies properly executed and marked with a negative
vote or an abstention will be considered to be present at the Meeting for
purposes of determining the existence of a quorum for the transaction of
business.
OTHER MATTERS
Management of the Fund knows of no other matters that may properly be, or
which are likely to be, brought before the meeting. However, if any other
business shall properly come before the meeting the persons named in the proxy
intend to vote thereon in accordance with their best judgment.
So far as management is presently informed, there is no litigation pending
or threatened against the Trust.
Whether or not shareholders expect to attend the meeting, all shareholders
are urged to sign, fill in and return the enclosed proxy form promptly.
AGREEMENT AND PLAN OF REORGANIZATION Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION dated as of September 6, 1996 (the
``Agreement''), by and between MONEY MARKET OBLIGATIONS TRUST, a Massachusetts
business trust, on behalf of its portfolio, Treasury Obligations Fund
(hereinafter called the ``Acquiring Fund''), FEDERATED MANAGEMENT, a Delaware
business trust (``Federated''), LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP
TRUST, a Massachusetts business trust, on behalf of its portfolio, Treasury
Instruments Money Market Fund II (hereinafter called the ``Acquired Fund'')
and LEHMAN BROTHERS GLOBAL ASSET MANAGEMENT, INC., a corporation.
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 and known liabilities of the Acquired Fund in exchange solely for
Institutional Shares and Institutional Service Shares of beneficial interest
of the Acquiring Fund (collectively, the ``Acquiring Fund Shares'') and the
distribution, after the Closing Date as hereinafter defined, of Institutional
Shares and Institutional Service Shares of the Acquiring Fund to the
shareholders of the Class A Shares and Class B Shares, respectively, 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, the Acquired Fund and the Acquiring Fund are registered open-end,
diversified, management investment companies and the Acquired Fund owns
securities which generally are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue the Acquiring Fund
Shares and the Acquired Fund is authorized to issue its shares of beneficial
interest;
WHEREAS, Federated, an investment adviser registered as such under the
Investment Advisers Act of 1940, as amended, serves as investment adviser to
the Acquiring Fund;
WHEREAS, Lehman, an investment adviser registered as such under the
Investment Advisers Act of 1940, as amended, serves as investment adviser to
the Acquired Fund;
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 Acquiring Fund has determined that
the exchange of all of the assets and known liabilities 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 the Acquired
Fund has determined that the exchange of all of the assets [and known
liabilities] of the Acquired Fund for Acquiring Fund Shares is in the best
interests of the Acquired Fund shareholders, that the interests of the
shareholders of the Acquired Fund would not be diluted as a result of this
transaction and determined that subsequent to the consummation of the
transaction contemplated by this Agreement, the Acquired Fund will cease
operations;
NOW THEREFORE, for and in consideration of the mutual 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 and known liabilities of the Acquired Fund at the time of the
Closing (defined below), including without limitation all securities and cash,
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, representing Institutional Shares and Institutional Service Shares,
determined as set forth in paragraph 2.3 of this Agreement. Such transactions
shall take place at the closing (the ``Closing'') on the closing date (the
``Closing Date''), as provided in paragraph 3.1 of this Agreement. 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 on the
stock record books of the Acquiring Fund's transfer agent 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 referred to as ``State Street''), Boston,
Massachusetts, the Acquiring Fund's custodian (the ``Custodian''), for the
account of the Acquiring Fund, together with proper instructions and all
documents necessary to transfer such assets to the account of the Acquiring
Fund, free and clear of all liens, encumbrances, rights, restrictions and
claims, except as may be indicated in a schedule delivered by the Acquired
Fund to the Acquiring Fund immediately prior to the Closing. All cash
delivered shall be in the form of currency or immediately available funds
payable to the order of Custodian for 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 hereunder. 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 practicable (the
"Liquidation Date"), the Acquired Fund will liquidate and distribute pro rata
to the Acquired Fund's shareholders of record, determined as of the close of
business on the Closing Date (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 (by the
Acquiring Fund or its transfer agent) of the Acquiring Fund Shares into an
account for each shareholder on the books of the Acquiring Fund's transfer
agent in the name of each Acquired Fund Shareholder and representing the pro
rata number of the Acquiring Fund Shares due each Acquired Fund Shareholder.
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 paragraph 2.3.
The Acquiring Fund will issue certificates representing the Acquiring Fund
Shares in connection with such exchange only for, and upon receipt of,
certificated shares of the Acquired Fund.
1.6 Any transfer taxes payable upon issuance of the 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 the Closing Date 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.
1.7 Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of the Acquired Fund up to and including the Closing
Date and such later dates with respect to dissolution and deregistration of
the Acquired Fund with federal and blue sky authorities.
2. VALUATION.
2.1 The value of the Acquired Fund's assets to be acquired by the
Acquiring Fund hereunder shall be the amortized cost value of such assets
computed as of the close of business on the Closing Date (such time and date
being hereinafter called the "Valuation Date"), 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 an Acquiring Fund Share shall be the net
asset value per share computed as of the close of business on the Valuation
Date, using the valuation procedures set forth in the Acquiring Fund's then-
current prospectus or statement of additional information.
2.3 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) of the Institutional Shares and the Institutional
Service Shares classes in exchange for the Acquired Fund's assets shall be
determined by dividing the value of the assets attributable to Class A Shares
and Class B Shares 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 determined in accordance with paragraph 2.2.
Institutional Shares of the Acquiring Fund shall be issued for Class A Shares
of the Acquired Fund and Institutional Service Shares of the Acquiring Fund
shall be issued for Class B Shares of the Acquired Fund.
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 Closing Date shall be November 8, 1996, or such later date as the
parties may mutually agree. All acts taking place at the Closing Date shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held at the
close of business at the offices of the Acquired Fund, One Exchange Place, 53
State Street, Boston, Massachusetts 02109, or such other time and/or place as
the parties may mutually agree.
3.2 If on the Valuation Date: (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 The Acquired Fund shall instruct First Data Investor Services
Group, Inc., as transfer agent for the Acquired Fund, to deliver to the
Acquiring Fund 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 of outstanding Class A Shares and Class B Shares
owned by each such shareholder immediately prior to the Closing. The
Acquiring Fund shall issue and deliver a confirmation evidencing the
Institutional Shares and the Institutional Services Shares of the Acquiring
Fund to be credited on the Closing Date to the Secretary of the Acquired Fund
or provide evidence satisfactory to the Acquired Fund that such Institutional
Shares and the Institutional Service Shares of the Acquiring Fund have been
credited to the respective accounts of the Acquired Fund Shareholders on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 Each of the Acquired Fund and Lehman represents and warrants to
the Acquiring Fund as follows:
(a) The Acquired Fund is a portfolio of a business trust
organized, validly existing, and in good standing under the laws of the
Commonwealth of Massachusetts and has power to carry on its business as it is
now being conducted.
(b) The Acquired Fund 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 Acquired Fund is not, and the execution, delivery, and
performance of this Agreement will not result, in a material violation of its
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 contracts or other commitments
outstanding which will result in liability to it after the Closing Date not
reflected on the Acquired Fund's balance sheet other than liabilities in the
ordinary course of business or otherwise disclosed to Federated and the
Acquiring Fund.
(e) No material 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 the
Acquired Fund's properties or assets which, if adversely determined, would
materially and adversely affect its financial condition or the conduct of its
business. Neither Lehman nor the Acquired Fund knows of any facts which might
form the basis for the institution of such proceedings, and the Acquired Fund
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 Statement of Assets and Liabilities of the Acquired Fund
at January 31, 1996, has been audited by Ernst & Young, LLP, independent
auditors, and has been prepared in accordance with generally accepted
accounting principles, consistently applied, and such statement (copies of
which have been furnished to the Acquiring Fund) fairly reflect the financial
condition of the Acquired Fund as of such date, and there are no liabilities
of the Acquired Fund, known to the Acquired Fund or to Lehman, contingent or
otherwise, as of such date not disclosed therein.
(g) The unaudited Statement of Assets and Liabilities of the
Acquired Fund at July 31, 1996, has been prepared in accordance with generally
accepted accounting principles, consistently applied, and on a basis
consistent with the Statement of Assets and Liabilities of the Acquired Fund
at January 31, 1996, which has been audited by Ernst & Young, LLP, and such
statement (copies of which have been furnished to the Acquiring Fund) fairly
reflects the financial condition of the Acquired Fund as of such date, and
there are no liabilities of the Acquired Fund known to the Acquired Fund or to
Lehman, contingent or otherwise, as of such date not disclosed therein.
(h) Since January 31, 1996, 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 any indebtedness for
borrowed money, except as otherwise disclosed to Federated and the Acquiring
Fund.
(i) At the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law (or permitted extensions thereto)
to have been filed shall have been filed, and to the best of the Acquired
Fund's knowledge 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.
(j) For each fiscal year (or part thereof) of its operation, the
Acquired Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
(k) All issued and outstanding shares of each class 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 each class 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 of this Agreement. The
Acquired Fund does not have outstanding options, warrants or other rights to
subscribe for or purchase any of the Acquired Fund shares, nor is there
outstanding any security convertible into Acquired Fund shares.
(l) On the Closing Date, all issued and outstanding shares of
the Acquired Fund will have been duly registered under the Securities Act of
1933, as amended (the "1933 Act"), and registered, or exempt from
registration, to the extent required thereby under each state securities or
"blue sky" law of every state in which the Acquired Fund has offered or sold
its 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
has been duly authorized by all necessary action on the part of the Acquired
Fund's Board of Trustees and, subject to the approval of the Acquired Fund
Shareholders, this Agreement constitutes 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 before which a
proceeding is brought (regardless of whether the enforceability is considered
in a proceeding in equity or at law).
(o) On the effective date of the Registration Statement and on
the Closing Date, the Prospectus/Proxy Statement (only insofar as it relates
to the Acquired Fund) will 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 will have provided the Acquiring Fund with
information reasonably necessary for the preparation of the Prospectus/Proxy
Statement
4.2 Each of Federated and the Acquiring Fund represents and warrants to
the Acquired Fund as follows:
(a) The Acquiring Fund 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 Acquiring Fund 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 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
regulation of the SEC 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.
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to its assets.
(e) The Acquiring Fund has no material contracts or other
commitments outstanding which will result in liability to it after the Closing
Date not reflected in the Acquiring Fund's balance sheet dated as of July 31,
1996, other than liabilities in the ordinary course of business or otherwise
disclosed to Lehman and the Acquired Fund.
(f) The Acquiring Fund is not, and the execution, delivery, and
performance of this Agreement will not result in violation of its 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.
(g) 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 the Acquiring Fund's
properties or assets which, if adversely determined, would affect the
Acquiring Fund's financial condition or the conduct of its business. Neither
Federated nor the Acquiring Fund knows of any facts which might form the basis
for the institution of such proceedings, and the Acquiring Fund is not a party
to or subject to the provisions of any order, decree or judgment of any court
or governmental body which affects its business or its ability to consummate
the transactions contemplated herein.
(h) The Statement of Assets and Liabilities of the Acquiring
Fund at July 31, 1996, has been audited by Arthur Andersen, LLP, independent
auditors, and has been prepared in accordance with generally accepted
accounting principles, consistently applied, and such statement (copies of
which have been furnished to the Acquired Fund) fairly reflects the financial
condition of the Acquiring Fund as of such date, and there are no liabilities
of the Acquiring Fund, contingent or otherwise, as of such date not disclosed
therein.
(i) Since July 31, 1996, there has not been any 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 any indebtedness for borrowed money.
(j) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed 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.
(k) For each fiscal year (or part thereof) of its operation, the
Acquiring Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company.
(l) All issued and outstanding shares of each class of the
Acquiring Fund are, and including the Acquiring Fund Shares issued to the
Acquired Fund Shareholders pursuant hereto, 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 the Acquiring Fund Shares, nor is there
outstanding any security convertible into any Acquiring Fund Shares.
(m) All issued and outstanding shares of each class of the
Acquiring Fund are, and, including the Acquiring Fund Shares issues to the
Acquired Fund Shareholders pursuant hereto, at the Closing Date will be, duly
registered under the 1933 Act and registered, or exempt from registration, to
the extent required thereby under each state securities or "blue sky" law of
every state in which the Acquiring Fund has offered or sold its shares.
(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 Acquiring Fund's Board of 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 before which a proceeding is brought
(regardless of whether the enforceability is considered in a proceeding in
equity or at law).
(o) 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 be true and correct in all material respects. Further, on the effective
date of the Registration Statement and on the Closing Date, the
Prospectus/Proxy Statement (only insofar as it relates to the Acquiring Fund)
will not contain any untrue statement of 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 Acquiring Fund has entered into an agreement under which
Federated will assume the expenses of the Reorganization, including legal fees
of the Acquiring Fund, registration fees, transfer tax (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.
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 The Acquired Fund will call a meeting of the Acquired Fund
Shareholders to consider and act upon this Agreement and to take all other
action necessary and appropriate 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 Acquired Fund's President or its
Treasurer.
5.5 The Acquiring Fund shall have filed with the SEC a Registration
Statement on Form N-14 complying in all material respects with the
requirements of the 1933 Act, the Securities Exchange Act of 1934, as amended,
the 1940 Act, and applicable rules and regulations thereunder, relating to a
meeting of the shareholders of the Acquired Fund to be called to consider and
act upon the transactions contemplated herein, and such Registration Statement
shall have been declared effective by the SEC. The Acquired Fund agrees to
provide the Acquiring Fund with information relating to the Acquired Fund
required under such Acts, rules and regulations for inclusion in the
Registration Statement on Form N-14.
5.6{PRIVATE } For a period of two years after the Closing Date,
Federated and the Acquiring Fund agree to waive fees and/or reimburse expenses
in order to maintain actual expense ratios of the Institutional Shares Class
and Institutional Service Shares Class as follows:
CLASS ACTUAL EXPENSE RATIO
Institutional Shares Class .35%
Institutional Service Shares Class .60%
5.7 The Acquiring Fund agrees to use all best 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.
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 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 Lehman and the Acquired
Fund 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.
6.2Error! Bookmark not defined. The Acquired Fund shall have
delivered to the Acquiring Fund a statement of the Acquired Fund's assets and
known liabilities, 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
or the Assistant Treasurer of the Acquired Fund.Error! Bookmark not defined.
6.3Error! Bookmark not defined. The Acquired Fund and Lehman shall
have delivered to the Acquiring Fund on the Closing Date a certificate
executed in their names by their respective Presidents or Vice Presidents and
their Treasurers or Assistant Treasurers, in form and substance reasonably
satisfactory to the Acquiring Fund, to the effect that the representations and
warranties of the Acquired Fund and Lehman 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 for herein shall be subject 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 Acquiring Fund and
Federated 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 and Federated shall have delivered to the
Acquired Fund on the Closing Date a certificate executed in their names by
their respective Presidents or Vice Presidents and their Treasurers or
Assistant Treasurers, in form and substance reasonably satisfactory to the
Acquired Fund, to the effect that the representations and warranties of the
Acquiring Fund and Federated 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.
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 beneficial interest of
the Acquired Fund in accordance with the laws of the Commonwealth of
Massachusetts and the Acquired Fund's Declaration of Trust and By-Laws.
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 parties hereto and all other consents, orders,
permits, and exemptions of federal, state, and local regulatory authorities
(including those of the Securities and Exchange 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.Error! Bookmark not defined.
8.4Error! Bookmark not defined. Reserved.
8.5 The Form N-14 shall have become effective under the 1933 Act by
the SEC 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.
8.6 The Acquiring Fund and the Acquired Fund shall have received an
opinion of Howard & Howard Attorneys, P.C., substantially 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:
(a) The transfer of all or substantially all of the Acquired
Fund assets in exchange for the Acquiring Fund Shares and the distribution of
the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund will constitute a "reorganization" within the
meaning of Section 368(a)(1)(C) 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).
8.7 The Acquired Fund and Lehman shall have received the opinion of
counsel to the Acquiring Fund, dated as of the date of the Closing, addressed
to and in form and substance satisfactory to the Acquired Fund and Lehman to
the effect that: (i) the Acquiring Fund is a business trust duly organized
and existing under the laws of the Commonwealth of Massachusetts, has the
power to own all its properties and assets and to carry on its business as a
registered investment company, and each of its Portfolios is a validly
existing series of shares of such business trust; (ii) the Acquiring Fund is
an open-end investment company of the management type registered under the
Investment Company Act of 1940; (iii) this Agreement and the Reorganization
provided for herein and the execution of this Agreement have been duly
authorized and approved by all requisite action of the Acquiring Fund and this
Agreement has been duly executed and delivered by the Acquiring Fund and is a
valid and binding obligation of the Acquiring Fund enforceable against the
Acquiring Fund in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing; (iv) the Registration
Statement on Form N-14 has been declared effective under the Securities Act of
1933 and to such counsel's knowledge after reasonable investigation no stop
order has been issued or threatened suspending its effectiveness and no order
pursuant to Section 8(e) of the 1940 Act has been issued; (v) to such
counsel's knowledge, no consent, approval, order or other authorization of any
federal or Massachusetts state court or administrative or regulatory agency is
required for the Acquiring Fund to enter into this Agreement or carry out its
term that has not already been obtained, other than where the failure to
obtain any such consent, approval, order or authorization would not have a
material adverse effect on the operations of the Acquiring Fund; (vi) to such
counsel's knowledge, the Acquiring Fund is not in breach or violation of any
material contract to which it is a party, which breach or violation would (a)
affect the ability of the Acquiring Fund to enter into this Agreement or
consummate the transactions contemplated hereby, including the Reorganization,
or (b) have a material adverse effect on the business or financial condition
of the Acquiring Fund; (vii) to such counsel's knowledge, no federal or
Massachusetts state administrative or regulatory proceeding is pending or
threatened against the Acquiring Fund which would (a) affect the ability the
Acquiring Fund to enter into this Agreement or consummate the transactions
contemplated hereby, including the Reorganization; or (b) have a material
adverse effect on the business or financial condition of the Acquiring Fund;
and (viii) the Shares to be issued in the Reorganization have been duly
authorized and upon issuance thereof in accordance with this Agreement, will
be validly issued, fully paid and nonassessable and no Acquiring Fund
Shareholder has any preemptive rights to subscription or purchase in respect
thereof; (ix) the Registration Statement on Form N-14 (except as to financial
data contained therein as to which no opinion is given) complies as to form in
all material respects with the requirements of the Securities Act of 1933, the
Securities Exchange Act of 1934 and the 1940 Act and the rules and regulations
thereunder; (x) such counsel does not know of any legal, administrative or
governmental proceedings, investigation, order, decree or judgment of any
court or governmental body, only insofar as they relate to the Acquiring Fund
or its assets or property, pending, threatened or otherwise existing on or
before the effective date of the Registration Statement on Form N-14 or the
Closing Date, which are required to be described in such Registration
Statement or to be filed as exhibits thereto which are not described and filed
as required; (xi) the execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not result in a
violation of the Acquiring Fund's Declaration of Trust or By-laws or in
violation of any material agreement to which the Acquiring Fund is a party or
by which it or its property is bound.
9. TERMINATION OF AGREEMENT.
9.1Error! Bookmark not defined. This Agreement and the transactions
contemplated hereby may be terminated and abandoned by resolution of the Board
of Trustees of the Acquired Fund or the Board of Trustees of the Acquiring
Fund, at any time prior to the Closing Date without liability on the part of
either party hereto, if circumstances should develop that, in the opinion of
the Board of Directors or Trustees, as the case may be, of either party
hereto, determines that proceeding with the Agreement is not in the best
interests of that party's shareholders.
9.2Error! Bookmark not defined. 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 (other than the agreement of
Federated to assume the expenses of the Reorganization) or the trustees,
directors, officers or shareholders of the Acquiring Fund or of the Acquired
Fund, in respect of this Agreement.
10.Error! Bookmark not defined. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions
(other than that set forth in Section 8.6) may be waived by the Board of
Trustees of the Acquiring Fund or the Board of Trustees of the Acquired Fund
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. AMENDMENT.
This Agreement and Plan of Reorganization may be amended at any time by the
mutual agreement of the Acquired Fund and the Acquiring Fund, authorized by
their respective Boards of Trustees and notwithstanding approval thereof by
the Acquired Fund Shareholders; provided, that if so approved by the Acquired
Fund Shareholders, no amendment shall be made which substantially changes the
terms hereof.
12.Error! Bookmark not defined. NO BROKER'S OR FINDER'S FEE.
The Acquired Fund and the Acquiring Fund each represents that there is no
person with whom it has dealt who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement and Plan of Reorganization.
13. MISCELLANEOUS.
13.1 The representations and warranties included or provided for
herein shall not survive consummation of the transactions contemplated hereby.
13.2 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.
13.3 This Agreement shall be governed and construed in accordance with
the internal laws of the State of New York, without giving effect to such
jurisdiction's conflicts of laws principles.
13.4 This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be deemed to be an original.
13.5 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 or 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.
13.6 The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of the
Acquiring Fund 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 Acquiring Fund or any of them.
13.7 The Acquiring Fund is hereby expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of the
Acquired Fund 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 Acquired Fund or any of them.
13.8 If the transactions contemplated by this Agreement and Plan of
Reorganization have not been completed by January 31, 1997, the Agreement
shall automatically terminate on that date unless a later date is agreed to in
writing by the parties hereto.
IN WITNESS WHEREOF, each of the Acquired Fund, Lehman, the Acquiring Fund,
and Federated have 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.
Attest
Chris Ritch
Assistant Secretary
Attest:
Chris Ritch
Assistant Secretary
Attest:
J. Crilley Kelly
Assistant Secretary
Attest:
Stephen A. Keen
Secretary
Acquired Fund:
LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST, ON BEHALF OF ITS
PORTFOLIO, GOVERNMENT OBLIGATIONS MONEY MARKET FUND
By: /s/ Andrew D. Gordon
Name: Andrew D.Gordon
Title: President
Lehman:
LEHMAN BROTHERS GLOBAL ASSET MANAGEMENT INC.
By: /s/ Andrew D Gordon
Name: Andrew D.Gordon
Title: President
Acquiring Fund:
MONEY MARKET OBLIGATIONS TRUST ON BEHALF OF ITS PORTFOLIO, GOVERNMENT
OBLIGATIONS FUND
By: /s/Richard B. Fisher
Vice President
Federated:
FEDERATED MANAGEMENT
By: /s/William Dawson, III
Name: William Dawson, III
Title: Executive Vice President
I:\b358\rcr\federated\agreement.reo
STATEMENT OF ADDITIONAL INFORMATION{PRIVATE }
October 15, 1996
Acquisition of the assets of TREASURY INSTRUMENTS MONEY MARKET
FUND II, a portfolio of Lehman Brothers Institutional Funds Group Trust
53 State Street
Boston, Massachusetts 02109-2873
Telephone No: 1-800-851-3134
By and in exchange for shares of
TREASURY OBLIGATIONS FUND, a portfolio of Money Market
Obligations Trust
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone No. 1-800-245-5000
This Statement of Additional Information dated October 15, 1996 is not a
prospectus. A Prospectus/Proxy Statement dated October 15, 1996, related to
the above-referenced matter may be obtained from Money Market Obligations
Trust, on behalf of its portfolio, Treasury Obligations Fund, Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779. This Statement of
Additional Information should be read in conjunction with such
Prospectus/Proxy Statement.
TABLE OF CONTENTS
Statement of Additional Information of Treasury Obligations Fund, a portfolio
of Money Market Obligations Trust, dated September 30, 1995.
Statement of Additional Information of Treasury Instruments Money Market
Fund II, a portfolio of Lehman Brothers Institutional Funds Group Trust, dated
May 30, 1996.
Financial Statements of Government Obligations Fund, a portfolio of Money
Market Obligations Trust, dated July 31, 1996.
Financial Statements of Treasury Instruments Money Market Fund II, a portfolio
of Lehman Brothers Institutional Funds Group Trust, dated January 31, 1996.
Unaudited Financial Statements of Treasury Instruments Money Market Fund II, a
portfolio of Lehman Brothers Institutional Funds Group Trust, dated July 31,
1996.
The Statement of Additional Information of Treasury Obligations Fund (the
"Portfolio"), a portfolio of Money Market Obligations Trust (the "Trust"), is
incorporated by reference to the Trust's Post-Effective Amendment No. 20 to
its Registration Statement on Form N-1A (File No. 33-31602) which was filed
with the Securities and Exchange Commission on or about September 23, 1996.
The Statement of Additional Information of Treasury Instruments Money Market
Fund II (the "Fund"), a portfolio of Lehman Brothers Institutional Funds Group
Trust, is incorporated by reference to Lehman Brothers Institutional Funds
Group Trust's Post-Effective Amendment No. 11 to its Registration Statement on
Form N-1A (File No. 33-55034) which was filed with the Securities and Exchange
Commission on or about March 29, 1996. A copy may be obtained from the Trust
at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. Telephone
Number: 1-800-245-5000.
The audited financial statements of the Portfolio dated July 31, 1996, are
incorporated by reference to the Annual Report to Shareholders of the
Portfolio which was filed with the Securities and Exchange Commission pursuant
to Section 30(b)2 of the Investment Company Act of 1940, as amended, on or
about September 29, 1996.
The audited financial statements of the Fund dated January 31, 1996, are
incorporated by reference to the Annual Report to Shareholders of the Fund
which was filed with the Securities and Exchange Commission pursuant to
Section 30(b)2 of the Investment Company Act of 1940, as amended, on or about
March 27, 1996.
The unaudited financial statements of the Fund dated July 31, 1996, are
incorporated by reference to the Semi-Annual Report to Shareholders of the
Fund which was filed with the Securities and Exchange Commission pursuant to
Section 30(b)2 of the Investment Company Act of 1940, as amended, on or about
October 2, 1996.
Pro forma financial statements have not been prepared because, as of September
9, 1996, the net asset value of the Fund did not exceed ten percent of the net
asset value of the Registrant's Portfolio.
IF YOU WISH TO RETURN YOUR BALLOT BY FAX, PLEASE SEND TO:
PROXY ADVANTAGE
FAX NUMBER: (617) 573-1985
ATTN: PETER DALY
FIRST DATA INVESTOR
SERVICES GROUP, INC.
ONE EXCHANGE PLACE
53 STATE STREET
BOSTON, MASSACHUSETTS 02109
TREASURY INSTRUMENTS MONEY MARKET FUND II
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 13, 1996
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholder of the
above-referenced fund, a portfolio of Lehman Brothers Institutional Funds
Group Trust, hereby appoints Andy Gordon and Jennifer Marre or any of them,
true and lawful attorneys, with power of substitution of each, to vote all
shares of the above-referenced fund, a portfolio of Lehman Brothers
Institutional Funds Group Trust, which the undersigned is entitled to vote, at
the Special Meeting of Shareholders to be held on November 13, 1996, at Lehman
Brothers, 3 World Financial Center, New York, New York 10285, at 11:00 a.m.,
and at any adjournment thereof.
Discretionary authority is hereby conferred as to all other manners as may
properly come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE ATTORNEYS
NAMED WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN ACCORDANCE WITH THE
CHOICE MADE ON THIS BALLOT. IF THIS PROXY IS RETURNED AND NO CHOICE IS
INDICATED AS TO ANY MATTER, THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THE
MATTER PRESENTED.
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
FOR THE TREASURY INSTRUMENTS MONEY MARKET FUND II, TAX-FREE MONEY MARKET FUND,
AND GOVERNMENT OBLIGATIONS MONEY MARKET FUND DETACH AND RETURN THIS PORTION
ONLY
VOTE ON PROPOSAL
APPROVEDISAPPROVEABSTAIN
" " "
1. APPROVAL OF A PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN LEHMAN BROTHERS INSTITUTIONAL FUNDS GROUP TRUST, ON BEHALF OF THE
ABOVE-REFERENCED FUND AND MONEY MARKET OBLIGATIONS TRUST (THE "TRUST"), ON
BEHALF OF ITS PORTFOLIO, TREASURY OBLIGATIONS FUND (THE "PORTFOLIO"), WHEREBY
THE TRUST WOULD ACQUIRE ALL OF THE ASSETS AND KNOWN LIABILITIES OF THE FUND IN
EXCHANGE FOR INSTITUTIONAL SHARES AND INSTITUTIONAL SERVICE SHARES OF THE
PORTFOLIO TO BE DISTRIBUTED PRO RATA BY THE FUND TO HOLDERS OF CLASS A SHARES
AND CLASS B SHARES, RESPECTIVELY, IN COMPLETE LIQUIDATION OF THE FUND.
" " "
2. ELECTION OF TRUSTEES TO SERVE UNTIL THE NEXT ANNUAL MEETING OF SHAREHOLDERS
AND UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND QUALIFIED. VOTE IS MADE FOR
THE ELECTION OF ALL NOMINATED TRUSTEES LISTED EXCEPT THOSE WHOSE NAME(S) ARE
WRITTEN BELOW: J.F. DONAHUE, T.G. BIGLEY, J.T. CONROY, JR., W.J. COPELAND,
J.C. DONAHUE, J.E. DOWD, L.D. ELLIS, M.D., E.L. FLAHERTY, JR., P.E. MADDEN,
G.F. MEYER, J.E. MURRAY, JR., W.W. POSVAR, AND M.P. SMUTS.
(NOTE: To withhold authority to vote for one or more nominees, write the
nominee(s) name(s) on the line below.)
PLEASE SIGN EXACTLY YOUR NAME(S) AS IT APPEARS BELOW. 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 SHARES ARE OWNED
JOINTLY, ALL PARTIES SHOULD SIGN.
______________________ ___________________________ ________________
SIGNATURE SIGNATURE (JOINT OWNERS) DATE
