STATE BOND CASH MANAGEMENT FUND
100 North Minnesota Street
P.O. Box 69
New Ulm, Minnesota 56073-0069
Dear Shareholder:
The Board of Directors and management of State Bond Cash Management Fund (the
`State Bond Fund'') are pleased to submit for your vote a proposal to transfer
all of the net assets of the State Bond Fund to Automated Cash Management Trust
(the "Federated Fund"), a portfolio of Money Market Obligations Trust, a mutual
fund advised by Federated Management. The Federated Fund has an investment
objective similar to that of the State Bond Fund in that it seeks to provide
stability of principal and current income consistent with stability of principal
by investing primarily in short-term money market securities. As part of the
transaction, holders of shares in the State Bond Fund would receive
Institutional Service Shares of the Federated Fund equal in value to their
shares in the State Bond Fund and the State Bond Fund would be liquidated.
Shareholders receiving Institutional Service Shares of the Federated Fund as a
result of the proposed reorganization would not have to pay a sales load upon
receiving such Shares, nor would they be subject to any contingent deferred
sales charges in connection with the exercise of exchange rights or redemptions
of such Shares.
The Board of Directors of the State Bond Fund, as well as ARM Capital Advisors,
Inc., the State Bond Fund's manager, and SBM Financial Services, Inc., the State
Bond Fund's distributor, believe the proposed agreement and plan of
reorganization is in the best interests of State Bond Fund shareholders for the
following reasons:
- -- The reorganization of the State Bond Fund into the Federated Fund may
provide operating efficiencies as a result of the size of the Federated Fund
which were not available to State Bond Fund shareholders due to the smaller size
of the State Bond Fund.
- -- The Federated Fund has an investment objective similar to that of the State
Bond Fund and offers an investment portfolio which invests in short-term money
market securities.
The Federated Fund is managed by Federated Management, a subsidiary of Federated
Investors. Federated Investors was founded in 1955 and is located in
Pittsburgh, Pennsylvania. Federated Management and other subsidiaries of
Federated Investors serve as investment advisers to a number of investment
companies and private accounts. With over $90 billion invested across more than
250 funds under management and/or administration by its subsidiaries, Federated
Investors is one of the largest mutual fund investment managers in the United
States. With more than 2,000 employees, Federated continues to be led by the
management who founded the company in 1955. Federated funds are presently at
work in and through 4,000 financial institutions nationwide. More than 100,000
investment professionals have selected Federated funds for their clients.
Federated Investors also has an excellent reputation for customer servicing,
having received a #1 rating for five years in a row by Dalbar, Inc. The
shareholder services for the Federated funds include advanced technological
systems that result in quick shareholder access to a broad spectrum of
information.
We believe the transfer of the State Bond Fund's assets in this transaction
presents an exciting investment opportunity for our shareholders. Your vote on
the transaction is critical to its success. The transfer will be effected only
if approved by a majority of all of the State Bond Fund's outstanding shares on
the record date voted in person or represented by proxy. We hope you share our
enthusiasm and will participate by casting your vote in person, or by proxy if
you are unable to attend the meeting. Please read the enclosed prospectus/proxy
statement carefully before you vote.
THE BOARD OF DIRECTORS BELIEVES THAT THE TRANSACTION IS IN THE BEST INTERESTS OF
THE STATE BOND FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR ITS APPROVAL.
Thank you for your prompt attention and participation.
Sincerely,
Dale C. Bauman
President
STATE BOND CASH MANAGEMENT FUND
100 North Minnesota Street
P.O. Box 69
New Ulm, Minnesota 56073-0069
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF STATE BOND CASH MANAGEMENT FUND:
A Special Meeting of Shareholders of State Bond Cash Management Fund, a
portfolio of State Bond Money Funds, Inc. (the `State Bond Fund'') will be held
at 4:15 p.m. on December 9, 1996 at: 100 North Minnesota Street, New Ulm,
Minnesota 56073-0069, for the following purposes:
1. To approve or disapprove a proposed Agreement and Plan of Reorganization
between the State Bond Fund and Money Market Obligations Trust, on behalf of its
portfolio, Automated Cash Management Trust (the "Federated Fund"), whereby the
Federated Fund would acquire all of the net assets of the State Bond Fund in
exchange for the Federated Fund's Institutional Service Shares to be distributed
pro rata by the State Bond Fund to the holders of its shares in complete
liquidation of the State Bond Fund; and
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
By Order of the Board of Directors,
Dated: November 2, 1996 Kevin L. Howard
Secretary
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.
PROSPECTUS/PROXY STATEMENT
NOVEMBER 2, 1996
ACQUISITION OF THE ASSETS OF
STATE BOND CASH MANAGEMENT FUND,
A PORTFOLIO OF
STATE BOND MONEY FUNDS, INC.
100 NORTH MINNESOTA STREET
P.O. BOX 69
NEW ULM, MINNESOTA 56073-0069
TELEPHONE NUMBER: 1-800-328-4735
BY AND IN EXCHANGE FOR INSTITUTIONAL SERVICE SHARES OF
AUTOMATED CASH MANAGEMENT TRUST,
A PORTFOLIO OF
MONEY MARKET OBLIGATIONS TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE NUMBER: 1-800-245-5051, OPTION ONE
This Prospectus/Proxy Statement describes the proposed Agreement and Plan of
Reorganization (the "Plan") whereby Automated Cash Management Trust (the
"Federated Fund"), a portfolio of Money Market Obligations Trust, a
Massachusetts business trust (the `Trust''), would acquire all of the net
assets of State Bond Cash Management Fund, a portfolio of State Bond Money
Funds, Inc., a Maryland corporation (the `State Bond Fund''), in exchange for
the Federated Fund's Institutional Service Shares to be distributed pro rata by
the State Bond Fund to the holders of its shares, in complete liquidation of the
State Bond Fund. As a result of the Plan, each shareholder of the State Bond
Fund will become the owner of the Federated Fund's Institutional Service Shares
having a total net asset value equal to the total net asset value of his or her
holdings in the State Bond Fund.
THE BOARD OF DIRECTORS OF THE STATE BOND FUND UNANIMOUSLY RECOMMENDS APPROVAL OF
THE PLAN.
Each of the Federated Fund and the State Bond Fund is a diversified portfolio of
securities of an open-end management investment company. The Federated Fund's
investment objective is stability of principal and current income consistent
with stability of principal which it pursues by investing in short-term money
market securities. The State Bond Fund's investment objectives are high current
income, preservation of capital and liquidity which it pursues by investing in
high quality money market instruments. For a comparison of the investment
policies of the Federated Fund and the State Bond Fund, see "Summary -
Investment Objectives, Policies and Limitations."
This Prospectus/Proxy Statement should be retained for future reference. It
sets forth concisely the information about the Federated Fund that a prospective
investor should know before investing. This Prospectus/Proxy Statement is
accompanied by the Prospectus of the Federated Fund dated September 30, 1996,
which is incorporated herein by reference. Statements of Additional Information
for the Federated Fund dated September 30, 1996 (relating to the Federated
Fund's Prospectus of the same date) and November 2, 1996 (relating to this
Prospectus/Proxy Statement), all containing additional information, have been
filed with the Securities and Exchange Commission and are incorporated herein by
reference. Copies of the Statements of Additional Information and the Annual
Report may be obtained without charge by writing or calling the Federated Fund
at the address and telephone number shown above.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
PAGE NO.
SUMMARY OF EXPENSES 6
SUMMARY 8
ABOUT THE PROPOSED REORGANIZATION 8
INVESTMENT OBJECTIVES, POLICIES AND LIMITATIONS 8
ADVISORY AND OTHER FEES 9
DISTRIBUTION ARRANGEMENTS 10
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES 11
DIVIDENDS 13
TAX CONSEQUENCES 13
RISK FACTORS 13
INFORMATION ABOUT THE REORGANIZATION 13
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION 13
AGREEMENT AMONG ARM, ARM CAPITAL AND FEDERATED 16
DESCRIPTION OF THE PLAN OF REORGANIZATION 16
DESCRIPTION OF FEDERATED FUND SHARES 16
FEDERAL INCOME TAX CONSEQUENCES 17
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS 17
CAPITALIZATION 19
INFORMATION ABOUT THE FEDERATED FUND, THE TRUST AND THE STATE BOND FUND
20
AUTOMATED CASH MANAGEMENT TRUST, A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST 20
STATE BOND CASH MANAGEMENT FUND 20
VOTING INFORMATION 21
OUTSTANDING SHARES AND VOTING REQUIREMENTS 21
DISSENTER'S RIGHT OF APPRAISAL 22
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY 22
AGREEMENT AND PLAN OF REORGANIZATION -- EXHIBIT A 24
SUMMARY OF EXPENSES
FEDERATED
FUND STATE PRO
(INSTITUTI BOND FORMA
ONAL FUND COMBINE
SERVICE D
SHARES)
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases NONE NONE NONE
(as a percentage of offering
price)
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of NONE NONE NONE
offering price)
Contingent Deferred Sales Charge
(as a percentage of original
purchase NONE NONE NONE
price or redemption proceeds, as
applicable)
Redemption Fee (as a percentage of
amount redeemed, if NONE NONE NONE
applicable)(1)
Exchange Fee NONE NONE NONE
Annual Operating Expenses
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
(AFTER EXPENSE REIMBURSEMENTS OR WAIVERS)
Management Fee 0.20%(2) 0.09%(3 0.20%(2)
)
12b-1 Fee NONE 0.04%(4 NONE
)
Total Other Expenses 0.37%(5) 0.67%(6 0.37%(5)
)
Total Operating 0.57% 0.80% 0.57%
Expenses(7)
(1) Wire-transferred redemptions of Institutional Service Shares of the
Federated Fund of less than $5,000 may be subject to additional fees. A $10.00
fee will be charged for certain redemptions of State Bond Fund shares by wire
transfer.
(2) The management fees of the Federated Fund and the Pro Forma Combined Fund
have been reduced to reflect the voluntary waiver of a portion of the management
fee. The adviser can terminate this voluntary waiver at any time in its sole
discretion. The maximum management fee is 0.50%
(3) The management fee of the State Bond Fund is net of expense reimbursements.
Without such reimbursements, the management fee would have been 0.40%.
(4) The 12b-1 fee of the State Bond Fund is net of expense reimbursements.
Without such reimbursements, the 12b-1 fee would have been 0.20%.
(5) Total other expenses for the Federated Fund and the Pro Forma Combined Fund
include a shareholder services fee of 0.24%. The shareholder services fee has
been reduced to reflect the voluntary waiver of a portion of the shareholder
services fee. The shareholder service provider can terminate this voluntary
waiver at any time in its sole discretion. The maximum shareholder services fee
is 0.25%.
(6) Total other expenses for the State Bond Fund are net of expense
reimbursements. Without such reimbursements, the total other expenses would
have been 2.97%.
(7) The total operating expenses for Institutional Service Shares of the
Federated Fund are based on expenses expected during its fiscal year ending
July 31, 1997. The total operating expenses were 0.57% for the fiscal year
ended July 31, 1996, and would have been 0.88% absent the voluntary waivers of a
portion of the management fee and a portion of the shareholder services fee.
The total operating expenses for the State Bond Fund are based upon expenses
incurred by the State Bond Fund during its fiscal year ended July 31, 1996. The
total operating expenses were 0.80% for the fiscal year ended July 31, 1996, and
would have been 3.57% absent the expense reimbursements of a portion of the
management fee, the 12b-1 fee and other expenses.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of shares of each of the Federated Fund,
the State Bond Fund and the Pro Forma Combined Fund will bear, either directly
or indirectly. For more complete descriptions of the various costs and
expenses, see "Summary - Advisory and Other Fees" and "Summary - Distribution
Arrangements."
Long-term shareholders of the Federated Fund may pay more than the economic
equivalent of the maximum front-end sales charges permitted under the rules of
the National Association of Securities Dealers, Inc.
EXAMPLE
The Example below is intended to assist an investor in understanding the various
costs that an investor will bear directly or indirectly. The Example assumes
payment of operating expenses at the levels set forth in the table above.
An investor would pay the 1 3 5 10
following expenses on a $1,000 year years years years
investment, assuming (1) 5%
annual return and (2) redemption
at the end of each time period.
Expenses would be the same if
there were no redemption at the
end of each time period.
Federated Fund $6 $18 $32 $71
State Bond Fund $8 $26 $44 $99
Pro Forma Combined $6 $18 $32 $71
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, the
Prospectus of the Federated Fund dated September 30, 1996, the Statement of
Additional Information of the Federated Fund dated September 30, 1996, the
Prospectus of the State Bond Fund dated December 1, 1995, the Statement of
Additional Information of the State Bond Fund dated December 1, 1995, and the
Plan, a copy of which is attached to this Prospectus/Proxy Statement as Exhibit
A.
About the Proposed Reorganization
The Board of Directors of the State Bond Fund has voted to recommend to holders
of the shares of the State Bond Fund the approval of the Plan whereby the
Federated Fund, a portfolio of the Trust, would acquire all of the net assets of
the State Bond Fund in exchange for the Federated Fund's Institutional Service
Shares to be distributed pro rata by the State Bond Fund to its shareholders in
complete liquidation and dissolution of the State Bond Fund (the
"Reorganization"). As a result of the Reorganization, each shareholder of the
State Bond Fund will become the owner of the Federated Fund's Institutional
Service Shares having a total net asset value equal to the total net asset value
of his or her holdings in the State Bond Fund on the date of the Reorganization,
i.e., the Closing Date (as hereinafter defined).
As a condition to the Reorganization transactions, the Trust and the State Bond
Fund will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the
Internal Revenue Code of 1986, as amended (the `Code''), so that no gain or
loss will be recognized by either the Federated Fund or the State Bond Fund or
the shareholders of the State Bond Fund. The tax basis of the Federated Fund's
Institutional Service Shares received by State Bond Fund shareholders will be
the same as the tax basis of their shares in the State Bond Fund. After the
acquisition is completed, the State Bond Fund will be dissolved.
Investment Objectives, Policies and Limitations
The investment objective of the Federated Fund is stability of principal and
current income consistent with stability of principal. This investment
objective may not be changed without the affirmative vote of a majority of the
outstanding voting securities of the Federated Fund, as defined in the
Investment Company Act of 1940, as amended (the `1940 Act''). The Federated
Fund pursues its investment objective by investing in a portfolio of short-term
money market instruments.
The investment objectives of the State Bond Fund are high current income,
preservation of capital and liquidity which it pursues by investing in high
quality money market instruments. This investment objective may not be changed
without the affirmative vote of a majority of the outstanding voting securities
of the State Bond Fund, as defined in the 1940 Act.
Both the Federated Fund and the State Bond Fund are money market mutual funds
that seek to maintain a stable net asset value of $1.00 per share. There can be
no assurance that either the Federated Fund or the State Bond Fund will be able
to maintain such a stable net asset value. The Federated Fund and the State
Bond Fund are subject to the investment restrictions of Rule 2a-7 of the 1940
Act which requires that each fund maintain a dollar-weighted average maturity of
not more than 90 days and invest exclusively in securities that mature within
397 days. Rule 2a-7 also requires that all investments be limited to U.S.
dollar-denominated investments that: (1) present `minimal credit risks,'' and
(2) are at the time of acquisition `Eligible Securities,'' as defined in
Rule 2a-7.
The Federated Fund pursues its investment objective by investing in a portfolio
of money market instruments maturing in 13 months or less. The average maturity
of the money market instruments in the Federated Fund's portfolio computed on a
dollar-weighted basis, will be 90 days or less. The Federated Fund invests in
high quality money market instruments that are either rated in the highest
short-term rating category by one or more nationally recognized statistical
rating organizations (`NRSROs'') or are of comparable quality to securities
having such ratings. The Federated Fund invests only in instruments denominated
and payable in U.S. dollars. The Federated Fund may enter into repurchase
agreements, invest in credit-enhanced instruments, acquire securities that are
subject to demand features, purchase short-term U.S. Government obligations on a
when-issued or delayed delivery basis, and invest in restricted and illiquid
securities (subject to a limit on all illiquid securities of 10% of its net
assets). Unless otherwise designated, the investment policies of the Federated
Fund may be changed by the Board of Trustees without shareholder approval,
although shareholders will be notified before any material change becomes
effective.
The State Bond Fund invests in high quality money market instruments, including:
U.S. Government obligations, bank obligations, commercial paper and corporate
debt securities. The State Bond Fund may enter into repurchase agreements
(subject to a limit on all repurchase agreements of more than one week's
duration of 10% of its net assets), lend portfolio securities and trade
investments to take advantage of short-term market movements. Unless otherwise
designated, the investment policies of the State Bond Fund may be changed by the
Board of Directors without shareholder approval.
Both the Federated Fund and the State Bond Fund are subject to certain
investment limitations. For the Federated Fund, these include investment
limitations which prohibit it from borrowing money directly or through reverse
repurchase agreements or pledging securities except, under certain
circumstances, the Federated Fund may borrow up to one-third of the value of its
total assets and pledge up to 10% of the value of its total assets to secure
such borrowings. These investment limitations cannot be changed without
shareholder approval.
The State Bond Fund has investment limitations which prohibit it from
(1) borrowing money, except for temporary purposes and in an aggregate amount
not in excess of 10% of the value of the total assets of the State Bond Fund,
provided that borrowings in excess of 5% of such value are permitted from banks
only, and that the State Bond Fund will not purchase securities when borrowings
exceed 5% of such value; (2) investing more than 25% of its assets in securities
of issuers in any one industry (provided that the State Bond Fund can
concentrate its investments in money market instruments issued by the U.S.
Government or its agencies or domestic banks); (3) mortgaging or pledging
assets, except that up to 10% of the State Bond Fund's assets can be used to
secure borrowings; (4) investing more than 5% of its assets in any one issuer
other than the U.S. Government or its agencies; or (5) investing more than 5% of
its assets in the securities of issuers in operation less than three continuous
years. The above investment limitations of the State Bond Fund cannot be
changed without shareholder approval.
In addition to the policies and limitations set forth above, both the Federated
Fund and the State Bond Fund are subject to certain additional investment
policies and limitations, described in the Federated Fund's Statement of
Additional Information dated September 30, 1996, and the State Bond Fund's
Statement of Additional Information dated December 1, 1995. Reference is hereby
made to the Federated Fund's Prospectus and Statement of Additional Information,
each dated September 30, 1996, and to the State Bond Fund's Prospectus and
Statement of Additional Information, each dated December 1, 1995, which set
forth in full the investment objective, policies and investment limitations of
each of the Federated Fund and the State Bond Fund, all of which are
incorporated herein by reference thereto.
Advisory and Other Fees
The annual investment advisory fee for the Federated Fund is 0.50 of 1% of the
Federated Fund's average daily net assets. The investment adviser to the
Federated Fund, Federated Management ("Federated Management"), a subsidiary of
Federated Investors, may voluntarily choose to waive a portion of its advisory
fee or reimburse other expenses of the Federated Fund. This voluntary waiver or
reimbursement may be terminated by Federated Management at any time in its sole
discretion. Federated Management has also undertaken to reimburse the Federated
Fund for operating expenses in excess of limitations established by certain
states. The maximum annual management fee for the State Bond Fund is 0.40 of 1%
on the first $500 million of average daily net assets of the State Bond Fund,
0.35 of 1% on the next $250 million, 0.30 of 1% of the next $250 million and
0.25 of 1% of such assets of the State Bond Fund in excess of $1 billion. The
State Bond Fund's investment manager, ARM Capital Advisors, Inc. (`ARM
Capital'), a wholly-owned subsidiary of ARM Financial Group, Inc. (``ARM''),
has voluntarily agreed to reimburse the State Bond Fund for any expenses
incurred by the State Bond Fund to the extent the State Bond Fund's total
expenses exceeded 0.80% of average daily net assets of the State Bond Fund.
This voluntary arrangement may be terminated by ARM Capital at any time in its
sole discretion. ARM Capital has also undertaken to reimburse the State Bond
Fund for operating expenses in excess of limitations established by certain
states.
Federated Services Company, an affiliate of Federated Management, provides
certain administrative personnel and services necessary to operate the Federated
Fund at an annual rate based upon the average aggregate daily net assets of all
funds advised by Federated Management and its affiliates. The rate charged is
0.15 of 1% on the first $250 million of all such funds' average aggregate daily
net assets, 0.125 of 1% on the next $250 million, 0.10 of 1% on the next $250
million and 0.075 of 1% of all such funds' average aggregate daily net assets in
excess of $750 million, with a minimum annual fee per portfolio of $125,000 plus
$30,000 for each additional class of shares of any such portfolio. Federated
Services Company may choose voluntarily to waive a portion of its fee. The
administrative fee expense for the Federated Fund's most recent fiscal year was
$954,191. Administrative personnel and services necessary to operate the State
Bond Fund are currently provided by ARM Capital and are included in the annual
management fee for the State Bond Fund, as discussed above.
The Federated Fund has entered into a Shareholder Services Agreement under which
it may make payments of up to 0.25 of 1% of the average daily net asset value of
the Institutional Service Shares to obtain certain personal services for
shareholders and the maintenance of shareholder accounts. The Shareholder
Services Agreement provides that Federated Shareholder Services ("FSS"), an
affiliate of Federated Management, either will perform shareholder services
directly or will select financial institutions to perform such services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedule of such fees and the basis upon which such
fees will be paid is determined from time to time by the Federated Fund and FSS.
Other than in connection with payments under a Rule 12b-1 plan as described
below, the State Bond Fund does not make payments to obtain similar shareholder
services.
The total annual operating expenses for Institutional Service Shares of the
Federated Fund were 0.57% of average daily net assets (after waivers) for its
most recent fiscal year. The total annual operating expenses for shares of the
State Bond Fund were 0.80% of average daily net assets (after expense
reimbursements) for its most recent fiscal year. Without such waivers or
reimbursements, the expense ratio of the Federated Fund and the State Bond Fund
would be higher by 0.31% and 2.77%, respectively, of average daily net assets.
Distribution Arrangements
Federated Securities Corp. ("FSC"), an affiliate of Federated Management, is the
principal distributor for shares of the Federated Fund. Institutional Service
Shares of the Federated Fund are sold at net asset value, without a sales
charge, next determined after an order is received. The Federated Fund does not
have a Rule 12b-1 plan in effect with respect to its Institutional Service
Shares and, accordingly, does not, nor does FSC, compensate brokers and dealers
for sales and administrative services performed in connection with sales of
Institutional Service Shares of the Federated Fund pursuant to a plan of
distribution adopted pursuant to Rule 12b-1. However, FSC and FSS, from their
own assets, may pay financial institutions supplemental fees as financial
assistance for providing substantial sales services, distribution-related
support services or shareholder services with respect to the Federated Fund.
Such assistance will be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made by
FSC may be reimbursed by Federated Management or its affiliates.
SBM Financial Services, Inc. (`SBMFS''), an affiliate of ARM Capital, is the
principal distributor for shares of the State Bond Fund. Shares of the State
Bond Fund are sold at net asset value, without a sales charge, next determined
after an order is received. The State Bond Fund has adopted a Rule 12b-1
Distribution Plan (the "Rule 12b-1 Plan") pursuant to which the State Bond Fund
pays SBMFS an amount equal to an annual rate of 0.20 of 1% of the average daily
net assets of the State Bond Fund. The fee may be used by SBMFS to (i) provide
initial and ongoing sales compensation to its investment executives and to other
broker/dealers in connection with the sale of State Bond Fund shares and to pay
for other advertising and promotional expenses in connection with the sale of
State Bond Fund shares, and (ii) provide compensation to entities in connection
with the provision of certain personal and account maintenance services to State
Bond Fund shareholders, including, but not limited to, responding to shareholder
inquiries and providing information on their investments. The Federated Fund
will not assume any liabilities or make any voluntary reimbursements on account
of the State Bond Fund's Rule 12b-1 Plan.
Purchase, Exchange and Redemption Procedures
The transfer agent and dividend disbursing agent for the Federated Fund is
Federated Shareholder Services Company (formerly called Federated Services
Company). The transfer agent and dividend disbursing agent for the State Bond
Fund is ARM Transfer Agency, Inc. Procedures for the purchase, exchange and
redemption of the Federated Fund's Institutional Service Shares differ slightly
from procedures applicable to the purchase, exchange and redemption of the State
Bond Fund's shares. Any questions about such procedures may be directed to, and
assistance in effecting purchases, exchanges or redemptions of the Federated
Fund's Institutional Service Shares or the State Bond Fund's shares may be
obtained from FSC, principal distributor for the Federated Fund, at 1-800-245-
5051, option one or from SBMFS, principal distributor for the State Bond Fund,
at 1-800-328-4735.
Reference is made to the Prospectus of the Federated Fund dated September 30,
1996, and the Prospectus of the State Bond Fund dated December 1, 1995, for a
complete description of the purchase, exchange and redemption procedures
applicable to purchases, exchanges and redemptions of Federated Fund and State
Bond Fund shares, respectively, each of which is incorporated herein by
reference thereto. Set forth below is a brief listing of the significant
purchase, exchange and redemption procedures applicable to the Federated Fund's
Institutional Service Shares and the State Bond Fund's shares.
Purchases of Institutional Service Shares of the Federated Fund may be made
through a financial institution who has an agreement with FSC or, once an
account has been established, by wire, check, phone or direct deposit.
Purchases of shares of the State Bond Fund may be made through SBMFS and through
certain broker/dealers under contract with SBMFS or directly by wire or check
once an account has been established. The minimum initial investment in the
Federated Fund is $25,000; however, an account may be opened with a smaller
amount as long as the $25,000 minimum is reached within 90 days. All accounts
maintained by an institutional investor will be combined together to determine
whether such minimum investment requirement is met. For purposes of the minimum
initial investment, all State Bond Fund shareholder accounts maintained by SBMFS
will be combined to meet the minimum investment requirement. The minimum
initial investment in the State Bond Fund is $1,000. Subsequent investments
must be in amounts of at least $100, unless the subsequent investment is made by
means of the automatic investment plan, in which case the subsequent minimum is
$50. The minimums for IRA, Keogh, and other tax-deferred pension plans in the
State Bond Fund are $250 for initial investment and $50 for subsequent
investments. The Federated Fund and the State Bond Fund each reserves the right
to reject any purchase request. In connection with the sale of Institutional
Service Shares of the Federated Fund, FSC may from time to time offer certain
items of nominal value to any shareholder.
The purchase price of the Federated Fund's Institutional Service Shares and the
State Bond Fund's shares is based on net asset value, without a sales charge.
The net asset value per share for the Federated Fund is calculated at 12:00
noon, 3:00 p.m. (Eastern time), and as of the close of trading (normally
4:00 p.m., Eastern time) on the New York Stock Exchange, Inc. (the `NYSE'') on
each day on which the NYSE is open for business. The net asset value per share
of the State Bond Fund is calculated as of 4:00 p.m. (Eastern time) on days in
which the State Bond Fund is open for business. Purchase orders for the
Federated Fund made through financial institutions are considered received when
the Federated Fund receives payment by wire or converts payment by check from
the financial institution into federal funds. Federated Fund purchase orders by
wire are considered received immediately and payments must be received before
3:00 p.m. (Eastern time) in order to begin earning dividends that same day.
Federated Fund purchase orders received by check are considered received after
the check is converted into federal funds, which normally occurs the business
day after receipt, and shares begin earning dividends the next day. Purchase
orders for shares of the State Bond Fund will begin to earn dividends on the day
that the order is considered effective, which occurs when payments are received
in, or converted into, federal funds.
Holders of Institutional Service Shares of the Federated Fund as a result of the
Reorganization will have exchange privileges with respect to Class A Shares in
certain of the funds for which affiliates of Federated Investors serve as
investment adviser or principal underwriter (collectively, the "Federated
Funds"), each of which has different investment objectives and policies.
Institutional Service Shares of the Federated Fund may be exchanged for Class A
Shares of certain Federated Funds at net asset value plus the applicable sales
charge for that fund. Institutional Service Shares to be exchanged must have a
net asset value which meets the minimum investment requirement for the fund into
which the exchange is being made. Holders of shares of the State Bond Fund have
exchange privileges with respect to shares in certain of the other funds for
which ARM Capital serves as investment manager (collectively, the `State Bond
Group'), each of which has different investment objectives and policies.
Shares of the State Bond Fund purchased directly (i.e., not through an exchange
from another mutual fund in the State Bond Group) may be exchanged for shares in
any other mutual fund in the State Bond Group at net asset value plus the
applicable sales charge for that fund. Shares of the State Bond Fund acquired
through an exchange with another fund in the State Bond Group which have been
held for seven calendar days or more may later be exchanged for shares of any of
the other funds in the State Bond Group at such fund's next determined net asset
value without a sales charge; however, if such exchange is for shares of a fund
which has a higher sales charge than the fund originally purchased and the
shares of the original fund were held for less than six months, an investor must
pay the difference in the sales charge applicable to the purchase of shares of
the original fund and the higher sales charge applicable to the purchase of
shares of the new fund. Exercise of the exchange privilege is treated as a sale
for federal income tax purposes and, accordingly, may have tax consequences for
the shareholder. Information on share exchanges may be obtained from the
Federated Fund or the State Bond Fund, as appropriate.
Redemptions of Federated Fund Institutional Service Shares may be made through a
financial institution, by telephone and by mailing a written request.
Redemptions of State Bond Fund shares may be made through an authorized dealer
or representative of SBMFS, by mailing a written request to the State Bond
Fund's transfer agent or through the State Bond Fund's quick redemption service
or check redemption service. Institutional Service Shares of the Federated Fund
are redeemed at their net asset value next determined after the redemption
request is received on each day on which the Federated Fund computes its net
asset value. Shares of the State Bond Fund are redeemed at their net asset
value next determined after receipt of a redemption request in proper form (or
as next determined on the next business day of the State Bond Fund if the
request is made by telephone and received after 4:00 p.m. Eastern time).
Proceeds will ordinarily be distributed by check within seven days after receipt
of a redemption request.
Dividends
Each of the Federated Fund's and the State Bond Fund's current policy is to
declare dividends daily and pay dividends monthly and to make annual
distributions of net realized capital gains, if any. With respect to both the
Federated Fund and the State Bond Fund, unless a shareholder otherwise
instructs, dividends and capital gain distributions will be reinvested
automatically in additional shares at net asset value.
Tax Consequences
As a condition to the Reorganization transactions, the Trust and the State Bond
Fund will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the Code
so that no gain or loss will be recognized by either the Federated Fund or the
State Bond Fund or the shareholders of the State Bond Fund. The tax basis of
the Federated Fund shares received by State Bond Fund shareholders will be the
same as the tax basis of their shares in the State Bond Fund.
RISK FACTORS
As with other mutual funds that invest primarily in money market securities, the
Federated Fund is subject to market risks. Briefly, these risks include, but
are not limited to, the ability of the issuers of securities owned by the
Federated Fund to meet their obligations for the payment of principal and
interest when due or to repurchase such securities as previously agreed, and, in
the case of certain dollar-denominated obligations issued by domestic or foreign
branches of U.S. and foreign banks and other offshore issuers, international
economic and political developments, foreign governmental restrictions that may
adversely affect the payment of principal or interest and foreign withholding or
other taxes on interest income. Since the State Bond Fund also invests in money
market instruments, these risk factors are generally also present in an
investment in the State Bond Fund. A full discussion of the risks inherent in
investment in the Federated Fund and the State Bond Fund is set forth in the
Federated Fund's Prospectus and Statement of Additional Information, each dated
September 30, 1996, and the State Bond Fund's Prospectus and Statement of
Additional Information, each dated December 1, 1995, each of which is
incorporated herein by reference thereto.
INFORMATION ABOUT THE REORGANIZATION
Background and Reasons for the Proposed Reorganization
On June 14, 1995, SBM Company, which was then the investment adviser to the
State Bond Fund, completed the sale of substantially all of its business
operations to ARM (the `1995 Transaction''). In connection with the 1995
Transaction, ARM Capital became the investment manager of the State Bond Fund.
In addition, ARM acquired all of the outstanding stock of SBMFS, the current
distributor of shares of the State Bond Fund.
Considerations of the Board of Directors of the State Bond Fund. On June 6,
1996, ARM management advised the Board of Directors of the State Bond Fund that
ARM was considering redirecting its corporate strategy away from the management
and distribution of retail mutual funds in order to concentrate more fully on
its core businesses. Moreover, ARM management stated that due to the relatively
small net assets in the State Bond Fund and the other mutual funds in the State
Bond Group, ARM and its affiliates were not in a position to provide the value-
added shareholder services, technological advancements, comprehensive
distribution networks and diversified product choices that many larger mutual
fund complexes offer. As a result, management stated that ARM was engaged in
the identification and analysis of various potential alternatives for the State
Bond Fund and the other funds in the State Bond Group.
After conducting a screening process, ARM determined that in its judgment, the
proposed Reorganization was the most desirable alternative involving the State
Bond Fund that was reasonably available and that it should be presented to the
State Bond Fund's Board of Directors for its consideration.
A meeting of the entire Board of Directors was held on August 16, 1996, at which
Federated (as defined below) presented to the Board information relating to the
overall reputation, financial strength and stability of Federated Investors, the
parent company of Federated Management (together with its affiliates,
`Federated''). Federated, founded in 1955, is among the seven largest mutual
fund sponsors, with over $90 billion invested across more than 250 funds under
management and/or administration by its subsidiaries, and over 2,000 employees.
Federated's management also discussed the growth of assets under management
and/or administration by Federated from approximately $35 billion in 1989 to
over $90 billion as of August 1996. Federated's management explained to the
Board that the majority of this growth came from within Federated through its
multiple distribution channels. The Board was also informed of the variety of
investment products available through Federated, including international funds
and an array of domestic funds broader than currently offered in the State Bond
Group, the exchange privileges that would be available to former State Bond Fund
shareholders if the Reorganization is consummated, and the multiple sales charge
(or `load'') structures available to prospective shareholders. The Board took
into account that if the Reorganization takes place, shareholders of the State
Bond Fund would exchange their shares for shares of the Federated Fund without
the imposition of any sales charge.
Federated's management advised the Board of its reputation for customer
servicing, noting that it has received a #1 rating for five years in a row by
Dalbar, Inc. Federated's management stated that its shareholder services
include advanced technological systems that result in quick shareholder access
to a broad spectrum of information, including: telephonic automated yield and
performance information; consolidated monthly shareholder statements; no-fee
IRAs; quarterly newsletters; year-end tax reporting information; direct deposit;
and telephonic redemption and exchange.
Federated's management also reviewed with the Board relative asset size and
expense ratios, including relative advisory fees. The Board discussed the fact
that the Federated Fund is larger in asset size than the State Bond Fund and
considered potential economies of scale that might be experienced by former
State Bond Fund shareholders if they were to become shareholders of a larger
fund. Federated's management discussed with the Board expense waiver and
reimbursement arrangements with respect to both the Federated Fund in particular
and to the complex generally. The Board noted that ARM Capital could terminate
its voluntary expense waiver and reimbursement arrangements with respect to the
State Bond Fund at any time in its sole discretion.
The Chief Investment Officer, Fixed-Income, of Federated discussed with the
Board the investment philosophy of Federated Management for its funds, including
the Federated Fund. He also described the background and significant investment
experience of Federated portfolio managers and other related personnel issues.
The Board was presented with materials comparing the investment objectives and
policies of the State Bond Fund with those of the Federated Fund, and determined
that they were substantially similar. The Board was also presented with and
discussed materials comparing the performance and relative risks of the State
Bond Fund and the Federated Fund. Federated's management also presented
biographical information about each of the Trustees of the Trust and reviewed
with the Board the structure of its compliance and internal audit departments
and the scope of its training programs.
The Board also considered the potential benefits to ARM if the Reorganization is
consummated. The Board discussed the fact that ARM and ARM Capital would be
compensated for selling the books, records and goodwill relating to the
management of the State Bond Group, agreeing to certain non-competition
arrangements and cooperating in assisting in the transfer of the net assets of
the State Bond Group to the Federated Funds. They also took into account the
proposed payment to SBMFS of 0.25% of the average daily net assets of the
Federated Fund attributable to shareholder accounts serviced by SBMFS, as well
as the possible compensation of SBMFS for distribution of additional Federated
financial products in the future.
The Board noted that the State Bond Fund would not bear any of the costs
involved in the Reorganization, which would be borne entirely by ARM and/or
Federated. In addition, the Board discussed the anticipated tax-free nature of
the Reorganization to the State Bond Fund and its shareholders.
In connection with their consideration of the Reorganization, the Board also
reviewed their fiduciary obligations under state and federal law. They
considered the requirements of Section 15(f) of the 1940 Act, which provides
that an investment manager to an investment company, and the affiliates of such
manager (such as ARM), may receive any amount or benefit in connection with a
sale of any interest in such investment manager which results in an assignment
of an investment management contract if (1) for a period of three years after
such assignment, at least 75% of the board of directors of the investment
company are not `interested persons'' (as defined in the 1940 Act) of the new
investment manager or its predecessor; and (2) no `unfair burden'' (as defined
in the 1940 Act) is imposed on the investment company as a result of the
assignment or any express or implied terms, conditions or understandings
applicable thereto.
With respect to the first condition of Section 15(f) relating to Board
composition, the Board was advised that the Federated Fund's Board of Trustees
presently consists of thirteen (13) Trustees, only three (3) of whom are
`interested persons.'' With respect to the second condition of Section 15(f),
while there is no specific definition of `unfair burden,'' it includes any
arrangement, for two years after the transaction, pursuant to which the
predecessor or successor adviser is entitled to receive compensation from any
person in connection with the mutual fund's purchase or sale of securities,
other than bona fide ordinary compensation as principal underwriter. The
definition of unfair burden also includes any payments from the fund for other
than bona fide investment advisory or other services. The Board considered the
fact that representations were made by Federated and ARM that the agreement
among Federated, ARM and ARM Capital would contain representations and covenants
that the Reorganization would not impose an unfair burden on the State Bond
Group.
After reviewing and considering all of the information provided by Federated and
ARM, including the terms of the Reorganization, the Board, including all of the
Directors who are not interested persons of the State Bond Fund or ARM Capital,
voted unanimously at a special telephonic meeting held on August 26, 1996, to
approve the Reorganization and to recommend it to the shareholders of the State
Bond Fund for their approval.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
REORGANIZATION.
Considerations of the Board of Trustees of the Federated Fund. The Board of
Trustees of the Federated Fund, including the independent Trustees, have
unanimously concluded that consummation of the Reorganization is in the best
interests of the Federated Fund and the shareholders of the Federated Fund and
that the interests of Federated Fund shareholders would not be diluted as a
result of effecting the Reorganization and have unanimously voted to approve the
Plan.
Agreement Among ARM, ARM Capital and Federated
The Reorganization is being proposed as part of an agreement in principle by and
among Federated, ARM and ARM Capital, pursuant to which ARM and ARM Capital
would be compensated for selling to Federated the books, records and goodwill
relating to the management of the State Bond Group and cooperating in
facilitating the transaction contemplated by the agreement. As part of that
agreement, ARM Capital and its affiliates have agreed not to compete with
Federated by providing investment advisory services to certain investment
companies. Following the Reorganization, ARM or its affiliates have agreed to
provide certain services to shareholders for which ARM or its affiliates may
receive fees paid by Federated and/or mutual funds in which the shareholders are
invested.
Description of the Plan of Reorganization
The Plan provides that the Federated Fund will acquire all of the net assets of
the State Bond Fund in exchange for the Federated Fund's Institutional Service
Shares to be distributed pro rata by the State Bond Fund to its shareholders in
complete liquidation of the State Bond Fund on or about December 13, 1996 (the
"Closing Date"). Shareholders of the State Bond Fund will become shareholders
of the Federated Fund as of the close of business on the Closing Date, and will
be entitled to the Federated Fund's next dividend distribution.
As of or prior to the Closing Date, the State Bond Fund will declare and pay a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to its shareholders all taxable income for the
period ending on the Closing Date. In addition, the State Bond Fund's dividend
will include its net capital gains realized in the period ending on the Closing
Date.
Consummation of the Reorganization is subject to the conditions set forth in the
Plan, including receipt of an opinion in form and substance satisfactory to the
State Bond Fund and the Trust, on behalf of the Federated Fund, as described
under the caption "Federal Income Tax Consequences" below. The Plan may be
terminated and the Reorganization may be abandoned at any time before or after
approval by shareholders of the State Bond Fund prior to the Closing Date by
either party if it believes that consummation of the Reorganization would not be
in the best interests of its shareholders.
Federated Management is responsible for the payment of substantially all of the
expenses of the Reorganization incurred by either party, whether or not the
Reorganization is consummated. Such expenses include, but are not limited to,
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 State Bond Fund shareholders and the costs of
holding the Special Meeting (as hereinafter defined). ARM is responsible for
the payment of the legal fees of the State Bond Fund. The accountants' fees of
the State Bond Fund will be borne equally by Federated Management and ARM.
The foregoing description of the Plan entered into between the Trust, on behalf
of the Federated Fund and the State Bond Fund, is qualified in its entirety by
the terms and provisions of the Plan, a copy of which is attached hereto as
Exhibit A and incorporated herein by reference thereto.
Description of Federated Fund Shares
Full and fractional Institutional Service Shares of the Federated Fund will be
issued without the imposition of a sales charge or other fee to the shareholders
of the State Bond Fund in accordance with the procedures described above.
Institutional Service Shares of the Federated Fund to be issued to shareholders
of the State Bond Fund under the Plan will be fully paid and nonassessable when
issued and transferable without restriction and will have no preemptive or
conversion rights. Reference is hereby made to the Prospectus of the Federated
Fund dated September 30, 1996, provided herewith for additional information
about Institutional Service Shares of the Federated Fund.
Federal Income Tax Consequences
As a condition to the Reorganization, the Trust, on behalf of the Federated
Fund, and the State Bond Fund will receive an opinion from Dickstein
Shapiro Morin & Oshinsky LLP, counsel to the Trust, to the effect that, on the
basis of the existing provisions of the Code, current administrative rules and
court decisions, for federal income tax purposes: (1) the Reorganization as set
forth in the Plan will constitute a tax-free reorganization under
Section 368(a)(1)(C) of the Code; (2) no gain or loss will be recognized by the
Federated Fund upon its receipt of the State Bond Fund's assets solely in
exchange for Federated Fund Institutional Service Shares; (3) no gain or loss
will be recognized by the State Bond Fund upon the transfer of its assets to the
Federated Fund in exchange for Federated Fund Institutional Service Shares or
upon the distribution (whether actual or constructive) of the Federated Fund
Institutional Service Shares to the State Bond Fund shareholders in exchange for
their shares of the State Bond Fund; (4) no gain or loss will be recognized by
shareholders of the State Bond Fund upon the exchange of their State Bond Fund
shares for Federated Fund Institutional Service Shares; (5) the tax basis of the
State Bond Fund's assets acquired by the Federated Fund will be the same as the
tax basis of such assets to the State Bond Fund immediately prior to the
Reorganization; (6) the tax basis of Federated Fund Institutional Service Shares
received by each shareholder of the State Bond Fund pursuant to the Plan will be
the same as the tax basis of State Bond Fund shares held by such shareholder
immediately prior to the Reorganization; (7) the holding period of the assets of
the State Bond Fund in the hands of the Federated Fund will include the period
during which those assets were held by the State Bond Fund; and (8) the holding
period of Federated Fund Institutional Service Shares received by each
shareholder of the State Bond Fund will include the period during which the
State Bond Fund shares exchanged therefor were held by such shareholder,
provided the State Bond Fund shares were held as capital assets on the date of
the Reorganization.
Shareholders should recognize that an opinion of counsel is not binding on the
Internal Revenue Service (`IRS'') or any court. The State Bond Fund does not
expect to obtain a ruling from the IRS regarding the consequences of the
Reorganization. Accordingly, if the IRS sought to challenge the tax treatment
of the Reorganization and was successful, neither of which is anticipated, the
Reorganization would be treated as a taxable sale of assets of the State Bond
Fund, followed by the taxable liquidation of the State Bond Fund.
The Federated Fund does not anticipate that taxable sales involving significant
amounts of securities of the combined portfolio will have to be made after the
Reorganization to effect a realignment with the policies and investment
practices of the Federated Fund.
Comparative Information on Shareholder Rights and Obligations
General. Both the Trust and the State Bond Fund are open-end, diversified
management investment companies registered under the 1940 Act, which
continuously offer to sell shares at their current net asset value. The Trust
is organized as a business trust pursuant to a Declaration of Trust under the
laws of the Commonwealth of Massachusetts. The Trust is governed by its
Declaration of Trust, Bylaws and Board of Trustees, in addition to applicable
state and federal law. The State Bond Fund is organized as a separate series of
State Bond Money Funds, Inc. under the laws of the State of Maryland and is
governed by its Articles of Incorporation, Bylaws and Board of Directors, in
addition to applicable state and federal law. Set forth below is a brief
summary of the significant rights of shareholders of the Trust and the State
Bond Fund.
Shares of the Trust and the State Bond Fund. The Trust is authorized to issue
an unlimited number of shares of beneficial interest which have no par value.
The Federated Fund is a separate series of the Trust. The Board of Trustees has
established two classes of shares of the Federated Fund, known as Institutional
Service Shares and Cash II Shares. The State Bond Fund has an authorized
capital of 20,000,000,000 shares of common stock with a par value of $.00001 per
share. The State Bond Fund is currently the sole investment portfolio of State
Bond Money Funds, Inc. and has only one class of shares. Issued and outstanding
shares of both the Federated Fund and State Bond Fund are fully paid and
nonassessable, and freely transferable.
Voting Rights. Neither the Trust nor the State Bond Fund is required to hold
annual meetings of shareholders, except as required under the 1940 Act.
Shareholder approval is necessary only for certain changes in operations or the
election of trustees/directors under certain circumstances. The Trust requires
that a special meeting of shareholders be called for any permissible purpose
upon the written request of the holders of at least 10% of the outstanding
shares of the series or class of the Trust entitled to vote. A special meeting
of the shareholders of the State Bond Fund is required to be called upon the
written request of shareholders representing not less than 25% of the shares
entitled to vote. Each share of the Federated Fund gives the shareholder one
vote in trustee elections and other matters submitted to shareholders for vote.
All shares of each portfolio or class in the Trust have equal voting rights
except that in matters affecting only a particular portfolio or class, only
shares of that portfolio or class are entitled to vote. All shares of the State
Bond Fund have equal voting rights.
Trustees and Directors. The Declaration of Trust of the Trust provides that the
term of office of each Trustee shall be for the lifetime of the Trust or the
earlier of his or her death, resignation, retirement, removal or mental or
physical incapacity. A Trustee of the Trust may be removed by: (i) written
instrument signed by at least two-thirds of the Trustees, (ii) a majority vote
of the Trustees if the Trustee has become mentally or physically incapacitated
or (iii) a vote of two-thirds of the outstanding shares at any special meeting
of shareholders. A vacancy on the Board may be filled by the Trustees remaining
in office. The Bylaws of the State Bond Fund provide that each Director holds
office from the time of his or her election until the next annual meeting of
shareholders or special meeting at which Directors are elected and until his or
her successor is duly elected and qualifies. No Director of the State Bond Fund
shall be qualified for election by the shareholders if he or she has attained
the age of 70. The Board of Directors of the State Bond Fund shall call a
meeting of shareholders for the purpose of voting upon the question of removal
of any Director or Directors when requested in writing to do so by the record
holders of not less than 10% of the outstanding shares. A Director of the State
Bond Fund may be removed, with or without cause, by the affirmative vote of a
majority of the votes entitled to be cast for the election of Directors, and
such shareholders may elect a qualified person as Director to replace the
Director so removed. In case of any vacancy on the Board of Directors, a
majority of the remaining Directors may elect a successor to hold office until
the next annual meeting of the shareholders or special meeting at which
Directors are elected and until his or her successor is duly elected and
qualifies. A meeting of shareholders will be required for the purpose of
electing additional Trustees or Directors whenever fewer than a majority of the
Trustees or Directors then in office were elected by shareholders.
Liability of Trustees/Directors and Officers. Under the Declaration of Trust of
the Trust, a Trustee or officer will be personally liable only for his or her
own willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office. The Declaration of
Trust further provides that Trustees and officers will be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses of litigation unless the person's conduct is determined to constitute
willful misfeasance, bad faith, gross negligence or reckless disregard of the
person's duties. The Articles of Amendment and Restatement of the State Bond
Fund contain a provision eliminating liability of directors and officers to the
State Bond Fund or its shareholders to the fullest extent permitted by Maryland
law. Therefore, directors and officers of the State Bond Fund will not be
liable for monetary damages to the State Bond Fund or its shareholders for
breach of the duty of care. However, such elimination of liability regarding a
director's duty of care does not permit the elimination or limitation of
liability (1) to the extent that it is proved that the person actually received
an improper benefit or profit in money, property or services; (2) to the extent
that a judgment or other final adjudication adverse to the person is entered in
a proceeding based on a finding in the proceeding that the person's action, or
failure to act, was committed in bad faith or was the result of active and
deliberate dishonesty and was material to the cause of action adjudicated in the
proceeding; or (3) for any action or failure to act occurring prior to February
18, 1988. In addition, due to the provisions of the 1940 Act, shareholders
would still have the right to pursue monetary claims against directors or
officers for acts involving willful malfeasance, bad faith, gross negligence or
reckless disregard of their duties as directors or officers. Under the
agreement in principle by and among Federated, ARM and ARM Capital, Federated
has agreed for a period of three (3) years following the Closing Date to provide
coverage under a directors and officers liability insurance policy for the
current Directors of the State Bond Fund.
Shareholder Liability. Under certain circumstances, shareholders of the
Federated Fund may be held personally liable as partners under Massachusetts law
for obligations of the Trust on behalf of the Federated Fund. To protect its
shareholders, the Trust has filed legal documents with the Commonwealth of
Massachusetts that expressly disclaim the liability of its shareholders for such
acts or obligations of the Trust. These documents require that notice of this
disclaimer be given in each agreement, obligation or instrument that the Trust
or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations on behalf of the Federated Fund, the Trust is required by the
Declaration of Trust to use its property to protect or compensate the
shareholder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them.
Termination or Liquidation. In the event of the termination or liquidation of
the Trust or any portfolio or class of the Trust or of the termination or
liquidation of the State Bond Fund, the shareholders of the respective portfolio
or class are entitled to receive, when and as declared by the Trustees or the
Directors, as the case may be, the excess of the assets belonging to the
respective portfolio or class over the liabilities belonging to the respective
portfolio or class. In either case, the assets belonging to the portfolio or
class will be distributed among the shareholders in proportion to the number of
shares of the respective portfolio or class held by them.
Capitalization
The following table sets forth the unaudited capitalization of the Institutional
Service Shares of the Federated Fund and the shares of the State Bond Fund as of
October 11, 1996, and on a pro forma combined basis as of that date:
Federated Fund
(Institutional State Bond Pro Forma
Service Shares) Fund Combined
Net Assets $1,332,349,408 $2,784,697 $1,335,134,105
Net Asset Value Per Share $1.00 $1.00
$1.00
Shares Outstanding 1,332,349,408 2,784,697 1,335,134,105
INFORMATION ABOUT THE FEDERATED FUND, THE TRUST
AND THE STATE BOND FUND
Automated Cash Management Trust, a portfolio of Money Market Obligations Trust
Information about the Trust and the Federated Fund is contained in the Federated
Fund's current Prospectus dated September 30, 1996, a copy of which is included
herewith and incorporated herein by reference. Additional information about the
Federated Fund is included in the Federated Fund's Statement of Additional
Information dated September 30, 1996, and the Statement of Additional
Information dated November 2, 1996 (relating to this Prospectus/Proxy
Statement), each of which is incorporated herein by reference. Copies of the
Statements of Additional Information, which have been filed with the Securities
and Exchange Commission (the "SEC"), may be obtained upon request and without
charge by contacting the Federated Fund at 1-800-245-5051, option one, or by
writing the Federated Fund at Federated Investors Tower, Pittsburgh, PA 15222-
3779. The Trust is subject to the informational requirements of the Securities
Act of 1933, as amended (the `1933 Act''), the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the 1940 Act and in accordance therewith files
reports and other information with the SEC. Reports, proxy and information
statements, charter documents and other information filed by the Trust or the
Federated Fund can be obtained by calling or writing the Federated Fund and can
also be inspected and copied by the public at the public reference facilities
maintained by the SEC in Washington, D.C. located at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at certain of its regional offices
located at Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, IL 60661 and 13th Floor, Seven World Trade Center, New York, NY 10048.
Copies of such material can be obtained from the Public Reference Branch, Office
of Consumer Affairs and Information Services, SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
This Prospectus/Proxy Statement, which constitutes part of a Registration
Statement filed by the Trust with the SEC under the 1933 Act, omits certain of
the information contained in the Registration Statement. Reference is hereby
made to the Registration Statement and to the exhibits thereto for further
information with respect to the Trust and the Federated Fund and the shares
offered hereby. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each such statement
is qualified in its entirety by reference to the copy of the applicable document
filed with the SEC.
State Bond Cash Management Fund
Information about the State Bond Fund and State Bond Money Funds, Inc. is
contained in the State Bond Fund's current Prospectus dated December 1, 1995,
the Annual Report to Shareholders dated July 31, 1996, the Statement of
Additional Information dated December 1, 1995, and the Statement of Additional
Information dated November 2, 1996 (relating to this Prospectus/Proxy
Statement), each of which is incorporated herein by reference. Copies of such
Prospectus, Annual Report, and Statements of Additional Information, which have
been filed with the SEC, may be obtained upon request and without charge from
the State Bond Fund by calling 1-800-328-4735 or by writing to the State Bond
Fund at 100 North Minnesota Street, P.O. Box 69, New Ulm, Minnesota 56073-0069.
The State Bond Fund is subject to the informational requirements of the 1933
Act, the 1934 Act and the 1940 Act and in accordance therewith files reports and
other information with the SEC. Reports, proxy and information statements,
charter documents and other information filed by State Bond Money Funds, Inc. or
its portfolio, the State Bond Fund, can be obtained by calling or writing the
State Bond Fund and can also be inspected at the public reference facilities
maintained by the SEC or obtained at prescribed rates at the addresses listed in
the previous section.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of the State Bond Fund of proxies for use at the
Special Meeting of Shareholders (the "Special Meeting") to be held at 4:15 p.m.
on December 9, 1996 at: 100 North Minnesota Street, New Ulm, Minnesota 56073-
0069, and at any adjournments thereof. The proxy confers discretionary
authority on the persons designated therein to vote on other business not
currently contemplated which may properly come before the Special Meeting. A
proxy, if properly executed, duly returned and not revoked, will be voted in
accordance with the specifications thereon; if no instructions are given, such
proxy will be voted in favor of the Plan. A shareholder may revoke a proxy at
any time prior to use by filing with the Secretary of the State Bond Fund an
instrument revoking the proxy, by submitting a proxy bearing a later date or by
attending and voting at the Special Meeting.
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by Federated Management. In addition to solicitations
through the mails, proxies may be solicited by officers, employees and agents of
the State Bond Fund, Federated Management and their respective affiliates at no
additional cost to the State Bond Fund. Such solicitations may be by telephone,
telegraph or personal contact. Federated Management 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 Directors of the State Bond 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 and any adjournments
thereof. As of the record date, there were 2,784,697 shares of the State Bond
Fund outstanding. Each of the State Bond Fund's shares is entitled to one vote
and fractional shares have proportionate voting rights. On the record date, the
Directors and officers of the State Bond Fund as a group owned less than 1% of
the outstanding shares of the State Bond Fund. To the best knowledge of ARM
Capital, as of the record date, no person, except as set forth in the table
below, owned beneficially or of record 5% or more of the State Bond Fund's
outstanding shares.
PERCENT OF
NAME AND ADDRESS SHARES OUTSTANDING
OWNED SHARES
Estate of Ernest 241,228.5 8.66%
Reitzel 90
Kenneth D. Reitzel PR
Madison, South Dakota
As of the record date, there were 1,332,349,408 Institutional Service and 300
Cash II Shares of the Federated Fund outstanding. On the record date, the
Trustees and officers of the Federated Fund as a group owned less than 1% of the
outstanding Institutional Service and Cash II Shares of the Federated Fund. To
the best knowledge of Federated Management, as of the record date, no person,
except as set forth in the table below, owned beneficially or of record 5% or
more of the Federated Fund's outstanding Institutional Service or Cash II
Shares.
INSTITUTI PERCENT OF
ONAL NAME AND ADDRESS SHARES OUTSTANDING
SERVICE OWNED SHARES
SHARES
Stephens, Inc. Omnibus
Account
Little Rock, Arkansas 150,177,2 11.27%
20.170
BHC Securities Inc.,
Cash Balance Sweep
Account
Philadelphia, 121,527,0 9.12%
Pennsylvania 83.520
Fiduciary Trust
Company International,
Customer Account
New York, New York 90,608,90 6.80%
0.000
PERCENT OF
NAME AND ADDRESS SHARES OUTSTANDING
OWNED SHARES
CASH II
SHARES
Federated Management
Pittsburgh, 100.000 33.33%
Pennsylvania
Federated Services
Company
Pittsburgh, 200.000 66.67%
Pennsylvania
Approval of the Plan requires the affirmative vote of a majority of the
outstanding shares of the State Bond Fund. The votes of shareholders of the
Federated Fund are not being solicited since their approval is not required in
order to effect the Reorganization.
One-third of the issued and outstanding shares of the State Bond Fund,
represented in person or by proxy, will be required to constitute a quorum at
the Special Meeting for the purpose of voting on the proposed Reorganization.
For purposes of determining the presence of a quorum, shares represented by
abstentions and "broker non-votes" will be counted as present, but not as votes
cast, at the Special Meeting. Because approval of the Reorganization requires
the approval of a majority of the outstanding shares of the State Bond Fund,
abstentions and "broker non-votes" will have the same effect as if they were
votes against the Reorganization.
Dissenter's Right of Appraisal
Shareholders of the State Bond Fund objecting to the Reorganization have no
appraisal rights under the State Bond Fund's Articles of Incorporation or
Maryland law. Under the Plan, if approved by State Bond Fund shareholders, each
shareholder will become the owner of Institutional Service Shares of the
Federated Fund having a total net asset value equal to the total net asset value
of his or her holdings in the State Bond Fund at the Closing Date.
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY
Management of the State Bond Fund knows of no other matters that may properly
be, or which are likely to be, brought before the Special Meeting. However, if
any other business shall properly come before the Special Meeting, the persons
named in the proxy intend to vote thereon in accordance with their best
judgment.
If at the time any session of the Special Meeting is called to order, a quorum
is not present in person or by proxy, the persons named as proxies may vote
those proxies which have been received to adjourn the Special Meeting to a later
date. In the event that a quorum is present but sufficient votes in favor of
one or more of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote those proxies which they are
entitled to vote in favor of the proposal, in favor of such an adjournment, and
will vote those proxies required to be voted against the proposal, against any
such adjournment.
Whether or not shareholders expect to attend the Special Meeting, all
shareholders are urged to sign, fill in and return the enclosed proxy form
promptly.
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated September 23, 1996 (the "Agreement"),
between MONEY MARKET OBLIGATIONS TRUST, a Massachusetts business trust (the
"Trust"), on behalf of its portfolio AUTOMATED CASH MANAGEMENT TRUST
(hereinafter called the "Acquiring Fund"), and STATE BOND MONEY FUNDS, INC., a
Maryland corporation (hereinafter called the "Corporation") on behalf of its
portfolio STATE BOND CASH MANAGEMENT FUND (hereinafter called the "Acquired
Fund").
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all of the net assets of the
Acquired Fund in exchange solely for Institutional Service Shares of the
Acquiring Fund (the "Acquiring Fund Shares") and the distribution, after the
Closing Date (as hereinafter defined), of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Corporation and the Trust are registered open-end management
investment companies and the Acquired Fund owns securities in which the
Acquiring Fund is permitted to invest;
WHEREAS, both the Acquired Fund and the Acquiring Fund are authorized to issue
shares of common stock or shares of beneficial interest, as the case may be;
WHEREAS, the Board of Trustees, including a majority of the trustees who are not
"interested persons" (as defined under the Investment Company Act of 1940, as
amended (the "1940 Act")), of the Trust has determined that the exchange of all
of the net assets of the Acquired Fund for Acquiring Fund Shares is in the best
interests of the Acquiring Fund shareholders and that the interests of the
existing shareholders of the Acquiring Fund would not be diluted as a result of
this transaction; and
WHEREAS, the Board of Directors, including a majority of the directors who are
not "interested persons" (as defined under the 1940 Act), of the Corporation has
determined that the exchange of all of the net assets of the Acquired Fund for
Acquiring Fund Shares is in the best interests of the Acquired Fund
shareholders;
NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING FUND
SHARES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions contained herein, the Acquired Fund
agrees to assign, transfer and convey to the Acquiring Fund all of the net
assets of the Acquired Fund, including all securities and cash, other than cash
in an amount necessary to pay any unpaid dividends and distributions as provided
in paragraph 1.5, beneficially owned by the Acquired Fund, and the Acquiring
Fund agrees in exchange therefor to deliver to the Acquired Fund the number of
Acquiring Fund Shares, including fractional Acquiring Fund Shares, determined as
set forth in paragraph 2.3. Such transaction shall take place at the closing
(the "Closing") on the closing date (the "Closing Date") provided for in
paragraph 3.1. In lieu of delivering certificates for the Acquiring Fund
Shares, the Acquiring Fund shall credit the Acquiring Fund Shares to the
Acquired Fund's account, for the benefit of its shareholders, on the stock
record books of the Acquiring Fund and shall deliver a confirmation thereof to
the Acquired Fund.
1.2 The Acquired Fund will discharge or make provision for the discharge of all
of its liabilities and obligations prior to or on the Closing Date.
1.3 Delivery of the assets of the Acquired Fund to be transferred shall be made
on the Closing Date and shall be delivered to State Street Bank and Trust
Company (hereinafter called "State Street"), Boston, Massachusetts, the
Acquiring Fund's custodian (the "Custodian"), for the account of the Acquiring
Fund, together with proper instructions and all necessary documents to transfer
to the account of the Acquiring Fund, free and clear of all liens, encumbrances,
rights, restrictions and claims created by the Acquired Fund. All cash
delivered shall be in the form of immediately available funds payable to the
order of the Custodian for the account of the Acquiring Fund.
1.4 The Acquired Fund will pay or cause to be paid to the Acquiring Fund any
dividends or interest received on or after the Closing Date with respect to
assets transferred to the Acquiring Fund thereunder. The Acquired Fund will
transfer to the Acquiring Fund any distributions, rights or other assets
received by the Acquired Fund after the Closing Date as distributions on or with
respect to the securities transferred. Such assets shall be deemed included in
assets transferred to the Acquiring Fund on the Closing Date and shall not be
separately valued.
1.5 As soon after the Closing Date as is conveniently practicable, the Acquired
Fund will liquidate and distribute pro rata to the Acquired Fund's shareholders
of record, determined as of the 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. In addition, each Acquired Fund
Shareholder shall have the right to receive any unpaid dividends or other
distributions which were declared before the Valuation Date (as hereinafter
defined) with respect to the shares of the Acquired Fund that are held by the
shareholder on the Valuation Date. Such liquidation and distribution will be
accomplished by the transfer of the Acquiring Fund Shares then credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share record books of the Acquiring Fund in the names of the Acquired
Fund Shareholders, and representing the respective pro rata number of the
Acquiring Fund Shares due such shareholders, based on their ownership of shares
of the Acquired Fund on the Closing Date. 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 shall not issue
certificates representing the Acquiring Fund Shares in connection with such
exchange.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued in
the manner described in the Acquiring Fund's current prospectus and statement of
additional information.
1.7 Any transfer taxes payable upon issuance of 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 that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.8 Any reporting responsibility of the Acquired Fund is and shall remain the
responsibility of the Corporation up to and including the Closing Date and such
later dates, with respect to dissolution and deregistration of the Corporation,
on which the Corporation is dissolved and deregistered.
1.9 The Corporation shall be deregistered as an investment company under the
1940 Act and dissolved as a Maryland corporation as promptly as practicable
following the Closing Date and the making of all distributions pursuant to
paragraph 1.5.
2. VALUATION.
2.1 The value of the Acquired Fund's net assets to be acquired by the Acquiring
Fund hereunder shall be the value of such assets computed as of the close of the
New York Stock Exchange (normally 4:00 p.m. Eastern time) on the Closing Date
(such time and date being herein 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 each Acquiring Fund Share shall be the net asset
value per share computed as of the close of the New York Stock Exchange
(normally 4:00 p.m. Eastern time) 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) in exchange for the Acquired Fund's net assets shall be
determined by dividing the value of the net assets of the Acquired Fund
determined using the same valuation procedures referred to in paragraph 2.1, by
the net asset value of one Acquiring Fund Share determined in accordance with
paragraph 2.2.
2.4 All computations of value shall be made in accordance with the regular
practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be December 13, 1996 or such later date as the
parties may mutually agree. All acts taking place at the Closing 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 4:00 p.m. (Eastern
time) at the offices of the Acquiring Fund, Federated Investors Tower,
Pittsburgh, PA 15222-3779, 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 ARM Transfer Agency, Inc., as transfer agent for the Acquired Fund, shall
deliver at the Closing a certificate of an authorized officer stating that its
records contain the names and addresses of the Acquired Fund Shareholders and
the number and percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue
and deliver a confirmation evidencing the Acquiring Fund Shares to be credited
on the Closing Date to the Secretary of the Acquired Fund, or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, assumption agreements, share certificates, if any, receipts or
other documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Corporation represents and warrants to the Trust as follows:
(a) The Corporation is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland and has power to own all
of its properties and assets and to carry out this Agreement.
(b) The Corporation is registered under the 1940 Act, as an open-end,
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.
(c) The Corporation is not, and the execution, delivery and performance of this
Agreement will not result, in material violation of the Corporation's Articles
of Incorporation or Bylaws or of any agreement, indenture, instrument, contract,
lease or other undertaking to which the Acquired Fund is a party or by which it
is bound.
(d) The Acquired Fund has no material contracts or other commitments
outstanding (other than this Agreement) which will result in liability to it
after the Closing Date.
(e) No litigation or administrative proceeding or investigation of or before
any court or governmental body is currently pending or to its knowledge
threatened against the Acquired Fund or any of its properties or assets which,
if adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Acquired Fund knows of no facts
which might form the basis for the institution of such proceedings, and is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects its business
or its ability to consummate the transactions herein contemplated.
(f) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable requirements of
the Securities Act of 1933, as amended (the "1933 Act"), and the 1940 Act and
the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(g) The Statement of Assets and Liabilities of the Acquired Fund at July 31,
1995 and 1996, have been audited by Ernst & Young LLP, independent auditors, and
have been prepared in accordance with generally accepted accounting principles,
consistently applied, and such statements (copies of which have been furnished
to the Acquiring Fund) fairly reflect the financial condition of the Acquired
Fund as of such dates, and there are no known contingent liabilities of the
Acquired Fund as of such dates not disclosed therein.
(h) Since July 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 indebtedness maturing more than one year from the date such
indebtedness was incurred, except as otherwise disclosed to and accepted by the
Acquiring Fund.
(i) At the Closing Date, all federal and other tax returns and reports of the
Acquired Fund required by law to have been filed by such date shall have been
filed or an appropriate extension obtained, and all federal and other taxes
shall have been paid so far as due, or provision shall have been made for the
payment thereof or contest in good faith, 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 of its operation, subject to applicable statute of
limitation periods, 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 the Acquired Fund are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable. All of the issued and outstanding shares of the Acquired Fund
will, at the time of the Closing, be held by the persons and in the amounts set
forth in the records of the transfer agent as provided in paragraph 3.3. The
Acquired Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Acquired Fund shares, nor is there
outstanding any security convertible into any of the Acquired Fund shares.
(l) 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.
(m) 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 Corporation 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 (regardless of whether the enforceability is
considered in a proceeding in equity or at law).
(n) The prospectus/proxy statement of the Acquired Fund (the "Prospectus/Proxy
Statement") to be included in the Registration Statement referred to in
paragraph 5.5 (only insofar as it relates to the Acquired Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading.
4.2 The Trust represents and warrants to the Corporation as follows:
(a) The Trust is a business trust duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has the power
to carry on its business as it is now being conducted and to carry out this
Agreement.
(b) The Trust is registered under the 1940 Act as an open-end, diversified,
management investment company, and such registration has not been revoked or
rescinded and is in full force and effect.
(c) The Acquiring Fund is not, and the execution, delivery and performance of
this Agreement will not result, in material violation of the Trust's Declaration
of Trust or Bylaws or of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Acquiring Fund is a party or by which it is
bound.
(d) No litigation or administrative proceeding or investigation of or before
any court or governmental body is currently pending or to its knowledge
threatened against the Acquiring Fund or any of its properties or assets which,
if adversely determined, would materially and adversely affect its financial
condition or the conduct of its business. The Acquiring Fund knows of no facts
which might form the basis for the institution of such proceedings, and is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body which materially and adversely affects its business
or its ability to consummate the transactions contemplated herein.
(e) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(f) The Statement of Assets and Liabilities of the Acquiring Fund at July 31,
1995 and 1996, have been audited by Arthur Andersen LLP, independent auditors,
and have been prepared in accordance with generally accepted accounting
principles, and such statements (copies of which have been furnished to the
Acquired Fund) fairly reflect the financial condition of the Acquiring Fund as
of such dates, and there are no known contingent liabilities of the Acquiring
Fund as of such dates not disclosed therein.
(g) Since July 31, 1996, there has not been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any incurrence by the
Acquiring Fund of indebtedness maturing more than one year from the date such
indebtedness was incurred, except as disclosed to and accepted by the Acquired
Fund.
(h) At the Closing Date, all federal and other tax returns and reports of the
Acquiring Fund required by law to have been filed or an appropriate extension
obtained, by such date shall have been filed, and all federal and other taxes
shall have been paid so far as due, or provision shall have been made for the
payment thereof or contest in good faith, 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.
(i) For each fiscal year of its operation, subject to applicable statute of
limitation periods, the Acquiring Fund has met the requirements of Subchapter M
of the Code for qualification and treatment as a regulated investment company.
(j) All issued and outstanding Acquiring Fund Shares are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid and non-
assessable. The Acquiring Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Acquiring Fund Shares,
nor is there outstanding any security convertible into any Acquiring Fund
Shares.
(k) The execution, delivery and performance of this Agreement has been duly
authorized by all necessary action on the part of the Trust, and this Agreement
constitutes the valid and legally binding obligation of the Acquiring Fund
enforceable in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws relating to or affecting creditors' rights generally and court decisions
with respect thereto, and to general principles of equity and the discretion of
the court (regardless of whether the enforceability is considered in a
proceeding in equity or at law).
(l) The Prospectus/Proxy Statement to be included in the Registration Statement
(only insofar as it relates to the Acquiring Fund) will, on the effective date
of the Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
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 Corporation will call a meeting of the Acquired Fund Shareholders to
consider and act upon this Agreement and to take all other action necessary to
obtain approval of the transactions contemplated herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund will each take, or cause to be taken, all action, and do or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days after the
Closing Date, the Acquired Fund shall furnish the Acquiring Fund, in such form
as is reasonably satisfactory to the Acquiring Fund, a statement of the earnings
and profits of the Acquired Fund for federal income tax purposes which will be
carried over to the Acquiring Fund as a result of Section 381 of the Code and
which will be certified by the Corporation's President and its Treasurer.
5.5 The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of the Prospectus/Proxy Statement,
referred to in paragraph 4.1(n), all to be included in a Registration Statement
on Form N-14 of the Acquiring Fund (the "Registration Statement"), in compliance
with the 1933 Act, the Securities Exchange Act of 1934, as amended, and the 1940
Act in connection with the meeting of the Acquired Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state Blue Sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
5.7 Prior to the Valuation Date, the Acquired Fund shall have declared a
dividend or dividends, with a record date and ex-dividend date prior to the
Valuation Date, which, together with all previous dividends, shall have the
effect of distributing to its shareholders all of its investment company taxable
income, if any, plus the excess of its interest income, if any, excludable from
gross income under Section 103(a) of the Code over its deductions disallowed
under Sections 265 and 171(a)(2) of the Code for the taxable periods or years
ended on or before July 31, 1996 and for the period from said date to and
including the Closing Date (computed without regard to any deduction for
dividends paid), and all of its net capital gain, if any, realized in taxable
periods or years ended on or before July 31, 1996 and in the period from said
date to and including the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided for
herein shall be subject, at its election, to the performance by the Acquired
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date.
6.2 The Acquired Fund shall have delivered to the Acquiring Fund a statement of
the Acquired Fund's assets, together with a list of the Acquired Fund's
portfolio securities showing the tax costs of such securities by lot and the
holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Acquired Fund.
6.3 The Acquired Fund shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in its name by its President or Vice President and
its Treasurer, in form and substance satisfactory to the Acquiring Fund, to the
effect that the representations and warranties of the Corporation made in this
Agreement are true and correct in all material respects at and as of the Closing
Date, except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Acquiring Fund shall reasonably
request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions provided
herein shall be subject, at its election, to the performance by the Acquiring
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Trust contained in this Agreement
shall be true and correct in all material respects as of the date hereof and,
except as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if made on
and as of the Closing Date.
7.2 The Acquiring Fund shall have delivered to the Acquired Fund on the Closing
Date a certificate executed in its name by its President or Vice President and
its Treasurer, in form and substance satisfactory to the Acquired Fund, to the
effect that the representations and warranties of the Trust made in this
Agreement are true and correct in all material respects at and as of the Closing
Date, except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Acquired Fund shall reasonably
request.
7.3 There shall not have been any material adverse change in the Acquiring
Fund's financial condition, assets, liabilities or business since the date
hereof other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of any indebtedness, except as otherwise
disclosed to and accepted by the Acquired Fund.
8. FURTHER CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRING FUND AND
THE ACQUIRED FUND.
If any of the conditions set forth below do not exist on or before the Closing
Date with respect to the Acquired Fund or the Acquiring Fund, either party to
this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement.
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Fund in accordance with the provisions of the Corporation's Articles of
Incorporation and the 1940 Act.
8.2 On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and permits of
federal, state and local regulatory authorities (including those of the
Commission and of state Blue Sky and securities authorities) deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933 Act
and no stop orders suspending the effectiveness thereof shall have been issued
and, to the best knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
8.5 The Trust and the Corporation shall have received an opinion of Dickstein
Shapiro Morin & Oshinsky LLP substantially to the effect that for federal income
tax purposes:
(a) The transfer of all of the Acquired Fund net assets in exchange for the
Acquiring Fund Shares and the distribution of the Acquiring Fund Shares to the
Acquired Fund Shareholders in liquidation of the Acquired Fund will constitute a
"reorganization" within the meaning of Section 368(a)(1)(C) of the Code; (b) No
gain or loss will be recognized by the Acquiring Fund upon the receipt of the
assets of the Acquired Fund solely in exchange for the Acquiring Fund Shares;
(c) No gain or loss will be recognized by the Acquired Fund upon the transfer of
the Acquired Fund assets to the Acquiring Fund in exchange for the Acquiring
Fund Shares or upon the distribution (whether actual or constructive) of the
Acquiring Fund Shares to Acquired Fund Shareholders in exchange for their shares
of the Acquired Fund; (d) No gain or loss will be recognized by the Acquired
Fund Shareholders upon the exchange of their Acquired Fund shares for the
Acquiring Fund Shares; (e) The tax basis of the Acquired Fund assets acquired by
the Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization; (f) The tax basis of the
Acquiring Fund Shares received by each of the Acquired Fund Shareholders
pursuant to the Reorganization will be the same as the tax basis of the Acquired
Fund shares held by such shareholder immediately prior to the Reorganization;
(g) The holding period of the assets of the Acquired Fund in the hands of the
Acquiring Fund will include the period during which those assets were held by
the Acquired Fund; and (h) The holding period of the Acquiring Fund Shares to be
received by each Acquired Fund Shareholder will include the period during which
the Acquired Fund shares exchanged therefor were held by such shareholder
(provided the Acquired Fund shares were held as capital assets on the date of
the Reorganization).
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transactions contemplated hereby may be terminated
and abandoned by resolution of the Board of Directors of the Corporation or the
Board of Trustees of the Trust at any time prior to the Closing Date (and
notwithstanding any vote of the Acquired Fund Shareholders) if circumstances
should develop that, in the opinion of either of the parties' Board, make
proceeding with this Agreement inadvisable.
9.2 If this Agreement is terminated and the exchange contemplated hereby is
abandoned pursuant to the provisions of this Section 9, this Agreement shall
become void and have no effect, without any liability on the part of any party
hereto or the directors, trustees or officers of the Corporation or the Trust or
the shareholders of the Acquiring Fund or of the Acquired Fund, in respect of
this Agreement.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions may be
waived by the Board of Trustees of the Trust or the Board of Directors of the
Corporation, if, in the judgment of either, such waiver will not have a material
adverse effect on the benefits intended under this Agreement to the shareholders
of the Acquiring Fund or of the Acquired Fund, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided for herein
shall survive consummation of the transactions contemplated hereby.
11.2 This Agreement contains the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof, and merges and
supersedes all prior discussions, agreement, and understandings of every kind
and nature between them relating to the subject matter hereof. Neither party
shall be bound by any condition, definition, warranty or representation, other
than as set forth or provided in this Agreement or as may be set forth in a
later writing signed by the party to be bound thereby.
11.3 This Agreement shall be governed and construed in accordance with the
internal laws of the State of New York, without giving effect to principles of
conflicts of laws.
11.4 This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
11.5 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof of any rights or obligations hereunder shall be made by any party without
the written consent of the other party. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
11.6 The Acquired Fund is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust of the Trust
and agrees that the obligations assumed by the Acquiring Fund pursuant to this
Agreement shall be limited in any case to the Acquiring Fund and its assets and
the Acquired Fund shall not seek satisfaction of any such obligation from the
shareholders of the Acquiring Fund, the trustees, officers, employees or agents
of the Trust or any of them.
11.7 An agreement has been entered into under which Federated Management will
assume substantially all of the expenses of the reorganization including
registration fees, transfer taxes (if any), the fees of banks and transfer
agents and the costs of preparing, printing, copying and mailing proxy
solicitation materials to the Acquired Fund shareholders and the costs of
holding the special meeting of shareholders. ARM Financial Group, Inc. will
assume the legal fees of the Acquired Fund. The accountants' fees of the
Acquired Fund will be borne equally by Federated Management and ARM Financial
Group, Inc.
IN WITNESS WHEREOF, the Acquired Fund and the Acquiring Fund have each caused
this Agreement and Plan of Reorganization to be executed and attested on its
behalf by its duly authorized representatives as of the date first above
written.
Acquired Fund:
STATE BOND MONEY FUNDS, INC.,
on behalf of its portfolio,
STATE BOND CASH MANAGEMENT FUND
Attest:
By: /s/ Kevin L. Howard
Kevin L. Howard
Vice President and Secretary
/s/ Sheri Bean
Sheri Bean
Assistant Secretary
Acquiring Fund:
MONEY MARKET OBLIGATIONS TRUST
on behalf of its portfolio,
AUTOMATED CASH MANAGEMENT
TRUST
Attest:
By: /s/ J. Christopher Donahue
J. Christopher Donahue
President
/s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
G01866-06
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 2, 1996
Acquisition of the Assets of
STATE BOND CASH MANAGEMENT FUND,
a Portfolio of
STATE BOND MONEY FUNDS, INC.
100 North Minnesota Street
P.O. Box 69
New Ulm, Minnesota 56073-0069
Telephone Number: 1-800-328-4735
By and in exchange for Institutional Service Shares of
AUTOMATED CASH MANAGEMENT TRUST,
a Portfolio of
MONEY MARKET OBLIGATIONS TRUST
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone Number: 1-800-245-5051, option one
This Statement of Additional Information dated November 2, 1996 is not a
prospectus. A Prospectus/Proxy Statement dated November 2, 1996 related to the
above-referenced matter may be obtained from Money Market Obligations Trust,
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
1. Statement of Additional Information of Automated Cash Management Trust, a
portfolio of Money Market Obligations Trust, dated September 30, 1996.
2. Statement of Additional Information of State Bond Cash Management Fund, a
portfolio of State Bond Money Funds, Inc., dated December 1, 1995.
3. Financial Statements of Automated Cash Management Trust, a portfolio of
Money Market Obligations Trust, dated July 31, 1996.
4. Financial Statements of State Bond Cash Management Fund, a portfolio of
State Bond Money Funds, Inc., dated July 31, 1996.
The Statement of Additional Information of Automated Cash Management Trust (the
"Federated Fund"), a portfolio of Money Market Obligations Trust (the "Trust"),
dated September 30, 1996, is incorporated herein by reference to Post-Effective
Amendment No. 19 to the Trust's Registration Statement on Form N-1A (File Nos.
33-31602 and 811-5950) which was filed with the Securities and Exchange
Commission on or about September 19, 1996. A copy may be obtained, upon request
and without charge, from the Federated Fund at Federated Investors Tower,
Pittsburgh, PA 15222-3279; telephone number: 1-800-245-5051, option one.
The Statement of Additional Information of State Bond Cash Management Fund (the
"State Bond Fund"), a portfolio of State Bond Money Funds, Inc. (the
"Corporation"), dated December 1, 1995, is incorporated herein by reference to
Post-Effective Amendment No. 14 to the Corporation's Registration Statement on
Form N-1A (File Nos. 2-74561 and 811-3299) which was filed with the Securities
and Exchange Commission on or about September 29, 1995. A copy may be obtained,
upon request and without charge, from the State Bond Fund at 100 North Minnesota
Street, P.O. Box 69, New Ulm, Minnesota 56073-0069; telephone number: 1-800-
328-4735.
The audited financial statements of the Federated Fund, dated July 31, 1996, are
incorporated herein by reference to the Federated Fund's Prospectus dated
September 30, 1996 which was filed with the Securities and Exchange Commission.
A copy may be obtained, upon request and without charge, from the Federated Fund
at Federated Investors Tower, Pittsburgh, PA 15222-3279; telephone number: 1-
800-245-5051, option one.
The audited financial statements of the State Bond Fund, dated July 31, 1996,
are incorporated herein by reference to the State Bond Fund's Annual Report to
Shareholders dated July 31, 1996, which was filed with the Securities and
Exchange Commission. A copy may be obtained, upon request and without charge,
from the State Bond Fund at 100 North Minnesota Street, P.O. Box 69, New Ulm,
Minnesota 56073-0069; telephone number 1-800-328-4735.
Pro forma financial statements are not included herein as the total net assets
of the State Bond Fund do not exceed 1% of the total assets of the Federated
Fund. At October 11, 1996, the total net assets of the State Bond Fund were
$2,784,697 and the total net assets of the Federated Fund were $1,332,349,708.
G01866-12
SBM Financial Services
Proxy Services
P.O. Box 9156
Farmingdale, NY 11735
STATE BOND CASH MANAGEMENT FUND,
a Portfolio of
STATE BOND MONEY FUNDS, INC.,
SPECIAL MEETING OF SHAREHOLDERS
December 9, 1996
STATE BOND CASH MANAGEMENT FUND,
a Portfolio of
STATE BOND MONEY FUNDS, INC.
The undersigned shareholder(s) of State Bond Cash Management Fund, a portfolio
of State Bond Money Funds, Inc. (the `State Bond Fund''), hereby appoint(s)
Kevin L. Howard, Keith O. Martens and Dale C. Bauman, or any of them true and
lawful proxies, with power of substitution of each, to vote all shares of the
State Bond Fund which the undersigned is entitled to vote, at the Special
Meeting of Shareholders to be held on December 9, 1996, at 100 North Minnesota
Street, New Ulm, Minnesota 56073-0069, at 4:15 p.m. (local time) and at any
adjournment thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The proxies named
will vote the shares represented by this proxy in accordance with the choice
made on this ballot. IF NO CHOICE IS INDICATED, THIS PROXY WILL BE VOTED
AFFIRMATIVELY ON THAT MATTER.
The Board of Directors unanimously recommends a vote FOR the proposal below.
Please sign EXACTLY as your name(s)
appear(s) above. When signing as
attorney, executor, administrator,
guardian, trustee, custodian, etc.,
please give your full title as
such. If a corporation or
partnership, please sign the full
name by an authorized officer or
partner. If stock is owned
jointly, all owners should sign.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
KEEP THIS PORTION FOR YOUR RECORDS.
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
STATE BOND CASH MANAGEMENT FUND
RECORD DATE SHARES:
-----------------
Vote On Proposal
TO APPROVE OR DISAPPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN THE
STATE BOND FUND AND MONEY MARKET OBLIGATIONS TRUST, ON BEHALF OF AUTOMATED CASH
MANAGEMENT TRUST.
FOR AGAINST ABSTAIN
- -----------------------------------
Signature
Signature(Joint owners)
Date: ______________________
