SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Federated Index Trust
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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FEDERATED INDEX TRUST
Federated Max-Cap Fund
Federated Mid-Cap Fund
Federated Mini-Cap Fund
Proxy Statement - Please Vote!
TIME IS OF THE ESSENCE. . .VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! ACT NOW TO HELP THE FUNDS AVOID ADDITIONAL EXPENSE.
Federated Index Trust (the "Trust") will hold a special meeting of shareholders
of Federated Max-Cap Fund, Federated Mid-Cap Fund, and Federated Mini-Cap Fund
(the "Funds") on November 17, 1999. It is important for you to vote on the
issues described in this Proxy Statement. We recommend that you read the Proxy
Statement in its entirety; the explanations will help you to decide on the
issues.
Following is an introduction to the process and the proposals.
Why am I being asked to vote?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like those included in this Proxy Statement. You have a right to vote
on these changes.
How do I vote my shares?
You may vote by telephone at 1-800-690-6903, or through the Internet at
www.proxyvote.com. You may also vote in person at the meeting or complete and
return the enclosed Proxy Card. If you:
1. choose to help save the Funds time and postage costs by voting
through the Internet or by telephone, please don't return your
Proxy Card.
2. do not respond at all, we may contact you by telephone to request that you
cast your vote. 3. sign and return the Proxy Card without indicating a
preference, your vote will be cast "for" all the
proposals.
4. check more than one box for each proposal, you invalidate your vote for
that proposal.
What are the issues?
The proposals include:
o the election of Trustees;
o changes to the Funds' fundamental investment policies; and
o an amendment to and restatement of the Declaration of Trust.
Why are individuals recommended for election to the Board of Trustees?
The Trust is devoted to serving the needs of its shareholders, and the Board is
responsible for managing the Trusts' business affairs to meet those needs. The
Board represents the shareholders and can exercise all of the Trusts' powers,
except those reserved only for shareholders.
Trustees are selected on the basis of their education and professional
experience. Candidates are chosen based on their distinct interest in, and
capacity for understanding the complexities of, the operation of a mutual fund.
These individuals bring considerable experience to the impartial oversight of a
fund's operation.
The Proxy Statement includes a brief description of each nominee's history and
current position with the Trust, if applicable.
Why are the Funds' "fundamental policies" being changed or eliminated?
Every mutual fund has certain investment policies that can be changed only with
the approval of its shareholders. These are referred to as "fundamental"
investment policies.
In some cases, these policies were adopted to reflect regulatory, business, or
industry conditions that no longer exist or no longer are necessary. In other
cases, advances in the securities markets and the economy have created different
procedures and techniques that affect the Funds' operations.
By reducing the number of "fundamental policies," the Funds may be able to
minimize the costs and delays associated with frequent shareholder meetings.
Also, the investment adviser's ability to manage assets may be enhanced and
investment opportunities increased.
The proposed amendments will:
o reclassify as operating policies those fundamental policies that are not
required to be fundamental by the Investment Company Act of 1940, as
amended ("1940 Act");
o simplify and modernize the policies that are required to be "fundamental"
by the 1940 Act; and
o eliminate fundamental policies that are no longer required by the
securities laws of individual states.
Federated Investment Management Company, the Funds' adviser, is a conservative
money manager. Its highly trained professionals are dedicated to making
investment decisions in the best interest of shareholders and the Funds. The
Board believes that the proposed changes will be applied responsibly by the
adviser.
Why are some "fundamental policies" being reclassified as "operating policies"?
As noted above, some "fundamental policies" have been redefined as "operating
policies." Operating policies do not require shareholder approval to be changed.
This gives the Board additional flexibility to determine whether to participate
in new investment opportunities and to meet industry changes promptly.
Why are the Trustees recommending an amendment to the Declaration of Trust?
The Declaration of Trust organizing the Funds was prepared many years ago. Since
then, developments in the investment company industry and changes in the law
resulted in many improvements. The Board is recommending a change to the
Declaration that permits the Funds to benefit from these developments.
Who do I call if I have questions about the Proxy Statement?
Call your Investment Professional or a Federated Client Service
Representative. Federated's toll-free number is 1-800-341-7400.
After careful consideration, the Board of Trustees has
unanimously approved these proposals. The Board recommends
that you read the enclosed materials
carefully and vote for all proposals.
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DEFINITIVE
FEDERATED INDEX TRUST
Federated Max-Cap Fund
Federated Mid-Cap Fund
Federated Mini-Cap Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD November 17, 1999
A special meeting of the shareholders of Federated Index Trust
(the "Trust"), which presently consists of three portfolios or series, Federated
Max-Cap Fund (the "Max-Cap Fund"), Federated Mid-Cap Fund (the "Mid-Cap Fund")
and Federated Mini-Cap Fund (the "Mini-Cap Fund") (individually a "Fund," and
collectively the "Funds") will be held at 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7000, at 2:00 p.m. (Eastern time), on November 17, 1999 to
consider proposals:
(1) To elect four Trustees.
(2) To make changes to the Funds' fundamental investment
policies:
(a) To amend the Funds' fundamental investment policies
regarding diversification;
(b) To amend the Funds' fundamental investment
policies regarding borrowing money and issuing
senior securities;
(c) To amend the Funds' fundamental investment
policies regarding investments in real estate;
(d) To amend the Funds' fundamental investment
policies regarding investments in commodities;
(e) To amend the Funds' fundamental investment
policies regarding underwriting securities;
(f) To amend the Funds' fundamental investment
policies regarding lending by the Funds;
(g) To amend the Funds' fundamental investment
policies regarding concentration of the Funds'
investments in the securities of companies in
the same industry;
(h) To amend, and to make non-fundamental, the
Funds' fundamental investment policies regarding
buying securities on margin;
(i) To amend, and to make non-fundamental, the
Funds' fundamental investment policies regarding
pledging assets; and
(j) To amend, and to make non-fundamental, the
Funds' fundamental investment policies regarding
investing in restricted securities.
(3) To eliminate certain of the Funds' fundamental
investment policies:
(a) To remove the Funds' fundamental investment policies on
selling securities short; and
(b) To remove the Max-Cap Fund's fundamental
investment policy on investing in issuers whose
securities are owned by officers and Trustees
(Max-Cap Fund only).
(4) To approve amendments to, and a restatement of, the
Trust's Declaration of Trust:
(a) To require the approval of a majority of the
outstanding voting securities of the Trust in
the event of the sale and conveyance of the
assets of the Trust to another trust or
corporation; and
(b) To permit the Board of Trustees to liquidate
assets of the Trust, or of its series or
classes, and distribute the proceeds of such
assets to the holders of such shares
representing such interests, without seeking
shareholder approval.
To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Trustees has fixed September 20, 1999 as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Board of Trustees,
John W. McGonigle
Secretary
October 12, 1999
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY.
IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
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TABLE OF CONTENTS
About the Proxy Solicitation and the Meeting................................4
Election of Four Trustees...................................................5
About the Election of Trustees..............................................5
Trustees Standing for Election..............................................5
Approval of Changes to the Funds' Fundamental Investment
Policies...............................................................6
Approval of the Elimination of Certain Fundamental Investment
Policies of the Funds.................................................16
Approval of Amendments to and a Restatement of the Trust's
Declaration of Trust..................................................17
Information About the Trust................................................19
Proxies, Quorum and Voting at the Meeting..................................19
Share Ownership of the Trustees............................................20
Trustee Compensation.......................................................20
Officers and Incumbent Trustees of the Trust...............................22
Other Matters and Discretion of Attorneys Named in the Proxy...............25
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DEFINITIVE
PROXY STATEMENT
FEDERATED INDEX TRUST
Federated Max-Cap Fund
Federated Mid-Cap Fund
Federated Mini-Cap Fund
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
About the Proxy Solicitation and the Meeting
The enclosed proxy is solicited on behalf of the Board of Trustees of
the Trust (the "Board" or "Trustees"), which presently consists of three
portfolios or series, Federated Max-Cap Fund (the "Max-Cap Fund"), Federated
Mid-Cap Fund (the "Mid-Cap Fund") and Federated Mini-Cap Fund (the "Mini-Cap
Fund") (individually a "Fund," and collectively the "Funds"). The proxies will
be voted at the special meeting of shareholders of the Trust to be held on
November 17, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000,
at 2:00 p.m. (such special meeting and any adjournment or postponement thereof
are referred to as the "Meeting").
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by the Trust. In addition to solicitations
through the mails, proxies may be solicited by officers, employees, and agents
of the Trust or, if necessary, a communications firm retained for this purpose.
Such solicitations may be by telephone, telegraph, through the Internet or
otherwise. Any telephonic solicitations will follow procedures designed to
ensure accuracy and prevent fraud, including requiring identifying shareholder
information, recording the shareholder's instructions, and confirming to the
shareholder after the fact. Shareholders who communicate proxies by telephone or
by other electronic means have the same power and authority to issue, revoke, or
otherwise change their voting instruction as shareholders submitting proxies in
written form. The Trust may 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.
The Board has reviewed both the proposed changes recommended in the
investment policies of the Funds and the proposed amendments to the Declaration
of Trust, and has approved them, subject to shareholder approval. The purposes
of the Meeting are set forth in the accompanying Notice. The Trustees know of no
business other than that mentioned in the Notice that will be presented for
consideration at the Meeting. Should other business properly be brought before
the Meeting, proxies will be voted in accordance with the best judgment of the
persons named as proxies. This Proxy Statement and the enclosed proxy card are
expected to be mailed on or about October 12, 1999, to shareholders of record at
the close of business on September 20, 1999 (the "Record Date").
On the Record Date, the Funds had outstanding shares of beneficial
interest as follows:
Max-Cap Fund: 99,070,624.94 shares
Mid-Cap Fund: 6,160,507.55 shares
Mini-Cap Fund: 7,481,948.92 shares
The Funds' annual reports, which include audited financial statements
for the fiscal year ended October 31, 1998, were previously mailed to
shareholders. The Funds' semi-annual reports, which contain unaudited financial
statements for the period ended April 30, 1999, were also previously mailed to
shareholders. The Trust will promptly provide, without charge and upon request,
to each person to whom this Proxy Statement is delivered, a copy of a Fund's
annual report and/or semi-annual report. Requests for an annual report or
semi-annual report for a Fund may be made by writing to the Trust's principal
executive offices or by calling the Trust. The Trust's principal executive
offices are located at Federated Investors Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000. The Trust's toll-free telephone number is
1-800-341-7400.
PROPOSAL #1: ELECTION OF FOUR TRUSTEES
The persons named as proxies intend to vote in favor of the election of
Nicholas P. Constantakis, John F. Cunningham, Charles F. Mansfield, Jr. and John
S. Walsh (collectively, the "Nominees") as Trustees of the Trust. All Nominees
are presently serving as Trustees. Please see "About the Election of Trustees"
below for current information about the Nominees, and "Officers and Incumbent
Trustees of the Trust" in this Proxy Statement for current information about the
incumbent Trustees who have previously been elected by shareholders. It is
currently anticipated that each of the incumbent Trustees will continue to serve
as Trustees following the Meeting.
Mr. Constantakis was appointed a Trustee on February 23, 1998, to fill a
vacancy created by the decision to expand the size of the Board. Messrs.
Cunningham, Mansfield and Walsh were appointed Trustees on January 1, 1999, also
to fill vacancies resulting from the decision to expand the size of the Board.
All Nominees have consented to serve if elected. If elected, the
Trustees will hold office without limit in time until death, resignation,
retirement, or removal or until the next meeting of shareholders to elect
Trustees and the election and qualification of their successors. Election of a
Trustee is by a plurality vote, which means that the four individuals receiving
the greatest number of votes at the Meeting will be deemed to be elected.
If any Nominee for election as a Trustee named above shall by reason of
death or for any other reason become unavailable as a candidate at the Meeting,
votes pursuant to the enclosed proxy will be cast for a substitute candidate by
the proxies named on the proxy card, or their substitutes, present and acting at
the Meeting. Any such substitute candidate for election as a Trustee who is an
"interested person" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Trust shall be nominated by the Executive
Committee. The selection of any substitute candidate for election as a Trustee
who is not an "interested person" shall be made by a majority of the Trustees
who are not "interested persons" of the Trust. The Board has no reason to
believe that any Nominee will become unavailable for election as a Trustee.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE TO ELECT AS TRUSTEES THE NOMINEES FOR
ELECTION TO THE BOARD OF TRUSTEES OF THE TRUST
About the Election of Trustees
The Declaration of Trust provides that Trustees will continue in office
until their respective successors are elected, and therefore, when elected,
Trustees will hold office during the lifetime of the Trust, except that: (a) any
Trustee may resign; (b) any Trustee may be removed by written instrument signed
by at least two-thirds of the number of Trustees prior to such removal; (c) any
Trustee who requests to be retired or who has become mentally or physically
incapacitated may be retired by written instrument signed by a majority of the
other Trustees; and (d) a Trustee may be removed at any special meeting of the
shareholders by a vote of two-thirds of the outstanding shares of the Trust. In
case a vacancy shall exist for any reason, the remaining Trustees will fill such
vacancy by appointment of another Trustee. The Trustees will not fill any
vacancy by appointment if, immediately after filling such vacancy, less than
two-thirds of the Trustees then holding office would have been elected by the
shareholders. If, at any time, less than a majority of the Trustees holding
office have been elected by the shareholders, the Trustees then in office will
call a shareholders' meeting for the purpose of electing Trustees to fill
vacancies. Otherwise, there will normally be no meeting of shareholders called
for the purpose of electing Trustees.
Trustees Standing for Election
Set forth below is a listing of the Trustees standing for election,
along with their addresses, birthdates, present positions with the Trust, and
principal occupations during the past five years:
Nicholas P. Constantakis
175 Woodshire Drive
Pittsburgh, PA
Birthdate: September 3, 1939
Trustee
Director or Trustee of the Federated Fund Complex; formerly, Partner, Andersen
Worldwide SC.
John F. Cunningham
353 El Brillo Way
Palm Beach, FL
Birthdate: March 5, 1943
Trustee
Director or Trustee of some of the Funds in the Federated Fund Complex;
Chairman, President and Chief Executive Officer, Cunningham & Co., Inc.
(strategic business consulting); Trustee Associate, Boston College; Director,
Iperia Corp. (communications/software); formerly, Director, Redgate
Communications and EMC Corporation (computer storage systems). Previous
Positions: Chairman of the Board and Chief Executive Officer, Computer Consoles,
Inc.; President and Chief Operating Officer, Wang Laboratories; Director, First
National Bank of Boston; Director, Apollo Computer, Inc.
Charles F. Mansfield, Jr.
80 South Road
Westhampton Beach, NY
Birthdate: April 10, 1945
Trustee
Director or Trustee of some of the Funds in the Federated Fund Complex;
Management Consultant. Previous Positions: Chief Executive Officer, PBTC
International Bank; Partner, Arthur Young & Company (now Ernst & Young LLP);
Chief Financial Officer of Retail Banking Sector, Chase Manhattan Bank; Senior
Vice President, Marine Midland Bank; Vice President, Citibank; Assistant
Professor of Banking and Finance, Frank G. Zarb School of Business, Hofstra
University.
John S. Walsh
2007 Sherwood Drive
Valparaiso, IN
Birthdate: November 28, 1957
Trustee
Director or Trustee of some of the Funds in the Federated Fund Complex;
President and Director, Heat Wagon, Inc. (manufacturer of construction temporary
heaters); President and Director, Manufacturers Products, Inc. (distribution of
portable construction heaters); President, Portable Heater Parts, a division of
Manufacturers Products, Inc.; Director, Walsh & Kelly, Inc. (heavy highway
contractor); formerly, Vice President, Walsh & Kelly, Inc.
APPROVAL OF CHANGES TO THE FUNDS'
FUNDAMENTAL INVESTMENT POLICIES
Introduction to Proposals #2(a) to #2(j) and #3(a) to #3(b).
The 1940 Act (which was adopted to protect mutual fund shareholders)
requires investment companies such as the Funds to adopt certain specific
investment policies or restrictions that can be changed only by shareholder
vote. An investment company may also elect to designate other policies or
restrictions that may be changed only by shareholder vote. Both types of
policies and restrictions are often referred to as "fundamental policies." These
policies and restrictions limit the investment activities of the Funds'
investment adviser.
After the Trust was formed in 1990, legal and regulatory requirements
applicable to mutual funds changed. For example, certain restrictions imposed by
state laws and regulations were preempted by the National Securities Markets
Improvement Act of 1996 ("NSMIA") and no longer apply. As a result, the Funds
are subject to fundamental policies that are no longer required to be
fundamental, and to other policies that are no longer required at all.
Accordingly, the Trustees have authorized the submission to the Funds'
shareholders for their approval, and recommend that shareholders approve, the
amendment, reclassification and/or elimination of certain of the Funds'
fundamental policies.
The proposed amendments would:
(i) simplify, modernize and standardize the fundamental policies that
are required to be stated under the 1940 Act;
(ii) reclassify as operating policies those fundamental policies
that are not required to be fundamental under the 1940 Act;
and
(iii) eliminate those fundamental policies that are no longer
required by the securities laws of the various states.
By reducing the number of policies that can be changed only by
shareholder vote, the Trustees believe that the Funds would be able to minimize
the costs and delays associated with holding future shareholder meetings to
revise fundamental policies that become outdated or inappropriate. The Trustees
also believe that the investment adviser's ability to manage the Funds' assets
in a changing investment environment will be enhanced and that investment
management opportunities will be increased by these changes. The chart that
follows briefly describes the differences between fundamental policies and
non-fundamental policies.
<TABLE>
<CAPTION>
<S> <C> <C>
Fundamental Policies Non-Fundamental Policies
-------------------------------------- ---------------------------------------
Who must approve changes in the Board of Trustees and shareholders Board of Trustees
policies?
How quickly can a change in the Fairly slowly, since a vote of Fairly quickly, because the change
policies be made? shareholders is required can be accomplished by action of the
Board of Trustees
What is the relative cost to Costly to change because a Less costly to change because a
change a policy? shareholder vote requires holding a change can be accomplished by action
meeting of shareholders of the Board of Trustees
</TABLE>
The recommended changes are specified below. Each Proposal will be
voted on separately by shareholders of each Fund (unless otherwise noted), and
the approval of each Proposal by each Fund will require the approval of a
majority of the outstanding voting shares of the Fund as defined in the 1940
Act. (See "Proxies, Quorum and Voting at the Meeting" below.)
Description of Proposed Changes
The proposed standardized fundamental investment policies cover those
areas for which the 1940 Act requires the Funds to have a fundamental
restriction. They satisfy current regulatory requirements and are written to
provide flexibility to respond to future legal, regulatory, market or technical
changes. The proposed standardized changes will not affect the Funds' investment
objectives. Although the proposed changes in fundamental policies will allow the
Funds greater flexibility to respond to future investment opportunities, the
Board of Trustees of the Trust does not anticipate that the changes,
individually or in the aggregate, will result at this time in a material change
in the level of investment risk associated with investments in the Funds. Nor
does the Board of Trustees anticipate that the proposed changes in fundamental
investment policies will, individually or in the aggregate, change materially
the manner in which the Funds are managed.
The following is the text and a summary description of the proposed
changes to the Funds' fundamental policies and restrictions. Any non-fundamental
policy may be modified or eliminated by the Trustees at any future date without
any further approval of shareholders. Shareholders should note that certain of
the fundamental policies that are treated separately below currently are
combined within a single existing fundamental policy.
Presently, if a Fund adheres to a fundamental or non-fundamental
percentage restriction at the time of an investment or transaction, a later
increase or decrease in the percentage resulting from a change in the value of
the Fund's portfolio securities or the amount of its total assets does not
create a violation of the policy. This policy will continue to apply for any of
the proposed changes that are approved.
PROPOSAL #2: APPROVAL OF AMENDMENTS TO THE FUNDS' FUNDAMENTAL INVESTMENT
POLICIES
PROPOSAL #2(a): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT
POLICIES REGARDING DIVERSIFICATION
Under the 1940 Act, the Funds' policies relating to the diversification
of their investments must be fundamental. The 1940 Act prohibits a "diversified"
mutual fund from purchasing securities of any one issuer if, at the time of
purchase, more than 5% of the fund's total assets would be invested in
securities of that issuer or the fund would own or hold more than 10% of the
outstanding voting securities of that issuer, except that up to 25% of the
fund's total assets may be invested without regard to this limitation. The 5%
limitation does not apply to securities issued by or guaranteed by the U.S.
government, its agencies or instrumentalities or to securities issued by other
open-end investment companies.
The Funds' present policies regarding diversification state:
Max-Cap Fund:
"The Fund will not invest more than 5% of the value of its total
assets in the securities of any one issuer, except U.S. government
securities, or invest in more than 10% of the voting securities of one
issuer."
Mid-Cap Fund and Mini-Cap:
"The Fund will not invest more than 5% of the value of its total
assets in the securities of any one issuer, except U.S. government
securities, or invest in more than 10% of the voting securities of any
one issuer."
In order to afford the Funds' investment adviser maximum flexibility in
managing the Funds' assets, the Trustees propose to amend the Funds'
diversification policies to be consistent with the definition of a diversified
investment company under the 1940 Act. The amended policy complies with the U.S.
Securities and Exchange Commission's (the "SEC" or "Commission") general
definition of diversification. The new policy would specifically add securities
of other investment companies to the list of issuers which are excluded from the
5% limitation in the investment policies for each of the Funds. In addition, the
new policy would also provide that the 5% limitation would apply with respect to
only 75% of a Fund's assets, rather than all of its assets.
Upon approval of the Funds' shareholders, the fundamental investment
policy governing diversification for each Fund will be amended as follows:
"With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash; cash items; securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities
and repurchase agreements collateralized by such U.S. government
securities; and securities of other investment companies) if, as a
result, more than 5% of the value of its total assets would be invested
in securities of that issuer, or the Fund would own more than 10% of
the outstanding voting securities of that issuer."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(b): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES
REGARDING BORROWING MONEY AND ISSUING SENIOR SECURITIES
The 1940 Act requires the Funds to have a fundamental investment policy
defining their ability to borrow money or issue senior securities. In general,
limitations on borrowing are designed to protect shareholders and their
investments by restricting a fund's ability to subject its assets to any claims
of creditors or senior security holders who would be entitled to dividends or
rights on liquidation of the fund prior to the rights of shareholders.
Shareholders of the Funds are being asked to approve a new standardized
fundamental policy for borrowing and the issuance of senior securities designed
to reflect all current regulatory requirements. The Funds' current policies
state:
Max-Cap Fund:
"The Fund will not issue senior securities, except as permitted by its
investment objective and policies, and except that the Fund may enter
into reverse repurchase agreements and otherwise borrow up to one-third
of the value of its total assets, including the amount borrowed, as a
temporary, extraordinary, or emergency measure, or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio instruments would be
inconvenient or disadvantageous. The Fund will not purchase any
securities while any borrowings in excess of 5% of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding the Fund will restrict the purchase of portfolio securities
to money market instruments maturing on or before the expiration date
of the reverse repurchase agreements, but only to the extent necessary
to assure the completion of the reverse repurchase agreements."
Mid-Cap Fund and Mini-Cap Fund:
"The Fund will not issue senior securities, except that the Fund may
borrow money and engage in reverse repurchase agreements in amounts up
to one-third of the value of its total assets, including the amounts
borrowed. The Fund will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as a
temporary, extraordinary, or emergency measure, or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding, but only to the extent necessary to assure completion of
the reverse repurchase agreements, the Fund will restrict the purchase
of portfolio instruments to money market instruments maturing on or
before the expiration date of the reverse repurchase agreements."
Senior Securities-Generally. A "senior security" is an obligation of an
investment company with respect to its earnings or assets that takes precedence
over the claims of the fund's shareholders with respect to the same earnings or
assets. The 1940 Act generally prohibits a fund from issuing senior securities,
in order to limit the use of leverage. In general, an investment company uses
leverage when it borrows money to enter into securities transactions, or
acquires an asset without being required to make payment until a later time.
The Commission's staff interpretations allow a fund to engage in a
number of types of transactions which might otherwise be considered to create
"senior securities" or "leverage," so long as the fund meets certain collateral
requirements designed to protect shareholders. For example, some transactions
that may create senior security concerns include short sales, certain options
and futures transactions, reverse repurchase agreements and securities
transactions that obligate the fund to pay money at a future date (such as
when-issued, forward commitment or delayed delivery transactions). When engaging
in such transactions, the fund must set aside money or securities to meet the
SEC staff's collateralization requirements. This procedure effectively
eliminates the fund's ability to engage in leverage for these types of
transactions.
Borrowing-Generally. Under the 1940 Act, an investment company is permitted to
borrow up to 5% of its total assets for temporary purposes. A fund may borrow
only from banks. If borrowings exceed 5%, the fund must have assets totaling at
least 300% of the borrowing when the amount of the borrowing is added to the
fund's other assets. The effect of this provision is to allow the fund to borrow
from banks in amounts up to one-third (33 1/3%) of its total assets (including
the amount borrowed). Investment companies typically borrow money to meet
redemptions in order to avoid a forced, unplanned sale of portfolio securities.
This technique allows the fund greater flexibility to buy and sell portfolio
securities for investment or tax considerations, rather than for cash flow
considerations. The costs of borrowing, however, can also reduce the fund's
total return.
The borrowing restrictions of the Funds permit borrowing only as a
temporary measure for extraordinary purposes, and restrict additional investment
by the Funds while borrowings in excess of 5% of the Funds' total assets are
outstanding. The Funds' policies also limit the type of securities that may be
purchased while reverse repurchase agreements are outstanding. The proposed
investment policy would provide greater flexibility to the Funds, and would
permit the Funds to borrow money, directly or indirectly (such as through
reverse repurchase agreements), and issue senior securities within the limits
established under the 1940 Act or under any rule or regulation of the
Commission, or any SEC staff interpretation thereof. If the new policy is
approved by shareholders, the Funds do not presently anticipate changing their
current practices relating to borrowing money and issuing senior securities. As
a matter of operating policy, the Funds do not intend to engage in
leveraging.
Upon shareholder approval, the fundamental investment policy governing
borrowing money and issuing senior securities by each Fund will state:
"The Fund may borrow money, directly or indirectly, and issue senior
securities to the maximum extent permitted under the 1940 Act."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(c): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES
REGARDING INVESTMENTS IN REAL ESTATE
Under the 1940 Act, the Funds' policies concerning investments in real
estate must be fundamental. The Funds currently have fundamental investment
policies prohibiting the purchase or sale of real estate. The current policies,
however, allow the Funds to invest in securities that are secured by real
estate, and state:
Max-Cap Fund:
"The Fund will not buy or sell real estate, although it may invest in
the marketable securities of companies whose business involves the
purchase or sale of real estate, or in marketable securities which are
secured by real estate or interests in real estate."
Mid-Cap Fund and Mini-Cap Fund:
"The Fund will not buy or sell real estate, including partnership
interests in real estate, although it may invest in securities of
companies whose business involves the purchase or sale of real estate
or in securities which are secured by real estate or interests in real
estate."
The proposed fundamental investment policy will not permit the Funds to
purchase real estate directly, but will permit the purchase of securities whose
payments of interest or principal are secured by mortgages or other rights to
real estate in the event of default. The investment policy will also enable the
Funds to invest in companies within the real estate industry, provided such
investments are consistent with the Funds' investment objectives and policies.
If the new policy is approved by shareholders, the Funds do not presently
anticipate changing their current practices relating to investing in real
estate.
Upon shareholder approval, the fundamental investment policy governing
investments in real estate by each Fund will state:
"The Fund may not purchase or sell real estate, provided that this
restriction does not prevent the Fund from investing in issuers which
invest, deal, or otherwise engage in transactions in real estate or
interests therein, or investing in securities that are secured by real
estate or interests therein. The Fund may exercise its rights under
agreements relating to such securities, including the right to enforce
security interests and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated in an orderly
manner."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(d): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES
REGARDING INVESTMENTS IN COMMODITIES
Under the 1940 Act, the Funds' policies concerning investments in
commodities must be fundamental. The Funds are currently subject to fundamental
restrictions prohibiting the purchase or sale of commodities and that provide:
Max-Cap Fund:
"The Fund will not purchase or sell commodities. However, the Fund may
purchase put options on stock index futures, put options on financial
futures and stock index futures contracts."
Mid-Cap Fund:
"The Fund will not purchase or sell commodities. However, the Fund may
purchase stock index futures contracts and put options on stock indices
and stock index futures contracts to the extent that not more than 5%
of the Fund's total assets are required as initial margin deposit for
futures contracts and not more than 20% of the Fund's total net assets
are invested in futures contracts and options at any time."
Mini-Cap:
"The Fund will not purchase or sell commodities. However, the Fund may
purchase stock index futures contracts and put options on stock indices
and stock index futures contracts to the extent that not more than 5%
of the Fund's total assets are required as initial margin deposit for
futures contracts and not more than 20% of the Fund's total net assets
are invested in futures and options at any time."
Historically, the most common types of commodities have been physical
commodities such as wheat, cotton, rice and corn. However, under federal law,
futures contracts are considered to be commodities and, therefore, financial
futures contracts, such as futures contracts related to currencies, stock
indices or interest rates are considered to be commodities. Financial futures
contracts enable an investment company to buy (or sell) the right to receive the
cash difference between the contract price for an underlying asset or index and
the future market price, if the market price is higher. If the future price is
lower, the investment company is obligated to pay (or, if the investment company
sold the contract, the investment company receives) the amount of the decrease.
Investment companies often desire to invest in financial futures contracts and
options related to such contracts for hedging or other investment reasons.
The proposed policy would provide appropriate flexibility for the Funds
to invest in financial futures contracts and related options. As proposed, the
policy is broad enough to permit investment in financial futures instruments for
either investment or hedging purposes. Using financial futures instruments can
involve substantial risks, and would be utilized only if the Funds' investment
adviser determined that such investments are advisable and such practices were
disclosed in the Funds' prospectuses or statements of additional information.
Gains or losses on investments in financial futures instruments depend on the
direction of securities prices, interest rates and other economic factors, and
losses from engaging in these types of transactions are potentially unlimited.
At the present time, the Funds do not intend to engage in these activities
beyond what is disclosed in the Funds' current prospectuses. As a matter of
non-fundamental operating policy, for purposes of the proposed policy,
investments in transactions involving futures contracts and options, forward
currency contracts, swap transactions and other financial contracts that settle
by payment of cash are not deemed to be investments in commodities.
Upon shareholder approval, the fundamental investment policy for each
Fund governing investments in commodities will state:
"The Fund may not purchase or sell physical commodities, provided that
the Fund may purchase securities of companies that deal in
commodities."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(e): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT
POLICIES REGARDING UNDERWRITING SECURITIES
Under the 1940 Act, the Funds' policies relating to underwriting are
required to be fundamental. Each Fund currently is subject to a fundamental
investment policy prohibiting it from acting as an underwriter of the securities
of other issuers, and states:
Max-Cap Fund:
"The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies and limitations."
Mid-Cap Fund and Mini-Cap Fund:
"The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted securities which the Fund may
purchase pursuant to its investment objective, policies and
limitations."
A person or company generally is considered an underwriter under the
federal securities laws if it participates in the public distribution of
securities of other issuers, usually by purchasing the securities from the
issuer and re-selling the securities to the public. From time to time, a mutual
fund may purchase a security for investment purposes which it later sells or
redistributes to institutional investors or others under circumstances where the
fund could possibly be considered to be an underwriter under the technical
definition of underwriter contained in the securities laws.
Upon shareholder approval, the fundamental investment policy concerning
underwriting for each Fund will state:
"The Fund may not underwrite the securities of other issuers, except
that the Fund may engage in transactions involving the acquisition,
disposition or resale of its portfolio securities, under circumstances
where it may be considered to be an underwriter under the Securities
Act of 1933."
This does not constitute a substantive change in the Funds' policies.
Rather, it reflects a restatement to standardized language now to be used by the
Federated Funds, and is submitted to shareholders to comply with the 1940 Act's
requirements.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(f): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES
REGARDING LENDING BY THE FUNDS
Under the 1940 Act, the Funds' policies concerning lending must be
fundamental. The Funds currently are subject to fundamental investment
restrictions limiting their ability to make loans that state:
Max-Cap Fund:
"The Fund will not lend any of its assets except portfolio securities,
the market value of which does not exceed 33 1/3% of the total value of
the Fund's assets. This shall not prevent the purchase or holding of
corporate or government bonds, debentures, notes, certificates of
indebtedness, or other debt securities of an issuer, repurchase
agreements, or other transactions which are permitted by the Fund's
investment objective and policies or the Declaration of Trust of the
Trust."
Mid-Cap Fund and Mini-Cap Fund:
"The Fund will not lend any of its assets, except portfolio securities
up to one-third of the value of its total assets. This shall not
prevent the Fund from purchasing or holding U.S. government
obligations, money market instruments, bonds, debentures, notes,
certificates of indebtedness, or other debt securities; entering into
repurchase agreements; or engaging in other transactions where
permitted by the Fund's investment objective and policies and the
Declaration of Trust of the Trust."
In order to ensure that each Fund may invest in certain debt securities
or repurchase agreements, which could technically be characterized as the making
of loans, the Funds' current fundamental restrictions specifically permit such
investments. In addition, the Funds' fundamental policies permit the Funds to
lend their portfolio securities. Securities lending is a practice that has
become common in the mutual fund industry and involves the temporary loan of
portfolio securities to parties who use the securities for the settlement of
securities transactions. The collateral delivered to a Fund in connection with
such a transaction is then invested to provide the Fund with additional income
it might not otherwise have.
Securities lending involves certain risks if the borrower fails to
return the securities. However, management believes that with appropriate
controls, such as 100% or greater collateralization of the loan and regular
monitoring of the creditworthiness of the counterparty, the ability to engage in
securities lending does not materially increase the risks to the Funds. In
addition, securities on loan cannot generally be sold until the term of the loan
is over.
Upon approval of the Funds' shareholders, the current fundamental
investment policy governing lending assets for each Fund will be replaced by the
following fundamental policy that states:
"The Fund may not make loans, provided that this restriction does not
prevent the Fund from purchasing debt obligations, entering into
repurchase agreements, lending its assets to broker/dealers or
institutional investors and investing in loans, including assignments
and participation interests."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(g): TO AMEND THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES REGARDING
CONCENTRATION OF THE FUNDS' INVESTMENTS IN THE SECURITIES OF COMPANIES IN THE
SAME INDUSTRY
Under the 1940 Act, the Funds' policies relating to the concentration
of their investments in securities of companies in a single industry must be
fundamental. The SEC staff considers a mutual fund to "concentrate" its
investments if 25% or more of its total assets are invested in a particular
industry (not counting U.S. government securities, bank instruments issued by
domestic banks and municipal securities).
The Funds currently have a fundamental investment policy prohibiting
them from concentrating their investments in a single industry:
"The Fund will not invest 25% or more of the value of its total assets in
securities of companies in any one industry. However, investing in U.S.
government obligations shall not be considered investing in any one
industry."
Upon the approval by the Funds' shareholders, the fundamental
investment policy governing concentration for each Fund will provide:
"The Fund will not make investments that will result in the
concentration of its investments in the securities of issuers primarily
engaged in the same industry. Government securities, municipal
securities and bank instruments will not be deemed to constitute an
industry. To conform to the current view of the SEC staff that only
domestic bank instruments may be excluded from industry concentration
limitations, as a matter of non-fundamental policy, the Fund will not
exclude foreign bank instruments from industry concentration limitation
tests so long as the policy of the SEC remains in effect. In addition,
investments in bank instruments, and investments in certain industrial
development bonds funded by activities in a single industry, will be
deemed to constitute investment in an industry, except when held for
temporary defensive purposes. The investment of more than 25% of the
value of the Fund's total assets in any one industry will constitute
`concentration.' "
The Trust's Board has also approved related non-fundamental policies
for each Fund, which will be adopted if the new fundamental policy is approved
by shareholders, and which provide that in applying the concentration
restriction: (1) utility companies will be divided according to their services,
for example, gas, gas transmission, electric and telephone will each be
considered a separate industry; (2) financial service companies will be
classified according to the end users of their services, for example, automobile
finance, bank finance and diversified finance will each be considered a separate
industry; and (3) asset-backed securities will be classified according to the
underlying assets securing such securities.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(h): TO AMEND, AND TO MAKE NON-FUNDAMENTAL, THE FUNDS'
FUNDAMENTAL INVESTMENT POLICIES REGARDING BUYING SECURITIES ON MARGIN
The Funds are not required to have a fundamental restriction on margin
transactions. Accordingly, it is proposed that the Funds' existing fundamental
policies be replaced with non-fundamental restrictions. The Funds' current
policies provide:
Max-Cap Fund:
"The Fund will not purchase any securities on margin, other than in
connection with buying stock index futures contracts, put options on
stock index futures and put options on financial futures, but may
obtain such short-term credits as are necessary for the clearance of
transactions."
Mid-Cap Fund and Mini-Cap Fund:
"The Fund will not purchase any securities on margin, other than in
connection with buying stock index futures contracts and put options on
stock index futures contracts, but may obtain such short-term credits
as are necessary for the clearance of transactions."
The proposed non-fundamental policy makes some changes in wording from
the existing fundamental restrictions, but does not result in a material change
to the Funds' current practices with regard to these types of transactions. Upon
the approval of the elimination of the existing fundamental policies on engaging
in margin transactions, the Funds would become subject to the following
non-fundamental policy:
"The Fund will not purchase securities on margin, provided that the
Fund may obtain short-term credits necessary for the clearance of
purchases and sales of securities, and further provided that the Fund
may make margin deposits in connection with its use of financial
options and futures, forward and spot currency contracts, swap
transactions and other financial contracts or derivative instruments."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(i): TO AMEND, AND TO MAKE NON-FUNDAMENTAL, THE FUNDS'
FUNDAMENTAL INVESTMENT POLICIES REGARDING PLEDGING ASSETS
The Funds are not required to have a fundamental investment restriction
with respect to the pledging of assets. To maximize the Funds' flexibility in
this area, the Board of the Trust believes that the Funds' policies on pledging
assets should be made non-fundamental. The non-fundamental policies would be
similar to the fundamental policies proposed to be eliminated which state:
Max-Cap Fund:
"The Fund will not mortgage, pledge, or hypothecate any assets except
to secure permitted borrowings. In those cases, it may mortgage,
pledge, or hypothecate assets having a market value not exceeding the
lesser of the dollar amounts borrowed or 10% of the value of the total
assets at the time of the borrowing."
Mid-Cap Fund and Mini-Cap Fund:
"The Fund will not mortgage, pledge, or hypothecate any assets except
to secure permitted borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts
borrowed or 10% of the value of total assets at the time of the
borrowing."
The Board does not expect this change to have a material impact on
the Funds' operations. Establishing the policy as non-fundamental, however,
would enable the Board to change this policy in the future without shareholder
approval. Upon the approval of the elimination of the existing fundamental
policies on pledging assets, each Fund would become subject to the following
non-fundamental policy:
"The Fund will not mortgage, pledge, or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in
connection with any permissible borrowing or to collateral arrangements
in connection with permissible activities."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #2(j): TO AMEND AND TO MAKE NON-FUNDAMENTAL THE FUNDS' FUNDAMENTAL
INVESTMENT POLICIES REGARDING INVESTING IN RESTRICTED SECURITIES
The Funds are presently subject to fundamental investment policies
pertaining to investments in restricted securities that provide:
Max-Cap Fund:
"The Fund will not invest in securities subject to restrictions on
resale under the federal securities laws, unless the securities are
determined by the Fund's manager to be liquid under criteria
established by the Fund's Trustees. The Fund will not invest more than
5% of its total assets in restricted securities."
Mid-Cap Fund and Mini-Cap Fund:
"To comply with requirements of a particular state, the Fund will limit
its investment in restricted securities to 5% of the value of its total
assets in securities subject to restrictions on resale under the
Securities Act of 1933."
These policies were adopted by the Funds because historically
restricted securities were viewed as illiquid since they could not be sold
within seven days. Investment companies issuing redeemable securities are
required to meet a shareholder's redemption request at the current net asset
value within seven days of receiving the request for redemption. In order to do
this, some portion of the securities in each Fund's portfolio must be "liquid"
so that the securities can be sold in sufficient time to obtain the necessary
cash to meet redemption requests. It is important to note that many restricted
securities are, in fact, quite liquid and can be purchased without jeopardizing
the liquidity of a Fund's portfolio.
Certain state securities regulators previously required mutual funds to
have a fundamental policy limiting investment in restricted securities. Since
the enactment of NSMIA, states no longer have the jurisdiction to impose such
requirements. Furthermore, rules adopted by the SEC have substantially increased
the number of restricted securities that can now be considered liquid and, in
addition, have given to the Trustees the ability to determine, under specific
guidelines, that a security is liquid. The Trustees may delegate this duty to
the investment adviser provided the investment adviser's determination of
liquidity is made in accordance with the guidelines established and monitored by
the Trustees.
Each Fund's current restricted securities policy limits the Fund's
ability to invest in restricted securities to 5% of its total assets, even if
the securities are viewed by the Fund's investment adviser to be liquid. As a
result, the Funds' management has suggested that the policy be revised to allow
the Funds greater flexibility to invest in restricted securities that are
considered to be liquid under the Trustees' guidelines on such securities. The
revised policy will also increase each Fund's limitation on investments in
restricted securities from 5% of its total assets to 15% of its net assets. The
SEC takes the position that an investment company, other than a money market
fund, should not invest more than 15% of its net assets in restricted
securities. The proposed restriction would comply with the SEC's guidelines.
Finally, it has been proposed that the revised restricted securities policy be
made non-fundamental. Establishing the policy as non-fundamental would enable
the Funds to change this restriction in the future without shareholder approval.
Upon the approval of the elimination of the existing fundamental
policies on investing in restricted securities, the Funds would become subject
to the following non-fundamental restriction:
"The Fund may invest in restricted securities. Restricted securities
are any securities in which the Fund may invest pursuant to its
investment objective and policies but which are subject to restrictions
on resale under federal securities law. Under criteria established by
the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to
be liquid, the Fund will limit their purchase, together with other
illiquid securities, to 15% of its net assets."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3: ELIMINATION OF CERTAIN OF THE FUNDS'
FUNDAMENTAL INVESTMENT POLICIES
The Board has determined that certain of the Funds' current
fundamental investment policies are unnecessary and should be removed. Until
NSMIA was adopted in 1996, the securities laws of several states required every
investment company which intended to sell its shares in those states to adopt
policies governing a variety of operational issues, including investments in
certain securities. As a consequence of those restrictions, the Funds adopted
the investment policies described below and agreed that the policies would be
changed only upon the approval of shareholders. Since these prohibitions are no
longer required under current law, the management of the Trust has recommended,
and the Board has determined, that these policies should be removed. The removal
of these policies would provide greater flexibility in the management of the
Funds by permitting the Funds to purchase a broader range of securities that are
permitted investments and that are consistent with the Funds' investment
objectives and policies.
The policies being removed are listed below. Each Proposal will be
voted on separately by each Fund (unless otherwise noted), and the approval of
each change by each Fund will require the affirmative vote of a majority of the
outstanding voting shares of the Fund as defined in the 1940 Act. (See "Proxies,
Quorum and Voting at the Meeting" below.)
PROPOSAL #3(a): TO REMOVE THE FUNDS' FUNDAMENTAL INVESTMENT POLICIES ON
SELLING SECURITIES SHORT
The Funds are not required to have a fundamental investment restriction
with respect to short sales of securities. The Funds' restrictions state:
"The Fund will not sell any securities short."
To maximize the Funds' flexibility in this area, the Board believes
that the Funds' restrictions on short sales of securities should be eliminated.
These restrictions were imposed by state laws and NSMIA preempts that
requirement. Notwithstanding the elimination of these fundamental restrictions,
the Funds expect to continue not to engage in short sales of securities, except
to the extent that the Funds contemporaneously own or have the right to acquire,
at no additional cost, securities identical to, or convertible into or
exchangeable for, those sold short.
Upon the approval of Proposal #3(a), the existing fundamental
restrictions on selling securities short for the Funds will be eliminated.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #3(b): TO REMOVE THE MAX-CAP FUND'S FUNDAMENTAL INVESTMENT POLICY
ON INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES
This Proposal Pertains to the Max-Cap Fund Only.
There is no legal requirement that the Max-Cap Fund have this
fundamental policy. This restriction was imposed by state laws and was preempted
by NSMIA. Moreover, the Board of the Trust and the Fund's investment adviser do
not believe that this policy provides any safeguards against conflicts of
interest that are not already effectively covered under the Trust's Code of
Ethics. Accordingly, the Board believes this restriction should be eliminated.
Upon the approval by shareholders of Proposal #3(b), the following
fundamental investment policy of the Max-Cap Fund will be eliminated:
"The Fund will not purchase or retain the securities of any issuer in
which the officers and Trustees of the Fund or its investment adviser
own a substantial financial interest."
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #4: TO APPROVE AMENDMENTS TO, AND A RESTATEMENT OF, THE TRUST'S
DECLARATION OF TRUST
Mutual funds, such as the Trust, are required to organize under the
laws of a state and to create and be bound by organizational documents outlining
how they will operate. In the case of the Trust, these organizational documents
are the Declaration of Trust and the By-Laws. Since the adoption of the Trust's
current Declaration of Trust, the market for mutual funds has evolved, requiring
mutual funds to be more flexible in their operation to respond quickly to
changes in the market. Certain items in the current Declaration of Trust,
described below, prohibit the Trust from responding quickly and favorably to
changing markets without going to the expense and delay of holding a shareholder
meeting.
Accordingly, the Trustees have approved, and have authorized the
submission to the Funds' shareholders for their approval, certain amendments to
the Trust's Declaration of Trust. The approval of each amendment will require
the affirmative vote of a majority of the outstanding voting shares of the Funds
entitled to vote, as described in the Declaration of Trust. (See "Proxies,
Quorum and Voting at the Meeting" below.)
PROPOSAL #4(a): TO AMEND AND RESTATE THE TRUST'S DECLARATION OF TRUST TO
REQUIRE THE APPROVAL OF A MAJORITY OF THE OUTSTANDING VOTING SHARES OF THE
TRUST IN THE EVENT OF THE SALE AND CONVEYANCE OF THE ASSETS OF THE TRUST TO
ANOTHER TRUST OR CORPORATION
Article XII, Section 4(b) of the Declaration of Trust currently
requires the approval of the holders of more than fifty percent of the
outstanding shares of the Trust to approve any sale and conveyance of the assets
of the Trust to another open-end management investment company. To reduce the
likelihood of greater expenses in a proposed solicitation for the approval of
any sale and conveyance, the Trustees have adopted an amendment that would
permit a majority vote to approve such a transaction. A majority vote means the
affirmative vote of: (a) 67% or more of the voting securities present at the
meeting if the holders of more than 50% of the outstanding voting securities are
present or represented by proxy; or (b) more than 50% of the outstanding voting
securities, whichever is less. The amendment would provide the Trust with
greater flexibility, and in the event circumstances warrant the approval of the
Board, the Trustees could determine that a sale and conveyance of assets would
be in the best interest of the Trust. The Trustees are recommending that
shareholders approve the adoption of this proposed amendment to the Declaration
of Trust.
If approved by shareholders, Article XII, Section 4(b) of the
Declaration of Trust would be amended to read as follows:
"(b) The Trustees, with the approval of a Majority Shareholder Vote of
each Series or Class, may sell and convey the assets of the Trust, or a
Class or Series of the Trust, to another trust or corporation organized
under the laws of any State of the United States, which is a
diversified open-end management investment company as defined in the
1940 Act, for an adequate consideration which may include the
assumption of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust, of each Class or Series of the
Trust, and which may include shares of beneficial interest or stock of
such trust or corporation. Upon making provision for the payment of all
such liabilities, by such assumption or otherwise, the Trustees shall
distribute the remaining proceeds belonging to each Series or Class
ratably among the holders of the Shares of that Series or Class of the
Trust, then outstanding. For the purposes of this provision, a
"Majority Shareholder Vote" means the affirmative vote of the lesser
of: (a) more than 50% of the outstanding voting securities entitled to
vote upon the matter, or (b) 67% or more of the voting securities
present at the meeting if the holders of 50% or more of the outstanding
voting securities entitled to vote on the matter are present at the
meeting in person or by proxy."
In the event that the amendment to Article XII, Section 4(b) is not
approved by shareholders, this section of the Declaration of Trust will remain
as it currently exists, and the Board of Trustees will consider what action, if
any, should be taken.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
PROPOSAL #4(b): TO AMEND AND RESTATE THE TRUST'S DECLARATION OF TRUST TO
PERMIT THE BOARD OF TRUSTEES TO LIQUIDATE ASSETS OF THE TRUST, ITS SERIES OR
CLASSES, AND DISTRIBUTE THE PROCEEDS OF SUCH ASSETS TO THE HOLDERS OF SUCH
SHARES REPRESENTING SUCH INTERESTS, WITHOUT SEEKING SHAREHOLDER APPROVAL
Shareholders are being asked to approve an amendment to the Trust's
Declaration of Trust to permit the Trustees to sell and convert into money
(i.e., liquidate) all the assets of the Trust, or any series or class of the
Trust, and then redeem all outstanding shares of any series or class of the
Trust. Currently, a majority vote of shareholders is required to liquidate the
Trust, or an affected series or class of which shares are outstanding. The
Trustees have determined that the current restriction presents a cumbersome
structure under which the best interest of all of the Trust's shareholders may
not be served. By requiring the Trustees to solicit a shareholder vote, by
means of a proxy solicitation and special meeting of shareholders, the
Declaration of Trust greatly hinders the Trustees' ability to effectively act
on decisions about the continued viability of the Trust. If it is determined
that it is no longer advisable to continue the Trust, or a series or class of
the Trust, it may not be in the best interest of shareholders to incur the
substantial additional expense of a shareholder meeting when it is more
important to preserve those assets that remain. If this proposal is approved
by shareholders, the Trustees will be authorized to liquidate a series or
class of the Trust by Board action without a further shareholder vote. The
Trustees have no present intention of liquidating the Trust or any of the
Funds.
If approved by shareholders, Article XII, Section 4(c) of the
Declaration of Trust will be amended to read as follows:
"The Trustees may at any time sell and convert into money all the
assets of the Trust or any Series or Class, without shareholder
approval, unless otherwise required by applicable law. Upon making
provision for the payment of all outstanding obligations, taxes and
other liabilities, accrued or contingent, belonging to each Series or
Class, the Trustees shall distribute the remaining assets belonging to
each Series or Class ratably among the holders of the outstanding
Shares of that Series or Class."
The Trustees believe that the interest of the shareholders is
adequately protected by this provision, as the liquidation would require the
conversion of the assets of the Trust to cash, which will thereafter be
distributed to shareholders pro rata. It is believed that this will result in
the return to shareholders of substantially the same value as would be provided
to the shareholders by a redemption resulting in the payment to the shareholders
of the then current net asset value of the shares owned by the shareholders.
Accordingly, the Trustees have approved, and have authorized the submission to
the Funds' shareholders for their approval, an amendment to the Trust's
Declaration of Trust.
In the event that the amendment to the Declaration of Trust to allow
the Trustees to liquidate assets of the Trust, or of a series or class thereof,
is not approved by the shareholders, the Declaration of Trust will remain as it
currently exists and the Trustees will consider what action, if any, should be
taken.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
INFORMATION ABOUT THE TRUST
Proxies, Quorum and Voting at the Meeting
Only shareholders of record on the Record Date will be entitled to
vote at the Meeting. Each share of the Trust is entitled to one vote. Fractional
shares are entitled to proportionate shares of one vote. Under both the
Investment Company Act of 1940 and the Declaration of Trust, the favorable vote
of a "majority of the outstanding voting shares" of the Trust or a Fund means:
(a) the holders of 67% or more of the outstanding voting securities present at
the Meeting, if the holders of 50% or more of the outstanding voting securities
of the Trust or the Fund are present or represented by proxy; or (b) the vote of
the holders of more than 50% of the outstanding voting securities, whichever is
less. The favorable vote of a majority of the outstanding voting shares of each
Fund is required to approve each of the Proposals, except the election of the
Trustees and the amendments of the Declaration of Trust. The election of
Trustees requires the favorable vote of a plurality of the outstanding shares of
the Trust, while the amendments to the Declaration of Trust must be approved by
the favorable vote of the majority of the outstanding voting shares of the
Funds.
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given on the proxy, the persons named as proxies will vote the shares
represented thereby in favor of the matters set forth in the attached Notice.
In order to hold the Meeting, a "quorum" of shareholders must be
present. Holders of more than fifty percent of the total number of outstanding
shares of the Trust entitled to vote, present in person or by proxy, shall be
required to constitute a quorum for the purpose of voting on the election of
Trustees and the amendments of the Declaration of Trust. Holders of more than
fifty percent of the total number of outstanding shares of each Fund entitled to
vote, present in person or by proxy, shall be required to constitute a quorum
for the purpose of voting on the other proposals.
For purposes of determining a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted. For
this reason, abstentions and broker non-votes will have the effect of a "no"
vote for purposes of obtaining the requisite approval of some of the proposals.
If a quorum is not present, the persons named as proxies may vote those
proxies which have been received to adjourn the 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 Meeting to permit further solicitations of
proxies with respect to such proposal(s). All such adjournments will require the
affirmative vote of a plurality of the shares present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote AGAINST any such adjournment those proxies which they are required to vote
against the proposal and will vote in FAVOR of the adjournment other proxies
which they are authorized to vote. A shareholder vote may be taken on other
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received for approval.
As referred to in this Proxy Statement, the "Federated Fund Complex,"
"The Funds" or "Funds" include the following investment companies: Cash Trust
Series, Inc.; Cash Trust Series II; CCB Funds; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Max-Cap Fund, Inc.; Federated ARMs
Fund; Federated Core Trust; Federated Index Trust; Federated Mid-Cap Income
Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Index Trust; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated Stock and Bond
Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Edward D. Jones & Co. Daily Passport Cash Trust; Liberty Term Trust, Inc. -
1999; Liberty U.S. Government Money Market Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; Tax-Free Instruments Trust; The
Planters Funds; WesMark Funds; WCT Funds; and World Investment Series, Inc.
Share Ownership of the Trustees
Officers and Trustees of the Trust own less than 1% of each Fund's outstanding
shares.
Max-Cap Fund: At the close of business on the Record Date, the following person
owned, to the knowledge of management, more than 5% of the outstanding shares of
the Class C Shares of the Fund: MLPF&S, Jacksonville, FL, for the sole benefit
of its customers, owned approximately 361,339.19 shares (11.82%). At the close
of business on the Record Date, the following person owned, to the knowledge of
management, more than 5% of the outstanding shares of the Institutional Shares
of the Fund: Mitra & Co., Milwaukee, WI, for the benefit of various customers,
owned approximately 9,355,635.00 shares (13.47%). At the close of business on
the Record Date, the following person owned, to the knowledge of management,
more than 5% of the outstanding shares of the Institutional Service Shares of
the Fund: Resources Trust Company, Englewood, CO, for the exclusive benefit of
various customers of IMS, owned approximately 1,769,814.69 shares (6.66%).
Mid-Cap Fund: At the close of business on the Record Date, the following persons
owned, to the knowledge of management, more than 5% of the outstanding shares of
the Fund: Charles Schwab & Co. Inc., San Francisco, CA, for the benefit of
various customers, owned approximately 852,479.48 shares (13.84%); and Covie
Co., Chicago, IL, for the benefit of various customers, owned approximately
786,301.65 shares (12.76%).
Mini-Cap Fund: At the close of business on the Record Date, the following person
owned, to the knowledge of management, more than 5% of the outstanding shares of
the Class C Shares of the Fund: MLPF&S, Jacksonville, FL, for the sole benefit
of its customers, owned approximately 55,224.35 shares (20.70%). At the close of
business on the Record Date, the following person owned, to the knowledge of
management, more than 5% of the outstanding shares of the Institutional Shares
of the Fund: Charles Schwab & Co. Inc., San Francisco, CA, for the benefit of
various customers, owned approximately 745,294.76 shares (10.33%).
<TABLE>
<CAPTION>
<S> <C> <C>
Trustee Compensation
Name and Position Aggregate Total Compensation Paid
With Trust Compensation From Fund Complex+
From
Trust1#
- --------------------------------------- -------------------- ----------------------------------------------------------
John F. Donahue*@ $0 $0 for the Trust and 54 other
Chairman and Trustee investment companies in the Fund Complex
Thomas G. Bigley $2,201.44 $113,860.22 for the Trust and 54 other
Trustee investment companies in the Fund Complex
John T. Conroy, Jr. $2,421.91 $125,264.48 for the Trust and 54 other
Trustee investment companies in the Fund Complex
Nicholas P. Constantakis $1,684.27 $47,958.02 for the Trust and 29 other
Trustee investment companies in the Fund Complex
John F. Cunningham** $0 $0 for the Trust and 46 other
Trustee investment companies in the Fund Complex
J. Christopher Donahue* $0 $0 for the Trust and 16 other
Executive Vice President and Trustee investment companies in the Fund Complex
Lawrence D. Ellis, M.D.* $2,201.44 $113,860.22 for the Trust and 54 other
Trustee investment companies in the Fund Complex
Peter E. Madden $2,201.44 $113,860.22 for the Trust and 54 other
Trustee investment companies in the Fund Complex
Charles F. Mansfield, Jr.** $0 $0 for the Trust and 50 other
Trustee investment companies in the Fund Complex
John E. Murray, Jr., J.D., S.J.D. @ $2,201.44 $113,860.22 for the Trust and 54 other
Trustee investment companies in the Fund Complex
Marjorie P. Smuts $2,201.44 $113,860.22 for the Trust and 54 other
Trustee investment companies in the Fund Complex
John S. Walsh** $0 $0 for the Trust and 48 other
Trustee investment companies in the Fund Complex
</TABLE>
1 Information is furnished for the fiscal year ended October 31, 1998.
# The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+ The information is provided for the last calendar year.
* The Trustee is deemed to be an "interested person" as defined in the 1940 Act.
@ Member of the Executive Committee.
** Messrs. Cunningham, Mansfield and Walsh became members of the Board of
Trustees on January 1, 1999. They did not receive any fees from the Fund Complex
as of the last calendar year.
During the fiscal year ended October 31, 1998, there were four meetings
of the Board of Trustees. The interested Trustees, other than Dr. Ellis, do not
receive fees from the Trust. Dr. Ellis is an interested person by reason of the
employment of his son-in-law by Federated Securities Corp. All Trustees were
reimbursed for expenses for attendance at Board of Trustees meetings.
The Executive Committee of the Board of Trustees handles the
responsibilities of the Board between meetings of the Board. Other than its
Executive Committee, the Trust has one Board committee, the Audit Committee.
Generally, the function of the Audit Committee is to assist the Board of
Trustees in fulfilling its duties relating to the Trust's accounting and
financial reporting practices and to serve as a direct line of communication
between the Board of Trustees and the independent auditors. The specific
functions of the Audit Committee include recommending the engagement or
retention of the independent auditors, reviewing with the independent auditors
the plan and the results of the auditing engagement, approving professional
services provided by the independent auditors prior to the performance of such
services, considering the range of audit and non-audit fees, reviewing the
independence of the independent auditors, reviewing the scope and results of the
Trust's procedures for internal auditing, and reviewing the Trust's system of
internal accounting controls.
For the most recently completed fiscal year, Messrs. Conroy, Madden and
Murray served on the Audit Committee. These Trustees are not interested Trustees
of the Trust. During the fiscal year ended October 31, 1998, there were four
meetings of the Audit Committee. All of the members of the Audit Committee were
present for each meeting. Each member of the Audit Committee receives an annual
fee of $100 plus $25 for attendance at each meeting and is reimbursed for
expenses of attendance.
Officers and Incumbent Trustees of the Trust
The executive officers of the Trust are elected annually by the Board
of Trustees. Each officer holds the office until qualification of his successor.
The names and birthdates of the executive officers of the Trust, as well as of
the incumbent Trustees who have previously been elected by shareholders, and
their principal occupations during the last five years, are set forth below:
John F. Donahue
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Date Became an Officer and a Trustee: February 1, 1990 and January 30, 1990
Chief Executive Officer and Director or Trustee of the Federated Fund Complex;
Chairman and Director, Federated Investors, Inc.; Chairman and Trustee,
Federated Investment Management Company; Chairman and Director, Federated
Investment Counseling and Federated Global Investment Management Corp.;
Chairman, Passport Research, Ltd. Mr. Donahue is the father of J. Christopher
Donahue, Executive Vice President and Trustee of the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Date Became a Trustee: October 1, 1995
Director or Trustee of the Federated Fund Complex; Director, Member of Executive
Committee, Children's Hospital of Pittsburgh; Director, Robroy Industries, Inc.
(coated steel conduits/computer storage equipment); formerly, Senior Partner,
Ernst & Young LLP; Director, MED 3000 Group, Inc. (physician practice
management); Director, Member of Executive Committee, University of Pittsburgh.
John T. Conroy, Jr.
Wood/IPC Commercial Dept.
John R. Wood Associates, Inc. Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
Date Became a Trustee: August 21, 1991
Director or Trustee of the Federated Fund Complex; President, Investment
Properties Corporation; Senior Vice President, John R. Wood and Associates,
Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest
Florida; formerly: President, Naples Property Management, Inc. and Northgate
Village Development Corporation.
J. Christopher Donahue
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President and Trustee
Date Became an Officer and a Trustee: June 1, 1995 and January 30, 1990
President or Executive Vice President of the Federated Fund Complex; Director or
Trustee of some of the Funds in the Federated Fund Complex; President, Chief
Executive Officer and Director, Federated Investors, Inc.; President and
Trustee, Federated Investment Counseling and Federated Investment Management
Company; President and Director, Federated Global Investment Management Corp.;
President, Passport Research, Ltd.; Trustee, Federated Shareholder Services
Company; Director, Federated Services Company. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue
Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Date Became a Trustee: January 30, 1990
Director or Trustee of the Federated Fund Complex; Professor of Medicine,
University of Pittsburgh; Medical Director, University of Pittsburgh Medical
Center-Downtown; Hematologist, Oncologist, and Internist, University of
Pittsburgh Medical Center; Member, National Board of Trustees, Leukemia Society
of America.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Date Became a Trustee: August 21, 1991
Director or Trustee of the Federated Fund Complex; formerly: Representative,
Commonwealth of Massachusetts General Court; President, State Street Bank and
Trust Company and State Street Corporation. Previous Positions: Director, VISA
USA and VISA International; Chairman and Director, Massachusetts Bankers
Association; Director, Depository Trust Corporation; Director, The Boston Stock
Exchange.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
Date Became a Trustee: February 14, 1995
Director or Trustee of the Federated Fund Complex; President, Law Professor,
Duquesne University; Consulting Partner, Mollica & Murray. Director, Michael
Baker Corp. (engineering, construction, operations, and technical services).
Previous Positions: Dean and Professor of Law, University of Pittsburgh School
of Law; Dean and Professor of Law, Villanova University School of Law.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Date Became a Trustee: January 30, 1990
Director or Trustee of the Federated Fund Complex; Public
Relations/Marketing/Conference Planning. Previous Positions: National
Spokesperson, Aluminum Company of America; television producer, business
owner.
Glen R. Johnson
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: May 2, 1929
President
Date Became an Officer: February 1, 1990
Staff member, Federated Securities Corp.
Edward C. Gonzales
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Date Became an Officer: June 1, 1995
Trustee or Director of some of the Funds in the Federated Fund Complex;
President, Executive Vice President and Treasurer of some of the Funds in the
Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice
President, Federated Investment Management Company, Federated Investment
Counseling, Federated Global Investment Management Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company.
John W. McGonigle
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Date Became an Officer: February 1, 1990
Executive Vice President and Secretary of the Federated Fund Complex;
Executive Vice President, Secretary and Director, Federated Investors, Inc.;
Trustee, Federated Investment Management Company; Trustee, Federated Investment
Counseling; Director, Federated Global Investment Management Corp.; Director,
Federated Services Company; Director, Federated Securities Corp.
Richard B. Fisher
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Date Became an Officer: February 1, 1990
President or Vice President of some of the Funds in the Federated Fund Complex;
Director or Trustee of some of the Funds in the Federated Fund Complex;
Executive Vice President, Federated Investors, Inc.; Chairman and Director,
Federated Securities Corp.
Richard J. Thomas
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: June 17, 1954
Treasurer
Date Became an Officer: November 19, 1998
Treasurer of the Federated Fund Complex; Vice President - Funds Financial
Services Division, Federated Investors, Inc.; formerly: various management
positions within Funds Financial Services Division of Federated Investors,
Inc.
J. Thomas Madden
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: October 22, 1945
Chief Investment Officer
Date Became an Officer: November 19, 1998
Chief Investment Officer of the Trust and various other Funds in the
Federated Fund Complex; Executive Vice President, Federated Investment
Counseling, Federated Global Investment Management Corp., Federated Investment
Management Company and Passport Research, Ltd.; Vice President, Federated
Investors, Inc.; formerly: Executive Vice President and Senior Vice President,
Federated Investment Counseling Institutional Portfolio Management Services
Division; Senior Vice President, Federated Investment Management Company and
Passport Research, Ltd.
Thomas M. Franks
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
Birthdate: December 15, 1954
Vice President
Date Became an Officer: November 19, 1998
Vice President of Federated Investment Management Company, Federated Investment
Counseling, Federated Global Research Corp. and Passport Research, Ltd.
None of the Officers of the Trust received salaries from the Trust
during the fiscal year ended October 31, 1998.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Trust is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to Federated Index Trust,
Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000, so that they are received within a reasonable time before any such
meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Trust.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Trustees,
John W. McGonigle
Secretary
October 12, 1999
<PAGE>
FEDERATED INDEX TRUST
Federated Max-Cap Fund
Federated Mid-Cap Fund
Federated Mini-Cap Fund
Investment Adviser
FEDERATED INVESTMENT MANAGEMENT COMPANY
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Distributor
FEDERATED SECURITIES CORP.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Administrator
FEDERATED SERVICES COMPANY
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Federated Max-Cap Fund (the "Fund"), a portfolio of Federated Index Trust (the
"Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Suzanne
W. Land and Ann M. Scanlon, or any one of them, true and lawful attorneys, with
the power of substitution of each, to vote all shares of the Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders (the
"Meeting") to be held on November 17, 1999, at 5800 Corporate Drive, Pittsburgh,
Pennsylvania, at 2:00 p.m. and at any adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF FEDERATED INDEX
TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSALS.
By checking the box "FOR" below, you will vote to approve each of the proposed
items in this proxy, and to elect each of the nominees as Trustees of the Trust
FOR [ ]
Proposal 1 To elect Nicholas P. Constantakis, John F. Cunningham,
Charles F. Mansfield, Jr. and John S. Walsh as Trustees of the Trust
FOR [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
VOTE FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR"
a particular nominee, mark the "VOTE FOR ALL
EXCEPT" box and strike a line through the name of
each nominee for whom you are NOT voting. Your
shares will be voted for the remaining nominees.
Proposal 2 To make changes to the Fund's fundamental investment policies:
2(a) To amend the Fund's fundamental investment policy regarding
diversification
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(b) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(c) To amend the Fund's fundamental investment policy regarding
investments in real estate
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(d) To amend the Fund's fundamental investment policy regarding
investments in commodities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(e) To amend the Fund's fundamental investment policy regarding
underwriting securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(f) To amend the Fund's fundamental investment policy regarding
lending by the Fund
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(g) To amend the Fund's fundamental investment policy regarding
concentration of the Fund's investments in the securities of
companies in the same industry
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding buying securities on margin
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(i) To amend, and to make non-fundamental, the Fund's
fundamental investment policy regarding
pledging assets
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(j) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in restricted securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 3 To eliminate certain of the Fund's fundamental investment policies:
3(a) To remove the Fund's fundamental investment policy on selling
securities short
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
3(b) To remove the Fund's fundamental investment policy on
investing in issuers whose securities are owned by officers
and Trustees
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 4 To approve amendments to, and a restatement of, the Trust's
Declaration of Trust:
4(a) To approve an amendment to and restatement of the Trust's
Declaration of Trust to require the approval by a majority of
the outstanding voting shares in the event of the sale or
conveyance of the assets of the Trust to another trust or
corporation
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
4(b) To approve an amendment to and restatement of the Trust's
Declaration of Trust to permit the Board of Trustees to
liquidate assets of the Trust, or of its series or classes,
and distribute the proceeds of such assets without seeking
shareholder approval
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS
IMPORTANT Please
complete, sign and
return this card
as soon as
possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
You may also vote your shares by touchtone phone
by calling 1-800-690-6903 or through the
Internet at www.proxyvote.com
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Federated Mid-Cap Fund (the "Fund"), a portfolio of Federated Index Trust (the
"Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Suzanne
W. Land and Ann M. Scanlon, or any one of them, true and lawful attorneys, with
the power of substitution of each, to vote all shares of the Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders (the
"Meeting") to be held on November 17, 1999, at 5800 Corporate Drive, Pittsburgh,
Pennsylvania, at 2:00 p.m. and at any adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF FEDERATED INDEX
TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSALS.
By checking the box "FOR" below, you will vote to approve each of the proposed
items in this proxy, and to elect each of the nominees as Trustees of the Trust
FOR [ ]
Proposal 1 To elect Nicholas P. Constantakis, John F. Cunningham,
Charles F. Mansfield, Jr. and John S. Walsh as Trustees of the Trust
FOR [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
VOTE FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR"
a particular nominee, mark the "VOTE FOR ALL
EXCEPT" box and strike a line through the name of
each nominee for whom you are NOT voting. Your
shares will be voted for the remaining nominees.
Proposal 2 To make changes to the Fund's fundamental investment policies:
2(a) To amend the Fund's fundamental investment policy regarding
diversification
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(b) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(c) To amend the Fund's fundamental investment policy regarding
investments in real estate
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(d) To amend the Fund's fundamental investment policy regarding
investments in commodities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(e) To amend the Fund's fundamental investment policy regarding
underwriting securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(f) To amend the Fund's fundamental investment policy regarding
lending by the Fund
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(g) To amend the Fund's fundamental investment policy regarding
concentration of the Fund's investments in the securities of
companies in the same industry
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding buying securities on margin
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(i) To amend, and to make non-fundamental, the Fund's
fundamental investment policy regarding
pledging assets
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(j) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in restricted securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 3 To eliminate certain of the Fund's fundamental investment policies:
3(a) To remove the Fund's fundamental investment policy on selling
securities short
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 4 To approve amendments to, and a restatement of, the Trust's
Declaration of Trust:
4(a) To approve an amendment to and restatement of the Trust's
Declaration of Trust to require the approval by a majority of
the outstanding voting shares in the event of the sale or
conveyance of the assets of the Trust to another trust or
corporation
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
4(b) To approve an amendment to and restatement of the Trust's
Declaration of Trust to permit the Board of Trustees to
liquidate assets of the Trust, or of its series or classes,
and distribute the proceeds of such assets without seeking
shareholder approval
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS
IMPORTANT Please
complete, sign and
return this card
as soon as
possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
You may also vote your shares by touchtone phone
by calling 1-800-690-6903 or through the
Internet at www.proxyvote.com
<PAGE>
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Federated Mini-Cap Fund (the "Fund"), a portfolio of Federated Index Trust (the
"Trust"), hereby appoint Patricia F. Conner, Gail Cagney, William Haas, Suzanne
W. Land and Ann M. Scanlon, or any one of them, true and lawful attorneys, with
the power of substitution of each, to vote all shares of the Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders (the
"Meeting") to be held on November 17, 1999, at 5800 Corporate Drive, Pittsburgh,
Pennsylvania, at 2:00 p.m. and at any adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF FEDERATED INDEX
TRUST. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSALS.
By checking the box "FOR" below, you will vote to approve each of the proposed
items in this proxy, and to elect each of the nominees as Trustees of the Trust
FOR [ ]
Proposal 1 To elect Nicholas P. Constantakis, John F. Cunningham,
Charles F. Mansfield, Jr. and John S. Walsh as Trustees of the Trust
FOR [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
VOTE FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR"
a particular nominee, mark the "VOTE FOR ALL
EXCEPT" box and strike a line through the name of
each nominee for whom you are NOT voting. Your
shares will be voted for the remaining nominees.
Proposal 2 To make changes to the Fund's fundamental investment policies:
2(a) To amend the Fund's fundamental investment policy regarding
diversification
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(b) To amend the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(c) To amend the Fund's fundamental investment policy regarding
investments in real estate
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(d) To amend the Fund's fundamental investment policy regarding
investments in commodities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(e) To amend the Fund's fundamental investment policy regarding
underwriting securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(f) To amend the Fund's fundamental investment policy regarding
lending by the Fund
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(g) To amend the Fund's fundamental investment policy regarding
concentration of the Fund's investments in the securities of
companies in the same industry
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(h) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding buying securities on margin
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(i) To amend, and to make non-fundamental, the Fund's
fundamental investment policy regarding pledging assets
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
2(j) To amend, and to make non-fundamental, the Fund's fundamental
investment policy regarding investing in restricted securities
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 3 To eliminate certain of the Fund's fundamental investment policies:
3(a) To remove the Fund's fundamental investment policy on selling
securities short
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Proposal 4 To approve amendments to, and a restatement of, the Trust's
Declaration of Trust:
4(a) To approve an amendment to and restatement of the Trust's
Declaration of Trust to require the approval by a majority of
the outstanding voting shares in the event of the sale or
conveyance of the assets of the Trust to another trust or
corporation
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
4(b) To approve an amendment to and restatement of the Trust's
Declaration of Trust to permit the Board of Trustees to
liquidate assets of the Trust, or of its series or classes,
and distribute the proceeds of such assets without seeking
shareholder approval
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS
IMPORTANT Please
complete, sign and
return this card
as soon as
possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
You may also vote your shares by touchtone phone
by calling 1-800-690-6903 or through the
Internet at www.proxyvote.com
