Reg. No. 333-____
811-6165
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MUNICIPAL SECURITIES INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
(412) 288-1900
(Area Code and Telephone Number)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
JOHN W. MCGONIGLE, ESQUIRE
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
Copies to:
C. Grant Anderson, Esquire Matthew G. Maloney, Esquire
Corporate Counsel Dickstein Shapiro Morin & Oshinsky LLP
Federated Investors, Inc. 2101 L Street, NW
Federated Investors Tower Washington, DC 20037
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Title of Securities Being Registered: shares of beneficial interest of
Federated North Carolina Municipal Income Fund, a portfolio of Municipal
Securities Income Trust.
Approximate Date of Proposed Public Offering: As soon as possible after the
effective date of this Registration Statement.
No filing fee is required under the Securities Act of 1933, as amended, because
an indefinite number of shares of beneficial interest have previously been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended.
The Registrant hereby amends this registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 19933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a) may determine.
<PAGE>
13
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
(FORMERLY, 111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND),
A PORTFOLIO OF CCB FUNDS (FORMERLY, 111 CORCORAN FUNDS)
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
June 18, 1999
Dear Shareholder:
The Board of Trustees and management of the CCB Funds are pleased to
submit for your vote a proposal to transfer all of the assets of the CCB North
Carolina Municipal Securities Fund (the "CCB Fund") to Federated North Carolina
Municipal Income Fund (the "Federated Fund"), a newly-organized portfolio of
Municipal Securities Income Trust, a mutual fund advised by Federated Investment
Management Company. The Federated Fund has an investment objective similar to
that of the CCB Fund in that it seeks to provide current income exempt from
federal regular income tax and the personal income taxes imposed by the State of
North Carolina and North Carolina municipalities. The Federated Fund pursues
this investment objective by investing its assets so that at least 80% of its
annual interest income is exempt from federal regular income tax and North
Carolina State personal income taxes. As part of the transaction, holders of
shares in the CCB Fund would receive Class A Shares of the Federated Fund equal
in value to their shares in the CCB Fund and the CCB Fund would be liquidated.
The Board of Trustees of CCB Funds, as well as Central Carolina Bank
& Trust Company, the CCB Fund's investment adviser, and Federated Securities
Corp., the CCB Fund's distributor, believe the proposed agreement and plan of
reorganization is in the best interests of CCB Fund shareholders.
Your vote on the transaction is critical to its success. The transfer
will be effected only if approved by a majority of all of the CCB Fund's
outstanding shares on the record date voted in person or represented by proxy.
We hope you will participate by casting your vote in person, or by proxy if you
are unable to attend the meeting. Please read the enclosed prospectus/proxy
statement carefully before you vote.
THE BOARD OF TRUSTEES BELIEVES THAT THE TRANSACTION IS IN THE BEST
INTERESTS OF THE CCB FUND AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR ITS APPROVAL.
Thank you for your prompt attention and participation.
Sincerely,
Edward C. Gonzales
President
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
(formerly, 111 Corcoran North Carolina Municipal Securities Fund)
a portfolio of
CCB FUNDS
(formerly, 111 Corcoran Funds)
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 22, 1999
A Special Meeting of the shareholders of CCB North Carolina Municipal
Securities Fund (the "CCB Fund"), a portfolio of CCB Funds (the "CCB Funds")
will be held at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010, at
2:00 p.m. (Eastern time), on July 22, 1999 to consider the following proposal:
To approve or disapprove a proposed Agreement and Plan of
Reorganization between the CCB Funds, on behalf of the CCB Fund, and
Municipal Securities Income Trust, on behalf of its portfolio,
Federated North Carolina Municipal Income Fund (the "Federated
Fund"), whereby the Federated Fund would acquire all of the assets of
the CCB Fund in exchange for Class A Shares of the Federated Fund to
be distributed pro rata by the CCB Fund to its shareholders in
complete liquidation and termination of the CCB Fund.
To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Trustees has fixed June 7, 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
June 18, 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.
<PAGE>
PROSPECTUS/PROXY STATEMENT
JUNE 18, 1999
Acquisition of the Assets of
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND,
(formerly, 111 Corcoran North Carolina Municipal Securities Fund),
a portfolio of CCB FUNDS
(formerly, 111 Corcoran Funds)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Telephone Number: 1-800-386-3111
By and in exchange for Class A Shares of
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND,
a portfolio of MUNICIPAL SECURITIES INCOME TRUST
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-245-5051, option one
This Prospectus/Proxy Statement describes the proposed Agreement and
Plan of Reorganization (the "Reorganization Agreement") whereby Federated North
Carolina Municipal Income Fund (the "Federated Fund"), a newly-organized
portfolio of Municipal Securities Income Trust, a Massachusetts business trust
(the "Trust"), would acquire all of the assets of CCB North Carolina Municipal
Securities Fund, a portfolio of CCB Funds, a Massachusetts business trust (the
"CCB Fund"), in exchange for the Federated Fund's Class A Shares to be
distributed pro rata by the CCB Fund to the holders of its shares, in complete
liquidation of the CCB Fund. As a result of the Plan, each shareholder of the
CCB Fund will become the owner of the Federated Fund's Class A Shares having a
total net asset value equal to the total net asset value of his or her holdings
in the CCB Fund.
THE BOARD OF TRUSTEES OF THE CCB FUNDS UNANIMOUSLY RECOMMENDS
APPROVAL OF THE REORGANIZATION AGREEMENT.
Each of the Federated Fund and the CCB Fund is a non-diversified
portfolio of securities of an open-end management investment company. The
Federated Fund's investment objective is to provide current income exempt from
federal regular income tax and the personal income taxes imposed by the State of
North Carolina and North Carolina municipalities. It pursues this investment
objective by investing its assets so that at least 80% of its annual interest
income is exempt from federal regular income tax and North Carolina state
personal income taxes. The CCB Fund has a similar objective in that it seeks to
provide income which is exempt from federal regular income tax and North
Carolina state personal income taxes. For a comparison of the investment
policies of the Federated Fund and the CCB Fund, see "Summary - Investment
Objectives, Policies and Limitations."
This Prospectus/Proxy Statement should be retained for future
reference. It sets forth concisely the information about the Federated Fund that
a prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the Prospectus of the Federated Fund dated June 4,
1999, which is incorporated herein by reference. Statements of Additional
Information for the Federated Fund dated June 4, 1999 (relating to the Federated
Fund's Prospectus of the same date) and June 18, 1999 (relating to this
Prospectus/Proxy Statement), all containing additional information, have been
filed with the Securities and Exchange Commission and are incorporated herein by
reference. Copies of the Statements of Additional Information may be obtained
without charge by writing or calling the Federated Fund at the address and
telephone number shown above.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES, OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
i
TABLE OF CONTENTS
Page No.
SUMMARY OF EXPENSES................................................ 1
SUMMARY............................................................ 3
About the Proposed Reorganization.............................. 3
Investment Objectives, Policies and Limitations................ 3
Advisory and Other Fees........................................ 4
Distribution Arrangements...................................... 5
Purchase, Exchange and Redemption Procedures................... 5
Dividends...................................................... 7
Tax Consequences............................................... 7
RISK FACTORS....................................................... 7
INFORMATION ABOUT THE REORGANIZATION............................... 7
Background and Reasons for the Proposed Reorganization......... 7
Description of the Plan of Reorganization...................... 8
Description of Federated Fund Shares........................... 9
Federal Income Tax Consequences................................ 9
Comparative Information on Shareholder Rights and Obligations.. 10
Capitalization.....................................................11
INFORMATION ABOUT THE FEDERATED FUND, THE TRUST, THE CCB FUND AND THE
CCB FUNDS... 11
Federated North Carolina Municipal Income Fund, a portfolio of
Municipal 11
Securities Income Trust..........................................
CCB North Carolina Municipal Securities Fund, a portfolio of CCB Funds 12
VOTING INFORMATION......................................................... 12
Outstanding Shares and Voting Requirements............................. 12
Dissenter's Right of Appraisal......................................... 13
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY................. 13
AGREEMENT AND PLAN OF REORGANIZATION -- EXHIBIT A.......................... A-1
<PAGE>
SUMMARY OF EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the CCB Fund and Federated North Carolina Municipal Income Fund's
Class A Shares.
<TABLE>
<CAPTION>
FEDERATED FUND
(CLASS A
SHARES)(1) FEDERATED
PRO FORMA
CCB FUND COMBINED(1)
--------------- ------------ ---------------
SHAREHOLDER FEES
<S> <C> <C> <C>
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering
price)................................... 4.50% 4.50% 4.50%
Maximum Deferred Sales Charge (Load) (as a
percentage of original purchase price or
redemption proceeds, as applicable)......
None None None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends (as a percentage of
offering price)..........................
None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable).................
None None None
Exchange Fee................................ None None None
ANNUAL OPERATING EXPENSES (BEFORE WAIVER/
REIMBURSEMENTS)
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee (2).......................... 0.40% 0.75% 0.40%
Distribution (12b-1) Fees................... 0.25% (3) None 0.25% (3)
Shareholder Services Fee.................... 0.25% None 0.25%
Other Expenses.............................. 0.39% 0.51% 0.39%
Total Annual Operating Expenses(4) 1.29% 1.26% 1.29%
</TABLE>
(1) The Federated Fund is a newly organized portfolio which has not conducted
any business except that incident to its organization. The fees and
expenses shown for the Federated Fund (Class A Shares) and for Federated
Pro Forma Combined are estimated fees and expenses expected to be incurred
for the fiscal year ending August 31, 2000.
(2) For the fiscal year ended May 31, 1998, the adviser for the CCB Fund
voluntarily waived all of its management fee. The CCB Fund adviser can
terminate this voluntary waiver at any time in its sole discretion. The
adviser for the Federated Fund anticipates waiving portions of the
management fee in the future for the Federated Fund. The Federated Fund
adviser can terminate this voluntary waiver at any time in its sole
discretion. The management fee paid by the Federated Fund and Federated Pro
Forma Combined (after the anticipated voluntary waiver) is expected to be
0.15% through the fiscal year ending August 31, 2000.
(3) The Federated Fund does not expect to pay or accrue the Distribution
(12b-1) fee of 0.25% through the fiscal year ending August 31, 2000. The
distributor can terminate this voluntary waiver at any time in its sole
discretion. The Distribution (12b-1) fee paid by the Federated Fund and
Federated Pro Forma Combined (after the voluntary waiver) is expected to be
0.00% through the fiscal year ending August 31, 2000.
(4) Although not contractually obligated to do so, the adviser waived certain
amounts during the year ended May 31, 1998 for the CCB Fund. These are
shown below along with the net expenses the CCB Fund ACTUALLY PAID for the
year ending May 31, 1998. In addition, although not contractually obligated
to do so, the adviser and distributor of the Federated Fund expect to waive
certain amounts through the fiscal year ending August 31, 2000. These are
shown below along with the net expenses the Federated Fund and Federated
Pro Forma Combined expects to ACTUALLY PAY through the fiscal year ending
August 31, 2000.
<TABLE>
<CAPTION>
Federated Federated
Fund Pro Forma
(Class A Shares) Combined
CCB Fund
----------------- ------------- -------------
<S> <C> <C> <C>
Total Waivers of Fund Expenses.............. 0.50% 0.75% 0.50%
Total Actual Annual Fund Operating
Expenses (after waivers)...............
0.79% 0.51% 0.79%
- --------------------
</TABLE>
EXAMPLE
The following Example is intended to help you compare the cost of investing
in the CCB Fund with the cost of investing in the Federated Fund's Class A
Shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
The Example assumes that you invest $10,000 in each 1 year 3 years 5 years 10 years
respective fund for the time periods indicated and
then redeem all of your shares at the end of those
periods. The Example assumes that your investment has
a 5% return each year and that the CCB Fund and the
Federated Fund and the Federated Pro Forma Combined
operating expenses are BEFORE WAIVERS as shown above
in the Table and remain the same. Although your
actual costs may be higher or lower, based on these
assumptions your costs would be:......................
CCB Fund.............................................. $ 573 $ 832 $1,110 $1,904
Federated Fund (Class A Shares) and Federated
Pro Forma Combined................................
$ 575 $ 841 $1,126 $1,936
</TABLE>
<PAGE>
SUMMARY
This summary is qualified in its entirety by reference to the
additional information contained elsewhere in this Prospectus/Proxy Statement,
the Prospectus of the Federated Fund dated June 4, 1999, the Statement of
Additional Information of the Federated Fund dated June 4, 1999, the Prospectus
of the CCB Fund dated July 31, 1998, the Statement of Additional Information of
the CCB Fund dated July 31, 1998, and the Reorganization Agreement, a copy of
which is attached to this Prospectus/Proxy Statement as Exhibit A.
ABOUT THE PROPOSED REORGANIZATION
The Board of Trustees of the CCB Funds has voted to recommend to
holders of the shares of the CCB Fund the approval of the Reorganization
Agreement whereby the Federated Fund, a portfolio of the Trust, would acquire
all of the assets of the CCB Fund in exchange for the Federated Fund's Class A
Shares to be distributed pro rata by the CCB Fund to its shareholders in
complete liquidation and dissolution of the CCB Fund (the "Reorganization"). As
a result of the Reorganization, each shareholder of the CCB Fund will become the
owner of the Federated Fund's Class A Shares having a total net asset value
equal to the total net asset value of his or her holdings in the CCB Fund on the
date of the Reorganization, i.e., the Closing Date (as hereinafter defined).
As a condition to the Reorganization transactions, the Trust and the
CCB Fund will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), so that no gain or loss
will be recognized by either the Federated Fund or the CCB Fund or the
shareholders of the CCB Fund. The tax basis of the Federated Fund's Class A
Shares received by CCB Fund shareholders will be the same as the tax basis of
their shares in the CCB Fund. After the acquisition is completed, the CCB Fund
will be dissolved.
INVESTMENT OBJECTIVES, POLICIES AND LIMITATIONS
The investment objective of the Federated Fund is to provide current
income exempt from federal regular income tax and the personal income taxes
imposed by the state of North Carolina and North Carolina municipalities. The
Federated Fund will pursue its investment objective by investing its assets so
that at least 80% of its annual interest income is exempt from federal regular
income tax and North Carolina state personal income taxes. Interest from the
Federated Fund's investments may be subject to the federal alternative minimum
tax for individuals or corporations. The Federated Fund will ordinarily invest
at least 65% of its portfolio in investment grade tax exempt securities. The
Federated Fund may invest the remainder of its portfolio in lower rated tax
exempt securities.
The investment objective of the CCB Fund is substantially identical
to the investment objective of the Federated Fund in that it seeks to provide
income which is exempt from federal regular income tax and North Carolina state
income tax. The CCB Fund pursues its investment objective by investing in a
professionally managed portfolio consisting primarily of municipal securities
exempt from North Carolina state income taxes and/or federal regular income tax.
Like the Federated Fund, interest from the CCB Fund's investments may be subject
to the federal alternative minimum tax for individuals or corporations. The
average maturity of the CCB Fund is 5 to 15 years. The Federated Fund does not
have a policy with respect to expected average maturity. As a matter of
fundamental investment policy, which may not be changed without shareholder
approval, the CCB Fund invests its assets so that, under normal circumstances,
at least 80% of its annual interest income is exempt from federal regular income
tax or that at least 80% of its net assets are invested in obligations, the
interest income from which is exempt from federal regular income tax. In
addition, the CCB Fund invests its assets so that, under normal circumstances,
at least 65% of the value of its total assets will be invested in North Carolina
municipal securities which are exempt from federal regular income tax and North
Carolina state income tax. Investments in the Federated Fund or the CCB Fund are
not insured or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.
The principal difference in the investment practices of the Federated
Fund, as compared to the CCB Fund, is that the Federated Fund may invest up to
35% of its assets in securities rated below investment grade, also known as
"junk bonds," which generally entail greater market, credit and liquidity risks
than investment grade securities. See "Risk Factors."
Both the Federated Fund and the CCB Fund are subject to certain
investment limitations. The investment limitations of the Federated Fund are
similar, but not identical to, the CCB Fund's existing investment limitations.
Some of the CCB Fund's fundamental limitations reflect past regulatory, business
or industry conditions, practices or requirements that are no longer in effect,
whereas the Federated Fund's fundamental limitations have been modernized to
take into account changes in the regulatory, business or industry conditions,
practices or requirements. The Federated Fund has slightly increased investment
flexibility which will allow the Federated Fund to respond to future investment
opportunities. Despite this increased investment flexibility, however, it is not
anticipated that the investment limitations of the Federated Fund, individually
or in the aggregate, will result at this time in a material change in the level
of investment risk associated with an investment in the CCB Fund.
In addition to the policies and limitations set forth above, both the
Federated Fund and the CCB Fund are subject to certain additional investment
policies and limitations, described in the Federated Fund's Statement of
Additional Information dated June 4, 1999, and the CCB Fund's Statement of
Additional Information dated July 31, 1998. Reference is hereby made to the
Federated Fund's Prospectus and Statement of Additional Information, each dated
June 4, 1999, and to the CCB Fund's Prospectus and Statement of Additional
Information, each dated July 31, 1998, which set forth in full the investment
objective, policies and investment limitations of each of the Federated Fund and
the CCB Fund, all of which are incorporated herein by reference thereto.
ADVISORY AND OTHER FEES
The annual investment advisory fee for the Federated Fund is 0.40 of
1% of the Federated Fund's average daily net assets. The investment adviser to
the Federated Fund, Federated Investment Management Company ("Federated
Investment Management Company"), a subsidiary of Federated Investors, may
voluntarily choose to waive a portion of its advisory fee or reimburse other
expenses of the Federated Fund. This voluntary waiver or reimbursement may be
terminated by Federated Investment Management Company at any time in its sole
discretion. The maximum annual management fee for the CCB Fund is 0.75 of 1% of
average daily net assets of the CCB Fund. The CCB Fund's investment manager,
Central Carolina Bank & Trust Company ("Central Carolina Bank"), may similarly
voluntarily choose to waive a portion of its advisory fee or reimburse the CCB
Fund for certain expenses and may likewise terminate such waiver or
reimbursement at any time in its sole discretion.
Federated Services Company, an affiliate of Federated Investment
Management Company, provides certain administrative personnel and services
necessary to operate the Federated Fund. Federated Administrative Services, also
an affiliate of Federated Investment Management Company, provides certain
administrative personnel and services necessary to operate the CCB Fund.
Federated Services Company provides these services at an annual rate based upon
the average aggregate daily net assets of all funds advised by Federated
Investment Management Company and its affiliates. Federated Administrative
Services provides these services at an annual rate based upon the average
aggregate daily net assets of the CCB Funds. For both Federated Services Company
and Federated Administrative Services, the rate charged is 0.15 of 1% on the
first $250 million of all such funds' average aggregate daily net assets, 0.125
of 1% on the next $250 million, 0.10 of 1% on the next $250 million and 0.075 of
1% of all such funds' average aggregate daily net assets in excess of $750
million. Federated Services Company's minimum annual administrative fee per
portfolio is $125,000 plus $30,000 for each additional class of shares of any
such portfolio, while the administrative fee received by Federated
Administrative Services during any fiscal year shall be at least $50,000 per
portfolio. Federated Services Company or Federated Administrative Services may
choose voluntarily to waive a portion of its respective fee. The administrative
fee expense for the CCB Fund's fiscal year ended May 31, 1998 was $53,009, or
0.144% of average daily net assets. The administrative fee expense for the
Federated Fund for the fiscal year ending August 31, 2000 is not presently
determinable, but is expected to approximate 0.161% of average daily net assets.
The Federated Fund has entered into a Shareholder Services Agreement
under which it may make payments of up to 0.25 of 1% of the average daily net
asset value of the Class A Shares to obtain certain personal services for
shareholders and the maintenance of shareholder accounts. The Shareholder
Services Agreement provides that Federated Shareholder Services ("FSS"), an
affiliate of Federated Investment Management Company, either will perform
shareholder services directly or will select financial institutions to perform
such services. Financial institutions will receive fees based upon shares owned
by their clients or customers. The schedule of such fees and the basis upon
which such fees will be paid is determined from time to time by the Federated
Fund and FSS. The CCB Fund does not make payments to obtain similar shareholder
services.
The total annual operating expenses for shares of the CCB Fund were
0.51% of average daily net assets (after waivers) for the fiscal year ended May
31, 1998. Without such waivers, the expense ratio of the CCB Fund would have
been 1.26%, or higher by 0.75%, of average daily net assets . The total annual
operating expenses for the Federated Fund for the fiscal year ending August 31,
2000 are not presently determinable, but are expected to be 0.79% after waivers.
Without such waivers, the expense ratio of the Federated Fund is expected to be
1.29% of average daily net assets for the fiscal year ended August 31, 2000, or
approximately 0.50% higher.
DISTRIBUTION ARRANGEMENTS
Federated Securities Corp. ("FSC"), an affiliate of Federated
Investment Management Company, is the principal distributor for shares of both
the Federated Fund and the CCB Fund. Except under certain circumstances, both
Class A Shares of the Federated Fund and shares of the CCB Fund are sold at net
asset value, next determined after an order is received, plus a maximum sales
charge of 4.50%. The Federated Fund has adopted a Rule 12b-1 Distribution Plan
(the "Distribution Plan") pursuant to which the Federated Fund may pay a fee to
the distributor in an amount computed at an annual rate of 0.25 of 1% of the
average daily net assets of the Class A Shares to finance any activity which is
principally intended to result in the sale of Class A Shares subject to the
Distribution Plan. The Federated Fund does not anticipate making or accruing
payments for Class A Shares under the Distribution Plan in the immediate future.
The CCB Fund does not have a Rule 12b-1 plan in effect and, accordingly, does
not, nor does FSC, compensate brokers and dealers for sales and administrative
services performed in connection with sales of shares of the CCB Fund pursuant
to a plan of distribution adopted pursuant to Rule 12b-1.
FSC and FSS, from their own assets, may pay financial institutions
supplemental fees as financial assistance for providing substantial sales
services, distribution-related support services or shareholder services with
respect to the Federated Fund. Such assistance will be predicated upon the
amount of shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the financial
institution. Any payments made by FSC may be reimbursed by Federated Investment
Management Company or its affiliates.
For sales of shares of the CCB Fund, a dealer will normally receive
up to 85% of the applicable sales charge. For shares sold with a sales charge,
Central Carolina Bank will receive 85% of the applicable sales charge for
purchases of shares of the CCB Fund made directly through Central Carolina Bank.
The sales charge for shares sold other than through Central Carolina Bank or
registered broker/dealers will be retained by FSC. However, FSC will,
periodically, uniformly offer to pay to dealers additional amounts in the form
of cash or promotional incentives. Such payments, all or a portion of which may
be paid from the sales charge FSC normally retains or any other source available
to it, will be predicated upon the amount of shares of the CCB Fund that are
sold by the dealer. For a complete description of sales charges and exemptions
from such charges, reference is hereby made to the Prospectus of the Federated
Fund dated June 4, 1999 and the Prospectus of the CCB Fund dated July 31, 1998,
each which is incorporated herein by reference thereto.
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES
The transfer agent and dividend disbursing agent for each of the
Federated Fund and the CCB Fund is Federated Shareholder Services Company.
Procedures for the purchase, exchange and redemption of the Federated Fund's
Class A Shares differ slightly from procedures applicable to the purchase,
exchange and redemption of the CCB Fund's shares. Reference is made to the
Prospectus of the Federated Fund dated June 4, 1999, and the Prospectus of the
CCB Fund dated July 31, 1998, for a complete description of the purchase,
exchange and redemption procedures applicable to purchases, exchanges and
redemptions of Federated Fund and CCB Fund shares, respectively, each of which
is incorporated herein by reference thereto.
Purchases of Class A Shares of the Federated Fund may be made through
an investment professional or, once an account has been established, by wire or
check. Purchases of shares of the CCB Fund may be made through Central Carolina
Bank and through certain broker/dealers under contract with FSC or directly by
wire or check once an account has been established. The minimum initial
investment in the Federated Fund is $1,500. Subsequent investments must be in
amounts of at least $100. For purposes of the minimum initial investment, all
CCB Fund shareholder accounts maintained by FSC will be combined to meet the
minimum investment requirement. The minimum initial investment in the CCB Fund
is $1,000. Subsequent investments must be in amounts of at least $100. These
minimums may be waived for purchases by the Trust Division of Central Carolina
Bank for its fiduciary or custodial accounts. All accounts maintained by an
institutional investor will be combined together to determine whether such
minimum investment requirement is met. The Federated Fund and the CCB Fund each
reserves the right to reject any purchase request. In connection with the sale
of shares of the CCB Fund, FSC may from time to time offer certain items of
nominal value to any shareholder.
The purchase price of each of the Federated Fund's Class A Shares and
the CCB Fund's shares is based on net asset value, plus a sales charge. No sales
charge will be imposed in connection with the issuance of Federated Fund shares
to the CCB Fund shareholders as a result of the Reorganization. Additionally,
Class A Shares of the Federated Fund may be purchased at net asset value,
without a sales charge, by the Trust Division of Central Carolina Bank for
accounts in which the Trust Division holds or manages assets. Except in limited
circumstances, the net asset value per share for each of the Federated Fund and
the CCB Fund is calculated as of the close of trading (normally 4:00 p.m.,
Eastern time) on the New York Stock Exchange, Inc. (the "NYSE") on each day on
which the NYSE is open for business. Federated Fund purchase orders received
from investment professionals before the close of trading on the NYSE may be
entered at that day's price. Payment is normally required in three business
days. Purchase orders for shares of the Federated Fund by wire are considered
received upon receipt of the wire and begin earning dividends on the business
day the wire is received. Federated Fund purchase orders received by check are
considered received upon receipt of the check and shares begin earning dividends
the next day. Purchase orders for shares of the CCB Fund received from Central
Carolina Bank and authorized brokers and dealers before 4:00 p.m. (Eastern time)
may be entered at that day's price. Payment is normally required in three
business days. If an order for shares of the CCB Fund is placed on the preceding
business day, shares purchased by wire begin earning dividends on the business
day wire payment is received by the CCB Fund's custodian, Fifth Third Bank. If
the order for shares and payment by wire are received on the same day, shares
begin earning dividends on the next business day. Shares of the CCB Fund
purchased by check begin earning dividends on the business day after the check
is converted into federal funds.
Holders of Class A Shares of the Federated Fund have exchange
privileges with respect to Class A shares in other funds for which subsidiaries
or affiliates of Federated Investors serve as investment adviser (collectively,
the "Federated Funds"). The exchange is subject to any initial or subsequent
investment amounts of the Federated Funds into which the exchange is being made.
Exercise of the exchange privilege is treated as a redemption and new purchase
for federal income tax purposes and, accordingly, may have tax consequences for
the shareholder. Holders of shares of the CCB Fund have exchange privileges with
respect to shares in CCB Equity Fund, CCB Bond Fund, Liberty U.S. Government
Money Market Trust and Federated American Leaders Fund, Inc., each of which has
different investment objectives and policies. Holders of shares of the CCB Fund
who exercise this exchange privilege must exchange shares having a net asset
value of at least $1,000. Exchanges are made at net asset value plus the
difference between the CCB Fund's sales charge already paid and any applicable
sales charge on shares of the CCB Fund to be acquired in the exchange. Exercise
of the exchange privilege is treated as a redemption and new purchase for
federal income tax purposes and, accordingly, may have tax consequences for the
shareholder.
Information on share exchanges may be obtained from the Federated Fund or the
CCB Fund, as appropriate.
Redemptions of Federated Fund Class A Shares may be made through an
investment professional, by telephone or by mailing a written request, or
through the Federated Fund's systematic withdrawal program. A contingent
deferred sales charge of 0.75% of the redemption amount applies to Class A
Shares of the Federated Fund redeemed up to 24 months after purchase under
certain investment programs where an investment professional received an
advanced payment on the transaction. This contingent deferred sales charge would
not be applicable to shares of the Federated Fund acquired under the proposed
Reorganization. Redemptions of CCB Fund shares may be made through Central
Carolina Bank or the CCB Fund, by telephone or by mailing a written request, or
through the CCB Fund's systematic withdrawal program. Class A Shares of the
Federated Fund and shares of the CCB Fund are each redeemed at their net asset
value, less any applicable contingent deferred sales charge for Class A Shares
of the Federated Fund, next determined after the redemption request is received
on each day on which the CCB Fund computes its net asset value. Proceeds will
ordinarily be distributed by check within seven days after receipt of a
redemption request.
Any questions about the foregoing procedures may be directed to, and
assistance in effecting purchases, exchanges or redemptions of the Federated
Fund's Class A Shares or the CCB Fund's shares may be obtained from FSC,
principal distributor for each of the Federated Fund and the CCB Fund, at
1-800-245-5051, option one.
DIVIDENDS
Each of the Federated Fund's and the CCB Fund's current policy is to
declare dividends daily and pay dividends monthly and to make annual
distributions of net realized capital gains, if any. With respect to both the
Federated Fund and the CCB Fund, unless a shareholder otherwise instructs,
dividends and capital gain distributions will be reinvested automatically in
additional shares at net asset value.
TAX CONSEQUENCES
As a condition to the Reorganization transactions, the Trust and the
CCB Funds will receive an opinion of counsel that the Reorganization will be
considered a tax-free "reorganization" under applicable provisions of the Code
so that no gain or loss will be recognized by either the Federated Fund or the
CCB Fund or the shareholders of the CCB Fund. The tax basis of the Federated
Fund shares received by CCB Fund shareholders will be the same as the tax basis
of their shares in the CCB Fund.
RISK FACTORS
As with other mutual funds that invest in municipal securities, the
Federated Fund is subject to market risks and credit risks. The value of the
shares of the Federated Fund will fluctuate. The amount of this fluctuation is
dependent upon the quality and maturity of the municipal securities in the
Federated Fund's portfolio as well as on market conditions. Generally speaking,
lower quality, longer-term securities in which the Federated Fund may invest
have greater fluctuation in value than high quality, shorter-term securities.
Municipal securities prices are interest rate sensitive, which means that their
value varies inversely with market interest rates. Prices of fixed income
securities also fluctuate with changes in the perceived quality of the credit of
their issuers. Since the Federated Fund invests primarily in North Carolina
municipal securities which are tax exempt and since it seeks to maximize income
derived from North Carolina municipal securities which are tax exempt, it is
susceptible to factors adversely affecting the State of North Carolina and
issuers of North Carolina municipal securities in addition to generally being
subject to the risk factors summarized above. Additionally, the Federated Fund
is a non-diversified portfolio of an investment company. An investment in the
Federated Fund, therefore, will entail greater risk than would exist in a
diversified investment company because the higher percentage of investments
among fewer issuers may result in greater fluctuation in the total market value
of the Federated Fund's portfolio. Since the CCB Fund also invests primarily in
North Carolina municipal securities, these risk factors are generally also
present in an investment in the CCB Fund. In addition, the Federated Fund,
unlike the CCB Fund, may invest up to 35% of its assets in securities rated
below investment grade, also known as junk bonds, which generally entail greater
market, credit and liquidity risks than investment grade securities. A full
discussion of the risks inherent in investment in the Federated Fund and the CCB
Fund is set forth in the Federated Fund's Prospectus and Statement of Additional
Information, each dated June 4, 1999, and the CCB Fund's Prospectus and
Statement of Additional Information, each dated July 31, 1998, each of which is
incorporated herein by reference thereto.
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
The CCB Fund was established in 1991 to provide investors with an
opportunity to invest in a professionally managed, non-diversified portfolio
investing primarily in North Carolina municipal securities. Although the Board
of CCB Funds has been satisfied with the CCB Fund's performance, it and Central
Carolina Bank, the CCB Fund's investment adviser, believe that certain operating
efficiencies may ultimately be achieved by reorganizing the CCB Fund as a
portfolio of the Trust rather than remaining as a portfolio of CCB Funds. For
the last several years, in an effort to remain competitive with other investment
companies, Central Carolina Bank has waived all of its investment advisory fees
and reimbursed the CCB Fund for certain operating expenses, resulting in
aggregate fee waivers and expense reimbursements of $276,004 for the CCB Fund's
fiscal year ended May 31, 1998. Central Carolina Bank has concluded that it will
not be able to continue indefinitely to waive such investment advisory fees and
reimburse operating expenses in order to allow the CCB Fund to earn a return on
its investments competitive with other investment companies with similar
investment objectives. As a result, Central Carolina Bank has recommended to the
Board of Trustees that it would be in the best interests of all of the CCB
Fund's shareholders that its assets be transferred to the Trust, on behalf of
the Federated Fund, in order to reorganize it as a separate portfolio of the
Trust. Federated Investment Management Company, the Trust's investment adviser,
similarly recommended to the Board of Trustees of the Trust that the Federated
Fund be organized for the purpose of acquiring the CCB Fund's assets and thereby
reorganizing the CCB Fund as a portfolio of the Trust. In connection with this
proposal, each of the Trust's and the CCB Fund's investment advisers emphasized
the comparable advisory services provided to the CCB Fund and the Federated
Fund, the substantially identical investment objectives and investment policies
of the CCB Fund and the Federated Fund, and the administrative convenience and
simplification of management achievable by operating the CCB Fund as a portfolio
of the Trust.
The Board of Trustees of CCB Funds, including a majority of the
independent Trustees, determined that participation in the Reorganization is in
the best interests of the CCB Fund and that the interests of CCB Fund
shareholders would not be diluted as a result of its effecting the
Reorganization. Based upon the foregoing considerations, and the fact that
shareholders of the CCB Fund will not suffer any adverse tax consequences as a
result of the Reorganization, the Board of Trustees of CCB Funds unanimously
voted to approve, and recommend to CCB Fund shareholders the approval of, the
Reorganization.
The Board of Trustees of the Trust, including the independent
Trustees, have unanimously concluded that consummation of the Reorganization is
in the best interests of the Federated Fund and the shareholders of the
Federated Fund and that the interests of Federated Fund shareholders would not
be diluted as a result of effecting the Reorganization and have unanimously
voted to approve the Reorganization Agreement.
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Reorganization Agreement provides that all of the assets of the
CCB Fund will be transferred to the Federated Fund, subject to the liabilities
of the CCB Fund. Each holder of shares of the CCB Fund will receive the same
number (with the same aggregate value) of Class A Shares of the Federated Fund
as the shareholder had in the CCB Fund immediately prior to the Reorganization.
The CCB Fund's shareholders will not pay a sales charge, commission or other
transaction cost in connection with their receipt of the Class A Shares of the
Federated Fund.
Following the transfer of assets and assumption of liabilities of the
CCB Fund to and by the Federated Fund, and the issuance of Class A Shares by the
Federated Fund to the CCB Fund, the CCB Fund will distribute the Class A Shares
of the Federated Fund received by the CCB Fund among the shareholders of the CCB
Fund in proportion to the number of shares each such shareholder holds in the
CCB Fund. In addition to receiving the Class A Shares of the Federated Fund,
each shareholder of the CCB Fund will have a right to receive any declared and
unpaid dividends or other distributions of the CCB Fund. Following the
Reorganization, shareholders of the CCB Fund will be shareholders of the
Federated Fund and the CCB Fund will take all steps necessary to effect its
termination. It will not be necessary for holders of share certificates of the
CCB Fund to exchange their certificates for new certificates following
consummation of the Reorganization. Certificates for shares of the CCB Fund
issued prior to the Reorganization will represent outstanding Class A Shares of
the Federated Fund after the Reorganization. Shareholders of the CCB Fund who
have not been issued certificates and whose shares are held in an open account
will automatically have those shares designated as Class A Shares of the
Federated Fund.
The Reorganization is subject to certain conditions, including:
approval of the Reorganization Agreement and the transactions and exchange
contemplated thereby as described in this Prospectus/Proxy Statement by the
shareholders of the CCB Fund; the receipt of a legal opinion described in the
Reorganization Agreement regarding tax matters; the receipt of certain
certificates from the parties concerning the continuing accuracy of the
representations and warranties in the Reorganization Agreement and other
matters; and the parties' performance, in all material respects, of the
agreements and undertakings in the Reorganization Agreement. Assuming
satisfaction of the conditions in the Reorganization Agreement, the
Reorganization is expected to occur on or after July 23, 1999.
The Federated Fund's investment adviser is responsible for the
payment of all expenses of the Reorganization incurred by either party, whether
or not the Reorganization is consummated. Such expenses include, but are not
limited to, legal fees, registration fees, transfer taxes (if any), the fees of
banks and transfer agents and the costs of preparing, printing, copying and
mailing proxy solicitation materials to the CCB Fund's shareholders.
The Reorganization may be terminated at any time prior to its
consummation by either the CCB Funds or the Trust if circumstances should
develop that, in the opinion of either the Board of the CCB Funds or the Board
of Trustees of the Trust, make proceeding with the Reorganization Agreement
inadvisable. The Reorganization Agreement provides further that at any time
prior to the consummation of the Reorganization: (i) the parties thereto may
amend or modify any of the provisions of the Reorganization Agreement provided
that such amendment or modification would not have a material adverse effect
upon the benefits intended under the Reorganization Agreement and it would be
consistent with the best interests of shareholders of the CCB Fund and the
Federated Fund; and (ii) either party may waive any of the conditions set forth
in the Reorganization Agreement if, in the judgment of the waiving party, such
waiver will not have a material adverse effect on the benefits intended under
the Reorganization Agreement to the shareholders of the CCB Fund or the
shareholders of the Federated Fund, as the case may be.
DESCRIPTION OF FEDERATED FUND SHARES
Full and fractional Class A Shares of the Federated Fund will be
issued without the imposition of a sales charge or other fee to the shareholders
of the CCB Fund in accordance with the procedures described above. Class A
Shares of the Federated Fund to be issued to shareholders of the CCB Fund under
the Plan will be fully paid and nonassessable when issued and transferable
without restriction and will have no preemptive or conversion rights. Reference
is hereby made to the Prospectus of the Federated Fund dated June 4, 1999,
provided herewith for additional information about Class A Shares of the
Federated Fund.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization, the CCB Funds, on behalf of the
CCB Fund, and the Trust, on behalf of the Federated Fund, will receive an
opinion from Dickstein Shapiro Morin & Oshinsky LLP, special counsel to the CCB
Funds and the Trust, to the effect that, on the basis of the existing provisions
of the Code, current administrative rules and court decisions, for federal
income tax purposes: (1) the Reorganization as set forth in the Reorganization
Agreement will constitute a tax-free "reorganization" under Section 368(a)(1)(F)
of the Code, and the CCB Fund and the Federated Fund each will be "a party to a
reorganization" within the meaning of Section 368(b) of the Code; (2) no gain or
loss will be recognized by the Federated Fund upon its receipt of the CCB Fund's
assets (subject to the liabilities of the CCB Fund) in exchange for Federated
Fund Class A Shares; (3) no gain or loss will be recognized by the CCB Fund upon
the transfer of its assets (subject to the liabilities of the CCB Fund) to the
Federated Fund in exchange for Federated Fund Class A Shares or upon the
distribution (whether actual or constructive) of the Federated Fund Class A
Shares to the CCB Fund shareholders in exchange for their shares of the CCB
Fund; (4) no gain or loss will be recognized by shareholders of the CCB Fund
upon the exchange of their Fund shares for Federated Fund Class A Shares; (5)
the tax basis of the CCB Fund's assets acquired by the Federated Fund will be
the same as the tax basis of such assets to the CCB Fund immediately prior to
the Reorganization; (6) the tax basis of Federated Fund Class A Shares received
by each shareholder of the CCB Fund pursuant to the Reorganization will be the
same as the tax basis of the CCB Fund shares held by such shareholder
immediately prior to the Reorganization; (7) the holding period of the assets of
the CCB Fund in the hands of the Federated Fund will include the period during
which those assets were held by the CCB Fund; and (8) the holding period of the
Federated Fund Class A Shares received by each shareholder of the CCB Fund
pursuant to the Reorganization will include the period during which the CCB Fund
shares exchanged therefor were held by such shareholder, provided the CCB Fund
shares were held as capital assets on the date of the Reorganization.
The CCB Funds and the Trust have not sought a tax ruling from the
Internal Revenue Service ("IRS"), but are acting in reliance upon the opinion of
counsel discussed in the previous paragraph. That opinion is not binding on the
IRS and does not preclude the IRS from adopting a contrary position.
Shareholders should consult their own advisers concerning the potential tax
consequences to them, including state and local income taxes.
The Federated Fund does not anticipate that taxable sales involving
significant amounts of securities of the combined portfolio will have to be made
after the Reorganization to effect a realignment with the policies and
investment practices of the Federated Fund.
<PAGE>
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
GENERAL. Both the Federated Fund and the CCB Fund are open-end,
non-diversified series of management investment companies registered under the
1940 Act, which continuously offer to sell shares at their current net asset
value. Each of the Trust and the CCB Funds is organized as a business trust
pursuant to a Declaration of Trust under the laws of the Commonwealth of
Massachusetts. Each of the Trust and the CCB Funds is governed by its respective
Declaration of Trust, Bylaws and Board of Trustees, in addition to applicable
state and federal law. The rights of shareholders of the Trust and shareholders
of the CCB Funds as set forth in the applicable Declaration of Trust and By-laws
are substantially identical. Set forth below is a brief summary of the
significant rights of shareholders of the Federated Fund and shareholders of the
CCB Fund.
SHARES OF THE FEDERATED FUND AND THE CCB FUND. The Trust is
authorized to issue an unlimited number of shares of beneficial interest which
have no par value. The Federated Fund is a separate series of the Trust. The
Board of Trustees has established one class of shares of the Federated Fund,
known as Class A Shares. The CCB Fund is authorized to issue an unlimited number
of shares of beneficial interest which have no par value. The CCB Fund is a
portfolio of the CCB Funds and has only one class of shares. Issued and
outstanding shares of both the Federated Fund and CCB Fund are fully paid and
nonassessable, and freely transferable.
VOTING RIGHTS. Neither the Trust nor the CCB Funds is required to
hold annual meetings of shareholders, except as required under the 1940 Act.
Shareholder approval is necessary only for certain changes in operations or the
election of trustees under certain circumstances. Each of the Trust and the CCB
Funds requires that a special meeting of shareholders be called for any
permissible purpose upon the written request of the holders of at least 10% of
the outstanding shares of the series or class of the Trust or the CCB Funds, as
the case may be, entitled to vote. Each share of the Federated Fund and of the
CCB Fund gives the shareholder one vote in trustee elections and other matters
submitted to shareholders for vote. All shares of each portfolio or class in
each of the Trust and the CCB Funds have equal voting rights except that in
matters affecting only a particular portfolio or class, only shares of that
portfolio or class are entitled to vote.
TRUSTEES. The Declaration of Trust for the Trust and the Declaration
of Trust for the CCB Funds each provides that the term of office of each Trustee
shall be for the lifetime of the Trust or the CCB Funds, as the case may be, or
the earlier of his or her death, resignation, retirement, removal or mental or
physical incapacity. A Trustee of the Trust or the CCB Funds may be removed by:
(i) written instrument signed by at least two-thirds of the Trustees, (ii) a
majority vote of the Trustees if the Trustee has become mentally or physically
incapacitated or (iii) a vote of two-thirds of the outstanding shares at any
special meeting of shareholders. A vacancy on the Board may be filled by the
Trustees remaining in office. A meeting of shareholders will be required for the
purpose of electing additional Trustees whenever fewer than a majority of the
Trustees then in office were elected by shareholders.
LIABILITY OF TRUSTEES AND OFFICERS. Under both the Declaration of
Trust for the Trust and the Declaration of Trust for the CCB Funds, a Trustee or
officer will be personally liable only for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office. The Declaration of Trust for the Trust and the
By-Laws of the CCB Funds each further provides that Trustees and officers will
be indemnified by the Trust or the CCB Funds, as the case may be, to the fullest
extent permitted by law against liability and against all expenses of litigation
unless the person's conduct is determined to constitute willful misfeasance, bad
faith, gross negligence or reckless disregard of the person's duties.
SHAREHOLDER LIABILITY. Under certain circumstances, shareholders of
the Federated Fund may be held personally liable as partners under Massachusetts
law for obligations of the Trust on behalf of the Federated Fund. To protect its
shareholders, the Trust has filed legal documents with the Commonwealth of
Massachusetts that expressly disclaim the liability of its shareholders for such
acts or obligations of the Trust. These documents require that notice of this
disclaimer be given in each agreement, obligation or instrument that the Trust
or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations on behalf of the Federated Fund, the Trust is required to
use its property to protect or compensate the shareholder. On request, the Trust
will defend any claim made and pay any judgment against a shareholder for any
act or obligation of the Trust on behalf of the Federated Fund. Therefore,
financial loss resulting from liability as a shareholder will occur only if the
Trust itself cannot meet its obligations to indemnify shareholders and pay
judgments against them from assets of the Federated Fund
Shareholders of the CCB Fund have the same potential liability under
Massachusetts law.
TERMINATION. In the event of the termination of the Trust or any
portfolio or class of the Trust or of the termination of the CCB Fund, the
shareholders of the respective portfolio or class are entitled to receive, when
and as declared by its Trustees, the excess of the assets belonging to the
respective portfolio or class over the liabilities belonging to the respective
portfolio or class. In either case, the assets belonging to the portfolio or
class will be distributed among the shareholders in proportion to the number of
shares of the respective portfolio or class held by them.
CAPITALIZATION
The Federated Fund is a newly-organized portfolio which, as of the
date of this Prospectus/Proxy Statement, has not conducted any business (other
than matters incident to its organization) and has no shareholders. Accordingly,
the capitalization of the Federated Fund immediately following the
Reorganization is expected to be identical to the capitalization of the CCB Fund
immediately prior to the Reorganization. The following table sets forth the
unaudited capitalization of the Class A Shares of the Federated Fund and the
shares of the CCB Fund as of May 31, 1999 and on a pro forma combined basis as
of that date:
<TABLE>
<CAPTION>
FEDERATED
FEDERATED FUND PRO FORMA
(CLASS A SHARES) CCB FUND COMBINED
<S> <C> <C> <C>
Net Assets -- $40,176,980 $40,176,980
Net Asset Value Per Share -- $10.72 $10.72
Shares Outstanding -- 3,747.85 3,747.85
</TABLE>
INFORMATION ABOUT THE FEDERATED FUND, THE TRUST,
THE CCB FUND AND CCB FUNDS
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND, A PORTFOLIO OF MUNICIPAL
SECURITIES INCOME TRUST
Information about the Trust and the Federated Fund is contained in
the Federated Fund's current Prospectus dated June 4, 1999, a copy of which is
included herewith and incorporated herein by reference. Additional information
about the Federated Fund is included in the Federated Fund's Statement of
Additional Information dated June 4, 1999, and the Statement of Additional
Information dated June 18, 1999 (relating to this Prospectus/Proxy Statement),
each of which is incorporated herein by reference. Copies of the Statements of
Additional Information, which have been filed with the Securities and Exchange
Commission (the "SEC"), may be obtained upon request and without charge by
contacting the Federated Fund at 1-800-245-5051, option one, or by writing the
Federated Fund at Federated Investors Funds, 5800 Corporate Drive, Pittsburgh,
PA 15237-7000. The Trust is subject to the informational requirements of the
Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the 1940 Act and in accordance
therewith files reports and other information with the SEC. Reports, proxy and
information statements, charter documents and other information filed by the
Trust or the Federated Fund can be obtained by calling or writing the Federated
Fund and can also be inspected and copied by the public at the public reference
facilities maintained by the SEC in Washington, D.C. located at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at certain of its regional
offices located at Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, IL 60661 and 13th Floor, Seven World Trade Center, New York, NY
10048. Copies of such material can be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates or from the SEC's Internet site
at http://www.sec.gov.
This Prospectus/Proxy Statement, which constitutes part of a
Registration Statement filed by the Trust with the SEC under the 1933 Act, omits
certain of the information contained in the Registration Statement. Reference is
hereby made to the Registration Statement and to the exhibits thereto for
further information with respect to the Trust and the Federated Fund and the
shares offered hereby. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each such statement
is qualified in its entirety by reference to the copy of the applicable document
filed with the SEC.
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND, A PORTFOLIO OF CCB FUNDS
Information about the CCB Fund and the CCB Funds is contained in the
CCB Fund's current Prospectus dated July 31, 1998, the Annual Report to
Shareholders dated May 31, 1998, the Semi-Annual Report to Shareholders dated
October 31, 1998, the Statement of Additional Information dated July 31, 1998,
and the Statement of Additional Information dated June 18, 1999 (relating to
this Prospectus/Proxy Statement), each of which is incorporated herein by
reference. Copies of such Prospectus, Annual Report, and Statements of
Additional Information, which have been filed with the SEC, may be obtained upon
request and without charge from the CCB Fund by calling 1-800-386-3111, or by
writing to the CCB Fund at 5800 Corporate Drive, Pittsburgh, PA 15237-7010. The
CCB Fund is subject to the informational requirements of the 1933 Act, the 1934
Act and the 1940 Act and in accordance therewith files reports and other
information with the SEC. Reports, proxy and information statements, charter
documents and other information filed by CCB Funds or its portfolio, the CCB
Fund, can be obtained by calling or writing the CCB Fund and can also be
inspected at the public reference facilities maintained by the SEC or obtained
at prescribed rates at the addresses listed in the previous section or from the
SEC's Internet site at http://www.sec.gov.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees of the CCB Funds of proxies for use at the
Special Meeting of Shareholders (the "Special Meeting") to be held at 2:00 p.m.
on July 22, 1999 at: 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7010,
and at any adjournments thereof. The proxy confers discretionary authority on
the persons designated therein to vote on other business not currently
contemplated which may properly come before the Special Meeting. A proxy, if
properly executed, duly returned and not revoked, will be voted in accordance
with the specifications thereon; if no instructions are given, such proxy will
be voted in favor of the Reorganization Agreement. A shareholder may revoke a
proxy at any time prior to use by filing with the Secretary of the CCB Funds an
instrument revoking the proxy, by submitting a proxy bearing a later date or by
attending and voting at the Special Meeting.
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by Federated Investment Management Company. In
addition to solicitations through the mails, proxies may be solicited by
officers, employees and agents of the CCB Fund, Federated Investment Management
Company and their respective affiliates at no additional cost to the CCB Fund.
Such solicitations may be by telephone, telegraph or personal contact. Federated
Investment Management Company will reimburse custodians, nominees and
fiduciaries for the reasonable costs incurred by them in connection with
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees of the CCB Funds has fixed the close of
business on June 7, 1999, as the record date for the determination of
shareholders of the CCB Fund entitled to notice of and to vote at the Special
Meeting and any adjournments thereof. As of the record date, there were
3,761,415 shares of the CCB Fund outstanding. Each of the CCB Fund's shares is
entitled to one vote and fractional shares have proportionate voting rights. On
the record date, the Trustees and officers of the CCB Funds as a group owned
less than 1% of the outstanding shares of the CCB Fund. To the best knowledge of
Central Carolina Bank, as of the record date, no person, except as set forth in
the table below, owned beneficially or of record 5% or more of the CCB Fund's
outstanding shares.
SHARES OWNED OF
RECORD AND PERCENT OF
BENEFICIALLY
NAME AND ADDRESS OUTSTANDING SHARES
Central Carolina Bank & Trust Company 3,325,199 88.40%
Durham, North Carolina
As of the record date, there were no Class A Shares of the Federated
Fund outstanding.
Approval of the Plan requires the affirmative vote of a majority of
the outstanding shares of the CCB Fund. The votes of shareholders of the
Federated Fund are not being solicited since their approval is not required in
order to effect the Reorganization.
One-half of the issued and outstanding shares of the CCB Fund,
represented in person or by proxy, will be required to constitute a quorum at
the Special Meeting for the purpose of voting on the proposed Reorganization.
For purposes of determining the presence of a quorum, shares represented by
abstentions and "broker non-votes" will be counted as present, but not as votes
cast, at the Special Meeting. Under the 1940 Act, however, which governs this
transaction, matters subject to the requirements of the 1940 Act, including the
Reorganization, are determined on the basis of a percentage of votes present at
the Special Meeting, which would have the effect of treating abstentions and
"broker non-votes" as if they were votes against the Reorganization.
DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the CCB Fund objecting to the Reorganization have no
appraisal rights under the CCB Funds' Declaration of Trust or Massachusetts law.
Under the Plan, if approved by CCB Fund shareholders, each shareholder will
become the owner of Class A Shares of the Federated Fund having a total net
asset value equal to the total net asset value of his or her holdings in the CCB
Fund at the Closing Date.
OTHER MATTERS AND DISCRETION OF PERSONS NAMED IN THE PROXY
Management of the CCB Funds knows of no other matters that may
properly be, or which are likely to be, brought before the Special Meeting.
However, if any other business shall properly come before the Special Meeting,
the persons named in the proxy intend to vote thereon in accordance with their
best judgment.
If at the time any session of the Special Meeting is called to order,
a quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to adjourn the Special Meeting to a
later date. In the event that a quorum is present but sufficient votes in favor
of one or more of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the shares
present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote those proxies which they are
entitled to vote in favor of the proposal, in favor of such an adjournment, and
will vote those proxies required to be voted against the proposal, against any
such adjournment.
Whether or not shareholders expect to attend the Special Meeting, all
shareholders are urged to sign, fill in and return the enclosed proxy form
promptly.
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of June 2, 1999 (the
"Agreement") between CCB Funds, a Massachusetts business trust ("CCB"), on
behalf of its portfolio CCB North Carolina Municipal Securities Fund (the
"Fund"), with its principal place of business at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7010 and Municipal Securities Income Trust, a
Massachusetts business trust ("MSIT"), with its principal place of business
located at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, on behalf
of its newly-organized portfolio Federated North Carolina Municipal Income Fund
(the "Successor Fund").
WHEREAS, the Board of Trustees of CCB and the Board of Trustees of
MSIT have determined that it is in the best interests of CCB and MSIT,
respectively, that the assets of the Fund be acquired by the Successor Fund
pursuant to this Agreement; and
WHEREAS, the parties desire to enter into a plan of exchange which
would constitute a reorganization within the meaning of Section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended (the "Code"):
NOW THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. Plan of Exchange.
(a) Subject to the terms and conditions set forth herein, the
Fund shall assign, transfer and convey its assets, including all securities and
cash held by the Fund (subject to the liabilities of the Fund) to the Successor
Fund, and the Successor Fund shall acquire all of the assets of the Fund
(subject to the liabilities of the Fund) in exchange for full and fractional
Class A Shares of the Successor Fund (the "Successor Fund Shares"), to be issued
by MSIT, having an aggregate net asset value equal to the value of the net
assets of the Fund. The value of the assets of the Fund and the net asset value
per share of the Successor Fund Shares shall be computed as of the close of the
New York Stock Exchange (normally 4:00 p.m. Eastern time) on the Exchange Date
(such time and date being hereinafter called the "Valuation Time") in accordance
with the procedures for determining the value of the Successor Fund's assets set
forth in the Successor Fund's organizational documents and the then-current
prospectus and statement of additional information for the Successor Fund that
forms a part of the Successor Fund's Registration Statement on Form N-1A (the
"Registration Statement"). In lieu of delivering certificates for the Successor
Fund Shares, MSIT shall credit the Successor Fund Shares to the Fund's account
on the share record books of MSIT and shall deliver a confirmation thereof to
the Fund. The Fund shall then deliver written instructions to MSIT's transfer
agent to establish accounts for the shareholders on the share record books
relating to the Successor Fund.
(b) Delivery of the assets of the Fund to be transferred shall
be made on the Exchange Date (as defined herein). Assets transferred shall be
delivered to State Street Bank and Trust Company, MSIT's custodian (the
"Custodian"), for the account of MSIT and the Successor Fund with all securities
not in bearer or book entry form duly endorsed, or accompanied by duly executed
separate assignments or stock powers, in proper form for transfer, with
signatures guaranteed, and with all necessary stock transfer stamps, sufficient
to transfer good and marketable title thereto (including all accrued interest
and dividends and rights pertaining thereto) to the Custodian for the account of
MSIT and the Successor Fund free and clear of all liens, encumbrances, rights,
restrictions and claims All cash delivered shall be in the form of immediately
available funds payable to the order of the Custodian for the account of MSIT
and the Successor Fund.
(c) The Fund will pay or cause to be paid to MSIT any interest
received on or after the Exchange Date with respect to assets transferred from
the Fund to the Successor Fund hereunder and to MSIT and any distributions,
rights or other assets received by the Fund after the Exchange Date as
distributions on or with respect to the securities transferred from the Fund to
the Successor Fund hereunder. All such assets shall be deemed included in assets
transferred to the Successor Fund on the Exchange Date and shall not be
separately valued.
(d) The Exchange Date shall be July 23, 1999, or such earlier
or later date as may be mutually agreed upon by the parties.
(e) As soon as practicable after the Exchange Date, the Fund
shall distribute all of the Successor Fund Shares received by it among the
shareholders of the Fund in proportion to the number of shares each such
shareholder holds in the Fund and shall take all other steps necessary to effect
its termination. After the Exchange Date, the Fund shall not conduct any
business except in connection with its termination.
2. CCB's Representations and Warranties. CCB, on behalf of the Fund,
represents and warrants to and agrees with MSIT, on behalf of the Successor
Fund, as follows:
(a) CCB is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts and has
power to own all of its properties and assets and, subject to the approval of
its shareholders as contemplated hereby, to carry out this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by CCB and is valid and binding on the Fund, enforceable in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, and other similar laws of general applicability relating
to or affecting creditors' rights and to general principles of equity. The
execution and delivery of this Agreement does not and will not, and the
consummation of the transactions contemplated by this Agreement will not,
violate the CCB's Declaration of Trust or By-Laws or any agreement or
arrangement to which the Fund is a party or by which it is bound.
(c) CCB is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and such registration has not been revoked or rescinded and is in full force and
effect.
(d) Except as shown on the audited financial statements of the
Fund for its most recently completed fiscal period and as incurred in the
ordinary course of the Fund's business since then, the Fund has no known
liabilities of a material amount, contingent or otherwise, and there are no
legal, administrative or other proceedings pending or, to the Fund's knowledge,
threatened against the Fund.
(e) On the Exchange Date, CCB will have full right, power and authority to
sell, assign, transfer and deliver the Fund's assets to be transferred by it
hereunder.
3. MSIT's Representations and Warranties. MSIT, on behalf of the Successor
Fund, represents and warrants to and agrees with CCB, on behalf of the Fund, as
follows:
(a) MSIT is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts and has
power to carry on its business as it is now being conducted and to carry out
this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by MSIT and is valid and binding on MSIT, enforceable in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, and other similar laws of general applicability relating
to or affecting creditors' rights and to general principles of equity. The
execution and delivery of this Agreement does not and will not, and the
consummation of the transactions contemplated by this Agreement will not,
violate MSIT's Declaration of Trust or By-Laws or any agreement or arrangement
to which it is a party or by which it is bound.
(c) MSIT is registered under the 1940 Act as an open-end
management investment company and such registration has not been revoked or
rescinded and is in full force and effect.
(d) The Successor Fund does not have any known liabilities of
a material amount, contingent or otherwise, and there are no legal,
administrative or other proceedings pending or, to MSIT's knowledge, threatened
against the Successor Fund. Other than organizational activities, the Successor
Fund has not engaged in any business activities.
(e) At the Exchange Date, the Successor Fund Shares to be
issued to the Fund (the only Successor Fund Shares to be issued as of the
Exchange Date, except for the initial capital, if any) will have been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
legally and validly issued and will be fully paid and non-assessable. No MSIT or
Successor Fund shareholder will have any preemptive right of subscription or
purchase in respect thereof.
4. MSIT's Conditions Precedent. The obligations of MSIT hereunder
with respect to the Successor Fund shall be subject to the following conditions:
(a) CCB shall have furnished to MSIT a statement of the Fund's
assets, including a list of securities owned by the Fund with their respective
tax costs and values determined as provided in Section 1 hereof, all as of the
Valuation Time.
(b) As of the Exchange Date, all representations and
warranties of CCB made in this Agreement shall be true and correct as if made at
and as of such date, and the Fund shall have complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to such date.
(c) A vote of the shareholders of the Fund approving this
Agreement and the transactions and exchange contemplated hereby shall have been
adopted by the vote required by applicable law.
5. CCB's Conditions Precedent. The obligations of CCB hereunder with
respect to the Fund shall be subject to the condition that as of the Exchange
Date all representations and warranties of MSIT made in the Agreement shall be
true and correct as if made at and as of such date, and that MSIT shall have
complied with all of the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such date.
6. MSIT's and CCB's Conditions Precedent. The obligations of both
MSIT and CCB hereunder shall be subject to the following conditions:
(a) The post-effective amendment to MSIT's Registration
Statement on Form N-1A relating to the Successor Fund under the 1933 Act and the
1940 Act, if applicable, shall have become effective, and any additional
post-effective amendments to such Registration Statement as are determined by
the Trustees of MSIT to be necessary and appropriate shall have been filed with
the Commission and shall have become effective.
(b) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency which seeks to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transaction contemplated herein.
(c) Each party shall have received an opinion of Dickstein
Shapiro Morin & Oshinsky LLP to the effect that the reorganization contemplated
by this Agreement qualifies as a "reorganization" under Section 368(a)(1)(F) of
the Code.
Provided, however, that at any time prior to the Exchange Date, any
of the foregoing conditions in this Section 6 may be waived by the parties if,
in the judgment of the parties, such waiver will not have a material adverse
effect on the benefits intended under this Agreement to the shareholders of the
Fund.
7. Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated and abandoned by resolution of the Board
of Trustees of CCB or the Board of Trustees of MSIT at any time prior to the
Exchange Date (and notwithstanding any vote of the shareholders of the Fund) if
circumstances should develop that, in the opinion of either the Board of
Trustees of CCB or the Board of Trustees of MSIT, make proceeding with this
Agreement inadvisable.
If this Agreement is terminated and the exchange contemplated
hereby is abandoned pursuant to the provisions of this Section 7, this Agreement
shall become void and have no effect, without any liability on the part of any
party hereto or the Trustees, officers or shareholders of MSIT or the Trustees,
officers or shareholders of CCB, in respect of this Agreement.
8. Waiver and Amendments. At any time prior to the Exchange Date, any
of the conditions set forth in Section 4 may be waived by the Board of MSIT, and
any of the conditions set forth in Section 5 may be waived by the Board of CCB,
if, in the judgment of the waiving party, such waiver will not have a material
adverse effect on the benefits intended under this Agreement to the shareholders
of the Fund or the shareholders of the Successor Fund, as the case may be. In
addition, prior to the Exchange Date, any provision of this Agreement may be
amended or modified by the Boards of CCB and MSIT if such amendment or
modification would not have a material adverse effect upon the benefits intended
under this Agreement and would be consistent with the best interests of
shareholders of the Fund and the Successor Fund.
9. No Survival of Representations. None of the representations and
warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
10. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflict of laws; provided, however, that the due
authorization, execution and delivery of this Agreement, in the case of CCB and
MSIT, shall be governed and construed in accordance with the laws of the
Commonwealth of Massachusetts without giving effect to principles of conflict of
laws.
11. Capacity of Trustees, Etc.
(a)(i) The names "CCB Funds" and "Board of Trustees of CCB
Funds" refer, respectively, to the trust created and the trustees, as trustees
but not individually or personally, acting from time to time under CCB's
Declaration of Trust, which is hereby referred to and a copy of which is on file
at the office of the State Secretary of the Commonwealth of Massachusetts and at
the principal office of CCB. The obligations of CCB entered into in the name or
on behalf of the Fund by any of the trustees, representatives or agents are made
not individually, but in such capacities, and are not binding upon any of the
trustees, shareholders or representatives of CCB or the Fund personally, but
bind only the Fund's trust property, and all persons dealing with any portfolio
of shares of CCB must look solely to the trust property belonging to such
portfolio for the enforcement of any claims against CCB.
(ii) Both parties specifically acknowledge and agree that
any liability of the Fund under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Fund and that no other portfolio of CCB shall be liable with respect
thereto.
(b)(i) The names "Municipal Securities Income Trust" and
"Board of Trustees of Municipal Securities Income Trust" refer, respectively, to
the trust created and the trustees, as trustees but not individually or
personally, acting from time to time under MSIT's Declaration of Trust, which is
hereby referred to and a copy of which is on file at the office of the State
Secretary of the Commonwealth of Massachusetts and at the principal office of
MSIT. The obligations of MSIT entered into in the name or on behalf of the
Successor Fund by any of the trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
trustees, shareholders or representatives of MSIT personally, but bind only the
Successor Fund's trust property, and all persons dealing with any portfolio of
shares of MSIT must look solely to the trust property belonging to such
portfolio for the enforcement of any claims against MSIT.
(ii) Both parties specifically acknowledge and agree that
any liability of MSIT under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Successor Fund and that no other portfolio of MSIT shall be liable with
respect thereto.
12. Counterparts. This Agreement may be executed in counterparts,
each of which, when executed and delivered, shall be deemed to be an original.
<PAGE>
IN WITNESS WHEREOF, CCB and MSIT have caused this Agreement and Plan
of Reorganization to be executed as of the date above first written.
ATTEST: CCB FUNDS, on behalf of its portfolio, CCB
North Carolina Municipal Securities Fund
/s/C. Grant Anderson
Assistant Secretary _/s/Joseph A. Machi
Title: Vice President
ATTEST: MUNICIPAL SECURITIES INCOME TRUST, on behalf
of its portfolio, Federated North Carolina
Municipal Income Fund
/s/ Leslie K. Ross /s/John W. McGonigle
Assistant Secretary Title: Executive Vice President and Secretary
STATEMENT OF ADDITIONAL INFORMATION
JUNE 18, 1999
Acquisition of the Assets of
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND,
(formerly, 111 Corcoran North Carolina Municipal Securities Fund)
a portfolio of
CCB FUNDS
(formerly, 111 Corcoran Funds)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Telephone Number: 1-800-386-3111
By and in exchange for Class A Shares of
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND,
a portfolio of
MUNICIPAL SECURITIES INCOME TRUST
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-245-5051, option one
This Statement of Additional Information dated June 18, 1999 is not a
prospectus. A Prospectus/Proxy Statement dated June 18, 1999 related to the
above-referenced matter may be obtained from Municipal Securities Income Trust,
5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. This Statement of
Additional Information should be read in conjunction with such Prospectus/Proxy
Statement.
<PAGE>
TABLE OF CONTENTS
1. Statement of Additional Information of Federated North Carolina Municipal
Income Fund, a portfolio of Municipal Securities Income Trust, dated June 4,
1999.
2. Statement of Additional Information of CCB North Carolina Municipal
Securities Fund, a portfolio of CCB Funds, dated July 31, 1998.
3. Financial Statements of CCB North Carolina Municipal Securities Fund, a
portfolio of CCB Funds, dated May 31, 1998.
4. Financial Statements (unaudited) of CCB North Carolina Municipal Securities
Fund, a portfolio of CCB Funds, dated November 30, 1998.
<PAGE>
The Statement of Additional Information of Federated North Carolina
Municipal Income Fund (the "Federated Fund"), a portfolio of Municipal
Securities Income Trust (the "Trust") dated June 4, 1999, is incorporated herein
by reference to the Federated Fund's definitive Statement of Additional
Information filed pursuant to Rule 497(c) (File Nos. 33-36729 and 811-8165)
which was filed with the Securities and Exchange Commission on or about June 9,
1999. A copy may be obtained, upon request and without charge, from the
Federated Fund at 5800 Corporate Drive, Pittsburgh, PA 15237-7000; telephone
number: 1-800-245-5051, option one.
The Statement of Additional Information of CCB North Carolina
Municipal Securities Fund (the "CCB Fund"), a portfolio of CCB Funds (the "CCB
Funds"), dated July 31, 1998, is incorporated herein by reference to
Post-Effective Amendment No. 12 to the CCB Funds' Registration Statement on Form
N-1A (File Nos. 33-45753 and 811-6561) which was filed with the Securities and
Exchange Commission on or about July 21, 1998. A copy may be obtained, upon
request and without charge, from the CCB Fund at 5800 Corporate Drive,
Pittsburgh, PA 15237-7010; telephone number: 1-800-386-3111.
Financial Statements of the Federated Fund are not included herein
because the Federated Fund has not yet commenced operations. The audited
financial statements of the CCB Fund, dated May 31, 1998, are incorporated
herein by reference to the CCB Fund's Annual Report to Shareholders, dated May
31, 1998, which was filed with the Securities and Exchange Commission on or
about July 29, 1998. A copy may be obtained, upon request and without charge,
from the CCB Fund at 5800 Corporate Drive, Pittsburgh, PA 15237-7000; telephone
number: 1-800-386-3111.
The unaudited financial statements of the CCB Fund, dated November
30, 1998, are incorporated herein by reference to the CCB Fund's Semi-Annual
Report to Shareholders, dated November 30, 1998, which was filed with the
Securities and Exchange Commission on or about January 22, 1999. A copy may be
obtained, upon request and without charge, from the CCB Bond Fund at 5800
Corporate Drive, Pittsburgh, PA 15237-7010; telephone number: 1-800-386-3111,
option one
Pro forma financial information is not required because the Federated
Fund has not conducted any business other than matters incident to its
organization and will not commence operations until completion of the
Reorganization.
<PAGE>
PART C - OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Indemnification is provided to trustees and officers of the
Registrant pursuant to the Registrant's Declaration of Trust, except where such
indemnification is not permitted by law. However, the Declaration of Trust does
not protect the trustees or officers from liability based on willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their office.
Trustees and officers of the Registrant are insured against certain
liabilities, including liabilities arising under the Securities Act of 1933 (the
"Act").
Insofar as indemnification for liabilities arising under the Act may
be permitted to trustees, officers, and controlling persons of the Registrant by
the Registrant pursuant to the Declaration of Trust or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by trustees, officers, or controlling persons of the Registrant in
connection with the successful defense of any act, suit, or proceeding) is
asserted by such trustees, officers, or controlling persons in connection with
the shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Insofar as indemnification for liabilities may be permitted pursuant
to Section 17 of the Investment Company Act of 1940, as amended, for trustees,
officers, or controlling persons of the Registrant by the Registrant pursuant to
the Declaration of Trust or otherwise, the Registrant is aware of the position
of the Securities and Exchange Commission as set forth in Investment Company Act
Release No. IC-11330. Therefore, the Registrant undertakes that in addition to
complying with the applicable provisions of the Declaration of Trust or
otherwise, in the absence of a final decision on the merits by a court or other
body before which the proceeding was brought, that an indemnification payment
will not be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a majority vote of
a quorum of non-party trustees who are not interested persons of the Registrant
or (ii) by independent legal counsel in a written opinion that the indemnitee
was not liable for an act of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duties. The Registrant further undertakes that
advancement of expenses incurred in the defense of a proceeding (upon
undertaking for repayment unless it is ultimately determined that
indemnification is appropriate) against an officer, trustee, or controlling
person of the Registrant will not be made absent the fulfillment of at least one
of the following conditions: (i) the indemnitee provides security for his
undertaking; (ii) the Registrant is insured against losses arising by reason of
any lawful advances; or (iii) a majority of a quorum of disinterested non-party
trustees or independent legal counsel in a written opinion makes a factual
determination that there is reason to believe the indemnitee will be entitled to
indemnification.
<PAGE>
ITEM 16. EXHIBITS
1.1 Paper Copy of Declaration of Trust of Registrant (1)
1.2 Paper Copy of Amendment No. 1 (dated August 26, 1991) to Declaration of
Trust (5)
1.3 Conformed Copy of Amendment No. 2 (dated August 6, 1990) to the Declaration
of Trust(6)
1.4 Conformed Copy of Amendment No. 3 (dated August 31, 1992 ) to the
Declaration of Trust(8)
1.5 Conformed Copy of Amendment No. 4 (dated September 17, 1992 ) to the
Declaration of Trust(8)
1.6 Conformed Copy of Amendment No. 5 (dated February 4, 1993) to the
Declaration of Trust(10)
1.7 Conformed Copy of Amendment No. 6 (dated May 24, 1993 ) to the Declaration
of Trust(13)
1.8 Conformed Copy of Amendment No. 16 (dated May 20, 1999) to the Declaration
of Trust*
2.1 Copy of By-Laws of the Registrant (1)
2.2 Copy of Amendment No. 1 (dated November 18, 1997) to the By-Laws (23)
2.3 Copy of Amendment No. 2 (dated February 23, 1998) to the By-Laws(23)
2.4 Copy of Amendment No. 3 (dated February 27, 1998) to the By-Laws(23)
2.5 Copy of Amendment No. 4 (dated May 12, 1998) to the By-Laws(23)
3 Not Applicable
4 Agreement and Plan of Reorganization dated June 2, 1999, between CCB
Funds, on behalf of its portfolio CCB North Carolina Municipal
Securities Fund, and Municipal Securities Income Trust, on behalf of its
portfolio Federated North Carolina Municipal Income Fund, is included as
Exhibit A to the Prospectus/Proxy Statement included in this
Registration Statement*
5 Not Applicable
6.1 Conformed Copy of new Investment Advisory Contract of the Registrant(21)
6.2 Copy of Amendment to Investment Advisory Contract(12)
6.3 Conformed Copies of Amendments to Investment Advisory Contract(14)
6.4 Conformed Copies of Amendments to Investment Advisory Contract(14)
6.5 Conformed Copy of Amendment to Investment Advisory Contract*
7.1 Conformed Copy of Distributor's Contract of the Registrant(21)
7.2 Conformed Copy of Amendment to Distributor's Contract(12)
7.3 Conformed Copy of Amendment to Distributor's Contract(14)
7.4 Conformed Copy of Exhibit O to the Distributor's Contract(23)
7.5 Conformed Copy of Distributor's Contract (Class B Shares) (23)
7.6 Conformed Copy of Exhibit P to the Distributor's Contract*
7.7 The Registrant hereby incorporates the conformed copy of the specimen
Mutual Fund Sales and Services Agreement; Mutual Funds Service
Agreement; and Plan Trustee/Mutual Funds Service Agreement from Item
24(b)(6) of the Cash Trust Series II Registration Statement on Form N-1A
filed with the Commission on July 24, 1995. (File Number 33-38550 and
811-6269).
8 Not Applicable
9.1 Conformed Copy of Custodian Contract of the Registrant(18)
9.2 Conformed Copy of Domestic Custody Fee Schedule(22)
10.1 Conformed Copy of Rule 12b-1 Distribution Plan of the Registrant(21)
10.2 Conformed Copy of Exhibit B to Rule 12b-1 Distribution Plan of the
Registrant(23)
10.3 Conformed Copy of Exhibit C to the Distribution Plan of the Registrant*
10.4 The Registrant hereby incorporates the conformed copy of the specimen
Multiple Class Plan from Item 24(b)(18) of the World Investment Series,
Inc. Registration Statement on Form N-1A, filed with the Commission on
January 26, 1996. (File Nos. 33-52149 and 811-07141).
10.5 The responses described in Item 16 (7.7) are hereby incorporated by
reference
11 Form of Opinion and Consent of Counsel regarding legality of shares being
issued*
12 Opinion of Dickstein Shapiro Morin & Oshinsky LLP regarding tax
consequences of Reorganization(26)
13.1 Conformed Copy of Agreement for Fund Accounting Services, Administrative
Services, Transfer Agency Services and Custody Services Procurement(23)
13.2 Conformed Copy of Amended and Restated Shareholder Services Agreement(22)
13.3 The responses described in Item 16 (7.6) and Item 16 (10.3) are hereby
incorporated by reference.
13.4 The Registrant hereby incorporates the conformed copy of the Shareholder
Services Sub-Contract between Fidelity and Federated Shareholder Services
from Item 24(b)(9)(iii) of the Federated GNMA Trust Registration Statement
on Form N-1A, filed with the Commission on March 25, 1996. (File Nos.
2-75670 and 811-3375).
14.1 Conformed Copy of Consent of Independent Auditors of CCB North Carolina
Municipal Securities Fund, Arthur Andersen LLP*
15 Not Applicable
16 Conformed Copy of Power of Attorney(23)(25)
17 Form of Proxy of CCB North Carolina Municipal Securities Fund*
- ------------------------------
* Filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed on August 31, 1990. (File Nos. 33-36729 and
811-6165)
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed on October 28, 1991. (File Nos. 33-36729
and 811-6165)
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed on January 24, 1992. (File Nos. 33-36729
and 811-6165)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed on September 25, 1992. (File Nos.
33-36729 and 811-6165)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed on March 24, 1993. (File Nos. 33-36729
and 811-6165)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed on April 28, 1993. (File Nos. 33-36729
and 811-6165)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed on April 28, 1993. (File Nos. 33-36729
and 811-6165)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed on July 2, 1993. (File Nos. 33-36729
and 811-6165)
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on October 28, 1993. (File Nos.
33-36729 and 811-6165)
18. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed on October 30, 1995. (File Nos.
33-36729 and 811-6165)
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 21 on Form N-1A filed on October 23, 1996. (File Nos.
33-36729 and 811-6165)
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed on October 15, 1997. (File Nos.
33-36729 and 811-6165)
22. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 on Form N-1A filed on October 31, 1997. (File Nos.
33-36729 and 811-6165)
23. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed on August 28, 1998. (File Nos. 33-36729
and 811-6165)
24. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 27 on Form N-1A filed on October 30, 1998. (File Nos.
33-36729 and 811-6165)
25. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed on April 29, 1999. (File Nos. 33-36729
and 811-6165)
26. To be filed by Post-Effective Amendment pursuant to "Dear Registrant"
Letter dated February 15, 1996.
<PAGE>
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file by Post-Effective
Amendment the opinion of counsel regarding the tax consequences of the proposed
reorganization required by Item 16 (12) of Form N-14 within a reasonable time
after receipt of such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Municipal Securities Income Trust, has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pittsburgh, Commonwealth of Pennsylvania on the 9th
day of June, 1999.
MUNICIPAL SECURITIES INCOME TRUST
(Registrant)
By: *
John F. Donahue
Chairman and Trustee
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on June 9, 1999:
* Chairman and Trustee
John F. Donahue
(Chief Executive Officer)
* President
RICHARD B. FISHER
* Executive Vice President and Trustee
J. Christopher Donahue
* Chief Investment Officer
William D. Dawson III
* Treasurer
Richard J. Thomas
(Principal Financial and Accounting Officer)
* Trustee
Thomas G. Bigley
* Trustee
John T. Conroy, Jr.
* Trustee
Nicholas P. Constantakis
* Trustee
William J. Copeland
* Trustee
Lawrence D. Ellis, M.D.
* Trustee
Edward L. Flaherty, Jr.
* Trustee
Peter E. Madden
* Trustee
Charles F. Mansfield, Jr.
* Trustee
John E. Murray, Jr., J.D., S.J.D.
* Trustee
Wesley W. Posvar
* Trustee
Marjorie P. Smuts
1*By:/s/ Gail Cagney
Attorney in Fact
Exhibit 17 under Form N-14
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND,
(formerly, 111 Corcoran North Carolina Municipal Securities Fund)
a portfolio of
CCB FUNDS,
(formerly, 111 Corcoran Funds)
SPECIAL MEETING OF SHAREHOLDERS
July 22, 1999
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND,
(formerly, 111 Corcoran North Carolina Municipal Securities Fund)
a portfolio of
CCB FUNDS,
(formerly, 111 Corcoran Funds)
CUSIP NO. 682365101
The undersigned shareholder(s) of the CCB North Carolina Municipal
Securities Fund, a portfolio of CCB Funds (the "CCB Fund"), hereby
appoint(s) C. Grant Anderson, Patricia F. Conner, Antoinette D.
Brkovich, Elisabeth Miller and Ann M. Scanlon or any of them true and
lawful proxies, with power of substitution of each, to vote all shares
of the CCB Fund which the undersigned is entitled to vote, at the
Special Meeting of Shareholders to be held on July 22, 1999, at 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7010 at 2:00 p.m. (local
time) and at any adjournment thereof.
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The proxies named
will vote the shares represented by this proxy in accordance with the
choice made on this ballot. IF NO CHOICE IS INDICATED, THIS PROXY WILL
BE VOTED AFFIRMATIVELY ON THAT MATTER.
PROPOSAL
TO APPROVE OR DISAPPROVE AN AGREEMENT AND PLAN OF REORGANIZATION BETWEEN THE CCB
FUNDS, ON BEHALF OF ITS PORTFOLIO CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND,
AND MUNICIPAL SECURITIES INCOME TRUST, ON BEHALF OF ITS PORTFOLIO FEDERATED
NORTH CAROLINA MUNICIPAL INCOME FUND
<PAGE>
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED ENVELOPE AND RETAIN
THE TOP PORTION.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS X
KEEP THIS PORTION FOR YOUR RECORDS.
- --------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY.
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND,
a portfolio of
CCB FUNDS
RECORD DATE SHARES: _________________
VOTE ON THE PROPOSAL
FOR AGAINST ABSTAIN
Please sign EXACTLY as your name(s) appear(s) above. When signing as attorney,
executor, administrator, guardian, trustee, custodian, etc., please give your
full title as such. If a corporation or partnership, please sign the full name
by an authorized officer or partner. If stock is owned jointly, all owners
should sign.
- -----------------------------------
- -----------------------------------
Signature(s) of Shareholder(s)
Date: ______________________________
FEDERATED SECURITIES CORP.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
June 9, 1999
Linda Stirling, Esq.
EDGAR Operations Branch
Securities and Exchange Commission
Office of Insurance Products
Room 10172, Stop 10-6
450 Fifth Street, Northwest
Washington, DC 20549
RE: MUNICIPAL SECURITIES INCOME TRUST(the "Registrant")
1933 Act File No. 33-36729
1940 Act File No. 811-6165
Dear Ms. Stirling:
Form N-14 under the Securities Act of 1933 to the Registration Statement
of the above-referenced Registrant is being filed with the Commission today,
Wednesday, June 9, 1999. The N-14 relates to the acquisition of the assets of
CCB North Carolina Municipal Securities Fund, a portfolio of the CCB Funds by
and in exchange for Class A Shares of the Federated North Carolina Municipal
Income Fund, a portfolio of the Registrant.
Assuming the Form N-14 of the Registrant meets with your approval, the
Registrant and its principal underwriter, Federated Securities Corp.,
respectfully request, pursuant to Rule 461 under the Securities Act of 1933,
that the effective date of the Registration Statement be accelerated to 11:00
A.M. on June 10, 1999 or as soon thereafter as the Commission shall deem
appropriate. We are requesting accelerated effectiveness so that the Form N-14
Proxy/Prospectus for the shareholders of the CCB North Carolina Municipal
Securities Fund can meet the mail date of June 18th and allow adequate time for
shareholders to review and mail back their proxies in time for the July 22, 1999
meeting date.
If you have any questions regarding this filing, please call Antoinette
D. Brkovich at (412) 288-7420.
Very truly yours,
/s/ Matthew S. Hardin
Matthew S. Hardin
Secretary
Federated Securities Corp.
/s/ Gail Cagney
Gail Cagney
Assistant Secretary
Municipal Securities Income Trust
Enclosures
Exhibit 11 under Form N-14
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND
A PORTFOLIO OF MUNICIPAL SECURITIES INCOME TRUST
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
JUNE __, 1999
The Trustees of
Municipal Securities Income Trust
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Ladies and Gentlemen:
Municipal Securities Income Trust, a Massachusetts business trust
("Trust"), proposes to issue shares of beneficial interest representing
interests in the Class A Shares of a separate portfolio of securities known as
"Federated North Carolina Municipal Income Fund" (such shares of beneficial
interest being herein referred to as "Shares") in connection with the
acquisition of the assets of CCB North Carolina Municipal Securities Fund, a
portfolio of CCB Funds, pursuant to the Agreement and Plan of Reorganization
dated June __, 1999 ("Agreement"), filed as an exhibit to the registration
statement of the Trust filed on Form N-14 (Securities Act of 1933 No. to be
assigned) under the Securities Act of 1933, as amended ("N-14 Registration").
As counsel I have participated in the organization of the Trust, its
registration under the Investment Company Act of 1940, as amended, the
registration of its securities on Form N-1A under the Securities Act of 1933 and
its N-14 Registration. I have examined and am familiar with the written Amended
and Restated Declaration of Trust dated August 6, 1990 ("Declaration of Trust"),
the Bylaws of the Trust and such other documents and records deemed relevant. I
have also reviewed questions of law and consulted with counsel thereon as deemed
necessary or appropriate by me for the purposes of this opinion.
Based upon the foregoing, it is my opinion that;
1. The Trust is duly organized and validly existing pursuant to the
Declaration of Trust.
2. The Shares which are currently being registered by the N-14
Registration may be legally and validly issued in accordance with the Agreement
and the Declaration of Trust upon receipt of consideration sufficient to comply
with the provisions of Article III, Section 3, of the Declaration of Trust and
subject to compliance with the Investment Company Act of 1940, as amended, and
applicable state laws regulating the sale of securities. Such Shares, when so
issued, will be fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the N-14
Registration referred to above and to any application or registration statement
filed under the securities laws of any of the states of the United States.
Very truly yours,
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND - A PORTFOLIO OF MUNICIPAL
SECURITIES INCOME TRUST
BY: GAIL CAGNEY
TITLE: ASSISTANT SECRETARY
Exhibit 10.3 under Form N-14
EXHIBIT C
to the
Distribution Plan
MUNICIPAL SECURITIES INCOME TRUST
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND
CLASS A SHARES
This Distribution Plan is adopted by between Municipal Securities
Income Trust with respect to the Class of Shares of the Federated
California Municipal Income Fund set forth above.
In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of .25% of the
average aggregate net asset value of the Class A Shares of Federated
North Carolina Municipal Income Fund held during the month.
Witness the due execution hereof this 1st day of June, 1999.
MUNICIPAL SECURITIES INCOME TRUST
By: /s/John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President and Secretary
Exhibit 7.6 under Form N-14
Exhibit P
to the
Distributor's Contract
MUNICIPAL SECURITIES INCOME TRUST
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND
CLASS A SHARES
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated September 9, 1991, between Municipal Securities
Income Trust and Federated Securities Corp. with respect to the Class of shares
set forth above.
1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Class
("Shares"). Pursuant to this appointment, FSC is authorized to select a
group of financial institutions ("Financial Institutions") to sell
Shares at the current offering price thereof as described and set forth
in the respective prospectuses of the Trust.
2. During the term of this Agreement, the Trust will pay FSC for services
pursuant to this Agreement, a monthly fee computed at the annual rate of
.25% of the average aggregate net asset value of the Shares held during
the month. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable
on the basis of the number of days that the Agreement is in effect
during the month.
3. FSC may from time-to-time and for such periods as it deems appropriate
reduce its compensation to the extent any Class' expenses exceed such
lower expense limitation as FSC may, by notice to the Trust, voluntarily
declare to be effective.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC, in
its sole discretion, may pay Financial Institutions a periodic fee in
respect of Shares owned from time to time by their clients or customers.
The schedules of such fees and the basis upon which such fees will be
paid shall be determined from time to time by FSC in its sole
discretion.
5. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts
paid to Financial Institutions and the purpose for such expenditures.
<PAGE>
In consideration of the mutual covenants set forth in the Distributor's
Contract dated September 9, 1991 between Municipal Securities Income Trust and
Federated Securities Corp., Municipal Securities Income Trust executes and
delivers this Exhibit on behalf of Federated California Municipal Income Fund,
and with respect to the Class A Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1999.
MUNICIPAL SECURITIES INCOME TRUST
By: /s/John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President and Secretary
FEDERATED SECURITIES CORP.
By: /s/David M. Taylor
Name: David M. Taylor
Title: Executive Vice President
Exhibit 14.1 under Form N-14
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated July 9, 1998, on the financial statements on the financial statements as
of May 31, 1998 of CCB North Carolina Municipal Securities Fund, included in or
made a part of this registration statement File No. 33-45753.
By: /s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Boston, Massachusetts
June 9, 1999
Exhibit 6.5 under Form N-14
EXHIBIT G
INVESTMENT ADVISORY CONTRACT
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND
For all services rendered by Adviser hereunder, the above-named Fund of
the Trust shall pay to Adviser and Adviser agrees to accept as full compensation
for all services rendered hereunder, an annual investment advisory fee equal to
.40 of 1% of the average daily net assets of the Fund.
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .40 of 1% applied to the
daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
The right of the adviser as set forth in Paragraph six of this Contract
to assume expenses of one or more of the Funds shall also apply as to any
classes of the above-named Fund.
Witness the due execution hereof this 1st day of June, 1999.
FEDERATED INVESTMENT
MANAGEMENT COMPANY
By: /s/Stephen A. Keen
Name: Stephen A. Keen
Title: Vice President
MUNICIPAL SECURITIES INCOME TRUST
By: /s/John W. McGonigle
Name: John W. McGonigle
Title: Executive Vice President and Secretary
Exhibit 1.8 under Form N-14
MUNICIPAL SECURITIES INCOME TRUST
Amendment No. 16
DECLARATION OF TRUST
As dated August 6, 1990
This Declaration of Trust is amended as follows:
Strike Section 1 of Article I from the Declaration of Trust and substitute
in its place the following:
Section 1. Name.
This Trust shall be known as Federated Municipal Securities Income Trust.
Strike Section 2(b) of Article I from the Declaration of Trust and
substitute in its place the following:
(b) The "Trust" refers to Federated Municipal Securities Income Trust;
Strike the first paragraph of Section 5 of Article III from the
Declaration of Trust and substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class. Without
limiting the authority of the Trustees set forth in Article XII, Section
8, INTER ALIA, to establish and designate any additional Series or Class
or to modify the rights and preferences of any existing Series or Class,
the Series and Classes of the Trust are established and designated as:
Federated California Municipal Income Fund
Class A Shares
Class B Shares
Federated Michigan Intermediate Municipal Trust
Federated New York Municipal Income Fund
Class A Shares
Federated North Carolina Municipal Income Fund
Class A Shares
Federated Ohio Municipal Income Fund
Class F Shares
Federated Pennsylvania Municipal Income Fund
Class A Shares
Class B Shares"
Insert the following as Section 9 of Article XII of the Declaration of
Trust:
Section 9. Use of Name. The Trust acknowledges that Federated Investors
has reserved the right to grant the non-exclusive use of the name
"Federated" or any derivative thereof to any other investment company,
investment company portfolio, investment adviser, distributor, or other
business enterprise, and to withdraw from the Trust or owe or more Series
or Classes any right to use of the name "Federated".
The undersigned hereby certify that the above stated Amendment is a true
and correct Amendment to the Declaration of Trust, as adopted by the Board of
Trustees at a meeting on the 20th day of May, 1999.
WITNESS the due execution hereof this 20th day of May, 1999.
/s/ John F. Donahue /s/ Edward L. Flaherty, Jr.
John F. Donahue Edward L. Flaherty, Jr.
/s/ Thomas G. Bigley, Jr. /s/ Peter E. Madden
Thomas G. Bigley, Jr. Peter E. Madden
/s/ John T. Conroy, Jr. /s/ Charles F. Mansfield, Jr.
John T. Conroy, Jr. Charles F. Mansfield, Jr.
/s/ Nicholas P. Constantakis /s/ John E. Murray, Jr.
Nicholas P. Constantakis John E. Murray, Jr.
/s/ William J. Copeland /s/ Wesley W. Posvar
William J. Copeland Wesley W. Posvar
/s/ Marjorie P. Smuts
James E. Dowd Marjorie P. Smuts
/s/ Lawrence D. Ellis, M.D.
Lawrence D. Ellis, M.D.
