SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
Federated Adjustable Rate U.S. Government Fund, Inc.
(Name of Registrant as Specified In Its Charter)
Federated Investors, Inc.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned shareholders of
Federated Adjustable Rate U.S. Government Fund, Inc. (the "Fund"), hereby
appoint Heidi E. Balogh, Marjorie B. Sellers, Ann Scanlon, C. Grant Anderson and
William Haas or any one of them, true and lawful attorneys, with the power of
substitution of each, to vote all shares of the Fund which the undersigned is
entitled to vote at the Special Meeting of Shareholders (the "Special Meeting")
to be held on August 21, 2000, at 5800 Corporate Drive, Pittsburgh,
Pennsylvania, at 2:00 p.m., and at any adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matter. Discretionary authority is
hereby conferred as to all other matters as may properly come before the Special
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FEDERATED
ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC. THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL.
TO MAKE CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT OBJECTIVE AND
FUNDAMENTAL INVESTMENT POLICY:
(A) TO APPROVE OR DISAPPROVE AMENDING THE FUND'S FUNDAMENTAL INVESTMENT
OBJECTIVE TO PROVIDE AS FOLLOWS: "THE FUND'S INVESTMENT OBJECTIVE IS TO
PROVIDE TOTAL RETURN;" AND
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
(B) TO APPROVE OR DISAPPROVE AMENDING, AND TO MAKE NON-FUNDAMENTAL, THE
FUND'S INVESTMENT POLICY REGARDING ACCEPTABLE INVESTMENTS TO PROVIDE
AS FOLLOWS: "THE FUND PURSUES ITS OBJECTIVE BY INVESTING ITS ASSETS
IN U.S. GOVERNMENT AND AGENCY SECURITIES, INCLUDING MORTGAGE BACKED
SECURITIES."
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT Please
complete, sign and return this
card as soon as possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Company.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
YOU MAY ALSO VOTE YOUR SHARES BY TOUCHTONE PHONE BY CALLING
1-800-690-6903, OR THROUGH THE INTERNET AT
WWW.PROXYVOTE.COM.
Federated Adjustable Rate U.S. Government Fund, Inc.
PROXY STATEMENT - PLEASE VOTE!
TIME IS OF THE ESSENCE. . .VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! ACT NOW TO HELP THE FUND AVOID ADDITIONAL EXPENSE.
Federated Adjustable Rate U.S. Government Fund, Inc., (the "Fund") will hold an
annual meeting of shareholders on August 21, 2000. It is important for you to
vote on the issues described in this Proxy Statement. We recommend that you read
the Proxy Statement in its entirety; the explanations will help you to decide on
the issues.
Following is an introduction to the process and the proposals.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like those included in this Proxy Statement. You have a right to vote
on these changes.
HOW DO I VOTE MY SHARES?
You may vote by telephone at 1-800-690-6903, or through the Internet at
WWW.PROXYVOTE.COM. You may also vote in person at the meeting or complete and
return the enclosed Proxy Card. If you:
1. choose to help save the Fund time and postage costs by voting through the
Internet or by telephone, please don't return your Proxy Card.
2. do not respond at all, we may contact you by telephone to request that you
cast your vote.
3. sign and return the Proxy Card without indicating a preference, your vote
will be cast "for" both proposals.
WHAT ARE THE ISSUES?
The proposals include a change to the Fund's investment objective and
fundamental investment policy.
WHY IS THE FUND'S "INVESTMENT OBJECTIVE" BEING CHANGED?
The Fund's adviser has determined that pursuing the current investment objective
-- to provide current income -- by investing at least 65% of its assets in
adjustable rate U.S. government securities ("ARMS") is no longer in the best
interest of the Fund and its shareholders. The liquidity of ARMS has decreased
and demand in the market has declined.
HOW IS THE FUND'S "INVESTMENT OBJECTIVE" BEING CHANGED?
The Fund will pursue a new investment objective -- to provide total return. The
Fund will be restructured as a short duration U.S. government fund investing in
all forms of U.S. government and agency obligations, including mortgage backed
securities.
WHY IS THE FUND'S "FUNDAMENTAL POLICY" BEING CHANGED?
Every mutual fund has certain investment policies that can be changed only with
the approval of its shareholders. These are referred to as "fundamental"
investment policies.
In some cases, these policies were adopted to reflect regulatory, business, or
industry conditions that no longer exist or no longer are necessary. In other
cases, advances in the securities markets and the economy have created different
procedures and techniques that affect the Fund's operations.
By amending the "fundamental policy," the Fund may be able to minimize the costs
and delays associated with frequent shareholder meetings. Also, the investment
adviser's ability to manage the Fund's assets may be enhanced and investment
opportunities increased.
Federated is a conservative money manager. Our highly trained professionals are
dedicated to making investment decisions in the best interest of the Fund and
its shareholders. The Board believes that the proposed changes will be applied
responsibly by the Fund's investment adviser.
After careful consideration, the Board of Directors has unanimously
approved these proposals. The Board recommends that you read the enclosed
materials
carefully and vote FOR all proposals.
FEDERATED ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 21, 2000
A special meeting of the shareholders of Federated Adjustable Rate U.S.
Government Fund, Inc. (the "Fund") will be held at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (Eastern time), on August 21,
2000 to consider proposals:
(1) To make changes to the Fund's fundamental investment objective and
fundamental investment policy:
(a) To amend the Fund's fundamental investment objective to provide as
follows: "The Fund's investment objective is to provide total return;"
and
(b) To amend, and make non-fundamental, the Fund's investment policy
regarding acceptable investments to provide as follows: "The Fund
pursues its objective by investing its assets in U.S. government and
government agency securities, including mortgage backed securities."
To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed June 22, 2000 as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Board of Directors,
John W. McGonigle
Secretary
June 22, 2000
YOU CAN HELP THE FUND 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.
TABLE OF CONTENTS
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING.................
APPROVAL OF CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT OBJECTIVE AND
FUNDAMENTAL INVESTMENT
POLICY.................................................................
INFORMATION ABOUT THE FUND...........................................
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING....................
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY.........
PRELIMINARY PROXY STATEMENT
FEDERATED ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
ABOUT THE PROXY SOLICITATION AND THE SPECIAL MEETING
The enclosed proxy is solicited on behalf of the Board of Directors of the
Fund (the "Board" or "Directors"). The proxies will be voted at the special
meeting of shareholders of the Fund to be held on August 21, 2000, at 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00 p.m. (such special
meeting and any adjournment or postponement thereof are referred to as the
"Special Meeting").
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Fund. In addition to solicitations through the
mail, proxies may be solicited by officers, employees, and agents of the Fund
or, if necessary, a communications firm retained for this purpose. Such
solicitations may be by telephone, telegraph, or otherwise. Any telephonic
solicitations will follow procedures designed to ensure accuracy and prevent
fraud, including requiring identifying shareholder information, recording the
shareholder's instructions, and confirming to the shareholder after the fact.
Shareholders who communicate proxies by telephone or by other electronic means
have the same power and authority to issue, revoke, or otherwise change their
voting instruction as shareholders submitting proxies in written form. The Fund
may reimburse custodians, nominees, and fiduciaries for the reasonable costs
incurred by them in connection with forwarding solicitation materials to the
beneficial owners of shares held of record by such persons.
The Board has reviewed the proposed changes recommended in the investment
objective and policy of the Fund, and has approved them, subject to shareholder
approval. The purposes of the Special Meeting are set forth in the accompanying
Notice. The Directors know of no business other than that mentioned in the
Notice that will be presented for consideration at the Special Meeting. Should
other business properly be brought before the Special Meeting, proxies will be
voted in accordance with the best judgment of the persons named as proxies. This
proxy statement and the enclosed proxy card are expected to be mailed on or
about July 5, 2000, to shareholders of record at the close of business on June
22, 2000 (the "Record Date"). On the Record Date, the Fund had outstanding
shares of common stock.
The Fund's annual report, which includes audited financial statements for
the fiscal year ended February 29, 2000, has been previously mailed to
shareholders on May 1, 2000. Requests for an annual report may be made in
writing to the Fund's principal executive offices, which are located at
Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000, or by calling toll free 1-800-341-7400.
APPROVAL OF CHANGES TO THE FUND'S
FUNDAMENTAL INVESTMENT OBJECTIVE AND FUNDAMENTAL INVESTMENT POLICY
INTRODUCTION TO PROPOSAL
The Fund's investment objective is "to provide current income with
volatility of principal which is lower than investment companies investing
primarily in fixed rate mortgage securities." The Fund currently pursues its
investment objective by investing, as a fundamental policy (the "Fundamental
Policy"), at least 65% of its assets in adjustable rate U.S. government mortgage
backed securities ("ARMs").
At its regular meeting held May 17, 2000, the Board of Directors of the
Fund approved a change to the Fund's fundamental investment objective to
"provide total return." To achieve the new objective, the Board of Directors
further approved changing the Fundamental Policy to "investing its assets in
U.S. government and government agency securities, including mortgage backed
securities." In addition, the Board of Directors approved reclassifying the
Fundamental Policy as non-fundamental. A reclassification would mean that the
policy could be changed in the future by the Directors without shareholder
approval.
The investment changes were made to reflect the adviser's determination
that investment in ARMs, as a primary investment strategy, is not viable. ARMs
have experienced reduced liquidity, as retail demand for ARMs has virtually
disappeared. Also, dealer commitment to make a market in ARMs has decidedly
decreased. Accordingly, the Fund's adviser has determined to restructure the
Fund as a short duration U.S. government fund, enabling the Fund to hold all
forms of U.S. government and agency obligations (including mortgage backed
securities), and not merely ARMs. In addition, the adviser will attempt to
minimize volatility of principal of the Fund by seeking to manage the Fund's
duration to within 20% of the duration of the Merrill Lynch 1-3 Year Treasury
Index. Consistent with the foregoing, the Fund will change its name to
"Federated Limited Duration Government Fund."
In order to implement this restructuring, it will be necessary to revise
the Fund's investment objective. The adviser believes that a broad objective is
advisable to allow the adviser sufficient flexibility to adjust the Fund's
investment policies to conform to future changes in the marketplace.
Accordingly, the adviser recommends adoption of the following fundamental
investment objective: "The Fund's investment objective is to provide total
return." The Fund's total return will consist of two components: (1) changes in
the market value of its portfolio securities (both realized and unrealized
appreciation); and (2) income from its portfolio of securities. The Fund's
adviser expects that income will comprise the largest component of its total
return. The adviser will seek to provide the appreciation component of total
return by selecting those securities whose prices will, in the opinion of the
adviser, benefit from anticipated changes in economic and market conditions.
In addition, it will be necessary to change the Fund's current fundamental
investment policy to provide that the Fund will pursue its investment policy by
investing in all forms of U.S. government and agency obligations, including
mortgage backed securities, rather than investing primarily in adjustable rate
U.S. government mortgage backed securities. The adviser also believes that the
investment policy should be changed to non-fundamental from fundamental to
minimize the costs and delays associated with holding future shareholder
meetings to revise a fundamental policy that may become outdated or
inappropriate. Accordingly, the Adviser recommends adoption of the following
non-fundamental investment policy: "The Fund pursues its objective by investing
its assets in U.S. government and agency securities, including mortgage backed
securities."
Because the proposals to change the Fund's fundamental investment
objective, and to change the Funds fundamental investment policy, are
interrelated and neither proposal could be implemented independently of the
other proposal, the proposals are being presented to shareholders as a single
proposal. In the event that the proposed changes to the Funds fundamental
investment objective and fundamental investment policy are not approved by
shareholders, the Fund's fundamental investment objective and fundamental
investment policy shall remain as they are presently in the Fund's prospectus
and the Board of Directors will consider what action, if any, should be taken.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE PROPOSAL
INFORMATION ABOUT THE FUND
PROXIES, QUORUM AND VOTING AT THE SPECIAL MEETING
The favorable vote of: (a) the holders of 67% or more of the outstanding
voting securities present at the Special Meeting, if the holders of 50% or more
of the outstanding voting securities of the Fund are present or represented by
proxy; or (b) the vote of the holders of more than 50% of the outstanding voting
securities, whichever is less, is required to approve the proposed changes to
the Funds fundamental investment objective and fundamental investment policy.
Only shareholders of record on the Record Date will be entitled to vote at
the Special Meeting. Each share of the Fund is entitled to one vote. Fractional
shares are entitled to proportionate shares of one vote.
Any person giving a proxy has the power to revoke it any time prior to its
exercise by executing a superseding proxy or by submitting a written notice of
revocation to the Secretary of the Fund. In addition, although mere attendance
at the Special Meeting will not revoke a proxy, a shareholder present at the
Special Meeting may withdraw his or her proxy and vote in person. All properly
executed and unrevoked proxies received in time for the Special Meeting will be
voted in accordance with the instructions contained in the proxies. IF NO
INSTRUCTION IS GIVEN ON THE PROXY, THE PERSONS NAMED AS PROXIES WILL VOTE THE
SHARES REPRESENTED THEREBY IN FAVOR OF THE MATTERS SET FORTH IN THE ATTACHED
NOTICE.
In order to hold the Special Meeting, a "quorum" of shareholders must be
present. Holders of a majority of the total number of outstanding shares of the
Fund, present in person or by proxy, shall be required to constitute a quorum
for the purpose of voting on the proposals made.
For purposes of determining a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are PRESENT but which have
not been VOTED. For this reason, abstentions and broker non-votes will have the
effect of a "no" vote for purposes of obtaining the requisite approval of some
of the proposals.
If a quorum is not present, the persons named as proxies may vote those
proxies that 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
solicitations of proxies with respect to such proposal(s). 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 AGAINST any such adjournment those proxies that they
are required to vote against the proposal, and will vote in FAVOR of such an
adjournment all other proxies that they are authorized to vote. A shareholder
vote may be taken on the proposals in this proxy statement prior to any such
adjournment if sufficient votes have been received for approval.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED
IN THE PROXY
The Fund is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to Federated Adjustable Rate
U.S. Government Fund, Inc., Federated Investors Funds, 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, so that they are received within a
reasonable time before any such meeting.
No business other than the matters described above is expected to come
before the Special Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or postponement
of the Special Meeting, the persons named on the enclosed proxy card will vote
on such matters according to their best judgment in the interests of the Fund.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
By Order of the Board of Directors,
John W. McGonigle
Secretary
June 22, 2000
FEDERATED ADJUSTABLE RATE U.S. GOVERNMENT FUND, INC.
INVESTMENT ADVISER
FEDERATED INVESTMENT MANAGEMENT COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
DISTRIBUTOR
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
ADMINISTRATOR
FEDERATED SERVICES COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
