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
CCB FUNDS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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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
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 "Fund") to Federated North Carolina
Municipal Income Fund (the "Successor Fund"), a portfolio of Federated Municipal
Securities Income Trust, a mutual fund advised by Federated Investment
Management Company. The Successor Fund has an investment objective similar to
that of the 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 Successor 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 Fund would receive Class A Shares of the Successor Fund equal in value to
their shares in the Fund and the Fund would be liquidated.
The Board of Trustees of CCB Funds, as well as Central Carolina Bank &
Trust Company, the Fund's investment adviser, and Federated Securities Corp.,
the Fund's distributor, believe the proposed agreement and plan of
reorganization is in the best interests of Fund shareholders.
We believe the transfer of the Fund's assets in this transaction
presents an exciting investment opportunity for our shareholders. Your vote on
the transaction is critical to its success. The transfer will be effected only
if approved by a majority of all of the Fund's outstanding shares on the record
date voted in person or represented by proxy. We hope you share our enthusiasm
and will participate by casting your vote in person, or by proxy if you are
unable to attend the meeting. Please read the enclosed prospectus/proxy
statement carefully before you vote.
THE BOARD OF TRUSTEES BELIEVES THAT THE TRANSACTION IS IN THE BEST
INTERESTS OF THE 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
992785 v3; L@1D03!.DOC
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 "Fund"), a portfolio of CCB Funds (the "Trust") 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 Trust, on behalf of the Fund, and Municipal Securities
Income Trust, on behalf of its portfolio, Federated North Carolina
Municipal Income Fund (the "Successor Fund"), whereby the Successor Fund
would acquire all of the assets of the Fund in exchange for Class A
Shares of the Successor Fund to be distributed pro rata by the Fund to
its shareholders in complete liquidation and termination of the 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 IN LIEU OF ANNUAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
- ----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE NO.
ABOUT THE PROXY SOLICITATION AND THE MEETING..........................3
PROPOSAL: TO APPROVE THE PROPOSED AGREEMENT AND PLAN OF
REORGANIZATION........................................................3
DESCRIPTION OF THE REORGANIZATION AGREEMENT...........................4
REASONS FOR THE PROPOSED REORGANIZATION...............................5
BOARD OF TRUSTEES' CONSIDERATIONS AND RECOMMENDATIONS.................5
FEDERAL INCOME TAX CONSEQUENCES.......................................6
COMPARISON OF INVESTMENT POLICIES, LIMITATIONS AND RISK FACTORS.......6
COMPARISON OF FEES AND EXPENSES.......................................7
INVESTMENT ADVISORY ARRANGEMENTS AND OTHER FEES.......................8
DISTRIBUTION ARRANGEMENTS.............................................9
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES..........................9
COMPARATIVE INFORMATION AND SHAREHOLDER RIGHTS AND OBLIGATIONS.......11
PROXIES, QUORUM AND VOTING AT THE MEETING............................11
DISSENTER'S RIGHTS OF APPRAISAL......................................12
BENEFICIAL OWNERSHIP.................................................12
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY.........12
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION............-1
EXHIBIT B: FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND
INVESTMENT LIMITATIONS..................................-1
EXHIBIT C: CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
INVESTMENT LIMITATIONS..................................-1
<PAGE>
PROXY STATEMENT
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, PA 15237-7010
ABOUT THE PROXY SOLICITATION AND THE MEETING
The enclosed proxy is solicited on behalf of the Board of Trustees of
CCB Funds (the "Trust"), on behalf of its portfolio CCB North Carolina Municipal
Securities Fund (the "Fund"). The proxies will be voted at the special meeting
of shareholders of the Fund to be held on July 22, 1999, at 5800 Corporate
Drive, Pittsburgh, Pennsylvania 15237-7010, at 2:00 p.m. (such special meeting
and any adjournment or postponement thereof are referred to as the "Meeting").
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by Federated Investment Management Company
("FIMCO"), investment adviser to Federated North Carolina Municipal Income Fund
(the "Successor Fund"), a portfolio of Municipal Securities Income Trust, a
Massachusetts business trust ("MSIT"). In addition to solicitations through the
mails, proxies may be solicited by officers, employees, and agents of the Trust
or, if necessary, a communications firm retained for this purpose. The Trust
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.
At its meeting on May 20, 1999, the Board considered the proposed
reorganization of the Fund, and approved it, subject to shareholder approval.
The purposes of the Meeting are set forth in the accompanying Notice. The
Trustees know of no business other than that mentioned in the Notice that will
be presented for consideration at the Meeting. Should other business properly be
brought before the Meeting, proxies will be voted in accordance with the best
judgment of the persons named as proxies. This proxy statement and the enclosed
proxy card are expected to be mailed on or about June 18, 1999, to shareholders
of record at the close of business on June 7, 1999 (the "Record Date"). On the
Record Date, the Fund had outstanding _________ shares of beneficial interest.
The Fund's annual prospectus, which includes audited financial
statements for the fiscal year ended May 31, 1998, was previously mailed to
shareholders. Requests for a semi-annual report which contains unaudited
financial statements, for the period ended November 30, 1998, may be made in
writing to the Fund's principal executive offices which are located at 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7010 or by calling toll-free
1-800-386-3111.
PROPOSAL: TO APPROVE THE PROPOSED AGREEMENT AND
PLAN OF REORGANIZATION
The Board of Trustees has voted to recommend to shareholders of the Fund
the approval of an Agreement and Plan of Reorganization (the "Reorganization
Agreement") whereby MSIT, on behalf of the Successor Fund, would acquire all of
the assets (subject to the liabilities) of the Fund in exchange for Class A
Shares of the Successor Fund to be distributed PRO RATA by the Fund to its
shareholders in complete liquidation and dissolution of the Fund (the
"Reorganization"). As a result of the Reorganization, each shareholder of the
Fund will become the owner of the Successor 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
Fund on the date of the Reorganization.
MSIT is an open-end management investment company which currently
includes five portfolios in addition to the Successor Fund, each of which has
its own investment objective. The Successor Fund is a newly-organized portfolio
of MSIT with substantially the same objective and investment strategies as the
Fund. The Board of Trustees of MSIT has established one class of shares of the
Successor Fund, known as Class A Shares. The investment objective of the
Successor 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 Successor 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. The Fund has an investment objective similar to that of
the Successor Fund in that it seeks to provide income which is exempt from
federal regular income tax and North Carolina state income tax. The Fund pursues
its investment objective by investing in a portfolio consisting primarily of
municipal securities exempt from North Carolina state income taxes and/or
federal regular income tax. (See "Comparison of Investment Policies, Limitations
and Risk Factors" below.) An investment in the Fund or the Successor Fund is
neither insured nor guaranteed by the U.S. government.
As a condition to the Reorganization transactions, the Trust and MSIT
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 for federal
income tax purposes will be recognized by either the Fund or the Successor Fund
or the shareholders of the Fund and the Successor Fund. The tax basis of the
Successor Fund shares received by Fund shareholders will be the same as the tax
basis of their shares in the Fund.
Significant components of the Reorganization and provisions of the
Reorganization Agreement are summarized below; however, this summary of the
Reorganization Agreement is qualified in its entirety by reference to the full
text of the Reorganization Agreement between the Trust, on behalf of the Fund,
and MSIT, on behalf of the Successor Fund, a copy of which is attached as
Exhibit A to this Proxy Statement.
DESCRIPTION OF THE REORGANIZATION AGREEMENT
The Reorganization Agreement provides that all of the assets of the Fund
will be transferred to the Successor Fund, subject to the liabilities of the
Fund. Each holder of shares of the Fund will receive the same number (with the
same aggregate value) of Class A Shares of the Successor Fund as the shareholder
had in the Fund immediately prior to the Reorganization. The 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 Successor Fund.
Following the transfer of assets and assumption of liabilities of the
Fund to and by the Successor Fund, and the issuance of Class A Shares by the
Successor Fund to the Fund, the Fund will distribute the Class A Shares of the
Successor Fund received by the Fund among the shareholders of the Fund in
proportion to the number of shares each such shareholder holds in the Fund. In
addition to receiving the Class A Shares of the Successor Fund, each shareholder
of the Fund will have a right to receive any declared and unpaid dividends or
other distributions of the Fund. Following the Reorganization, shareholders of
the Fund will be shareholders of the Successor Fund and the Fund will take all
steps necessary to effect its termination. It will not be necessary for holders
of share certificates of the Fund to exchange their certificates for new
certificates following consummation of the Reorganization. Certificates for
shares of the Fund issued prior to the Reorganization will represent outstanding
Class A Shares of the Successor Fund after the Reorganization. Shareholders of
the 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 Successor 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 Proxy Statement by the shareholders of the 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 Successor 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 Fund's shareholders.
The Reorganization may be terminated at any time prior to its
consummation by either the Trust or MSIT if circumstances should develop that,
in the opinion of either the Board of the Trust or the Board of Trustees of
MSIT, 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 Fund and the Successor 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 Fund or the shareholders of
the Successor Fund, as the case may be.
REASONS FOR THE PROPOSED REORGANIZATION
The 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
has been satisfied with the Fund's performance, it and Central Carolina Bank &
Trust Company ("Central Carolina Bank"), the Fund's investment adviser, believe
that certain operating efficiencies may ultimately be achieved by reorganizing
the Fund as a portfolio of MSIT rather than remaining as a portfolio of the
Trust. 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 Fund for certain operating expenses, resulting
in aggregate fee waivers and expense reimbursements of $276,004 for the 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 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 Fund's
shareholders that its assets be transferred to MSIT, on behalf of the Successor
Fund, in order to reorganize it as a separate portfolio of MSIT. FIMCO, MSIT's
investment adviser, similarly recommended to the Board of Trustees of MSIT that
the Successor Fund be organized for the purpose of acquiring the Fund's assets
and thereby reorganizing the Fund as a portfolio of MSIT. In connection with
this proposal, each of MSIT's and the Fund's investment advisers emphasized the
comparable advisory services provided to the Fund and the Successor Fund, the
substantially identical investment objectives and investment policies of the
Fund and the Successor Fund, and the administrative convenience and
simplification of management achievable by operating the Fund as a portfolio of
MSIT.
BOARD OF TRUSTEES' CONSIDERATIONS AND RECOMMENDATIONS
The Board of Trustees of MSIT, including the Trustees who are not
"interested persons," have unanimously concluded that consummation of the
Reorganization is in the best interests of MSIT and the shareholders of the
Successor Fund, and that the interests of Successor Fund shareholders would not
be diluted as a result of effecting the Reorganization. As a consequence, the
Board of Trustees of MSIT unanimously approved the Reorganization Agreement.
The Trust's Board of Trustees, including a majority of the Trustees who
are not "interested persons," additionally determined that participation in the
Reorganization is in the best interests of the Trust and that the interests of
the Fund's 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 Fund will not suffer any adverse federal income tax
consequences as a result of the Reorganization, the Board of Trustees of the
Trust unanimously voted to approve, and recommended to Fund shareholders the
approval of, the Reorganization. Under the terms of the Declaration of Trust,
the approval of the Reorganization requires the affirmative vote of a majority
of the outstanding voting shares of the Fund as defined under the Declaration of
Trust. (See "Proxies, Quorum and Voting at the Meeting" below.)
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization, the Trust, on behalf of the Fund,
and MSIT, on behalf of the Successor Fund, will receive an opinion from
Dickstein Shapiro Morin & Oshinsky LLP, special counsel to the Trust and MSIT,
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 Fund
and the Successor 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 Successor Fund upon its receipt of the Fund's assets (subject to the
liabilities of the Fund) in exchange for Successor Fund Class A Shares; (3) no
gain or loss will be recognized by the Fund upon the transfer of its assets
(subject to the liabilities of the Fund) to the Successor Fund in exchange for
Successor Fund Class A Shares or upon the distribution (whether actual or
constructive) of the Successor Fund Class A Shares to the Fund shareholders in
exchange for their shares of the Fund; (4) no gain or loss will be recognized by
shareholders of the Fund upon the exchange of their Fund shares for Successor
Fund Class A Shares; (5) the tax basis of the Fund's assets acquired by the
Successor Fund will be the same as the tax basis of such assets to the Fund
immediately prior to the Reorganization; (6) the tax basis of Successor Fund
Class A Shares received by each shareholder of the Fund pursuant to the
Reorganization will be the same as the tax basis of the Fund shares held by such
shareholder immediately prior to the Reorganization; (7) the holding period of
the assets of the Fund in the hands of the Successor Fund will include the
period during which those assets were held by the Fund; and (8) the holding
period of the Successor Fund Class A Shares received by each shareholder of the
Fund pursuant to the Reorganization will include the period during which the
Fund shares exchanged therefor were held by such shareholder, provided the Fund
shares were held as capital assets on the date of the Reorganization.
The Trust and MSIT 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.
COMPARISON OF INVESTMENT POLICIES, LIMITATIONS AND RISK FACTORS
The investment objective of the Successor 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
Successor 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
Successor Fund's investments may be subject to the federal alternative minimum
tax for individuals or corporations. The Successor Fund will ordinarily invest
at least 65% of its portfolio in investment grade tax exempt securities. The
Successor Fund may invest the remainder of its portfolio in lower rated tax
exempt securities.
The investment objective of the Fund is substantially identical to the
investment objective of the Successor Fund in that it seeks to provide income
which is exempt from federal regular income tax and North Carolina state income
tax. The 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. The average
maturity of the Fund is 5 to 15 years. As a matter of fundamental investment
policy, which may not be changed without shareholder approval, the 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 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 Successor Fund or the 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.
Both the Successor Fund and the Fund are subject to certain investment
limitations. The investment limitations of the Successor Fund are similar, but
not identical to, the Fund's existing investment limitations. Some of the Fund's
fundamental limitations reflect past regulatory, business or industry
conditions, practices or requirements that are no longer in effect, whereas the
Successor Fund's fundamental limitations have been modernized to take into
account changes in the regulatory, business or industry conditions, practices or
requirements. The Successor Fund has slightly increased investment flexibility
which will allow the Successor Fund to respond to future investment
opportunities. Despite this increased investment flexibility, however, it is not
anticipated that the investment limitations of the Successor 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 Fund. A listing of the
investment limitations of the Successor Fund is set forth in Exhibit B to this
proxy statement. A listing of the current investment limitations of the Fund is
set forth in Exhibit C to this proxy statement.
As with other mutual funds that invest in municipal securities, the Fund
is subject to market risks and credit risks. The value of the shares of the Fund
will fluctuate. The amount of this fluctuation is dependent upon the quality and
maturity of the municipal securities in the Fund's portfolio as well as on
market conditions. Generally speaking, lower quality, longer-term securities in
which the 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 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
additional to generally being subject to the risk factors summarized above.
Additionally, the Fund is a non-diversified portfolio of an investment company.
An investment in the 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 Fund's portfolio. Since the Successor Fund will also invest primarily in
North Carolina municipal securities, these risk factors are generally also
present in an investment in the Successor Fund. In addition, the Successor 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.
COMPARISON OF FEES AND EXPENSES
The table below describes the fees and expenses that you may pay if you
buy and hold shares of the Fund or Class A Shares of the Successor Fund. The
amounts for Class A Shares of the Successor Fund are based on the estimated
expenses of the Successor Fund for the fiscal year ending August 31, 2000. The
amounts for shares of the Fund are based on the expenses for the Fund for the
fiscal year ended May 31, 1998.
SUCCESSOR FUND
FUND (CLASS A SHARES)
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)............. 4.50% 4.50%
Maximum Deferred Sales Charge (Load) (as a
percentage of original purchase price or
redemption proceeds, as applicable)............. None None
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends (as a percentage of offering price)... None None
Redemption Fee (as a percentage of amount redeemed,
if applicable).................................. None None
Exchange Fee....................................... None None
ANNUAL OPERATING EXPENSES (BEFORE WAIVER/
REIMBURSEMENTS)
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A
PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee(1).................................. 0.75% 0.40%
Distribution (12b-1) Fees.......................... None 0.25%(2)
Shareholder Services Fee........................... None 0.25%
Other Expenses..................................... 0.51% 0.39%
Total Annual Operating Expenses(3)....... 1.26% 1.29%
- ---------------------
(1) For the fiscal year ended May 31, 1998, the adviser for the Fund
voluntarily waived all of its management fee. The adviser can terminate
this voluntary waiver at any time in its sole discretion. The adviser for
the Successor Fund anticipates waiving portions of the management fee in
the future for the Successor Fund. The adviser can terminate this voluntary
waiver at any time in its sole discretion. The management fee paid by the
Successor Fund (after the anticipated voluntary waiver) is expected to be
0.15% through the fiscal year ending August 31, 2000.
(2) The Successor 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 Successor Fund (after
the voluntary waiver) is expected to be 0.00% through the fiscal year
ending August 31, 2000.
(3) Although not contractually obligated to do so, the adviser waived certain
amounts during the year ended May 31, 1998 for the Fund. These are shown
below along with the net expenses the 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 Successor Fund expect to waive
certain amounts through the fiscal year ending August 31, 2000. These are
shown below along with the net expenses the Successor Fund expects to
ACTUALLY PAY through the fiscal year ending August 31, 2000.
Successor Fund
Fund (Class A
Shares)
Total Waiver of Fund Expenses..................... 0.75% 0.50%
Total Actual Annual Fund Operating Expenses (after 0.51% 0.79%
Waivers).......................................
EXAMPLE
The following Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in the Successor Fund's Class A
Shares.
The Example assumes that you invest $10,000 in each
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 Fund and the
Successor Fund's 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:.......
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Fund............................. $ 573 $ 832 $1,110 $1,904
Successor Fund (Class A Shares).. $ 575 $ 841 $1,126 $1,936
INVESTMENT ADVISORY ARRANGEMENTS AND OTHER FEES
In connection with the Reorganization, the Successor Fund will be
subject to an investment advisory agreement between MSIT, on behalf of the
Successor Fund, and FIMCO to become effective on or about July 23, 1999. The
same general types of investment advisory services currently provided to the
Fund by Central Carolina will be provided to the Successor Fund by FIMCO.
The annual investment advisory fee for the Successor Fund is 0.40 of 1%
of the Successor Fund's average daily net assets. The investment adviser to the
Successor Fund, FIMCO, may voluntarily choose to waive a portion of its advisory
fee or reimburse other expenses of the Successor Fund. This voluntary waiver or
reimbursement may be terminated by FIMCO at any time in its sole discretion. The
maximum annual management fee for the Fund is 0.75 of 1% of average daily net
assets of the Fund. The Fund's investment manager, Central Carolina Bank, may
similarly voluntarily choose to waive a portion of its advisory fee or reimburse
the 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 FIMCO, provides certain
administrative personnel and services necessary to operate the Successor Fund.
Federated Administrative Services, also an affiliate of FIMCO, provides certain
administrative personnel and services necessary to operate the Fund. Federated
Services Company provides these services at an annual rate based upon the
average aggregate daily net assets of all Federated Funds. Federated
Administrative Services provides these services at an annual rate based upon the
average aggregate daily net assets of the Trust. 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 Successor 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 Company
("FSSC"), an affiliate of FIMCO, either will perform shareholder services
directly or may select others to perform such services for their customers and
may pay them fees. The Fund does not make payments to obtain similar shareholder
services.
DISTRIBUTION ARRANGEMENTS
Federated Securities Corp. ("FSC"), an affiliate of FIMCO, is the
principal distributor for shares of both the Successor Fund and the Fund. Except
under certain circumstances, both Class A Shares of the Successor Fund and
shares of the Fund are sold at net asset value, next determined after an order
is received, plus a maximum sales charge of 4.50%. The Successor Fund has
adopted a Rule 12b-1 Distribution Plan (the "Distribution Plan") pursuant to
which the Successor 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 Successor Fund does
not anticipate making or accruing payments for Class A Shares under the
Distribution Plan in the immediate future. The 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 Fund pursuant to a plan of distribution adopted pursuant to
Rule 12b-1.
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES
The transfer agent and dividend disbursing agent for each of the
Successor Fund and the Fund is FSSC. Procedures for the purchase, exchange and
redemption of the Successor Fund's Class A Shares differ slightly from
procedures applicable to the purchase, exchange and redemption of the Fund's
shares. Any questions about such procedures may be directed to, and assistance
in effecting purchases, exchanges or redemptions of the Successor Fund's Class A
Shares or the Fund's shares may be obtained from FSC, principal distributor for
each of the Successor Fund and the Fund, at 1-800-245-5051, option one. Set
forth below is a brief listing of the significant purchase, exchange and
redemption procedures applicable to the Successor Fund's Class A Shares and the
Fund's shares.
Purchases of Class A Shares of the Successor Fund may be made through an
investment professional or, once an account has been established, by wire or
check. Purchases of shares of the 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 Successor Fund is $1,500. Subsequent investments must be in amounts of at
least $100. For purposes of the minimum initial investment, all Fund shareholder
accounts maintained by FSC will be combined to meet the minimum investment
requirement. The minimum initial investment in the 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 Successor Fund and the Fund each reserves the right to reject any
purchase request. In connection with the sale of shares of the Fund, FSC may
from time to time offer certain items of nominal value to any shareholder.
The purchase price of each of the Successor Fund's Class A Shares and
the 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 Successor Fund shares
to the Fund shareholders as a result of the Reorganization. Additionally, Class
A Shares of the Successor Fund may be purchased at net asset value, with 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 Successor Fund and the 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. Successor 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 Successor Fund by wire are considered received upon receipt of the wire
and begin earning dividends on the business day the wire is received. Successor
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 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 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 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 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 Successor 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 fund 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 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 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 Fund's sales charge already paid and any applicable sales charge on
shares of the 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 Successor Fund or the
Fund, as appropriate.
Redemptions of Successor Fund Class A Shares may be made through an
investment professional, by telephone or by mailing a written request, or
through the Successor Fund's systematic withdrawal program. A contingent
deferred sales charge of 0.75% of the redemption amount applies to Class A
Shares of the Successor 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 Successor Fund acquired under the proposed
Reorganization. Redemptions of Fund shares may be made through Central Carolina
Bank or the Fund, by telephone or by mailing a written request, or through the
Fund's systematic withdrawal program. Class A Shares of the Successor Fund and
shares of the Fund are each redeemed at their net asset value, less any
applicable contingent deferred sales charge for Class A Shares of the Successor
Fund, next determined after the redemption request is received on each day on
which the fund computes its net asset value. Proceeds will ordinarily be
distributed by check within seven days after receipt of a redemption request.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
Each of the Trust and MSIT is organized as a business trust pursuant to
a Declaration of Trust under the laws of the Commonwealth of Massachusetts. The
rights of shareholders of the Trust and of shareholders of MSIT relating to
voting, distributions and redemptions, as set forth in the applicable
Declaration of Trust and By-Laws, are substantively identical. Set forth below
is a brief summary of the significant rights of shareholders of the Trust and of
MSIT.
MSIT is authorized to issue an unlimited number of shares of beneficial
interest which have no par value. The Successor Fund is a portfolio of MSIT and
has one class of shares, known as Class A Shares. The Trust is authorized to
issue an unlimited number of shares of beneficial interest which have no par
value. The Fund is a portfolio of the Trust and has only one class of shares.
Neither the Trust nor MSIT are required to hold annual meetings of
shareholders. Shareholder approval is necessary only for certain changes in
operations or the election of Trustees under certain circumstances. A special
meeting of shareholders of either the Trust or MSIT for any permissible purpose
shall be called by the Trustees upon the written request of the holders of at
least 10% of the outstanding shares of the Trust or MSIT, as the case may be.
Each share of the Trust and MSIT is entitled to one vote. All shares of each
portfolio or class in each of MSIT and the Trust have equal voting rights,
except that in matters affecting only a particular portfolio or class, only
shares of that portfolio of class are entitled to vote.
Under certain circumstances, shareholders of the Fund and shareholders
of the Successor Fund may be held personally liable as partners under
Massachusetts law for obligations of the Trust or of MSIT, respectively. To
protect their shareholders, the Trust and MSIT have filed legal documents with
the Commonwealth of Massachusetts that expressly disclaim the liability of their
shareholders for such acts or obligations of the Trust or MSIT. These documents
require that notice of this disclaimer be given in each agreement, obligation or
instrument that the Trust or MSIT or their respective Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the
Fund's or the Successor Fund's obligations, each of the Fund and the Successor
Fund is required to use its property to protect or compensate the shareholder.
On request, the Fund or the Successor Fund will defend any claim made and pay
any judgment against a shareholder for any act or obligation of the Successor
Fund. Therefore, financial loss resulting from liability as a shareholder will
occur only if the Trust or MSIT cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Trust or
MSIT.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE
FUND VOTE "FOR" APPROVAL OF THE REORGANIZATION AGREEMENT.
PROXIES, QUORUM AND VOTING AT THE MEETING
Only shareholders of record on the Record Date will be entitled to vote
at the Meeting. Each share of the Fund is entitled to one vote. Fractional
shares are entitled to proportionate shares of one vote. Approval of the
Reorganization Agreement requires the affirmative vote of a majority of the
outstanding shares of the Fund.
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. IF NO INSTRUCTION IS
GIVEN ON THE PROXY, THE PERSONS NAMED AS PROXIES WILL VOTE THE SHARES
REPRESENTED THEREBY IN FAVOR OF THE PROPOSAL SET FORTH IN THE ATTACHED NOTICE.
In order to hold the Meeting, a "quorum" of shareholders must be
present. Holders of one-half of the issued and 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 proposal. For purposes of determining a quorum for
transacting business at the Meeting, abstentions and broker "non-votes" (that
is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have discretionary power) will be treated as shares that are PRESENT but
which have not been VOTED. Under the Investment Company Act of 1940 (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 Meeting, which would have the
effect of treating abstentions and "broker non-votes" as if they were votes
against the Reorganization.
If a quorum is not present, the persons named as proxies may vote those
proxies that have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of the proposal
have not been received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitations of proxies with
respect to such proposal. 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 Meeting to be adjourned. The persons named as proxies will vote AGAINST an
adjournment those proxies that they are required to vote against the proposal,
and will vote in FAVOR of such an adjournment of all other proxies that they are
authorized to vote. A shareholder vote may be taken on other proposals in this
Proxy Statement prior to any such adjournment if sufficient votes have been
received for approval.
DISSENTER'S RIGHTS OF APPRAISAL
Shareholders of the Fund objecting to the Proposal have no appraisal
rights under the Fund's Declaration of Trust or Massachusetts law.
BENEFICIAL OWNERSHIP
Officers and Trustees of the Trust own less than 1% of the Fund's
outstanding shares.
At the close of business on the Record Date, the following shareholder
of record owned, to the knowledge of management, 5% or more of the outstanding
shares of the Fund: Central Carolina Bank & Trust Company, Durham, North
Carolina, owned approximately ______ shares (_____%).
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Trust is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to CCB Funds, 5800 Corporate
Drive, Pittsburgh, Pennsylvania 15237-7010, so that they are received within a
reasonable time before any such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the 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 Trustees,
John W. McGonigle
Secretary
June 18, 1999
<PAGE>
CCB FUNDS
INVESTMENT ADVISER
CENTRAL CAROLINA BANK AND TRUST COMPANY 111 Corcoran Street Durham, North
Carolina 27702
DISTRIBUTOR
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
ADMINISTRATOR
FEDERATED ADMINISTRATIVE SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Cusip 682365101
(________/99)
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
A-5
992785 v3; L@1D03!.DOC
992785 v3; L@1D03!.DOC
A-1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of May __, 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
- ---------------------- --------------------------------------------
Title:
ATTEST: MUNICIPAL SECURITIES INCOME TRUST, on behalf
of its portfolio, Federated North Carolina
Municipal Income Fund
- ---------------------- --------------------------------------------
Title:
<PAGE>
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992785 v3; L@1D03!.DOC
992785 v3; L@1D03!.DOC
B-1
EXHIBIT B
FEDERATED NORTH CAROLINA MUNICIPAL INCOME FUND INVESTMENT LIMITATIONS
FUNDAMENTAL INVESTMENT LIMITATIONS
BORROWING MONEY AND ISSUING SENIOR SECURITIES
The Fund may borrow money, directly or indirectly, and issue senior
securities to the maximum extent permitted under the 1940 Act.
UNDERWRITING
The Fund may not underwrite the securities of other issuers, except that
the Fund may engage in transactions involving the acquisition, disposition
or resale of its portfolio securities, under circumstances where it may be
considered to be an underwriter under the Securities Act of 1933.
INVESTING IN REAL ESTATE
The Fund may not purchase or sell real estate, provided that this
restriction does not prevent the Fund from investing in issuers which
invest, deal, or otherwise engage in transactions in real estate or
interests therein, or investing in securities that are secured by real
estate or interests therein. The Fund may exercise its rights under
agreements relating to such securities, including the right to enforce
security interests and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated in an orderly manner.
INVESTING IN COMMODITIES
The Fund may not purchase or sell physical commodities, provided that the
Fund may purchase securities of companies that deal in commodities. For
purposes of this restriction, investments in transaction involving futures
contracts and options, forward currency contracts, swap transactions and
other financial contracts that settle by payment of cash are not deemed to
be investments in commodities.
LENDING CASH OR SECURITIES
The Fund may not make loans, provided that this restriction does not
prevent the Fund from purchasing debt obligations, entering into repurchase
agreements, lending its assets to broker/dealers or institutional investors
and investing in loans, including assignments and participation interests.
CONCENTRATION OF INVESTMENTS
The Fund will not make investments that will result in the concentration of
its investments in the securities of issuers primarily engaged in the same
industry. Government securities, municipal securities and bank instruments
will not be deemed to constitute an industry.
The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities," as defined by the Investment
Company Act. The following limitations, however, may be changed by the Board
without shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
NONFUNDAMENTAL INVESTMENT LIMITATIONS
BUYING ON MARGIN
The Fund will not purchase any securities on margin, provided that the Fund
may obtain short-term credits necessary for the clearance of purchases and
sales of securities, and further provided that the Fund may make margin
deposits in connection with its use of financial options and futures,
forward and spot currency contracts, swap transactions and other financial
contracts or derivative instruments.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any of its assets,
provided that this shall not apply to the transfer of securities in
connection with any permissible borrowing or to collateral arrangements in
connection with permissible activities.
CONCENTRATION OF INVESTMENTS
In applying the Fund's fundamental policy regarding Concentration of
Investments: (1) utility companies will be divided according t their
services, for example, gas, gas transmission, electric and telephone will
each be considered a separate industry; (2) financial service companies
will be classified according to the end users of their services, for
example, automobile finance, bank finance and diversified finance will each
be considered a separate industry; and (3) asset-backed securities will be
classified according to the underlying assets securing such securities.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
obligations, including repurchase agreements providing for settlement in
more than seven days after notice, over-the-counter options and certain
restricted securities and municipal leases determined by the Board of
Trustees not to be liquid.
<PAGE>
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992785 v3; L@1D03!.DOC
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C-1
EXHIBIT C
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND INVESTMENT LIMITATIONS
FUNDAMENTAL INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of securities. The deposit or payment by
the Fund of initial or variation margin in connection with futures
contracts or related options transactions is not considered the purchase of
a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money in amounts up to one-third of the value of its total assets,
including the amounts borrowed. The Fund will not borrow money for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund
to meet redemption requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. The Fund will not purchase
any securities while borrowings in excess of 5% of its total assets are
outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate its assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding 10% of the value of
its total assets at the time of the pledge.
UNDERWRITING
The Fund will not underwrite any issue of securities except as it may be
deemed to be an underwriter under the Securities Act of 1933, as amended,
in connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate including limited partnership
interests, although it may invest in municipal bonds secured by real estate
or interests in real estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities. However, the Fund may
purchase put and call options on portfolio securities and on financial
futures contracts. In addition, the Fund reserves the right to hedge the
portfolio by entering into financial futures contracts and to sell puts and
calls on financial futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities up to
one-third of the value of its total assets. The Fund may, however, acquire
publicly or non-publicly issued municipal bonds or temporary investments or
enter into repurchase agreements in accordance with its investment
objective, policies, and limitations or the Declaration of Trust.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such purchase, 25%
or more of the value of its total assets would be invested in any one
industry, or in industrial development bonds or other securities, the
interest upon which is paid from revenues of similar types of projects.
However, the Fund may invest as temporary investments more than 25% of the
value of its assets in cash or cash items, securities issued or guaranteed
by the U.S. government, its agencies, or instrumentalities, or instruments
secured by these money market instruments, such as repurchase agreements.
The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
NONFUNDAMENTAL INVESTMENT LIMITATIONS
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
obligations, including repurchase agreements providing for settlement in
more than seven days after notice, over-the-counter options and certain
restricted securities and municipal leases determined by the Board of
Trustees not to be liquid.
WRITING COVERED CALL OPTION AND PURCHASING PUT OPTIONS
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them in
deliverable form without further payment or after segregating cash in the
amount of any further payment. The Fund will not purchase put options on
securities unless the securities are held in the Fund's portfolio.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not own more than 3% of the total outstanding voting stock of
any investment company, invest more than 5% of its total assets in any
investment company, or invest more than 10% of its total assets in
investment companies in general. The Fund will purchase securities of
investment companies only in open-market transactions involving only
customary broker's commissions. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation, or
acquisition of assets.
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, Susan M. Jones 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: ______________________________
