"Hub and Spoke"(R) is a registered service mark of Signature Financial
Group, Inc. Federated Services Company is a licensee of Signature Financial
Group, Inc.
FEDERATED BOND INDEX FUND
PLEASE VOTE!
Federated Bond Index Fund will hold a special meeting of shareholders on
September 21, 1998. It is important for you to vote on the issue described in
this Proxy Statement. We recommend that you read the Proxy Statement in its
entirety; the explanations it includes will help you decide how to vote.
TIME IS OF THE ESSENCE. . .
VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! BE SURE TO
COMPLETE AND RETURN YOUR PROXY CARD
PROMPTLY TO AVOID ADDITIONAL EXPENSE TO THE
FUND.
Following is an introduction to the proposal and the process.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types of
changes, like the one included in this Proxy Statement. You have a right to vote
on this change.
WHAT IS THE ISSUE I AM BEING ASKED TO VOTE ON?
To approve a tax-free reorganization of Federated Bond Index Fund (the "Fund")
into Federated Total Return Bond Fund (the "Portfolio").
WHY IS THE REORGANIZATION BEING PROPOSED?
1) The Fund no longer benefits from the economies of scale offered by the Fund's
"Hub and Spoke"(R) structure since the only additional fund ("Spoke" fund)
withdrew its assets on March 31, 1998. 2) The reorganization of the Fund into
the Portfolio may provide operating efficiencies as a result of the combined
size of the Portfolio and Fund. 3) Actively managed bond portfolios, like
Federated Total Return Bond Fund, have had better performance (see attached
comparison chart) and are more attractive than passively managed bond portfolios
like Federated Bond Index Fund. Fund shareholders may benefit from the economic,
financial, and market analysis offered by the Portfolio's actively managed
investment strategy.
WHAT WILL HAPPEN TO MY SHARES?
Holders of Institutional Shares and Institutional Services Shares in the Fund
would receive Institutional Shares and Institutional Services Shares,
respectively, of the Portfolio equal in value to their shares in the Fund.
WILL THE REORGANIZATION CREATE TAX CONSEQUENCES?
As discussed in the enclosed proxy statement, the proposed reorganization will
be a tax-free event. If a shareholder chooses to redeem shares from Federated
Bond Index Fund before the reorganization, it will be a taxable transaction.
HOW DO THE FUND AND PORTFOLIO COMPARE?
The Fund and the Portfolio differ in the way they seek to achieve their
investment strategies.
The Fund is a passively managed "index" fund which seeks to replicate the
performance of the Lehman Brothers Aggregate Bond Index (the "Index"). The
Portfolio is an actively managed fund which allocates investments among various
fixed income classes, using the Index as a benchmark. Unlike the Fund, the
Portfolio may invest in high yield and international bonds.
The following data is as of May 31, 1998.
===============---------------------------============
Institutional Institutional InstitutionInstitutional
Shares Service Shares Shares Service
Shares
=================== ============
------------------------------------------
Assets $40.3 million $25.7 million $48.5 $9.8
million million
------------------------------------------============
===================------------------------------------------============
Expense Ratio 29* 54** 35* 65**
(b.p.)
------------------------------------------============
===================------------------------------------------============
Inception Date 7/11/94*** 7/11/94*** 10/1/96 10/1/96
---------------
- --------------------------------------------------=======================
Weighted Average
Credit Quality AAA AA
- --------------------------------------------------=======================
-------------------------------=======================
Weighted Average
Duration 4.5 years 4.5 years
-------------------------------=======================
===================------------------------------------------============
FUND PERFORMANCE
------------------------------------------============
- -------------------------------------------------------------============
30-day SEC Yield 5.96% 5.71% 6.41% 6.10%
- -------------------------------------------------- ============
------------------------------------------============
30-day
Distribution Yield 6.02% 5.77% 5.99% 5.69%
------------------------------------------============
===================------------------------------- ============
3 Month Total 1.80% 1.74% 2.08% 2.00%
Return
------------------------------------------============
===================------------------------------------------============
Year-to-Date 2.98% 2.87% 3.39% 3.27%
Total Return
------------------------------------------============
===================------------------------------------------============
1 year Total 10.41% 10.14% 11.57% 11.24%
Return
------------------------------------------============
===================------------------------------------------============
3 year Total 7.47% 7.29% NA NA
Return
------------------------------- ============
==================================---------------------------============
Annualized Total
Return Since 8.60% 8.45% 10.33% 10.03%
Inception
==================================---------------------------============
* The total operating expenses for Federated Total Return Bond Fund are based on
expenses expected during the fiscal year ending September 30, 1998 and would
have been 0.94% absent the voluntary waiver of the management fee and
reimbursement of certain other operating expenses. The total operating
expenses for Federated Total Return Bond Fund were 0.25% for the six months
ended March 31, 1998 and would have been 1.67% absent the voluntary waiver of
the management fee and reimbursement of certain other expenses by the Adviser.
The total operating expenses for Federated Bond Index Fund are based upon
expenses incurred during the six months ended March 31, 1998 and would have
been 0.93% absent the voluntary reimbursement of certain other operating
expenses by the Investment Manager and Administrator.
**The total operating expenses for Federated Total Return Bond Fund are based on
expenses expected during the fiscal year ending September 30, 1998 and would
have been 1.44% absent the voluntary waiver of the management fee and
reimbursement of certain other operating expenses. The total operating
expenses for Federated Total Return Bond Fund were 0.59% for the six months
ended March 31, 1998 and would have been 1.87% absent the voluntary waiver of
the management fee and reimbursement of certain other expenses by the Adviser.
The total operating expenses for Federated Bond Index Fund are based upon
expenses incurred during the six months ended March 31, 1998 and would have
been 1.15% absent the voluntary reimbursement of certain other operating
expenses by the Investment Manager and Administrator.
***Performance information for periods prior to March 7, 1996 relate to the Bond
Index Portfolio in which the Federated Bond Index Fund invests all of its
assets through a two-tier Hub and Spoke(R) fund structure.
<PAGE>
HOW DO I VOTE MY SHARES?
You may vote in person at the special meeting of shareholders or simply sign and
return the enclosed Proxy Card. If we do not receive your Proxy Card, we may
contact you by telephone to request that you cast your vote.
WHO DO I CALL IF I HAVE QUESTIONS ABOUT THE PROXY STATEMENT?
Call your Fund Representative or a Federated Client Service Representative.
Federated's toll-free number is 1-800-341-7400.
AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED THIS
PROPOSAL. THE BOARD RECOMMENDS THAT YOU READ THE ENCLOSED MATERIALS CAREFULLY
AND VOTE FOR THE PROPOSAL.
- -----------------------
Past performance is not indicative of future results. Investment return and
principal value will fluctuate so when shares are redeemed, they may be worth
more or less than their original cost.
The 30-day SEC yield is calculated by dividing the net investment income per
share for the thirty days ended on the date of the calculation by the maximum
offering price per share on that date. This figure is compounded and annualized.
The 30-day distribution yield reflects actual distributions to shareholders. It
is calculated by dividing the monthly annualized dividend plus short-term
capital gains, if any, by the average 30-day offering price.
In the absence of temporary expense waivers or reimbursements, the 30-day SEC
yield for Federated Total Return Bond Fund would have been 5.11% (IS) and 4.80%
(ISS). Total return would also have been lower.
FEDERATED INVESTMENT TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Dear Shareholder:
The Board of Trustees and Management of Federated Investment Trust (the
"Trust"), are pleased to submit for your vote a proposal to transfer all of the
assets of Federated Bond Index Fund (the "Fund") to Federated Total Return Bond
Fund (the "Portfolio"), a portfolio of Federated Total Return Series, Inc. The
Portfolio has a similar investment objective to that of the Fund in that it
seeks to provide total return by investing primarily in a diversified portfolio
of investment grade debt securities.
As part of the transaction, holders of Institutional Shares and Institutional
Services Shares in the Fund would receive an equal value of Institutional Shares
and Institutional Service Shares, respectively, of the Portfolio. The Fund would
then be liquidated. The Board of Trustees of the Trust, as well as Federated
Research Corp., the Trust's investment adviser, and Federated Securities Corp.,
the Fund's principal underwriter, believe the proposed agreement and plan of
reorganization is in the best interests of Fund shareholders for the following
reasons:
The reorganization of the Fund into the Portfolio may provide
operating efficiencies as a result of the size of the combined Portfolio and
Fund which are not available to Fund shareholders due to the smaller size of the
Fund and the Fund no longer benefiting from the economies of scale offered by
the Fund's "Hub and Spoke"(R) structure.
The Portfolio has an investment objective similar to that of the
Fund and offers a diversified portfolio of securities which invests primarily in
investment grade securities. In addition, Fund shareholders would benefit from
the economic, financial, and market analysis offered by the Portfolio's actively
managed investment strategy.
We believe that the sale of the Fund's assets in this transaction will
present an excellent investment opportunity for our shareholders. Your vote on
the transaction is critical to its success. The sale will occur only if approved
by the holders of a majority of the Fund's outstanding shares as of the record
date. 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. If you have any
questions, please feel free to call us at 1-(800)-341-7400.
Thank you for your prompt attention and participation.
Sincerely,
John F. Donahue
CHAIRMAN OF THE BOARD1
<PAGE>
FEDERATED INVESTMENT TRUST
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7000
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF FEDERATED BOND INDEX FUND, A PORTFOLIO OF FEDERATED
INVESTMENT TRUST: A Special Meeting of Shareholders of Federated Bond Index Fund
(the "Fund") will be held at 2:00 p.m. on September 21, 1998, at Federated
Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3779 for the following purposes:
To approve or disapprove a proposed Agreement and Plan of Reorganization
between Federated Investment Trust, on behalf of the Fund, and Federated
Total Return Series, Inc. (the "Corporation"), on behalf of its portfolio,
Federated Total Return Bond Fund (the "Portfolio"), whereby the Corporation
would acquire all of the assets of the Fund in exchange for Institutional
Shares and Institutional Service Shares of the Portfolio to be distributed
PRO RATA by the Fund to the respective holders of Institutional Shares and
Institutional Service Shares of the Fund, in complete liquidation of the
Fund; and
To transact such other business as may properly come before the meeting or
any adjournment thereof.
By Order of the Board of Trustees
John W. McGonigle
SECRETARY
August 6, 1998
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JULY 23, 1998 ARE ENTITLED
TO VOTE AT THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
SIGN AND RETURN THE ENCLOSED PROXY CARD. YOUR VOTE IS IMPORTANT.
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO SAVE THE EXPENSE OF
FURTHER MAILINGS, PLEASE MARK YOUR PROXY CARD, SIGN IT, AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU
MAY REVOKE YOUR PROXY AT ANY TIME AT OR BEFORE THE MEETING OR VOTE IN PERSON IF
YOU ATTEND THE MEETING.
<PAGE>
2
<PAGE>
PROSPECTUS/PROXY STATEMENT
August 6, 1998
ACQUISITION OF THE ASSETS OF
FEDERATED BOND INDEX FUND,
A PORTFOLIO OF FEDERATED INVESTMENT TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-341-7400
BY AND IN EXCHANGE FOR INSTITUTIONAL SHARES AND INSTITUTIONAL SERVICE SHARES OF
FEDERATED TOTAL RETURN BOND FUND,
A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone Number: 1-800-341-7400
This Prospectus/Proxy Statement describes the proposed Agreement and Plan of
Reorganization (the "Plan") whereby Federated Total Return Series, Inc., a
Maryland Corporation (the "Corporation"), on behalf of its portfolio, Federated
Total Return Bond Fund (the "Portfolio"), would acquire all of the assets of
Federated Bond Index Fund (the "Fund"), a portfolio of Federated Investment
Trust (the "Trust"), in exchange for Institutional Shares and Institutional
Service Shares of the Portfolio to be distributed PRO RATA by the Fund to the
respective holders of Institutional Shares and Institutional Service Shares of
the Fund in complete liquidation of the Fund. As a result of the Plan, each
shareholder of the Fund will become the owner of shares of the Portfolio having
a total net asset value equal to the total net asset value of his or her
holdings in the Fund.
The Corporation is among over 100 funds managed by subsidiaries of
Federated Investors, Inc. Federated Investors, Inc. is one of the largest
institutional service providers in the United States. It has been providing
advisory services for over 01 years.
THE BOARD OF TRUSTEES OF FEDERATED INVESTMENT TRUST
UNANIMOUSLY RECOMMENDS APPROVAL OF THE PLAN
The shares of each of the Portfolio and the Fund represent interests in
separate open-end, diversified management investment companies. The Corporation
currently includes three portfolios: Federated Limited Duration Fund, Federated
Government Fund, and the Portfolio. The investment objective of the Portfolio is
to provide total return. The Portfolio pursues its investment objective by
investing primarily in a diversified portfolio of investment grade debt
securities. Under normal circumstances, the Portfolio will invest at least 65%
of the value of its total assets in domestic investment grade debt securities.
The investment objective of the Fund is to provide investment results that
correspond to the investment performance of the Lehman Brothers Aggregate Bond
Index, a broad market-weighted index which encompasses U.S. Treasury and agency
securities, corporate investment grade bonds and mortgage-backed securities. The
Fund pursues its investment objective by investing all of its investable assets
in Bond Index Portfolio, a diversified series of Federated Investment
Portfolios, an open-end management investment company.
Shares in the Portfolio and the Fund are not insured or guaranteed by the
U.S. government or any agency thereof. For a comparison of the investment
policies of the Portfolio and the Fund, see " Investment Objective, Policies and
Limitations."
The Portfolio is currently offered with two classes of shares: Institutional
Shares and Institutional Service Shares. Holders of Institutional Shares and
Institutional Service Shares of the Fund will receive corresponding
Institutional Shares and Institutional Service Shares of the Portfolio if the
Reorganization is approved by shareholders. Information concerning Institutional
Shares and Institutional Service Shares of the Portfolio, as compared to
Institutional Shares and Institutional Service Shares of the Fund, is included
in this Prospectus/Proxy Statement in the sections entitled
"SUMMARY--Comparative Fee Tables" and "INFORMATION ABOUT THE
REORGANIZATION--Description oF the Plan of Reorganization."
This Prospectus/Proxy Statement should be retained for future reference. It
sets forth concisely the information about the Corporation and the Portfolio
that a prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the Prospectus of the Portfolio dated November 30,
1997, which is incorporated herein by reference. A Prospectus and a Statement of
Additional Information for the Portfolio dated November 30, 1997 as well as a
Statement of Additional Information dated ____________, 1998 (relating to this
Prospectus/Proxy Statement) containing additional information have been filed by
the Corporation with the Securities and Exchange Commission and are incorporated
herein by reference. Further information about the Portfolio's performance is
contained in the Portfolio's Annual Report for the fiscal year ended September
30, 1997, which is incorporated herein by reference. Copies of these materials,
Annual Reports and other information about the Portfolio may be obtained without
charge by writing or by calling the Corporation at the address and telephone
number shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE PORTFOLIO.
SHARES OF THE PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. SHARES OF THE PORTFOLIO ARE NOT FEDERALLY INSURED BY,
GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN THE PORTFOLIO INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
<PAGE>
TABLE OF CONTENTS
PAGE
PROPOSAL 1. REORGANIZATION.................. 1
SUMMARY................................ 2
INVESTMENT OBJECTIVE, POLICIES AND 8
LIMITATIONS.................................
INFORMATION ABOUT THE REORGANIZATION... 10
INFORMATION ABOUT THE PORTFOLIO AND THE 14
FUND........................................
VOTING INFORMATION.......................... 15
OTHER MATTERS............................... 17
AGREEMENT AND PLAN OF REORGANIZATION........ Exhibit
A
<PAGE>
SUMMARY
ABOUT THE PROPOSED REORGANIZATION
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, the
Prospectus for the Fund's Institutional Shares dated September 30, 1997 and the
Prospectus for the Fund's Institutional Service Shares dated September 30, 1997
(collectively, the "Fund's Prospectuses"), the Statement of Additional
Information of the Fund dated September 30, 1997 (the "Fund's Statement of
Additional Information"), the Prospectus of the Portfolio's Institutional Shares
dated November 30, 1997 and the Prospectus for the Portfolio's Institutional
Service Shares dated November 30, 1997 (collectively, the "Portfolio's
Prospectuses"), the Statement of Additional Information of the Portfolio dated
November 30, 1997 (the "Portfolio's Statement of Additional Information"), and
the Plan, a copy of which is attached to this Prospectus/Proxy Statement as
Exhibit A.
The Board of Trustees of the Trust, including its members who are not
"interested persons" within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"), has voted to recommend to shareholders of the Fund
the approval of an Agreement and Plan of Reorganization (the "Plan"), whereby
the Corporation, on behalf of the Portfolio, would acquire all of the assets of
the Fund in exchange for Institutional Shares and Institutional Service Shares
of the Portfolio 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 holder of Institutional Shares and
Institutional Service Shares of the Fund will become the owner of Institutional
Shares and Institutional Service Shares of the Portfolio 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 (the "Closing Date").
As a condition to the Reorganization transactions, the Corporation and the
Trust 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, so that no gain or loss will be
recognized by either the Portfolio or the Fund or their respective shareholders.
The tax basis of the Institutional Shares and Institutional Services Shares of
the Portfolio received by Fund shareholders will be the same as the tax basis of
their shares in the Fund.
After the acquisition is completed, the Fund will no longer be available as
an investment portfolio of the Trust.
<PAGE>
<TABLE>
<CAPTION>
FEDERATED TOTAL RETURN BOND FUND
SUMMARY OF TRUST EXPENSES
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
FEDERATED FEDERATED
TOTAL RETURN BOND INDEX PRO FORMA
BOND FUND FUND COMBINED
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering None None None
price)
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering None None None
price)
Contingent Deferred Sales Charge (as a
percentage of original purchase price or None None None
redemption proceeds, as
applicable)............................
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)....
Exchange None None None
Fee
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after 0.00% 0.00% 0.00% (1)
waiver)
12b-1 Fee None None None
Fee
Total Other Expenses (after expense 0.35% 0.29% 0.35%
reimbursement).............................
Shareholder Services 0.00% 0.00% 0.00% (2)
Fee........................................................
Total Operating Expenses (after waiver and 0.35% 0.29% 0.35% (3)
expense reimbursement)....
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time at
its sole discretion. The maximum management fee is 0.40%
(2) The Fund has no present intention of paying or accruing the shareholder
services fee on Institutional Shares during the fiscal year ending September 30,
1998. If Institutional Shares were paying or accruing the shareholder services
fee, Institutional Shares would be able to pay up to 0.25% of its average daily
net assets for the shareholder services fee.
(3) The total operating expenses for Federated Total Return Bond Fund are based
on expenses expected during the fiscal year ending September 30, 1998, and would
have been 0.94% absent the voluntary waiver described in note 1 and the
voluntary reimbursement of certain other operating expenses. The total operating
expense for Federated Total Return Bond Fund were 0.25% for the six months ended
March 31, 1998, and would have been 1.67% absent the voluntary waiver and
reimbursement of certain other expenses by the adviser. The total operating
expense for Federated Bond Index Fund are based upon expenses incurred during
the six months ended March 31, 1998, and would have been 0.93% absent the
voluntary reimbursement of certain other operating expenses by the Investment
Manager and Administrator.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "How To Purchase Shares" and "Fund Information." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE FEDERATED FEDERATED
TOTAL RETURN BOND INDEX PRO FORMA
BOND FUND FUND COMBINED
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period...
1 Year $4 $3 $4
3 Year $11 $9 $11
5 Year $20 $16 $20
10 Year $44 $37 $44
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
<TABLE>
<CAPTION>
FEDERATED TOTAL RETURN BOND FUND
SUMMARY OF TRUST EXPENSES...........
......INSTITUTIONAL SERVICE SHARES
......SHAREHOLDER TRANSACTION EXPENSES
.................................... .
-
FEDERATED FEDERATED
TOTAL RETURN BOND INDEX PRO FORMA
BOND FUND FUND COMBINED
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering None None None
price)
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering None None None
price)
Contingent Deferred Sales Charge (as a
percentage of original purchase price or None None None
redemption proceeds, as
applicable)
Redemption Fee (as a percentage of amount None None None
redeemed, if applicable)....
Exchange Fee None None None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after 0.00% 0.00% 0.00% (1)
waiver)...............................................................
12b-1 Fee (after 0.05% 0.00% 0.05% (2)
waiver)...........................................................................
Total Other Expenses (after expense 0.60% 0.54% 0.60%
reimbursement).............................
Shareholder Services 0.25% 0.25% 0.25%
Fee........................................................
Total Operating Expenses (after waiver and 0.65% 0.54% 0.65% (3)
expense reimbursement)
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time at
its sole discretion. The maximum management fee is 0.40%
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver of a portion
of the 12b-1 fee. The distributor can terminate this voluntary waiver at any
time at its sole discretion. The maximum 12b-1 fee is 0.25%.
(3) The total operating expenses for Federated Total Return Bond Fund are based
on expenses expected during the fiscal year ending September 30, 1998, and would
have been 1.44% absent the voluntary waiver described in note 1 and the
voluntary reimbursement of certain other operating expenses. The total operating
expense for Federated Total Return Bond Fund were 0.59% for the six months ended
March 31, 1998, and would have been 1.87% absent the voluntary waivers of the
management fee, a portion of the 12b-1 fee and voluntary reimbursement of
certain other expenses by the adviser. The total operating expense for Federated
Bond Index Fund are based upon expenses incurred during the six months ended
March 31, 1998, and would have been 1.15% absent the voluntary reimbursement of
certain other operating expenses by the Investment Manager and Administrator.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "How To Purchase Shares" and "Fund Information." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
LONG-TERM SHAREHOLDERS MAY PAY MORE THAN THE ECONOMIC EQUIVALENT OF THE
MAXIMUM FRONT-END SALES CHARGES PERMITTED UNDER THE RULES OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC.
<PAGE>
EXAMPLE FEDERATED FEDERATED COMBINED
TOTAL RETURN BOND INDEX FUND
BOND FUND FUND PRO FORMA
You would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each time period...
1 Year $7 $6 $7
3 Year $21 $17 $21
5 Year $36 $30 $36
10 Year $81 $68 $81
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
INVESTMENT OBJECTIVE, POLICIES, AND LIMITATIONS
The investment objective of the Portfolio is to provide total return. This
investment objective cannot be changed without the approval of shareholders. The
Portfolio pursues its investment objective by investing primarily in U.S.
Treasury and government agency securities, corporate investment grade bonds, and
mortgage-backed securities. The Portfolio also may allocate some of its
investments in the high-yield corporate and international bond sectors.
The investment objective of the Fund is to provide investment results that
correspond to the investment performance of the Lehman Brothers Aggregate Bond
Index (the "Aggregate Bond Index"). The approval of shareholders is not required
to change this investment objective. The Fund pursues its investment objective
by investing in investment grade debt securities which comprise the Aggregate
Bond Index including U.S. Treasury and Government Agency Securities, corporate
investment grade bonds, and mortgage-backed securities.
The Aggregate Bond Index is a broad market-weighted index which encompasses
three major classes of United States investment grade fixed income securities
with maturities greater than one year: U.S. Treasury and agency securities,
corporate bonds, mortgage-backed securities, and U.S. dollar denominated foreign
obligations. The Index measures the total investment return (capital change plus
income) provided by a universe of fixed income securities, weighted by the
market value outstanding of each security. The securities included in the Index
generally meet the following criteria, as defined by Lehman Brothers: an
outstanding market value of at least $100 million and investment grade quality
(rated a minimum of Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's ("S&P")).
Both the Portfolio and the Fund have substantially similar investment
policies that correspond to the Aggregate Bond Index. Unlike the Portfolio which
directly acquires and manages its own portfolio of securities, the Fund is a
"Spoke"(R) fund that achieves its investmenT objective by investing all of its
assets in the Bond Index Portfolio (the "Hub Portfolio"(R)), a series of
Federated Investment Portfolios, through a "Hub and Spoke" structure.
Through the Hub Portfolio, the Fund invests in substantially similar types of
securities in which the Portfolio invests. Both Bond Index Portfolio (therefore,
indirectly, the Fund) and the Portfolio invest in a diversified portfolio of
investment grade debt securities including U.S. Treasury and government agency
securities, corporate investment grade bonds, and mortgage-backed securities.
Unlike the Fund, the Portfolio may allocate some of its investments in the
high-yield corporate and international bond sectors.
The Fund is a passively managed bond "index" fund which seeks to replicate
the performance of the Aggregate Bond Index. The Portfolio is an actively
managed portfolio which allocates investments among various fixed-income asset
classes using the Aggregate Bond Index as a benchmark. Thus the security
selection and sector strategy of the Portfolio will be broader in scope than
that of the Fund. The Portfolio is managed pursuant to traditional methods of
active investment management, which involve the buying and selling of securities
based upon economic, financial and market analyses and investment judgment.
Therefore, an investment in the Portfolio may present shareholders with
opportunities and risks different than those presented by an investment in the
Fund.
The Portfolio pursues its investment objective by investing primarily in a
diversified portfolio of investment grade debt securities. Under normal
circumstances, the Portfolio will invest at least 65% of the value of its total
assets in domestic investment grade debt securities. Investment grade securities
must be rated Aaa, Aa, A or Baa by Moody's Investors Services, Inc. ("Moody's"),
or AAA, AA, A, or BBB by Standard & Poor's ("S&P"), Fitch IBCA ("Fitch") or Duff
& Phelps Rating Service Co. ("Duff & Phelps"), or which are of comparable
quality in the judgment of the investment adviser. Permitted investments include
asset-backed securities; domestic and foreign issues of corporate debt
obligations; domestic and foreign issues of obligations of foreign governments
and/or their instrumentalities; U.S. government securities, which generally
include direct obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations (including mortgage-backed securities, bonds,
notes and discount notes) issued or guaranteed by U.S. government agencies or
instrumentalities. The Portfolio also may invest up to 35% of its assets in
high-yield, lower-rated debt obligations (obligations rated BB or lower by a
nationally recognized statistical rating organization ("NRSRO") ). In addition
the Portfolio may enter into swap agreements, repurchase and reverse repurchase
agreements, financial and foreign currency futures and options on futures, and
when-issued and delayed delivery transactions. Additional Portfolio investments
may include restricted and illiquid securities, municipal securities, bank
instruments, and securities of other investment companies. The investment
policies of the Portfolio may be changed by the Directors without the approval
of shareholders.
The Fund seeks to achieve its investment objective by investing all of its
assets in Bond Index Portfolio, a diversified series of Federated Investment
Portfolios, that has the same investment objective, policies and limitations as
the Fund. The Bond Index Portfolio seeks to achieve its investment objective by
replicating the yield and total return of the Aggregate Bond Index through a
statistically selected sample of debt instruments. The Bond Index Portfolio
invests at least 80% of its assets in a portfolio of securities consisting of a
representative selection of debt instruments included in the Aggregate Bond
Index. The Bond Index Portfolio intends to remain fully invested, to the extent
practicable, in a pool of securities that match the yield and total return of
the Aggregate Bond Index. Permitted investments include: U.S. government and
agency securities; investment grade domestic and foreign corporate and sovereign
debt securities denominated in U.S. dollars (securities rated at least Baa by
Moody's or BBB by S&P or Fitch); and mortgage pass-throughs and collateralized
mortgage obligations rated investment grade or of comparable quality. The Fund
also may enter into when-issued and delayed delivery transactions; repurchase
agreements and reverse repurchase agreements; and futures and options contracts
In addition to the policies and limitations set forth above, both the
Portfolio and the Fund are subject to certain additional investment policies and
limitations, described in the Portfolio's Statement of Additional Information
dated November 30, 1997, and the Fund's Statement of Additional Information
dated September 30, 1997. Reference is hereby made to the Portfolio's Prospectus
and Statement of Additional Information, each dated November 30, 1997, and the
Fund's Prospectus and Statement of Additional Information date September 30,
1997, which set forth in full the investment objective, policies and limitations
of each of the Portfolio and Fund, all of which are incorporated herein by
reference thereto.
ADVISORY FEES AND EXPENSE RATIOS
The maximum annual investment advisory fee for the Portfolio is 0.40% of
average daily net assets. The Fund does not pay any fee directly to an
investment adviser. It bears indirectly, as an investor in Bond Index Portfolio,
any fees paid by Bond Index Portfolio to its investment adviser. The maximum
annual investment advisory fee for Bond Index Portfolio is 0.25% of average
daily net assets.
For its fiscal year ended September 30, 1997, the Portfolio's ratio of
expenses to average daily net assets for Institutional Shares and Institutional
Service Shares were 0.01% and 0.31%, respectively. During this period the
Portfolio's investment adviser, Federated Management ("Federated Management"),
and other service providers voluntarily waived a portion of the management,
shareholder services, and distribution fees and reimbursed the Portfolio for
certain operating expenses. Absent such waiver and reimbursement, the ratio of
expenses to average daily net assets for Institutional Shares and Institutional
Service Shares would have been 4.40% and 4.90%, respectively. This undertaking
to waive management fees and/or reimburse operating expenses may be terminated
by Federated Management at any time in its discretion.
For the six-month period ended March 31, 1998, the Portfolio's ratio of
expenses to average daily net assets for Institutional Shares and Institutional
Service Shares were 0.25% and 0.59%, respectively. During this period the
Portfolio's investment adviser, and other service providers voluntarily waived a
portion of the management, shareholder services, and distribution fees and
reimbursed the Portfolio for certain operating expenses. Absent such waiver and
reimbursement, the ratio of expenses to average daily net assets for
Institutional Shares and Institutional Service Shares would have been 0.93% and
1.15%, respectively. This undertaking to waive management fees and/or reimburse
operating expenses may be terminated by Federated Management at any time in its
discretion.
Based on expenses expected during the fiscal year ending September 30, 1998,
the total operating expenses anticipated for Institutional Shares and
Institutional Service Shares of the Portfolio are 0.35% and 0.65%, respectively,
and would be 0.94% and 1.44%, respectively, absent the voluntary waiver of the
management fee.
For its fiscal year ended May 31, 1998, the Fund's ratio of expenses to
average daily net assets for Institutional Shares and Institutional Service
Shares was 0.29% and 0.54%, respectively. During this period Bond Index Fund's
investment adviser, Federated Research Corp. ("Federated Research"), and other
service providers, voluntarily waived a portion of the management, shareholder
services, and distribution fees and reimbursed the Fund for certain operating
expenses. Absent such waiver and reimbursement, the ratio of expenses to average
daily net assets for Institutional Shares and Institutional Service Shares would
have been 0.93% and 1.15%, respectively. This undertaking to waive management
fees and/or reimburse operating expenses may be terminated by Federated Research
at any time in its discretion.
Both the Portfolio and the Fund can charge a Rule 12b-1 fee of up to 0.25%
of the average daily net assets of Institutional Service Shares.
PURCHASE AND REDEMPTION PROCEDURES
Procedures for the purchase and redemption of Portfolio shares are identical
to procedures applicable to the purchase and redemption of Fund shares. In
anticipation that the Reorganization will be consummated, shareholders of the
Fund will receive information with respect to the various services provided by
the Portfolio, as well as a detailed explanation of the options available to
shareholders for effecting purchases and redemptions of Portfolio shares. Any
questions about such procedures may be directed to, and assistance in effecting
purchases or redemptions of Portfolio shares may be obtained by calling the
Portfolio at 1-800-341-7400.
Reference is made to the Prospectus of the Portfolio dated November 30, 1997,
and the Prospectus of the Fund for a complete description of the purchase and
redemption procedures applicable to purchases and redemptions of Portfolio and
Fund shares, respectively, each of which is incorporated herein by reference
thereto.
Shares of the Portfolio are available for purchase without the imposition of
any sales charge on purchases or any contingent deferred sales charge. The
minimum initial investment in Institutional Shares of the Portfolio is $100,000.
The minimum initial investment in Institutional Service Shares of the Portfolio
is $25,000. The minimum initial investment in Institutional Shares of the Fund
is $25,000. The minimum initial investment in Institutional Service Shares of
the Fund is $5,000. To meet the minimum investment requirements, purchases of
shares of the Portfolio may be aggregated over a period of 90 days.
The Fund's and the Portfolio's net asset values are calculated at the close
of each day on which the New York Stock Exchange is open. Purchase orders
received by the Portfolio by wire before 3:00 p.m. (Eastern time) begin earning
dividends that day. Purchase orders received by the Fund by wire begin earning
dividends on the business day after the order is received. Purchase orders
received by check by either the Portfolio or the Fund begin earning dividends
the day after such check is converted into federal funds, which ordinarily
occurs one day after receipt by State Street Bank and Trust Company, the Fund's
and the Portfolio's custodian.
Shares of both the Portfolio and the Fund may be redeemed by mail or by
telephone. Shares of the Fund are redeemed at the net asset value per share next
determined after receiving the redemption order.
DIVIDENDS
Both the Portfolio's and the Fund's dividends are declared daily and paid
monthly. Dividends paid by both the Fund and the Portfolio are automatically
reinvested in additional shares unless shareholders request cash payment.
SERVICE PROVIDERS TO THE CORPORATION AND PORTFOLIO
Administrative services to the Corporation and Portfolio are provided by
Federated Services Company ("Federated Services"). Federated Services is a
wholly-owned subsidiary of Federated Investors, Inc. For its services to the
Portfolio, Federated Services receives a fee at an annual rate which relates to
the average aggregate daily net assets of all funds administered by Federated
Services in the Federated Investors, Inc. complex, determined as follows: 0.15%
on the first $250 million in assets; 0.125% on the next $250 million in assets;
0.10% on the next $250 million in assets; and 0.075% on assets in excess of $750
million. The minimum annual administrative fee for the Portfolio is $125,000
plus $30,000 per each additional class of shares. For the fiscal year ended
September 30, 1997, Federated Services earned $154,935 in administrative fees
from the Portfolio.
Federated Services also serves as the Portfolio's transfer agent and dividend
disbursing agent. Federated Services also provides certain accounting and
recordkeeping services with respect to the portfolio investments of the
Portfolio.
Federated Securities Corp. ("FSC"), a wholly-owned subsidiary of Federated
Investors, Inc., is the principal distributor of the Corporation and Portfolio.
Under a distribution agreement, FSC acts as the Corporation's agent in
connection with the offering of shares of the Portfolio.
Each of the forgoing service providers provide similar services to the Fund
at comparable terms.
RISK FACTORS
As with other mutual funds that invest in investment grade bonds and other
fixed income securities, the Portfolio is subject to market risks. Since the
investment policies of the Portfolio and the Fund correspond to the Aggregate
Bond Index, these risk factors associated with investment grade securities,
including mortgage- and asset-backed securities, are generally also present in
an investment in the Fund. Mortgage-backed and asset-backed securities are
subject to higher prepayment risks than most other types of debt instruments
with prepayment risks because the underlying mortgage loans or the collateral
supporting asset-backed securities may be prepaid without penalty or premium.
Unlike the Fund, the Portfolio may allocate some of its assets in the high-yield
corporate and international bond sectors. Debt obligations that are determined
not to be investment grade are high-yield, high-risk bonds, typically subject to
greater market fluctuations and greater risk of loss of income and principal due
to an issuer's default.
The risks associated with investments in foreign securities relate to
political and economic developments abroad, as well as those that result from
the differences between the regulation of domestic securities and issuers and
foreign securities and issuers. Foreign securities may be denominated in foreign
currencies. Therefore, the value in U.S. dollars of the Portfolio's assets and
income may be affected by changes in exchange rates and regulations.
As one way of managing its exposure to different types of investments, the
Portfolio may enter into interest rate swaps, currency swaps, and other types of
swap agreements such as caps, collars, and floors. Depending on how they are
used, swap agreements may increase or decrease the overall volatility of the
Portfolio's investments, its share price and yield.
When the Portfolio uses futures and options on futures as hedging devices,
there is a risk that the prices of the instruments subject to the futures
contracts may not correlate perfectly with the prices of the instruments in the
portfolio. This may cause the futures contract and any related options to react
differently than the portfolio's holdings to market changes.
A full discussion of the risks inherent in investment in the Portfolio and
the Fund is set forth in the Portfolio's Prospectus and Statement of Additional
Information, each dated November 30, 1997, and the Fund's Prospectus and
Statement of Additional Information, each dated September 30, 1997, each of
which is incorporated herein by reference thereto.
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE PROPOSED ACQUISITION
The Fund commenced operations on October 3, 1995, in order to provide investors
a convenient means of accumulating an interest in a professionally managed,
diversified portfolio of U.S. investment grade fixed income securities to
provide investment results that correspond to the Aggregate Bond Index. As a
Spoke fund, the Fund achieves its investment objective by investing all of its
assets in the Hub Portfolio. In a Hub and Spoke structure, the investment
management functions are performed at the Hub Portfolio level. The Hub Portfolio
is advised by Federated Research. The only additional Spoke fund to the Hub
Portfolio, the Excelsior Institutional Bond Index Fund (the "Excelsior Fund"),
withdrew its assets from the Hub Portfolio on March 31, 1998. In addition,
United States Trust Company of New York ("U.S. Trust") terminated the
subadvisory agreement with Federated Research as of May 31, 1998. As a result of
the Excelsior Fund withdrawal, the Fund will no longer benefit from the
economies of scale offered by a Hub and Spoke structure. Thus, Federated
Research is unwilling to continue to waive the Fund's expenses to such a large
degree. Federated Securities Corp. ("FSC"), the distributor of shares of both
the Fund and the Portfolio, has proposed that the Fund consider the transfer of
all of the Fund's assets to the Corporation, acting on behalf of the Portfolio
In considering the proposed Reorganization, the Board of Trustees of the
Trust took into consideration a number of factors, including: (1) the Hub and
Spoke structure of the Fund, in that the only additional Spoke fund to the Hub
Portfolio withdrew its assets from the Hub Portfolio on March 31, 1998, (2) the
Board has approved withdrawing the assets from the Hub Portfolio, (3) the Fund
will no longer have the benefit from the economies of scale offered by a Hub and
Spoke structure, (4) the Fund's sub-adviser terminated the subadvisory
agreement, (5) the capabilities and resources of Federated Management, the
Portfolio's investment adviser, (5) expense ratios and published information
regarding the fees and expenses of the Portfolio in relation to similar funds,
(6) the fact that Federated Research had advised the Board that, if the
Reorganization is not completed, it will consider discontinuing the waiver of
its investment advisory fee and its reimbursement of certain Fund operating
expenses; (7) the comparative investment performance of the Portfolio and the
Fund as well as the performance of similar funds, (8) the terms and conditions
of the Reorganization and whether the Reorganization would result in the
dilution of shareholder interests, (9) the tax consequences of the
Reorganization, and (10) the compatibility of the Portfolio's and the Fund's
investment objectives, policies, and restrictions, as well as service features
available to shareholders in the respective funds.
The Board concluded to recommend that the shareholders of the Fund vote to
approve the Reorganization. Pursuant to Rule 17a-8 under the 1940 Act, the Board
of Trustees of the Trust, including a majority of the Trustees who are not
interested persons of either the Trust or the Corporation, Inc., determined that
participation in the transaction was in the best interests of the Fund's
shareholders and that the interests of existing Fund shareholders would not be
diluted as a result of effecting the transaction. This conclusion was based on a
number of factors, including the following:
1.The Reorganization would permit the shareholders of the Fund to pursue
substantially similar investment goals in an actively managed fund.. Fund
shareholders would benefit from the economic, financial, and market
analysis offered by the Portfolio's actively managed investment strategy.
2.The 30-day yields of the Portfolio for the fiscal year ended September 30,
1997, were 7.02% and 6.72%, for Institutional Shares and Institutional
Service Shares, respectively. The 30-day yields of the Fund for the fiscal
year ended May 31, 1997, were 7.06% and 6.81%, for Institutional Shares and
Institutional Service Shares, respectively. Over other periods the
performance of the Portfolio and the Fund in relation to each other have
varied, in part due to differing expense waivers by the respective
investment advisers.
3.The current waiver of investment advisory fees charged to the Fund by
Federated Research as well as Federated Research's reimbursement of certain
Fund operating expenses, might be discontinued.
The Board of Directors of the Corporation likewise considered the
Reorganization and approved the Plan on behalf of the Portfolio. Pursuant to
Rule 17a-8 under the 1940 Act, the Board of Directors of the Corporation,
including a majority of the Directors who are not interested persons of either
the Trust or the Corporation, determined that participation in the transaction
was in the best interests of the Portfolio's shareholders and that the interests
of existing Portfolio shareholders would not be diluted as a result of effecting
the transaction.
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Plan provides that the Corporation, on behalf of the Portfolio, will
acquire all of the assets of the Fund in exchange for Institutional Shares and
Institutional Service Shares of the Portfolio to be distributed PRO RATA by the
Fund to the holders of Fund Institutional Shares and Institutional Service in
complete liquidation of the Fund on or about September 25, 1998. Fund
shareholders will receive a number of shares in the Portfolio equal to the same
total net asset value as the Fund shares they held immediately prior to the
Closing. Shareholders of the Fund will become shareholders of the Portfolio as
of 4:00 p.m. (Eastern time) on the Closing Date. Shareholders of the Fund will
earn their last dividend from the Fund on the day preceding the Closing Date,
which Closing Date is expected to be September 25, 1998. Shareholders will
receive their last dividend from the Fund on the closing date.
Consummation of the Reorganization is subject to the conditions set forth in
the Plan, including receipt of an opinion in form and substance satisfactory to
the Trust, on behalf of the Fund, and the Corporation, on behalf of the
Portfolio, as described under the caption "Federal Income Tax Consequences"
below. The Plan may be terminated and the Reorganization may be abandoned at any
time before or after approval by shareholders of the Fund prior to the Closing
Date by either party if it believes that consummation of the Reorganization
would not be in the best interests of its shareholders.
Federated Management is responsible for the payment of all expenses of the
Reorganization, 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 and the costs of holding the Special Meeting of Shareholders.
The foregoing description of the Plan entered into between the Corporation,
on behalf of the Portfolio, and the Trust, on behalf of the Fund, is qualified
in its entirety by the terms and provisions of the Plan, a copy of which is
attached hereto as Exhibit A and incorporated herein by reference.
DESCRIPTION OF PORTFOLIO SHARES
Institutional Shares and Institutional Service Shares of the Portfolio to be
issued to shareholders of the Fund under the Plan will be fully paid and
nonassessable when issued, transferable without restrictions and will have no
preemptive or conversion rights. Reference is hereby made to the Prospectus of
the Portfolio provided herewith for additional information about Institutional
Shares and Institutional Service Shares of the Portfolio.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization transactions, the Corporation, on behalf
of the Portfolio, and the Trust, on behalf of the Fund, will receive an opinion
from Dickstein Shapiro Morin & Oshinsky LLP to the effect that, on the basis of
the existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), current administrative rules and court decisions, for federal income
tax purposes: (1) the Reorganization as set forth in the Plan will constitute a
tax-free reorganization under section 368(a)(1)(C) of the Code; (2) no gain or
loss will be recognized by the Portfolio upon its receipt of the Fund's assets
in exchange for Portfolio shares; (3) the holding period and basis for the
Fund's assets acquired by the Portfolio will be the same as the holding period
and the basis to the Fund immediately prior to the Reorganization; (4) no gain
or loss will be recognized by the Fund upon transfer of its assets to the
Portfolio in exchange for Portfolio shares or upon the distribution of the
Portfolio shares to the Fund's shareholders in exchange of their Fund shares;
(5) no gain or loss will be recognized by shareholders of the Fund upon exchange
of their Fund shares for Portfolio shares; (6) the holding period of Portfolio
shares received by shareholders of the Fund pursuant to the Plan will be the
same as the holding period of Fund shares held immediately prior to the
Reorganization, provided the Fund shares were held as capital assets on the date
of the Reorganization; and (7) the basis of Portfolio shares received by
shareholders of the Fund pursuant to the Plan will be the same as the basis of
Fund shares held immediately prior to the Reorganization.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
The Corporation was incorporated under the laws of the State of Maryland on
October 11, 1993. The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated October 3, 1995. The rights of shareholders
of the Corporation and the Trust are substantially similar.
CAPITALIZATION TO BE UPDATED
The following table shows the capitalization of the Portfolio and the Fund as
of November 30, 1997, and on a PRO FORMA basis as of that date:
INFORMATION ABOUT THE PORTFOLIO AND THE FUND
FEDERATED TOTAL RETURN BOND FUND, A PORTFOLIO OF FEDERATED TOTAL RETURN
SERIES, INC.
Information about the Corporation and the Portfolio is contained in the
Portfolio's current Prospectus. A copy of the Prospectus is included herewith
and incorporated by reference herein. Additional information about the
Corporation and the Portfolio is included in the Portfolio's Statement of
Additional Information dated November 30, 1997, which is incorporated herein by
reference. Copies of the Statement of Additional Information, as well as the
Statement of Additional Information relating to this Prospectus/Proxy Statement
dated ______________, 1998, both of which have been filed with the Securities
and Exchange Commission, may be obtained without charge by contacting the
Corporation at 1-800-341-7400 or by writing to the Corporation at Federated
Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The
Corporation, on behalf of the Portfolio, is subject to the informational
requirements of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and the Investment Company Act of 1940, as amended, and
in accordance therewith files reports and other information with the Securities
and Exchange Commission. Reports, proxy and information statements, and other
information filed by the Corporation, on behalf of the Portfolio, can be
obtained by calling or writing the Corporation and can also be inspected and
copied by the public at the public reference facilities maintained by the
Securities and Exchange Commission in Washington, D.C. located at Room 1024, 450
Fifth Street, N.W., Washington D.C. 20549 and at certain of its regional offices
located at Room 1204, Everett McKinley Dirksen Building, 219 South Dearborn
Street, Chicago, Illinois 60604 and 14th Floor, 75 Park Place, New York, NY
10007. Copies of such material can be obtained at prescribed rates from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington D.C. 20549, or obtained
electronically from the Securities and Exchange Commission's Internet Web site
(http://www.sec.gov).
This Prospectus/Proxy Statement, which constitutes part of a Registration
Statement filed by the Corporation, on behalf of the Portfolio, with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
omits certain of the information contained in the Registration Statement.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to the Corporation, the Portfolio
and the shares offered hereby. Statements contained herein concerning the
provisions of documents are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable documents filed with the Securities and Exchange Commission.
FEDERATED BOND INDEX FUND, A PORTFOLIO OF FEDERATED INVESTMENT TRUST
Information about the Fund may be found in the Fund's current Prospectuses
dated September 30, 1997, and its Statement of Additional Information dated
September 30, 1997, which are incorporated herein by reference. Audited
Financial Statements for the Fund for the year ended May 31, 1997, may be found
in the Fund's Annual Report dated May 31, 1997. Unaudited Financial Statements
for the six-month period ended November 30, 1997, may be found in the Fund's
Semi-Annual Report dated November 30, 1997. Copies of the Fund's Annual Report,
Semi-Annual Report, Prospectus and Statement of Additional Information may be
obtained without charge from the Fund by calling 1-800-341-7400 or by writing to
the Fund at Federated Investors Funds, 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7000. A copy of the Statement of Additional Information
relating to this Prospectus/Proxy Statement may be obtained without charge from
the Trust by calling 1-800-341-7400 or by writing to the Trust at Federated
Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The
Fund is subject to the information requirements of the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and the Investment
Company Act of 1940, as amended, and in accordance therewith files reports and
other information with the Securities and Exchange Commission. Reports, proxy
and information statements, and other information filed by the Fund can be
obtained by calling or writing the Fund and can also be inspected at the public
reference facilities maintained by the Securities and Exchange Commission at the
addresses listed in the previous section.
INTERESTS OF CERTAIN PERSONS
The Portfolio is managed by Federated Management and the Fund is managed by
Federated Research. Federated Management and Federated Research are a
subsidiaries of Federated Investors, Inc. All of the voting securities of
Federated Investors, Inc. are owned by a trust, the trustees of which are John
F. Donahue, his wife and his son, J. Christopher Donahue. John F. Donahue and J.
Christopher Donahue currently serve as trustees and directors to the Portfolio
and the Fund, respectively.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees of the Fund of proxies for use at the
Special Meeting of Shareholders (the "Meeting") to be held on September 21, 1998
and at any adjournment thereof. The proxy confers discretionary authority on the
persons designated therein to vote on other business not currently contemplated
which may properly come before the Meeting. A proxy, if properly executed, duly
returned, and not revoked, will be voted in accordance with the specifications
thereon; if no instructions are given, such proxy will be voted in favor of the
Plan. A shareholder may revoke a proxy at any time prior to use by filing with
the Secretary of the Fund an instrument revoking the proxy, or by submitting a
proxy bearing a later date, or by attending and voting at the Meeting. Proxies,
instruments revoking a proxy, or proxies bearing a later date may be received by
telephone, by electronic means, including facsimile, or by mail.
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by Federated Management. In addition to solicitations
through the mails, proxies may be solicited by officers, employees, and agents
of the Fund at no additional costs to the Fund. 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
currently exists for instructions communicated in written form. Federated
Management will reimburse custodians, nominees, and fiduciaries for the
reasonable costs incurred by them in connection with forwarding solicitation
materials to the beneficial owners of shares held of record by such persons.
OUTSTANDING SHARES
The Board of Trustees of the Fund has fixed the close of business on July 23,
1998, as the record date for the determination of shareholders entitled to
notice of and to vote at the Special Meeting of Shareholders and any adjournment
thereof. As of the record, date, there were _______________ shares of the Fund
outstanding. Each Fund share is entitled to one vote and fractional shares have
proportionate voting rights. On the record date, the following persons of
record, each acting in various capacities for numerous accounts, owned more than
5% of the Fund's outstanding shares:
On the record date, the Trustees and officers of the Fund as a group owned
less than 1% of the outstanding shares of the Fund.
VOTING REQUIREMENTS
The votes of shareholders of the Portfolio are not being solicited since
their approval is not required in order to effect the Reorganization.
The Reorganization must be approved by a majority of the votes cast and
entitled to vote by Fund shareholders on the matter. In tallying shareholder
votes, abstentions and broker non-votes (i.e., proxies sent in by brokers and
other nominees that cannot be voted on a proposal because instructions have been
received from the beneficial owners) will be counted for purposes of determining
whether or not a quorum is present for purposes of convening the meeting. On the
proposal, broker non-votes will be considered to be abstentions on the vote
regarding the proposal.
QUORUM
In the event that a quorum is not present at the Special Meeting, or in the
event that a quorum is present at the Special Meeting, but sufficient votes to
approve the Plan are not received, the persons named as proxies may propose one
or more adjournments of the Special Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of a plurality
of shares that are represented at the Meeting in person or by proxy. If a quorum
is present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the Plan in favor of such adjournments, and will vote those
proxies required to be voted AGAINST such proposal against any adjournment. A
quorum is constituted with respect to the Fund by the presence in person or by
proxy of the holders of one-half of the total number of outstanding shares of
the Fund entitled to vote at the Meeting. Proxies properly executed and marked
with a negative vote or an abstention will be considered to be present at the
Meeting for purposes of determining the existence of a quorum for the
transaction of business.
NO DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the Fund objecting to the Reorganization have no appraisal
rights under the Fund's Declaration of Trust or under the laws of the
Commonwealth of Massachusetts. Shareholders have the right, however, to redeem
their Fund shares at net asset value until the Closing Date, and thereafter
shareholders may redeem Institutional Shares and Institutional Service Shares of
the Portfolio acquired by them in the Reorganization at net asset value.
OTHER MATTERS
Management of the Fund knows of no other matters that may properly be, or
which are likely to be, brought before the Meeting. However, if any other
business shall properly come before the Meeting the persons named in the proxy
intend to vote thereon in accordance with their best judgment.
So far as management is presently informed, there is no litigation pending or
threatened against the Trust.
Whether or not shareholders expect to attend the meeting, all shareholders
are urged to sign, fill in and return the enclosed proxy form promptly.
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION dated June 25, 1998 (the
"Agreement"), by and between FEDERATED TOTAL RETURN SERIES, INC., a Maryland
corporation (the "Corporation"), on behalf of its portfolio, FEDERATED TOTAL
RETURN BOND FUND (hereinafter called the "Acquiring Fund"), and FEDERATED
INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), on behalf of its
portfolio, FEDERATED BOND INDEX FUND (hereinafter called the "Acquired Fund")..
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Acquired Fund in exchange solely for the Institutional Shares and
Institutional Service Shares of the Acquiring Fund (collectively, the "Acquiring
Fund Shares") and the distribution of Institutional Shares and Institutional
Service Shares of the Acquiring Fund to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are registered open-end,
non-diversified, management investment companies and the Acquired Fund owns
securities which generally are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue common stock and the
Acquired Fund is authorized to issue shares of beneficial interest;
WHEREAS, Federated Management, an investment adviser registered as such
under the Investment Advisers Act of 1940, as amended, serves as investment
adviser to the Acquiring Fund;
WHEREAS, Federated Research Corp. ("Federated Research"), an investment
adviser registered as such under the Investment Advisers Act of 1940, as
amended, serves as investment adviser to the Acquired Fund;
WHEREAS, the Board of Directors, including a majority of the Directors who
are not "interested persons" as defined under the Investment Company Act of
1940, as amended (the "1940 Act") of the Acquiring Fund has determined that the
transfer of all of the assets of the Acquired Fund for Acquiring Fund Shares is
in the best interests of the Acquiring Fund shareholders and that the interests
of the existing shareholders of the Acquiring Fund would not be diluted as a
result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the 1940 Act) of the Acquired
Fund has determined that the exchange of all of the assets of the Acquired Fund
for Acquiring Fund Shares is in the best interests of the Acquired Fund
shareholders, that the interests of the shareholders of the Acquired Fund would
not be diluted as a result of this transaction and determined that subsequent to
the consummation of the transaction contemplated by this Agreement, the Acquired
Fund will cease operations;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions contained herein, the
Acquired Fund agrees to assign, transfer, and convey to the Acquiring Fund
all of the assets of the Acquired Fund at the time of the Closing (defined
below), including without limitation all securities and cash, other than
cash in an amount necessary to pay any unpaid dividends and distributions
as provided in paragraph 1.5, beneficially owned by the Acquired Fund, and
the Acquiring Fund agrees in exchange therefor to deliver to the Acquired
Fund the number of Acquiring Fund Shares, including fractional Acquiring
Fund Shares, determined as set forth in paragraph 2.3 of this Agreement.
Such transactions shall take place at the closing (the "Closing") on the
closing date (the "Closing Date"), as provided in paragraph 3.1 of this
Agreement. In lieu of delivering certificates for its Institutional Shares
and Institutional Service Shares, the Acquiring Fund shall credit the
Institutional Shares and Institutional Service Shares to the Acquired
Fund's account, for the benefit of the holders of its Institutional Shares
and Institutional Service Shares, respectively, on the stock record books
of the Acquiring Fund and shall deliver a confirmation thereof to the
Acquired Fund.
1.2 The Acquired Fund will discharge all of its liabilities and obligations
prior to the Closing Date.
1.3 Delivery of the assets of the Acquired Fund to be transferred
shall be made on the Closing Date and shall be delivered to State Street
Bank and Trust Company (hereinafter referred to as "State Street"),
Boston, Massachusetts, the Acquiring Fund's custodian (the "Custodian"),
for the account of the Acquiring Fund, together with proper instructions
and all documents necessary to transfer such assets to the account of the
Acquiring Fund, free and clear of all liens, encumbrances, rights,
restrictions and claims, except as may be indicated in a schedule
delivered by the Acquired Fund to the Acquiring Fund immediately prior to
the Closing. All cash delivered shall be in the form of currency or
immediately available funds payable to the order of Custodian for the
Acquiring Fund.
1.4 The Acquired Fund will pay or cause to be paid to the Acquiring
Fund any dividends or interest received on or after the Closing Date with
respect to assets transferred to the Acquiring Fund hereunder. The
Acquired Fund will transfer to the Acquiring Fund any distributions,
rights, or other assets received by the Acquired Fund after the Closing
Date as distributions on, or with respect to, the securities transferred.
Such assets shall be deemed included in assets transferred to the
Acquiring Fund on the Closing Date and shall not be separately valued.
1.5 At the Closing, the Acquired Fund shall distribute in complete
liquidation pro rata to the Acquired Fund's shareholders of record,
determined as of the close of business on the Closing Date (the "Acquired
Fund Shareholders"), the Acquiring Fund Shares received by the Acquired
Fund pursuant to paragraph 1.1. In addition, each shareholder of record of
the Acquired Fund shall have the right to receive any unpaid dividends or
other distributions which were declared before the Valuation Date (as
hereinafter defined) with respect to the shares of the Acquired Fund that
are held by the shareholder on the Valuation Date. Such liquidation and
distribution will be accomplished by the transfer (by the Acquiring Fund
or its transfer agent) of the Acquiring Fund Shares to an account for each
shareholder on the books of the Acquiring Fund's transfer agent in the
name of each Acquired Fund Shareholder and representing the pro rata
number of the Acquiring Fund Shares due each Acquired Fund Shareholder.
All issued and outstanding shares of the Acquired Fund will simultaneously
be canceled on the books of the Acquired Fund. Share certificates
representing interests in the Acquired Fund will represent a number of
Acquiring Fund Shares after the Closing Date as determined in accordance
with paragraph 2.3. The Acquiring Fund will not issue certificates
representing Acquiring Fund Shares in connection with such exchange.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be
issued in the manner described in the Acquiring Fund's current prospectus
and statement of additional information.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquired Fund
shares on the books of the Acquired Fund as of the Closing Date shall, as
a condition of such issuance and transfer, be paid by the person to whom
such Acquiring Fund Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of the Acquired Fund up to and including the
Closing Date and such later dates with respect to discontinuation of the
Acquired Fund as a series of the Trust with federal and state authorities.
2. VALUATION.
2.1 The value of the Acquired Fund's net assets to be acquired by
the Acquiring Fund hereunder shall be the net asset value of such assets
computed as of the close of business on the Closing Date (such time and
date being hereinafter called the "Valuation Date"), using the valuation
procedures set forth in the Acquiring Fund's then-current prospectus or
statement of additional information.
2.2 The net asset value of an Acquiring Fund Share shall be the net
asset value per share computed as of the close of business on the
Valuation Date, using the valuation procedures set forth in the Acquiring
Fund's then-current prospectus or statement of additional information.
2.3 The number of the Acquiring Fund's Institutional Shares and
Institutional Service Shares to be issued (including fractional shares, if
any) in exchange for the Acquired Fund's net assets shall be determined
(a) by dividing the value of the net assets of the Acquired Fund
attributable to Institutional Shares, determined using the same valuation
procedures referred to in paragraph 2.1, by the net asset value of one
Institutional Share of the Acquiring Fund and (b) by dividing the value of
the net assets of the Acquired Fund attributable to Institutional Service
Shares, determined using the same valuation procedures referred to in
paragraph 2.1, by the net asset value of one Institutional Service Share
of the Acquiring Fund, in each case determined in accordance with
paragraph 2.2.
2.4 All computations of value shall be made in accordance with the regular
practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be September 25, 1998, or such later date
as the parties may mutually agree. All acts taking place at the Closing
Date shall be deemed to take place simultaneously as of the close of
business on the Closing Date unless otherwise provided. The Closing shall
be held at the close of business at the offices of the Acquired Fund,
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779, or such
other time and/or place as the parties may mutually agree.
3.2 If on the Valuation Date: (a) the primary trading market for
portfolio securities of the Acquiring Fund or the Acquired Fund shall be
closed to trading or trading thereon shall be restricted; or (b) trading
or the reporting of trading shall be disrupted so that accurate appraisal
of the value of the net assets of the Acquiring Fund or the Acquired Fund
is impracticable, the Closing Date shall be postponed until the first
business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.3 The Acquired Fund shall instruct Federated Shareholder Services
Company, as transfer agent for the Acquired Fund, to deliver to the
Acquiring Fund at the Closing, a certificate of an authorized officer
stating that its records contain the names and addresses of the Acquired
Fund Shareholders and the number of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall
issue and deliver a confirmation evidencing the Institutional Shares and
Institutional Service Shares of the Acquiring Fund to be credited on the
Closing Date to the Secretary of the Acquired Fund or provide evidence
satisfactory to the Acquired Fund that such Institutional Shares and
Institutional Service Shares of the Acquiring Fund have been credited to
the respective accounts of the Acquired Fund Shareholders on the books of
the Acquiring Fund. At the Closing, each party shall deliver to the other
such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may
reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Trust represents and warrants to the Acquiring Fund as
follows:
(a) The Trust is a business trust 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.
(b) The Trust is registered under the 1940 Act, as an
open-end, non-diversified, management investment company, and such
registration has not been revoked or rescinded and is in full force
and effect.
(c) The Trust is not, and the execution, delivery, and
performance of this Agreement will not result, in a material
violation of its Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquired Fund is a party or by which it is
bound.
(d) No litigation or administrative proceeding or
investigation of or before any court or governmental body is
currently pending or to its knowledge threatened against the
Acquired Fund or any of the Acquired Fund's properties or assets
which, if adversely determined, would adversely affect its financial
condition or the conduct of its business. The Acquired Fund knows of
no facts which might form the basis for the institution of such
proceedings, and the Acquired Fund is not a party to or subject to
the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions herein
contemplated.
(e) The Statement of Assets and Liabilities of the Acquired
Fund at May 31, 1997, has been audited by Ernst & Young LLP,
independent auditors, and has been prepared in accordance with
generally accepted accounting principles, consistently applied, and
such statement (copies of which have been furnished to the Acquiring
Fund) fairly reflect the financial condition of the Acquired Fund as
of such date, and there are no liabilities of the Acquired Fund,
known to the Acquired Fund, contingent or otherwise, as of such date
not disclosed therein.
(f) The unaudited Statement of Assets and Liabilities of the
Acquired Fund at November 30, 1997, has been prepared in accordance
with generally accepted accounting principles, consistently applied,
and on a basis consistent with the Statement of Assets and
Liabilities of the Acquired Fund at May 31, 1997, which has been
audited by Ernst & Young LLP, and such statement (copies of which
have been furnished to the Acquiring Fund) fairly reflects the
financial condition of the Acquired Fund as of such date, and there
are no liabilities of the Acquired Fund known to the Acquired Fund,
contingent or otherwise, as of such date not disclosed therein.
(g) Since May 31, 1997, there has not been any material
adverse change in the Acquired Fund's financial condition, assets,
liabilities, or business other than changes occurring in the
ordinary course of business, or any incurrence by the Acquired Fund
of any indebtedness for borrowed money.
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law (or permitted
extensions thereto) to have been filed shall have been filed, and to
the best of the Acquired Fund's knowledge all federal and other
taxes shall have been paid so far as due, or provision shall have
been made for the payment thereof, and to the best of the Acquired
Fund's knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns.
(i) For each fiscal year (or part thereof) of its operation,
the Acquired Fund has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment
company.
(j) All issued and outstanding shares of the Acquired Fund
are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. All of the issued and
outstanding shares of the Acquired Fund will, at the time of the
Closing, be held by the persons and in the amounts set forth in the
records of the transfer agent as provided in paragraph 3.3 of this
Agreement. The Acquired Fund does not have outstanding options,
warrants or other rights to subscribe for or purchase any of the
Acquired Fund shares, nor is there outstanding any security
convertible into Acquired Fund shares.
(k) On the Closing Date, all issued and outstanding shares of
the Acquired Fund will have been duly registered under the
Securities Act of 1933, as amended (the "1933 Act"), and registered,
or exempt from registration, to the extent required thereby under
each state securities or "blue sky" law of every state in which the
Acquired Fund has offered or sold its shares.
(l) On the Closing Date, the Acquired Fund will have full
right, power, and authority to sell, assign, transfer, and deliver
the assets to be transferred by it hereunder.
(m) The execution, delivery, and performance of this Agreement
has been duly authorized by all necessary action on the part of the
Trust's Board of Trustees and, subject to the approval of the
Acquired Fund Shareholders, this Agreement constitutes the valid and
legally binding obligation of the Trust enforceable in accordance
with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other similar
laws relating to or affecting creditors' rights generally and court
decisions with respect thereto, and to general principles of equity
and the discretion of the court before which a proceeding is brought
(regardless of whether the enforceability is considered in a
proceeding in equity or at law).
(n) The Prospectus/Proxy Statement to be included in the
Registration Statement (only insofar as it relates to the Acquired
Fund) will, on the effective date of the Registration Statement and
on the Closing Date be true and correct in all material respects.
Further, on the effective date of the Registration Statement and on
the Closing Date, the Prospectus/Proxy Statement (only insofar as it
relates to the Acquired Fund) will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which such statements were made, not
misleading.
(o) The Acquired Fund will provide the Acquiring Fund with
information reasonably necessary for the preparation of the
Prospectus/Proxy Statement.
4.2 The Corporation represents and warrants to the Acquired Fund as
follows:
(a) The Corporation is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland and has the power to carry on its business as it is now
being conducted and to carry out this Agreement.
(b) The Corporation is registered under the 1940 Act as an
open-end, non-diversified, management investment company, and such
registration has not been revoked or rescinded and is in full force
and effect.
(c) The current prospectuses and statement of additional
information of the Acquiring Fund conform in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and
the rules and regulation of the SEC thereunder and do not include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to its assets.
(e) The Corporation is not, and the execution, delivery, and
performance of this Agreement will not result in a material
violation of its Articles of Incorporation or By-Laws or of any
agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquiring Fund is a party or by which it is
bound.
(f) No litigation or administrative proceeding or
investigation of or before any court or governmental body is
currently pending or to its knowledge threatened against the
Acquiring Fund or any of the Acquiring Fund's properties or assets
which, if adversely determined, would affect the Acquiring Fund's
financial condition or the conduct of its business. The Acquiring
Fund knows of no facts which might form the basis for the
institution of such proceedings, and the Acquiring Fund is not a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects its business or its ability to consummate the
transactions herein contemplated.
(g) The Statement of Assets and Liabilities of the Acquiring
Fund at September 30, 1997, has been audited by Ernst & Young LLP,
independent auditors, and has been prepared in accordance with
generally accepted accounting principles, consistently applied, and
such statement (copies of which have been furnished to the Acquired
Fund) fairly reflects the financial condition of the Acquiring Fund
as of such date, and there are no liabilities of the Acquiring Fund,
known to the Acquiring Fund or to Federated Advisers, contingent or
otherwise, as of such date not disclosed therein.
(h) The unaudited Statement of Assets and Liabilities of the
Acquiring Fund at March 31, 1998, has been prepared in accordance
with generally accepted accounting principles, consistently applied,
and on a basis consistent with the Statement of Assets and
Liabilities of the Acquiring Fund at September 30, 1997, which has
been audited by Ernst & Young LLP, and such statement (copies of
which have been furnished to the Acquired Fund) fairly reflects the
financial condition of the Acquiring Fund as of such date, and there
are no liabilities of the Acquiring Fund known to the Acquiring
Fund, contingent or otherwise, as of such date not disclosed
therein.
(i) Since September 30, 1997, there has not been any adverse
change in the Acquiring Fund's financial condition, assets,
liabilities, or business other than changes occurring in the
ordinary course of business, or any incurrence by the Acquiring Fund
of any indebtedness for borrowed money.
(j) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law (or permitted
extensions thereto) to have been filed shall have been filed, and to
the best of the Acquiring Fund's knowledge all federal and other
taxes shall have been paid so far as due or provision shall have
been made for the payment thereof, and to the best of the Acquiring
Fund's knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns.
(k) For each fiscal year (or part thereof) of its operation,
the Acquiring Fund has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment
company.
(l) All issued and outstanding shares of the Acquiring Fund
are, and including the Acquiring Fund Shares issued to the Acquired
Fund Shareholders pursuant hereto, at the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable.
The Acquiring Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Acquiring
Fund Shares, nor is there outstanding any security convertible into
any Acquiring Fund Shares.
(m) All issued and outstanding shares of each class of the
Acquiring Fund are, and at the Closing Date will be, duly registered
under the 1933 Act and registered, or exempt from registration, to
the extent required thereby under each state securities or "blue
sky" law of every state in which the Acquiring Fund has offered or
sold its shares.
(n) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the
Corporation's Board of Directors, and this Agreement constitutes the
valid and legally binding obligation of the Corporation enforceable
in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and to general
principles of equity and the discretion of the court before which a
proceeding is brought (regardless of whether the enforceability is
considered in a proceeding in equity or at law).
(o) The Prospectus/Proxy Statement to be included in the
Registration Statement (only insofar as it relates to the Acquiring
Fund) will, on the effective date of the Registration Statement and
on the Closing Date be true and correct in all material respects.
Further, on the effective date of the Registration Statement and on
the Closing Date, the Prospectus/Proxy Statement (only insofar as it
relates to the Acquiring Fund) will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which such statements were made, not
misleading.
(p) The Acquiring Fund has entered into an agreement under
which Federated Management will assume the expenses of the
Reorganization, including legal fees of the Acquiring Fund,
registration fees, transfer tax (if any), the fees of banks and
transfer agents, and the costs of preparing, printing, copying, and
mailing proxy solicitation materials to the Acquired Fund's
shareholders.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
5.1 The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing
Date, it being understood that such ordinary course of business will
include customary dividends and distributions.
5.2 The Acquired Fund will call a meeting of the Acquired Fund
Shareholders to consider and act upon this Agreement and to take all other
action necessary and appropriate to obtain approval of the transactions
contemplated herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund
and the Acquired Fund will each take, or cause to be taken, all action,
and do or cause to be done, all things reasonably necessary, proper, or
advisable to consummate and make effective the transactions contemplated
by this Agreement.
5.4 As promptly as practicable, but in any case within sixty days
after the Closing Date, the Acquired Fund shall furnish the Acquiring
Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a
statement of the earnings and profits of the Acquired Fund for federal
income tax purposes which will be carried over to the Acquiring Fund as a
result of Section 381 of the Code and which will be certified by the
Acquired Fund's President or its Treasurer.
5.5 The Corporation shall have filed with the SEC a Registration
Statement Form on N-14 complying in all material respects with the
requirements of the 1933 Act, the Securities Exchange Act of 1934, as
amended, the 1940 Act, and applicable rules and regulations thereunder,
relating to a meeting of the shareholders of the Acquired Fund to be
called to consider and act upon the transactions contemplated herein, and
such Registration Statement shall have been declared effective by the SEC.
The Acquired Fund agrees to provide the Acquiring Fund with information
relating to the Acquired Fund required under such Acts, rules and
regulations for inclusion in the Registration Statement on Form N-14.
5.6 The Acquiring Fund agrees to use all best efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act, and
such of the state Blue Sky or securities laws as it may deem appropriate
in order to continue its operations after the Closing Date.
5.7 Prior to the Valuation Date, the Acquired Fund shall have
declared a dividend or dividends, with a record date prior to the
Valuation Date, which, together with all previous dividends, shall have
the effect of distributing to its shareholders all of its investment
company taxable income, if any, plus the excess of its interest income, if
any, excludable from gross income under Section 103(a) of the Code over
its deductions disallowed under Sections 265 and 171(a)(2) of the Code for
the taxable periods or years ended on or before May 31, 1998 and for the
period from said date to and including the Closing Date (computed without
regard to any deduction for dividends paid), and all of its net capital
gain, if any, realized in taxable periods or years ended on or before May
31, 1998 and in the period from said date to and including the Closing
Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject to the performance by the Acquired Fund of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Trust contained in
this Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.
6.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets, together with a list of the
Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the
Closing Date, certified by the Treasurer or the Assistant Treasurer of the
Acquired Fund.
6.3 The Trust shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in their names by their respective
Presidents or Vice Presidents and their Treasurers or Assistant
Treasurers, in form and substance reasonably satisfactory to the Acquiring
Fund, to the effect that the representations and warranties of the
Acquired Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the
Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject to the performance by the Acquiring Fund of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Corporation contained
in this Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.
7.2 The Corporation shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in their names by their respective
Presidents or Vice Presidents and their Treasurers or Assistant
Treasurers, in form and substance reasonably satisfactory to the Acquired
Fund, to the effect that the representations and warranties of the
Acquiring Fund made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the
Acquired Fund shall reasonably request.
7.3 There shall not have been any material adverse change in the
Acquiring Fund's financial condition, assets, liabilities or business
since the date hereof other than changes occurring in the ordinary course
of business, or any incurrence by the Acquiring Fund of any indebtedness,
except as otherwise disclosed to and accepted by the Acquired Fund.
8. FURTHER CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND.
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement.
8.1 The Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of beneficial
interest of the Acquired Fund in accordance with the laws of the
Commonwealth of Massachusetts, the Acquired Fund's Declaration of Trust
and By-Laws, and the 1940 Act.
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein.
8.3 All consents of parties hereto and all other consents, orders,
permits, and exemptions of federal, state, and local regulatory
authorities (including those of the Securities and Exchange Commission and
of state Blue Sky and securities authorities) deemed necessary by the
Acquiring Fund or the Acquired Fund to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order, or
permit would not involve a risk of a material adverse effect on the assets
or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may for itself waive any of such conditions.
8.4 The Form N-14 shall have become effective under the 1933 Act by
the SEC and no stop orders suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or
be pending, threatened, or contemplated under the 1933 Act.
8.5 The Corporation and the Trust shall have received an opinion of
Dickstein Shapiro Morin & Oshinsky LLP substantially 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:
(a) The transfer of all of the Acquired Fund assets in
exchange for the Acquiring Fund Shares and the distribution of the
Acquiring Fund Shares to the Acquired Fund shareholders in
liquidation of the Acquired Fund will constitute a "reorganization"
within the meaning of Section 368(a)(1)(C) of the Code;
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Acquired Fund solely in
exchange for the Acquiring Fund Shares;
(c) No gain or loss will be recognized by the Acquired Fund
upon the transfer of the Acquired Fund assets to the Acquiring Fund
in exchange for the Acquiring Fund Shares or upon the distribution
(whether actual or constructive) of the Acquiring Fund Shares to
Acquired Fund Shareholders in exchange for their shares of the
Acquired Fund;
(d) No gain or loss will be recognized by the Acquired Fund
Shareholders upon the exchange of their Acquired Fund shares for the
Acquiring Fund Shares;
(e) The tax basis of the Acquired Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to
the Acquired Fund immediately prior to the Reorganization;
(f) The tax basis of the Acquiring Fund Shares received by
each of the Acquired Fund Shareholders pursuant to the
Reorganization will be the same as the tax basis of the Acquired
Fund shares held by such shareholder immediately prior to the
Reorganization;
(g) The holding period of the assets of the Acquired Fund in
the hands of the Acquiring Fund will include the period during which
those assets were held by the Acquired Fund; and
(h) The holding period of the Acquiring Fund Shares to be
received by each Acquired Fund Shareholder will include the period
during which the Acquired Fund shares exchanged therefor were held
by such shareholder (provided the Acquired Fund shares were held as
capital assets on the date of the Reorganization).
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees of the
Trust or the Board of Directors of the Corporation, at any time prior to
the Closing Date without liability on the part of either party hereto, if
circumstances should develop that, in the opinion of the Board of either
party hereto, determines that proceeding with the Agreement is not in the
best interests of that party's shareholders.
9.2 If this Agreement is terminated and the exchange contemplated
hereby is abandoned pursuant to the provisions of this Section 9, this
Agreement shall become void and have no effect, without any liability on
the part of any party hereto or the trustees, directors, officers or
shareholders of the Acquiring Fund or of the Acquired Fund, in respect of
this Agreement.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions
(other than that set forth in Section 8.5) may be waived by the Board of
Trustees of the Trust or the Board of Directors of the Corporation if, in the
judgment of either, such waiver will not have a material adverse effect on the
benefits intended under this Agreement to the shareholders of the Acquiring Fund
or of the Acquired Fund, as the case may be.
11. AMENDMENT.
This Agreement and Plan of Reorganization may be amended at any time by
the mutual agreement of the Acquired Fund and the Acquiring Fund, authorized by
their respective Boards and notwithstanding approval thereof by the Acquired
Fund Shareholders; PROVIDED, that if so approved by the Acquired Fund
Shareholders, no amendment shall be made which substantially changes the terms
hereof.
12. NO BROKER'S OR FINDER'S FEE.
The Acquired Fund and the Acquiring Fund each represents that there is no person
with whom it has dealt who by reason of such dealings is entitled to any
broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement and Plan of Reorganization.
13. MISCELLANEOUS.
13.1 The representations and warranties included or provided for
herein shall not survive consummation of the transactions contemplated
hereby.
13.2 This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof, and
merges and supersedes all prior discussions, agreements, and
understandings of every kind and nature between them relating to the
subject matter hereof. Neither party shall be bound by any condition,
definition, warranty, or representation, other than as set forth or
provided in this Agreement or as may be set forth in a later writing
signed by the party to be bound thereby.
13.3 This Agreement shall be governed and construed in accordance
with the internal laws of the Commonwealth of Pennsylvania, without giving
effect to such jurisdiction's conflicts of laws principles.
13.4 This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be deemed to be an
original.
13.5 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
13.6 The Corporation is hereby expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of the
Trust and agrees that the obligations assumed by the Acquired Fund
pursuant to this Agreement shall be limited in any case to the Acquired
Fund and its assets and the Acquiring Fund shall not seek satisfaction of
any such obligation from the shareholders of the Acquired Fund, the
Trustees, officers, employees, or agents of the Trust or any of them.
<PAGE>
IN WITNESS WHEREOF, each of the Acquired Fund and the Acquiring Fund, have
caused this Agreement and Plan of Reorganization to be executed and attested on
its behalf by its duly authorized representatives as of the date first above
written.
Acquired Fund:
Attest: FEDERATED INVESTMENT TRUST, ON BEHALF OF ITS
PORTFOLIO, FEDERATED BOND INDEX FUND
By:
Secretary Name:
Title:
Acquiring Fund:
FEDERATED TOTAL RETURN SERIES, INC., ON
BEHALF OF ITS PORTFOLIO, FEDERATED TOTAL
RETURN BOND FUND
Attest: By:
Secretary
- --------
1 "Hub and Spoke"(R) is a registered service mark of Signature Financial Group,
Inc. Federated Services Company is a licensee of Signature Financial Group, Inc.
2 "Hub and Spoke" is a registered service mark of Signature Financial Group,
Inc. Federated Services Company is a licensee of Signature Financial Group, Inc.
STATEMENT OF ADDITIONAL INFORMATION
ACQUISITION OF THE ASSETS OF
FEDERATED BOND INDEX FUND,
A PORTFOLIO OF FEDERATED INVESTMENT TRUST
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
BY AND IN EXCHANGE FOR INSTITUTIONAL SHARES AND INSTITUTIONAL SERVICE SHARES OF
FEDERATED TOTAL RETURN BOND FUND
A PORTFOLIO OF FEDERATED TOTAL RETURN SERIES, INC.
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
Telephone No: 1-800-341-7400
This Statement of Additional Information dated _______________, 1998 is
not a prospectus. A Prospectus/Proxy Statement dated ________________, 1998,
related to the above-referenced matter may be obtained from Federated Total
Return Series, Inc. , on behalf of its portfolio, Federated Total Return Bond
Fund, Federated Investors Funds, 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000. this Statement should be read in conjunction with the
Prospectus/Proxy Statement.
<PAGE>
TABLE OF CONTENTS
1. Statement of Additional Information of Federated Bond Index Fund, a portfolio
of Federated Investment Trust, dated September 30, 1997.
2. Statement of Additional Information of Federated Total Return Bond Fund, a
portfolio of Federated Total Return Series, Inc., dated November 30, 1997.
3. Financial Statements of Federated Bond Index Fund, a portfolio of Federated
Investment Trust, dated May 31, 1997.
4. Financial Statements of Federated Total Return Bond Fund, a portfolio of
Federated Total Return Series, Inc. dated September 30, 1997.
5. Unaudited Financial Statements of Federated Bond Index Fund, a portfolio of
Federated Investment Trust, dated November 30, 1997.
6. Unaudited Financial Statements of Federated Total Return Bond Fund, a
portfolio of Federated Total Return Series, Inc., dated March 31, 1998.
7. Information Incorporated By Reference
8. Pro Forma Financial Statements
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The Statement of Additional Information of Federated Total Return Bond Fund
(the "Portfolio"), a portfolio of Federated Total Return Series, Inc. (the
"Corporation"), is incorporated by reference to the Corporation's Post-Effective
Amendment No.13 to its Registration Statement on Form N-1A (File No. 33-50773)
which was filed with the Securities and Exchange Commission on November 26,
1997. A copy may be obtained from the Corporation at Federated Investors Tower,
1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. Telephone Number:
1-800-341-7400.
The Statement of Additional Information of Federated Bond Index Fund (the
"Fund"), a portfolio of Federated Investment Trust. (the "Trust"), is
incorporated by reference to the Trust's Post-Effective Amendment No. 3 to its
Registration Statement on Form N-1A (File No. 33-00053) which was filed with the
Securities and Exchange Commission on September 26, 1997.
The audited financial statements of the Portfolio dated September 30,
1997, are incorporated by reference to the Portfolio's Prospectus filed with
Post-Effective Amendment No. 13 to the Corporation's Registration Statement on
Form N-1A (File No. 33-50773) which was filed with the Securities and Exchange
Commission on November 26, 1997.
The audited financial statements of the Fund dated May 31, 1997, are
incorporated by reference to the Fund's Annual Report which was filed with the
Securities and Exchange Commission pursuant to Section 30(b)2 of the Investment
company Act of 1940, as amended, on July 30, 1997.
The unaudited financial statements of the Fund dated November 30, 1997,
are incorporated by reference to the Fund's Semi-Annual Report which was filed
with the Securities and Exchange Commission pursuant to Section 30(b)2 of the
Investment company Act of 1940, as amended, on January 28, 1998.
The unaudited financial statements of the Portfolio dated March 31, 1998,
are incorporated by reference to the Portfolio's Semi-Annual Report which was
filed with the Securities and Exchange Commission pursuant to Section 30(b)2 of
the Investment company Act of 1940, as amended, on May 29, 1998.
<PAGE>
FEDERATED TOTAL RETURN BOND FUND
FEDERATED BOND INDEX FUND
INTRODUCTION TO PROPOSED MERGER
The accompanying unaudited Pro Forma Combining Statement of Assets and
Liabilities reflects the accounts of the Portfolio and the Fund at March 31,
1998. This statement has been derived from the books and records utilized in
calculating the daily net asset value at March 31, 1998. The accompanying
unaudited Pro Forma Combining Statement of Operations reflects the accounts of
the Portfolio and the Fund for the six months ended March 31, 1998.
The Fund is a spoke fund to a hub portfolio, Federated Bond Index Portfolio,
wherein it invests all of its investable assets into Federated Bond Index
Portfolio. As of the close of business on March 31, 1998, the Fund comprised of
the only spoke fund to the Federated Bond Index Portfolio. In consideration of
this, the Board of Trustees of the Trust has approved withdrawing the assets
from the hub portfolio provided the shareholders of the Fund approve the
reorganization. Consequently, a Pro Forma Combining Portfolio of Investments is
not reflected with the accompanying statements.
The Pro Forma statements give effect to the proposed transfer of assets from the
Fund in exchange for Institutional Shares and Institutional Service Shares of
the Portfolio.
<PAGE>
<TABLE>
<CAPTION>
FEDERATED TOTAL RETURN BOND FUND
FEDERATED BOND INDEX FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
MARCH 31, 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FEDERATED FEDERATED
TOTAL
RETURN BOND BOND PRO FORMA PRO FORMA
INDEX
FUND FUND ADJUSTMENT COMBINED
------------ ---------- ------------ --------------
ASSETS:
- ----------------------------
Investments in securities, $ 47,006,102 $ 52,251,746 --- $ 99,257,848
at value
- ----------------------------
Cash 3,468 --- --- 3,468
- ----------------------------
Income receivable 666,898 3,165,895 --- 3,832,793
- ----------------------------
Receivable for investments 1,306,181 --- --- 1,306,181
sold
- ----------------------------
Receivable for shares sold 85,184 109,315 --- 194,499
- ----------------------------
Prepaid expenses 18,383 386,103 --- 404,486
- ----------------------------
Deferred organizational 8,551 33,751 --- 42,302
costs
- ---------------------------- ------------ ---------- ------------ --------------
Total assets 49,094,767 55,946,810 --- 105,041,577
- ----------------------------
LIABILITIES:
- ----------------------------
Payable for investments 3,390,225 --- --- 3,390,225
purchased
- ----------------------------
Income distribution payable 213,170 264,077 --- 477,247
- ----------------------------
Accrued expenses --- 119,908 --- 119,908
- ---------------------------- ------------ ---------- --------------
------------
Total liabilities 3,603,395 383,985 --- 3,987,380
- ----------------------------
------------ ---------- ------------ --------------
NET ASSETS $ 45,491,372 $ 55,562,825 --- $ 101,054,197
- ---------------------------- ------------ ---------- ------------ --------------
NET ASSETS CONSISTS OF:
- ----------------------------
Paid in capital $ 44,964,723 $ 54,586,767 --- 99,551,490
- ----------------------------
Net unrealized 561,431 605,878 --- 1,167,309
appreciation of
investments
- ----------------------------
Accumulated net realized
gain (loss) on investments (34,782) 370,180 --- 335,398
- ----------------------------
------------ ---------- ------------ --------------
Total Net Assets $ 45,491,372 $ 55,562,825 --- $ 101,054,197
- ---------------------------- ------------ ---------- ------------ --------------
NET ASSETS:
- ----------------------------
Institutional Shares $ 36,435,875 $ 33,691,189$ --- $ 70,127,064
- ---------------------------- --------------
------------ ---------- ------------
Institutional Service $ 9,055,497 $ 21,871,636$ --- $ 30,927,133
Shares
- ---------------------------- ------------ ---------- ------------ --------------
SHARES OUTSTANDING:
- ----------------------------
Institutional Shares 3,481,352 4,646,375 (1,427,271) (a) 6,700,456
- ----------------------------
------------ ---------- ------------ --------------
Institutional Service 865,212 3,016,503 (926,767) (b) 2,954,948
Shares
- ---------------------------- ------------ ---------- ------------ --------------
NET ASSET VALUE, OFFERING
PRICE, AND REDEMPTION
PROCEEDS PER SHARE:
- ----------------------------
Institutional Shares $ 10.47 $ 7.25 $ --- $ 10.47
- ---------------------------- ------------ --------------
---------- ------------
Institutional Service $ 10.47 $ 7.25 $ --- $ 10.47
Shares
- ----------------------------
------------ ---------- ------------ --------------
INVESTMENTS IN SECURITIES, $ 46,444,671 $ 51,645,868$ --- $ 98,090,539
AT COST
- ---------------------------- ------------ ---------- ------------ --------------
</TABLE>
(a) Adjustment to reflect share balance as a result of the combination, based on
an exchange ratio of 0.692820532. (b) Adjustment to reflect share balance as a
result of the combination, based on an exchange ratio of 0.692767751.
(See Notes to Pro Forma Financial Statements)
<PAGE>
FEDERATED TOTAL RETURN BOND FUND
FEDERATED BOND INDEX FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
FEDERATED FEDERATED
TOTAL RETURN BOND
BOND INDEX PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
-------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT
INCOME:
- ----------------------------------------------------
Dividends $8,154 $8,154
$ ---- $ ----
- ----------------------------------------------------
Interest 998,187 1,347,385 2,345,572
----
- ---------------------------------------------------- -------------- ----------- -----------
Total Investment $1,006,341 $1,347,385 $2,353,726
Income
- ----------------------------------------------------
31,431,600
- ----------------------------------------------------
EXPENSES: 374,808,933
- ----------------------------------------------------
Investment 61,731 86,371 (a) 148,102 406,240,533
advisory fee ---- 6286.32
- ----------------------------------------------------
Administrative personnel 77,288 45,000 (45,000) (b) 77,288
and services fee
- ----------------------------------------------------
Custodian fees 1,636 1,790 (c) 3,426 3,426
----
- ----------------------------------------------------
Transfer and dividend disbursing agent 18,751 21,377 (15,378) (d) 24,750
fees and expenses
- ----------------------------------------------------
Directors'/Trustees' 4,383 5,231 (2,114) (e) 7,500
fees
- ----------------------------------------------------
Auditing 3,240 2,260 (f) 5,500
fees ----
- ----------------------------------------------------
Legal 3,333 1,741 (3,074) (g) 2,000
fees
- ----------------------------------------------------
Portfolio 29,014 25,486 (23,200) (h) 31,300
accounting fees
- ----------------------------------------------------
Distribution services fee - 7,498 19,158 (i) 26,656
Institutional Service Shares ----
- ----------------------------------------------------
Shareholder services fee - 7,498 19,714 (556) (j) 26,656
Institutional Service Shares
- ----------------------------------------------------
Share 13,658 10,266 8,168 (k) 32,092
registration
costs
- ----------------------------------------------------
Printing and 4,167 9,321 (2,488) (l) 11,000
postage
- ----------------------------------------------------
Insurance 1,250 $1,376 (1,026) (m) 1,600
premiums
- ----------------------------------------------------
Miscellaneous 3,446 8,621 (7,967) (n) 4,100 203120.2667 ###
- ---------------------------------------------------- -------------- ----------- ---------- -----------
Total 233,653 151,373 16,944 401,970
expenses
- ---------------------------------------------------- -------------- ----------- ---------- -----------
Waivers and
reimbursements--
- ----------------------------------------------------
Waiver of investment (61,731) (86,371) (148,102)
advisory fee ----
- ----------------------------------------------------
Waiver of distribution services (5,998) (15,327) (21,325)
fee--Institutional Service Shares ----
- ----------------------------------------------------
Reimbursement of other (116,571) 112,973 (65,739) (69,337)
operating expenses
- ---------------------------------------------------- -------------- ----------- ---------- -----------
Total waivers and (184,300) 112,973 (167,437) (o) (238,764)
reimbursements
- ---------------------------------------------------- -------------- ----------- ---------- -----------
Net expenses 49,353 264,346 (150,493) 163,206
- ---------------------------------------------------- -------------- ----------- ---------- -----------
Net 956,988 1,083,039 150,493 2,190,520
investment income
- ---------------------------------------------------- -------------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
- ----------------------------------------------------
Net realized gain on 37,791 359,735 ---- 397,526
investments
- ----------------------------------------------------
Net change in unrealized 295,195 156,765 ---- 451,960
appreciation of investments
- ---------------------------------------------------- -------------- ----------- -----------
Net realized and unrealized 332,986 516,500 ---- 849,486
gain (loss) on investments
- ---------------------------------------------------- -------------- ----------- ---------- -----------
Change in net assets $1,289,974 $1,599,539 $150,493 $3,040,006
resulting from operations
- ---------------------------------------------------- -------------- ----------- ---------- -----------
</TABLE>
(See Legend on following
page)
(See Notes to Pro Forma Financial
Statements)
ALL AMOUNTS ARE BASED ON 182 DAYS EXCEPT THE SEC
EXPENSE.
IAF difference is due to FBIF not charging IAF and the increase in assets to
FTRBF. FAS is based on the combined ANA of $74,254,500 which is charged at the
minimum fee of $125,000 / fund plus $30,000 for an additional class. Custody is
based on combined ANA times .000025 bp. for the asset charge along with security
transaction charges. Transfer Agent expense is based on the minimum
$1,000/class/month and estimated T/A oop charges. Directors fees are based off
current FTRBF expense projection. Audit fees are based off current FTRBF expense
projection. Legal fees are based off current FTRBF expense projection. Portfolio
accounting is based on the minimum $39,000/ fund + $12,000 for an additional
class and estimated PA OOP charges and a procurement charge of .00001 bp.
Maximum distribution charge for SS Class is 25 bp. of combined ANA. Shareholder
service fee for IS Shares is Dormant. Shareholder service fee for SS Shares is
25 bp. of combined ANA. Share registration cost is based off the current FTRBF
expense projection for Blue Sky cost. The SEC portion of the expense
is based off the current FTRBF expense projection and the additional
assets. Printing and postage is based off the current FTRBF expense projection.
Insurance is based off a similar sized fund and class structure from the current
Insurance report. Miscellaneous is based off current FTRBF expense projection.
The full IAF amount is being waived. The SS distribution has 20 bp.
being waived.
The IS Shareholder
services is Dormant.
The fund is assuming
approx. 18.7 bp.
<PAGE>
Federated Total Return Bond Fund
Federated Bond Index Fund
Pro Forma Combining Statement of Operations
For the Six Months Ended March 31, 1998
(unaudited)
(a) Federated Management, Federated Total Return Bond Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of the average daily net assets of Federated Total Return Bond
Fund. The Adviser may voluntarily choose to waive a portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its sole
discretion. The adjustment is to reflect the increase in advisory fees as a
result of the merger.
(b) Federated Services Company ("FServ") provides the Funds with administrative
personnel and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of Federated
Investors, Inc. for the period. The fee structure is tiered. The increase in net
assets brought reductions in the annual fee percentage incurred.
(c) State Street Bank and Trust Company is the custodian for the securities and
cash of the Funds. The custodian fee is based on a percentage of assets, plus
out-of-pocket expenses.
(d) FServ serves as transfer and dividend disbursing agent for the Funds. The
fee is based on the size, type, and number of accounts and transactions made by
shareholders. The savings result from maintaining only one Fund at FServ.
(e) Adjustment to reflect the Directors/Trustees fees for one Fund.
(f) Adjustment to reflect the audit fee as a result of the merger.
(g) Pro forma combined legal fees are adjusted to include legal retainers, plus
estimated out-of-pocket charges, for one portfolio only.
(h) FServ maintains each Funds' accounting records. The fee is based on the
level of each Funds' average daily net assets for the period, plus out-of-pocket
expenses. The savings results from maintaining only one Fund at FServ.
(i) Federated Total Return Bond Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under
the terms of the Plan, the Fund will compensate Federated Securities Corp.
("FSC"), the principal distributor, from the net assets of the Fund's
Institutional Service Shares to finance activities intended to result in the
sale of Federated Total Return Bond Fund's Institutional Service Shares. The
Plan provides that the Fund may incur distribution expenses up to 0.25% of the
average daily net assets of the Institutional Service Shares annually, to
compensate FSC. FSC may voluntarily choose to waive a portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
(j) Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average daily
net assets of the Fund for the period. This fee is to obtain certain services
for shareholders and to maintain shareholder accounts. FSS can modify or
terminate this limitation at any time at its sole discretion. Currently,
Federated Total Return Bond Fund is not accruing Shareholder Services Fees for
Institutional Shares.
(k) Adjustment to reflect the anticipated increase in registration costs as a
result of the merger.
(l) Printing and postage expenses are adjusted to reflect estimated savings to
be realized by combining two portfolios into a single portfolio.
(m) Adjustment to reflect the decrease in insurance fees as a result of the
merger.
(n) Adjustment to reflect the decrease in miscellaneous expenses due to the
elimination of one portfolio.
(o) Adjustment to reflect the net reduction in waivers and reimbursements due to
a decline in expenses following the merger.
<PAGE>
Federated Total Return Bond Fund
Federated Bond Index Fund
Notes to Pro Forma Financial Statements (unaudited)
1. BASIS OF COMBINATION
The accompanying unaudited Pro Forma Combining Statement of Assets and
Liabilities reflects the accounts of the Portfolio and the Fund as of
March 31, 1998 . These statements have been derived from the books and
records utilized in calculating daily net asset values at March 31, 1998.
The Statement of Operations reflects the accounts of the Portfolio and the
Fund for the six months ending March 31, 1998.
The Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of the Portfolio and the Fund which are
incorporated by reference in their respective Statements of Additional
Information. The Portfolio and the Fund follow generally accepted
accounting principles applicable to management investment companies which
are disclosed in the historical financial statements of each.
The Pro Forma Financial Statements give effect to the proposed transfer of
the assets of the Fund in exchange for Institutional Shares and
Institutional Service Shares of the Portfolio. Under generally accepted
accounting principles, the Portfolio will be the surviving entity for
accounting purposes with its historical cost of investment securities and
results of operations being carried forward.
The Pro Forma Financial Statements have been adjusted to reflect the
anticipated advisory and administration fee arrangements for the surviving
entity. Certain other operating costs have also been adjusted to reflect
anticipated expenses of the combined entity. Other costs which may change
as a result of the reorganization are currently undeterminable.
For the six months ended March 31, 1998, the Portfolio paid an investment
advisory fee computed at the annual rate of 0.40% of the Portfolio's
average daily net assets. The adviser may voluntarily choose to waive a
portion of the fees and reimburse certain operating expenses of the
Portfolio.
The Fund pays no advisory fees.
2. SHARES OF BENEFICIAL INTEREST
The Pro Forma net asset value per share assumes the issuance of 3,219,104
and 2,089,736 shares of the Portfolio's Institutional Shares and
Institutional Service Shares, respectively, in exchange for 4,646,375 and
3,016,503 shares of the Fund's Institutional Shares and Institutional
Service Shares, respectively, which would have been issued at March 31,
1998, in connection with the proposed reorganization.
Cusip 313909103
G0 ( /98)
FEDERATED SHAREHOLDER SERVICES COMPANY
P.O. BOX 8600
BOSTON, MASSACHUSETTS 02266-8600
FEDERATED INVESTMENT TRUST
FEDERATED BOND INDEX FUND
SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 21, 1998
KNOW ALL PERSONS BY THESE RESENTS that the undersigned shareholder of FEDERATED
BOND INDEX FUND, a portfolio of Federated Investment Trust, hereby appoints
Anthony R. Bosch, Patricia F. Conner, Marie M. Hamm, Suzanne W. Land, and Ann M.
Scanlon, or any of them, true and lawful attorneys, with power of substitution
of each, to vote all shares of FEDERATED BOND INDEX FUND, a portfolio of
Federated Investment Trust, which the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held on September 21, 1998, at Federated
Investors Tower, 1001 Liberty Avenue, Nineteenth Floor, Pittsburgh, Pennsylvania
15222-3779, at 2:00 p.m., and 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 ATTORNEYS NAMED
WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN ACCORDANCE WITH THE CHOICE
MADE ON THIS BALLOT. IF THIS PROXY IS RETURNED AND NO CHOICE IS INDICATED AS TO
THE MATTER, THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THE MATTER PRESENTED.
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 KEEP THIS PORTION FOR YOUR
RECORDS
FEDERATED INVESTMENT FUND
Approval of a proposed Agreement and Plan of Reorganization between Federated
Investment Trust, on behalf of the Fund, and Federated Total Return Series,
Inc. (the "Corporation"), on behalf of its portfolio, Federated Total Return
Bond Fund (the "Portfolio"), whereby the Corporation would acquire all of the
assets of the Fund in exchange for Institutional Shares and Institutional
Service Shares of the Portfolio to be distributed PRO RATA by the Fund to the
respective holders of Institutional Shares and Institutional Service Shares
of the Fund, in complete liquidation of the Fund.
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
Please sign exactly as your name(s) appears on the books of the Trust. Joint
owners should each sign personally. Trustees 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.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
----
Pre-Effective Amendment No. ....................
Post-Effective Amendment No............................. ______
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FEDERATED TOTAL RETURN SERIES, INC.
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective on July 24, 1998, or as
soon thereafter as is practicable, pursuant to Rule 488.
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
<PAGE>
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(RULE 404(C) CROSS REFERENCE)
<S> <C> <C>
Item 1. Beginning of Registration
Statement and Cover Page
of Prospectus Cover Page.
Item 2. Beginning and Outside
Back Cover Page of
Prospectus Cover Page; Table of Contents
Item 3. Fee Table, Synopsis
Information, and Risk
Factors Summary; Investment Objective
..............................Policies, and Limitations; Risk Factors.
Item 4. Information About the
Transaction Information About the Reorganization
Item 5. Information About the
Registrant....................Information About the Portfolio and the Fund
Item 6. Information About the
Company Being Acquired........Information About the Portfolio and the Fund
Item 7. Voting Information............Voting Information
Item 8. Interest of Certain Persons
and Experts Not Applicable
Item 9. Additional Information Required
for Reoffering by Persons
Deemed to be Underwriters Not Applicable
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page....................Cover Page.
Item 11. Table of Contents.............Table of Contents.
Item 12. Additional Information About
the Registrant Information Incorporated by Reference
Item 13. Additional Information About
the Company Being Acquired Information Incorporated by Reference
Item 14. Financial Statements Information Incorporated by Reference.
</TABLE>
PART C. OTHER INFORMATION.
Item 15 Indemnification is provided to Officers and Directors of the Registrant
pursuant to Article Eighth of the Articles of Incorporation. The Investment
Advisory Contract between the Registrant and Federated Management (the
"Adviser") provides that, in the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the obligations or duties under the
Investment Advisory Contract on the part of the Adviser, the Adviser shall not
be liable to the Registrant or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or for any losses that
may be sustained in the purchase, holding, or sale of any security. Registrant's
Directors and Officers are covered by an Errors and Omissions Policy.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to Directors,
Officers, and controlling persons of the Registrant by the Registrant pursuant
to the Articles of Incorporation or otherwise, the Registrant is aware that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by Directors,
Officers, or controlling persons of the Registrant in connection with the shares
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issues.
Insofar as indemnification for liabilities may be permitted pursuant to
Section 17 of the Investment Company Act of 1940, as amended, for Directors,
Officers, and controlling persons of the Registrant by the Registrant pursuant
to the Articles of Incorporation or otherwise, the registrant is aware of the
position of the Securities and Exchange Commission as set forth in Investment
Company Act Release No. IC-11330. Therefore, the Registrant undertakes that in
addition to complying with the applicable provisions of the Articles of
Incorporation or otherwise, in the absence of a final decision on the merits by
a court or other body before which the proceeding was brought, that an
indemnification payment will not be made unless in the absence of such a
decision, a reasonable determination based upon factual review has been made:
(i) by a majority vote of a quorum of non-party Directors who are not interested
persons of the Registrant, or (ii) by independent legal counsel for an act of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
duties. The Registrant further undertakes that advancement of expenses incurred
in the defense of a proceeding (upon undertaking for repayment unless it is
ultimately determined that indemnification is appropriate) against an Officer,
Director, or controlling person of the Registrant will not be made absent the
fulfillment of at least one of the following conditions: (i) the indemnitee
provides security for his undertaking; (ii) the Registrant is insured against
losses arising by reason of any lawful advances; or (iii) a majority of a quorum
of disinterested non-party Directors or independent legal counsel in a written
opinion makes a factual determination that there is reason to believe the
indemnitee will be entitled to indemnification.
Item 16 Exhibits......................
1.1 Conformed copy of Articles of Incorporation;
1.2 Conformed copy of Articles of Amendment of Articles of
Incorporation; (2)
2. Copy of By-Laws; (1)
3. Not Applicable;
4. Agreement and Plan of Reorganization is included as
Exhibit A to the Combined Proxy Statement and
Prospectus*
5. Copy of Specimen Certificate for Shares of Capital
Stock of the Registrant; (10)
6.1 Copy of Investment Advisory Contract and conformed
copies of Exhibits A and B of Investment Advisory
Contract; (7)
6.2 Conformed copies of Exhibits D and E of Investment
Advisory Contract; (11)
7. Copy of Distributor's Contract and Conformed copies of
Exhibits A, B, C, and D to Distributor's Contract; (4)
7.1 Copy of Distributor's Contract and Conformed copies of
Exhibits E and F to Distributor's Contract; (10)
7.2 Conformed copies of Exhibits G and H to Distributor's
Contract; (11)
7.3 The Registrant hereby incorporates the conformed copy
of the specimen Mutual Funds Sales and Service
Agreement; Mutual Funds Service Agreement; and Plan
Trustee/Mutual Funds Service Agreement from
Item 24 (b) (6) of the Cash
Trust Series II Registration Statement on Form N-1A,
filed with the Commission on July 24, 1995. (File
Numbers 33-38550 and 811-6269);
8. Not Applicable;
9.1 Conformed copy of the Custodian Agreement of the
Registrant; (4)
9.2 Conformed Copy of Fee Schedule to the Custodian
Agreement of the Registrant; (13)
- -------------------------------------------------
+ All exhibits have been filed electronically.
(1) Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed October 25, 1993. (File Nos. 33-50773 and
811-7115)
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed December 21, 1993. (File Nos. 33-50773
and 811-7115)
(4) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 27, 1994. (File Nos. 33-50773 and
811-7115)
(7) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed June 6, 1995. (File Nos. 33-50773 and
811-7115)
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed November 27, 1996. (File Nos. 33-50773
and 811-7115)
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed March 31, 1997. (File Nos. 33-50773 and
811-7115)
(13) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed November 26, 1997. (File Nos. 33-50773
and 811-7115)
<PAGE>
9.3 Conformed copy of Fund Accounting Services,
Administrative Services, Transfer Agency Services, and
Custody Services Procurement Agreement of
the Registrant; (13)
9.4 Conformed copy of Administrative Services Agreement; (4)
9.5 The responses described in Item 24(b)(6) are hereby
incorporated by reference; 9.6 Conformed Copy of Amended and
Restated Shareholder Services Agreement of the Registrant; (13)
10. Conformed copy of Distribution Plan including Exhibits A
and B; (11) 10.1 Conformed copy of Exhibits C to Distribution
Plan; (10) 10.2 Conformed copy of Exhibit D and E to
Distribution Plan; (11) 10.3 The responses described in Item
24(b)(6) are hereby incorporated by reference; 11. Conformed
copy of Opinion and Consent of Counsel as to legality of shares
being registered;* 12. Conformed Copy of Tax Opinion of
Dickstein Shapiro
Morin & Oshinsky LLP (To be filed by amendment);
13. Not Applicable
14. Conformed copy of Consent of Independent Auditors;*
15. Not Applicable
16.1 Conformed copy of Power of Attorney; (14)
16.2 Conformed copy of Limited Power of Attorney; (10)
17. Form of Proxy.*
- --------------------------------------------------
+ All exhibits have been filed electronically.
(2) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed December 21, 1993. (File Nos. 33-50773
and 811-7115)
(3) Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 on Form N-1A filed January 13, 1994. (File Nos. 33-50773
and 811-7115)
(4) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 27, 1994. (File Nos. 33-50773 and
811-7115)
(10) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed November 27, 1996. (File Nos. 33-50773
and 811-7115)
(11) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed March 31, 1997. (File Nos. 33-50773 and
811-7115)
(12) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed May 28, 1997. (File Nos. 33-50773 and
811-7115)
(13) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed November 26, 1997. (File Nos. 33-50773
and 811-7115)
(14) Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed April 30, 1998. (File Nos. 33-50773 and
811-7115)
<PAGE>
Item 17. Undertakings:
The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is part of this Registration Statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c( of the Securities Act of f1933, as amended,
the reoffering prospectus will contain the information called for by
the applicable registration form for the reofferings by persons who
may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The undersigned Registrant agrees that every prospectus filed under
the above paragraph will be filed as part of an amendment to the
Registration Statement and will not be used until the amendment is
effective, and that in determining any liability under the
Securities Act of 1933, as amended, each post-effective amendment
shall be deemed to be a new Registration Statement for the
securities offered therein; and the offering of the securities at
that time shall be deemed to be the initial BONA FIDE offering of
them.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant, FEDERATED TOTAL RETURN SERIES, INC. certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to Form
N-14 under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Pittsburgh and Commonwealth of Pennsylvania, on
the 25th day of June, 1998.
FEDERATED TOTAL RETURN SERIES, INC.
BY: /s/ Anthony R. Bosch
Anthony R. Bosch, Assistant Secretary
Attorney in Fact for John F. Donahue
June 25, 1998
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in the
capacity and on the date indicated:
NAME TITLE DATE
By: /s/ Anthony R. Bosch Attorney In Fact June 25, 1998
Anthony R. Bosch For the Persons
ASSISTANT SECRETARY Listed Below
NAME TITLE
John F. Donahue* Chairman and Director
(Chief Executive Officer)
Glen R. Johnson* President
J. Christopher Donahue* Executive Vice President
and Director
Edward C. Gonzales Executive Vice President
John W. McGonigle* Executive Vice President,
Treasurer and Secretary (Principal
Financial and Accounting Officer)
Thomas G. Bigley* Director
John T. Conroy, Jr.* Director
Nicholas P. Constantakis* Director
William J. Copeland* Director
James E. Dowd* Director
Lawrence D. Ellis, M.D.* Director
Edward L. Flaherty, Jr.* Director
Peter E. Madden* Director
John E. Murray, Jr.* Director
Wesley W. Posvar* Director
Marjorie P. Smuts* Director
* By Power of Attorney
Exhibit 11
FEDERATED SERVICES COMPANY
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3775
June 24, 1998
The Directors of
Federated Total Return Series, Inc.
1001 Liberty Avenue
Federated Investors Tower
Pittsburgh, PA 15222-3779
Gentlemen:
Federated Total Return Series, Inc., a Maryland Corporation (the
"Corporation"), proposes to issue shares of common stock representing interests
in a separate portfolio of securities known as Federated Total Return Bond Fund
(such shares of common stock being herein referred to as "Shares") in connection
with the acquisition of the assets of Federated Bond Index Fund, a portfolio of
Federated Investment Trust, pursuant to the Agreement and Plan of Reorganization
dated June 25, 1998 ("Agreement"), filed as an exhibit to the registration
statement of the Corporation filed on Form N-14 (Securities Act of 1933 Number
to be assigned) under the Securities Act of 1933 as amended ("N-14
Registration").
As counsel, I have participated in the organization of the Corporation,
its registration under the Investment Company Act of 1940, the registration of
its securities on Form N-1A under the Securities Act of 1933 and its N-14
Registration. I have examined and am familiar with the written Articles of
Incorporation dated October 7, 1993 ("Articles of Incorporation"), the Bylaws of
the Corporation, the Agreement and such other documents and records deemed
relevant. I have also reviewed questions of law and consulted with counsel
thereon as deemed necessary or appropriate for the purposes of this opinion.
Based upon the foregoing, it is my opinion that:
1. The Corporation is duly organized and validly existing pursuant to the
Articles of Incorporation.
2. The Shares which are currently being registered by the N-14
Registration may be legally and validly issued in accordance with the provisions
of the Agreement and the Articles of Incorporation upon receipt of consideration
sufficient to comply with the provisions of Article Fourth of the Articles of
Incorporation and subject to compliance with the Investment Company Act of 1940,
as amended, and applicable state laws regulating the sale of securities. Such
Shares, when so issued, will be fully paid and non-assessable.
I consent to your filing this opinion as an exhibit to the N-14
Registration referred to above and to any application or registration statement
filed under the securities laws of any of the states of the United States.
Very truly yours,
FEDERATED SERVICES COMPANY
BY:_/S/ THOMAS J. WARD
TITLE: Secretary
Exhibit 14
Consent of Ernst & Young LLP, Independent Auditors
We consent to the use of our report dated November 14, 1997 on the financial
statements and financial highlights of Federated Total Return Bond Fund, a
portfolio of Federated Total Return Series, Inc. incorporated by reference in
the initial Registration Statement (Form N-14) and the related Prospectus/Proxy
Statement of Federated Total Return Series, Inc.
We also consent to the use of our report dated July 15, 1997 on the financial
statements and financial highlights of Federated Bond Index Fund, a portfolio of
Federated Investment Trust incorporated by reference in the initial Registration
Statement described above.
/s/Ernst & Young LLP
Pittsburgh, Pennsylvania
June 25, 1998
