SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
MONEY MARKET OBLIGATIONS TRUST II
(Name of Registrant as Specified In Its Charter)
FEDERATED INVESTORS
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary proxy materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MONEY MARKET OBLIGATIONS TRUST II
PROXY STATEMENT - PLEASE VOTE!
TIME IS OF THE ESSENCE ...VOTING ONLY TAKES A FEW MINUTES AND YOUR
PARTICIPATION IS IMPORTANT! ACT NOW TO HELP THE TRUST AVOID ADDITIONAL EXPENSE.
Money Market Obligations Trust II (the "Trust") will hold a special meeting of
shareholders of Municipal Obligations Fund, Prime Cash Obligations Fund and
Prime Value Obligations Fund (collectively, the "Funds") on September 23, 1999.
It is important for you to vote on the issues described in this Proxy Statement.
We recommend that you read the Proxy Statement in its entirety; the explanations
will help you to decide on the issues.
Following is an introduction to the proposals and the process.
WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to obtain shareholders' votes for certain types
of changes, like those included in this Proxy Statement. You have a right to
vote on these changes.
WHAT ISSUES AM I BEING ASKED TO VOTE ON?
The proposals include the election of Trustees and the proposed reorganizations
of the Funds into newly created portfolios of Money Market Obligations Trust
("MMOT").
WHY ARE INDIVIDUALS RECOMMENDED FOR ELECTION TO THE BOARD OF TRUSTEES?
The Trust is devoted to serving the needs of its shareholders, and the Board is
responsible for managing the Trust's business affairs to meet those needs. The
Board represents the shareholders and can exercise all of the Trust's powers,
except those reserved only for shareholders.
Trustees are selected on the basis of their education and professional
experience. Candidates are chosen based on their distinct interest in, and
capacity for understanding the complexities of, the operation of a mutual fund.
These individuals bring considerable experience to the impartial oversight of a
fund's operation.
The Proxy Statement includes a brief description of each nominee's history and
current position with the Trust, if applicable.
WHY ARE THE REORGANIZATIONS BEING PROPOSED?
The Board of Trustees and the Funds' investment adviser believe that the
management structure of the Funds can be simplified by reorganizing the Funds as
portfolios of MMOT, another money market mutual fund. After the Reorganizations,
the original Trust will be dissolved. MMOT offers a variety of portfolios
investing in money market securities, each with its own investment objective.
HOW WILL THE REORGANIZATIONS AFFECT MY INVESTMENT?
o The shares you own and the value of your investment will not change.
o The three Reorganizations will each be a tax-free event.
o There will not be any sales loads, commissions, or transaction charges with
the Reorganizations.
o The investment objectives will remain the same.
o There will be no increases in the fees payable to the Funds' investment
adviser because of the Reorganizations.
HOW DO I VOTE MY SHARES?
You may vote in person at the special meeting of shareholders or complete and
return the enclosed Proxy Card. IF YOU SIGN AND RETURN THE PROXY CARD WITHOUT
INDICATING A PREFERENCE, YOUR VOTE WILL BE CAST "FOR" ALL THE PROPOSALS.
You may also vote by telephone at 1-800-690-6903, or through the Internet at
WWW.PROXYVOTE.COM. If you choose to help save the Trust time and postage costs
by voting through the Internet or by telephone, please don't return your Proxy
Card. If you do not respond at all, 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 Investment Professional or a Federated Client Service
Representative. Federated's toll-free number is 1-800-341-7400.
After careful consideration, the Board of Trustees has unanimously approved
these proposals. The Board recommends that you read the enclosed materials
carefully and vote FOR all proposals.
DEFINITIVE
MONEY MARKET OBLIGATIONS TRUST II
MUNICIPAL OBLIGATIONS FUND
PRIME CASH OBLIGATIONS FUND
PRIME VALUE OBLIGATIONS FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 23, 1999
A Special Meeting of the shareholders of Money Market
Obligations Trust II (the "Trust"), which consists of three portfolios or
series, Municipal Obligations Fund (the "Municipal Fund"), Prime Cash
Obligations Fund (the "Prime Cash Fund") and Prime Value Obligations Fund (the
"Prime Value Fund") (individually, a "Fund" and collectively, the "Funds"), will
be held at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, at 2:00
p.m. (Eastern time), on September 23, 1999 to consider proposals:
(1) To elect five Trustees.
(2) To approve a proposed Agreement and Plan of
Reorganization between the Trust, on behalf of its
portfolio, the Municipal Fund, and Money Market
Obligations Trust, on behalf of its series, Municipal
Obligations Fund (the "New Municipal Fund"), whereby the
New Municipal Fund would acquire all of the assets of the
Municipal Fund in exchange for shares of the New Municipal
Fund to be distributed PRO RATA by the Municipal Fund to
its shareholders in complete liquidation and termination
of the Municipal Fund (Municipal Fund ONLY).
(3) To approve a proposed Agreement and Plan of Reorganization
between the Trust, on behalf of its portfolio, the Prime
Cash Fund, and Money Market Obligations Trust, on behalf
of its series, Prime Cash Obligations Fund (the "New Prime
Cash Fund"), whereby the New Prime Cash Fund would acquire
all of the assets of the Prime Cash Fund in exchange for
shares of the New Prime Cash Fund to be distributed PRO
RATA by the Prime Cash Fund to its shareholders in
complete liquidation and termination of the Prime Cash
Fund (Prime Cash Fund ONLY).
(4) To approve a proposed Agreement and Plan of Reorganization
between the Trust, on behalf of its portfolio, the Prime
Value Fund, and Money Market Obligations Trust, on behalf
of its series, Prime Value Obligations Fund (the "New
Prime Value Fund"), whereby the New Prime Value Fund would
acquire all of the assets of the Prime Value Fund in
exchange for shares of the New Prime Value Fund to be
distributed PRO RATA by the Prime Value Fund to its
shareholders in complete liquidation and termination of
the Prime Value Fund (Prime Value Fund ONLY).
To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Trustees has fixed July 26, 1999 as the record date for
determination of shareholders entitled to vote at the meeting.
By Order of the Board of Trustees,
John W. McGonigle
Secretary
August 10, 1999
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ENSURE A QUORUM BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY.
IF YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL
MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
TABLE OF CONTENTS
ABOUT THE PROXY SOLICITATION AND THE MEETING...................................4
ELECTION OF FIVE TRUSTEES......................................................5
ABOUT THE ELECTION OF TRUSTEES.................................................5
TRUSTEES STANDING FOR ELECTION..........................................6
APPROVAL OF THE PROPOSED REORGANIZATIONS.......................................7
INFORMATION ABOUT THE TRUST...................................................12
PROXIES, QUORUM AND VOTING AT THE MEETING.....................................12
SHARE OWNERSHIP OF THE TRUSTEES...............................................13
TRUSTEE COMPENSATION..........................................................14
OFFICERS AND INCUMBENT TRUSTEES OF THE TRUST..................................15
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY..................19
APPENDIX I: AGREEMENT AND PLAN OF REORGANIZATION.............................I-1
APPENDIX II - A: COMPARISON OF INVESTMENT POLICIES AND LIMITATIONS FOR
THE MUNICIPAL FUND AND THE NEW MUNICIPAL FUND.............................II-A-1
APPENDIX II - B: COMPARISON OF INVESTMENT POLICIES AND LIMITATIONS FOR
THE PRIME CASH FUND AND THE NEW PRIME CASH FUND...........................II-B-1
APPENDIX II - C: COMPARISON OF INVESTMENT POLICIES AND LIMITATIONS FOR
THE PRIME VALUE FUND AND THE NEW PRIME VALUE FUND.........................II-C-1
DEFINITIVE
PROXY STATEMENT
MONEY MARKET OBLIGATIONS TRUST II
MUNICIPAL OBLIGATIONS FUND
PRIME CASH OBLIGATIONS FUND
PRIME VALUE OBLIGATIONS FUND
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
ABOUT THE PROXY SOLICITATION AND THE MEETING
The enclosed proxy is solicited on behalf of the Board of Trustees of
the Trust (the "Board" or "Trustees"), which consists of three portfolios or
series, Municipal Obligations Fund (the "Municipal Fund"), Prime Cash
Obligations Fund (the "Prime Cash Fund") and Prime Value Obligations Fund (the
"Prime Value Fund") (individually, a "Fund" and collectively, the "Funds"). The
proxies will be voted at the special meeting of shareholders of the Trust to be
held on September 23, 1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania
15237-7000, at 2:00 p.m. (such special meeting and any adjournment or
postponement thereof are referred to as the "Meeting").
The cost of the solicitation, including the printing and mailing of
proxy materials, will be borne by the Trust. In addition to solicitations
through the mails, proxies may be solicited by officers, employees, and agents
of the Trust or, if necessary, a communications firm retained for this purpose.
Such solicitations may be by telephone, telegraph, through the Internet or
otherwise. Any telephonic solicitations will follow procedures designed to
ensure accuracy and prevent fraud, including requiring identifying shareholder
information, recording the shareholder's instructions, and confirming to the
shareholder after the fact. Shareholders who communicate proxies by telephone or
by other electronic means have the same power and authority to issue, revoke, or
otherwise change their voting instruction as shareholders submitting proxies in
written form. The Trust may reimburse custodians, nominees, and fiduciaries for
the reasonable costs incurred by them in connection with forwarding solicitation
materials to the beneficial owners of shares held of record by such persons.
The Board has reviewed the proposed reorganizations (the
"Reorganizations") of the Funds, and approved them, subject to shareholder
approval. The purposes of the Meeting are set forth in the accompanying Notice.
The Trustees know of no business other than that mentioned in the Notice that
will be presented for consideration at the Meeting. Should other business
properly be brought before the Meeting, proxies will be voted in accordance with
the best judgment of the persons named as proxies. This Proxy Statement and the
enclosed proxy card are expected to be mailed on or about August 10, 1999, to
shareholders of record at the close of business on July 26, 1999 (the "Record
Date").
On the Record Date, the Funds had outstanding the following number of
shares of beneficial interest:
Municipal Fund: 509,899,505.60 shares
Prime Cash Fund: 3,196,183,791.73 shares
Prime Value Fund: 2,129,862,319.76 shares
The Funds' annual reports, which include audited financial statements
for the Funds for the fiscal year ended January 31, 1999, were previously mailed
to shareholders. The Funds' annual reports are incorporated by reference into
this Proxy Statement. The Trust will promptly provide, without charge and upon
request, to each person to whom this Proxy Statement is delivered, a copy of a
Fund's annual report. Requests for an annual report may be made by writing to
the Trust's principal executive offices or by calling the Trust. The Trust's
principal executive offices are located at Federated Investors Funds, 5800
Corporate Drive, Pittsburgh, Pennsylvania 15237-7000. The Trust's toll-free
telephone number is 1-800-341-7400.
PROPOSAL #1: ELECTION OF FIVE TRUSTEES
The persons named as proxies intend to vote in favor of the election of
Nicholas P. Constantakis, John F. Cunningham, J. Christopher Donahue, Charles F.
Mansfield, Jr. and John S. Walsh (collectively, the "Nominees") as Trustees of
the Trust. Each of the Nominees is presently serving as a Trustee. Mr.
Constantakis was appointed a Trustee on February 23, 1998 to fill a vacancy
created by the decision to expand the size of the Board. Messrs. Cunningham,
Donahue, Mansfield and Walsh were appointed Trustees on January 1, 1999, also to
fill vacancies resulting from the decision to expand the size of the Board.
Please see "ABOUT THE ELECTION OF TRUSTEES" below for current information about
the Nominees, and "OFFICERS AND INCUMBENT TRUSTEES OF THE TRUST" in this Proxy
Statement for current information about the incumbent Trustees who have
previously been elected by shareholders.
All Nominees have consented to serve if elected. If elected, the
Trustees will hold office without limit in time until death, resignation,
retirement, or removal or until the next meeting of shareholders to elect
Trustees and the election and qualification of their successors. Election of a
Trustee is by a plurality vote, which means that the five individuals receiving
the greatest number of votes at the Meeting will be deemed to be elected.
If any Nominee for election as a Trustee named above shall by reason of
death or for any other reason become unavailable as a candidate at the Meeting,
votes pursuant to the enclosed proxy will be cast for a substitute candidate by
the proxies named on the proxy card, or their substitutes, present and acting at
the Meeting. Any such substitute candidate for election as a Trustee who is an
"interested person" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Trust shall be nominated by the Executive
Committee. The selection of any substitute candidate for election as a Trustee
who is not an "interested person" shall be made by a majority of the Trustees
who are not "interested persons" of the Trust. The Board has no reason to
believe that any Nominee will become unavailable for election as a Trustee.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE TO ELECT AS TRUSTEES THE NOMINEES FOR
ELECTION TO THE BOARD OF TRUSTEES OF THE TRUST
ABOUT THE ELECTION OF TRUSTEES
The Declaration of Trust provides that Trustees will continue in
office until their respective successors are elected, and therefore, when
elected, the Trustees will hold office during the lifetime of the Trust, except
that: (a) any Trustee may resign; (b) any Trustee may be removed by written
instrument signed by at least two-thirds of the number of Trustees prior to such
removal; (c) any Trustee who requests to be retired or who has become mentally
or physically incapacitated may be retired by written instrument signed by a
majority of the other Trustees; and (d) a Trustee may be removed at any special
meeting of the shareholders by a vote of two-thirds of the outstanding shares of
the Trust. In case a vacancy shall exist for any reason, the remaining Trustees
will fill such vacancy by appointment of another Trustee. The Trustees will not
fill any vacancy by appointment if, immediately after filling such vacancy, less
than two-thirds of the Trustees then holding office would have been elected by
the shareholders. If, at any time, less than a majority of the Trustees holding
office have been elected by the shareholders, the Trustees then in office will
call a shareholders' meeting for the purpose of electing Trustees to fill
vacancies. Otherwise, there will normally be no meeting of shareholders called
for the purpose of electing Trustees.
Set forth below is a listing of the Trustees standing for election,
along with their addresses, birthdates, present positions with the Trust and
principal occupations during the past five years:
TRUSTEES STANDING FOR ELECTION
NICHOLAS P. CONSTANTAKIS
175 Woodshire Drive
Pittsburgh, PA
Birthdate: September 3, 1939
Trustee
Director or Trustee of the Federated Fund Complex; formerly, Partner, Andersen
Worldwide SC.
JOHN F. CUNNINGHAM
353 El Brillo Way
Palm Beach, FL
Birthdate: March 5, 1943
Trustee
Director or Trustee of some of the Funds in the Federated Fund Complex;
Chairman, President and Chief Executive Officer, Cunningham & Co., Inc.
(specialized financial consulting organization); Trustee Associate, Boston
College; Director, EMC Corporation; formerly, Director, Redgate Communications.
J. CHRISTOPHER DONAHUE
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President or Executive Vice President of the Federated Fund Complex; Director
or Trustee of some of the Funds in the Federated Fund Complex; President and
Director, Federated Investors, Inc.; President and Director, Federated
Investment Management Company and Federated Global Research Corp.; President,
Passport Research, Ltd.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company. Mr. Donahue is the son of John F. Donahue,
Chairman and Trustee of the Trust.
CHARLES F. MANSFIELD, JR.
80 South Road
Westhampton Beach, NY
Birthdate: April 10, 1945
Trustee
Director or Trustee of some of the Funds in the Federated Fund Complex;
management consultant.
JOHN S. WALSH
2007 Sherwood Drive
Valparaiso, IN
Birthdate: November 28, 1957
Trustee
Director or Trustee of some of the Funds in the Federated Fund Complex;
President and Director, Heat Wagon, Inc.; President and Director, Manufacturers
Products, Inc.; President, Portable Heater Parts, a division of Manufacturers
Products, Inc.; Director, Walsh & Kelly, Inc.; formerly, Vice President, Walsh &
Kelly, Inc.
PROPOSAL #2: TO APPROVE THE PROPOSED REORGANIZATIONS
The Board of Trustees of the Trust has voted to recommend to
shareholders of each of the Municipal Obligations Fund (the "Municipal Fund"),
the Prime Cash Obligations Fund (the "Prime Cash Fund") and the Prime Value
Obligations Fund (the "Prime Value Fund") (the Municipal Fund, the Prime Cash
Fund and the Prime Value Fund are sometimes individually referred to as a "Fund"
and collectively referred to as the "Funds"), the approval of an Agreement and
Plan of Reorganization (individually, a "Reorganization Agreement," and
collectively, the "Reorganization Agreements") whereby Money Market Obligations
Trust, a Massachusetts business trust ("MMOT"), on behalf of its portfolios,
Municipal Obligations Fund (the "New Municipal Fund"), Prime Cash Obligations
Fund (the "New Prime Cash Fund") and Prime Value Obligations Fund (the "New
Prime Value Fund") (the New Municipal Fund, the New Prime Cash Fund and the New
Prime Value Fund are collectively referred to as the "New Funds"), would acquire
all of the assets (subject to the liabilities) of the Municipal Fund, the Prime
Cash Fund and the Prime Value Fund, respectively, in exchange for shares of
beneficial interest of the New Municipal Fund, the New Prime Cash Fund and the
New Prime Value Fund, to be distributed pro rata by the Municipal Fund, the
Prime Cash Fund and the Prime Value Fund to its respective shareholders in
complete liquidation and dissolution of the Municipal Fund, the Prime Cash Fund
and the Prime Value Fund (each a "Reorganization" and collectively, the
"Reorganizations"). As a result of the Reorganizations:
Shareholders of the Municipal Fund will receive shares of the New
Municipal Fund having a total net asset value equal to the total net
asset value of his or her holdings in the Municipal Fund on the date of
the Reorganization of the Municipal Fund;
Shareholders of the Prime Cash Fund will receive shares of the New Prime
Cash Fund having a total net asset value equal to the total net asset
value of his or her holdings in the Prime Cash Fund on the date of the
Reorganization of the Prime Cash Fund; and
Shareholders of the Prime Value Fund will receive shares of the New
Prime Value Fund having a total net asset value equal to the total net
asset value of his or her holdings in the Prime Value Fund on the date
of the Reorganization of the Prime Value Fund.
MMOT is an open-end management investment company that consists of a
number of portfolios, each of which has its own investment objective. The New
Funds are newly-organized portfolios of MMOT (initially "shell" portfolios). As
set forth below, each New Fund has the same investment objective as the
corresponding Fund that is merging into the New Fund:
The Municipal Fund and the New Municipal Fund - to provide current
income exempt from all federal regular income tax consistent with stability of
principal;
The Prime Cash Fund and the New Prime Cash Fund - current income
consistent with stability of principal and liquidity; and
The Prime Value Fund and the New Prime Value Fund - current income
consistent with stability of principal and liquidity.
The permissible investments for the New Funds are the same as the
permissible investments for the Funds, and the New Funds use comparable
investment strategies. Each of the New Funds pursues its investment objective by
investing in a portfolio of money market instruments maturing in 397 days or
less. The average maturity of money market instruments in each New Fund's
portfolio, computed on a dollar weighted basis, will be 90 days or less. The
Municipal Fund invests in a portfolio of high quality, tax-exempt securities
maturing in 13 months or less. Each of the Prime Cash Fund and the Prime Value
Fund invests in a portfolio of high quality fixed income securities maturing in
13 months or less. The Funds and the New Funds are money market mutual funds
which seek to stabilize their offering and redemption prices at $1.00 per share,
although there can be no assurance that any of the Funds or the New Funds will
be able to do so. (See "Comparison of Investment Policies and Risk Factors"
below.) An investment in any of the Funds or the New Funds is neither insured
nor guaranteed by the U.S. government.
As a condition to each Reorganization transaction, the Trust and MMOT
will receive an opinion of counsel that each Reorganization will be considered a
tax-free "reorganization" under applicable provisions of the Internal Revenue
Code, so that no gain or loss for federal income tax purposes will be recognized
by any of the Funds or New Funds or the shareholders of any of the Funds. The
tax basis of each New Fund's shares received by the corresponding Fund's
shareholders will be the same as the tax basis of the shareholders' shares in
the Fund.
Significant components of the Reorganizations and provisions of the
Reorganization Agreements are summarized below; however, this summary of the
Reorganization Agreements is qualified in its entirety by reference to the full
text of each of the three Reorganization Agreements between the Trust, on
behalf of its portfolios, the Municipal Fund, the Prime Cash Fund and the Prime
Value Fund, and MMOT, on behalf of its portfolios, the New Municipal Fund, the
New Prime Cash Fund and the New Prime Value Fund, respectively. A copy of the
Reorganization Agreement between the Trust, on behalf of the Municipal Fund,
and MMOT, on behalf of the New Municipal Fund, is attached as Appendix I to
this Proxy Statement. The two other Reorganization Agreements, between the
Trust, on behalf of the Prime Cash Fund, and MMOT, on behalf of the New Prime
Cash Fund, and between the Trust, on behalf of the Prime Value Fund, and MMOT,
on behalf of the New Prime Value Fund, are identical to the Reorganization
Agreement attached as Appendix I, except for the Reorganization Agreements'
identification of the Funds and the New Funds.
DESCRIPTION OF THE REORGANIZATION AGREEMENTS
The discussion in this Proxy Statement refers to the Reorganization
Agreement between the Trust, on behalf of the Municipal Fund, and MMOT, on
behalf of the New Municipal Fund. This discussion also applies to the two other
Reorganizations, and describes the provisions of the two other Reorganization
Agreements.
The Reorganization Agreement for the Municipal Fund provides that all
of the assets of the Municipal Fund will be transferred to the New Municipal
Fund, subject to the liabilities of the Municipal Fund. Each holder of shares
of the Municipal Fund will receive the same number (with the same aggregate
value) of shares of the New Municipal Fund as the shareholder had in the
Municipal Fund immediately prior to the Reorganization. The Municipal Fund's
shareholders will not pay a sales charge, commission or other transaction cost
in connection with their receipt of the shares of the New Municipal Fund.
Following the transfer of assets (subject to the liabilities) of the
Municipal Fund to the New Municipal Fund, and the issuance of shares by the New
Municipal Fund to the Municipal Fund, the Municipal Fund will distribute the
shares of the New Municipal Fund received by the Municipal Fund among the
shareholders of the Municipal Fund in proportion to the number of shares each
such shareholder holds in the Municipal Fund. Following the Reorganization,
shareholders of the Municipal Fund will be shareholders of the New Municipal
Fund. Upon the completion of the Reorganization, the Trust will be deregistered
as an investment company under the 1940 Act and its existence terminated under
state law. The stock transfer books of the Trust will be permanently closed
after the Reorganization. MMOT will not issue share certificates with respect to
shares of the New Municipal Fund issued in connection with the
Reorganization.
The Reorganization is subject to certain conditions, including: approval
of the Reorganization Agreement and the transactions and exchange contemplated
thereby as described in this Proxy Statement by the shareholders of the
Municipal Fund; the receipt of a legal opinion described in the Reorganization
Agreement regarding tax matters; the receipt of certain certificates from the
parties concerning the continuing accuracy of the representations and warranties
in the Reorganization Agreement and other matters; and the parties' performance,
in all material respects, of the agreements and undertakings in the
Reorganization Agreement. Assuming satisfaction of the conditions in the
Reorganization Agreement, the Reorganization is expected to occur on or after
November 1, 1999.
The Trust's investment adviser is responsible for the payment of
expenses of the Reorganizations incurred by either party, whether or not the
Reorganizations are 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 a portion of the costs of preparing, printing, copying and
mailing proxy solicitation materials to the Municipal Fund's shareholders.
The Reorganizations may be terminated at any time prior to their
consummation by either the Trust or MMOT if circumstances should develop that,
in the opinion of either the Board of the Trust or the Board of Trustees of
MMOT, make proceeding with the Reorganization Agreements inadvisable. The
Reorganization Agreements provide further that at any time prior to the
consummation of the Reorganizations: (i) the parties thereto may amend or modify
any of the provisions of the Reorganization Agreements provided that such
amendment or modification would not have a material adverse effect on the
benefits intended under the Reorganization Agreements and it would be consistent
with the best interests of the shareholders of a Fund and its corresponding New
Fund; and (ii) the parties may waive any of the conditions set forth in the
Reorganization Agreements if, in the judgment of the waiving party, such waiver
will not have a material adverse effect on the benefits intended under the
Reorganization Agreements to the shareholders of a Fund or its corresponding New
Fund as the case may be.
REASONS FOR THE PROPOSED REORGANIZATION
The Trust was established as a Massachusetts business trust in 1992.
Although the Board has been satisfied with the Municipal Fund's performance, it,
and the Trust's distributor and administrator, believe that reorganizing the
Municipal Fund as a portfolio of MMOT could improve the Municipal Fund's
distribution and streamline administration. Accordingly, the Trust's distributor
and administrator have recommended to the Board of Trustees of MMOT that the New
Municipal Fund be organized for the purpose of acquiring the Municipal Fund's
assets and thereby reorganizing the Municipal Fund as a portfolio of MMOT. The
Trust's distributor and administrator similarly recommended to the Trustees of
the Trust that the Municipal Fund's assets be transferred to MMOT, on behalf of
the New Municipal Fund, in order to reorganize it as a separate portfolio of
MMOT. In connection with this proposal, the Trust's distributor and
administrator emphasized the comparable advisory services provided, the
identical investment objectives, the similar investment policies, and the
administrative convenience and simplification of management achievable by
operating the Municipal Fund as a portfolio of MMOT.
BOARD OF TRUSTEES' CONSIDERATIONS AND RECOMMENDATIONS
The Trust's Board of Trustees, at its meeting on May 18, 1999,
concluded that the reorganization of the Municipal Fund as a portfolio of MMOT
could provide for improved distribution and streamlined administration. The
Trust's Trustees also noted that the Municipal Fund's shareholders would
continue to receive the same quality of investment management services from the
New Municipal Fund's investment adviser, which is also the Municipal Fund's
current investment adviser. The Board of Trustees, including a majority of the
Trustees who are not "interested persons," additionally determined that
participation in the Reorganization is in the best interests of the Municipal
Fund, and that the interests of the Municipal Fund's shareholders would not be
diluted as a result of effecting the Reorganization. Based upon the foregoing
considerations, and the fact that shareholders of the Municipal Fund will not
suffer any adverse federal income tax consequences as a result of the
Reorganization, the Board of Trustees of the Trust unanimously voted to approve,
and recommended to the Municipal Fund's shareholders the approval of, the
Reorganization.
The Board of Trustees of MMOT, including the Trustees who are not
"interested persons," at the Board's meeting on May 18, 1999, unanimously
concluded that consummation of the Reorganization is in the best interests of
MMOT and the shareholders of the New Municipal Fund, and that the interests of
the New Municipal Fund's shareholders would not be diluted as a result of
effecting the Reorganization. As a consequence, the Board of Trustees of MMOT
unanimously approved the Reorganization Agreement.
Under the terms of the Declaration of Trust, the approval of each
Reorganization of a Fund requires the affirmative vote of a majority of the
shares of the Fund outstanding and entitled to vote. (See "PROXIES, QUORUM AND
VOTING AT THE MEETING" below.)
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization, the Trust, on behalf of the
Municipal Fund, and MMOT, on behalf of the New Municipal Fund, will receive an
opinion from Dickstein Shapiro Morin & Oshinsky LLP, special counsel to the
Trust and MMOT, 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 Reorganization Agreement will constitute
a tax-free reorganization under section 368(a)(1)(F) of the Code, and the
Municipal Fund and the New Municipal Fund each will be a "party to a
reorganization" within the meaning of Section 368(b) of the Code; (2) no gain or
loss will be recognized by the New Municipal Fund upon its receipt of the
Municipal Fund's assets (subject to the liabilities of the Municipal Fund) in
exchange for the New Municipal Fund shares; (3) no gain or loss will be
recognized by the Municipal Fund upon the transfer of its assets (subject to the
liabilities of the Municipal Fund) to the New Municipal Fund in exchange for New
Municipal Fund shares or upon the distribution (whether actual or constructive)
of the New Municipal Fund shares to the Municipal Fund shareholders in exchange
for their shares of the Municipal Fund; (4) no gain or loss will be recognized
by shareholders of the Municipal Fund upon the exchange of their Municipal Fund
shares for the New Municipal Fund shares; (5) the tax basis of the Municipal
Fund's assets acquired by the New Municipal Fund will be the same as the tax
basis of such assets to the Municipal Fund immediately prior to the
Reorganization; (6) the tax basis of the New Municipal Fund shares received by
each shareholder of the Municipal Fund pursuant to the Reorganization will be
the same as the tax basis of the Municipal Fund shares held by such shareholder
immediately prior to the Reorganization; (7) the holding period of the assets of
the Municipal Fund in the hands of the New Municipal Fund will include the
period during which those assets were held by the Municipal Fund; and (8) the
holding period of the New Municipal Fund shares received by each shareholder of
the Municipal Fund pursuant to the Reorganization will include the period during
which the Municipal Fund shares exchanged therefor were held by such
shareholder, provided the Municipal Fund shares were held as capital assets on
the date of the Reorganization.
The Trust and MMOT have not sought a tax ruling from the Internal
Revenue Service ("IRS"), but are acting in reliance upon the opinion of counsel
discussed in the previous paragraph. That opinion is not binding on the IRS and
does not preclude the IRS from adopting a contrary position. Shareholders
should consult their own advisers concerning the potential tax consequences to
them, including state and local income taxes.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The investment objective of the Municipal Fund is identical to the
investment objective of the New Municipal Fund. Investments in both the
Municipal Fund and the New Municipal Fund are not insured or guaranteed by the
U.S. government. Since the Municipal Fund and the New Municipal Fund are
managed to maintain a constant net asset value, they have little risk of
principal loss. However, investments in the Municipal Fund and the New
Municipal Fund are subject to certain risks, which include, but are not limited
to, the following: the possibility that issuers of securities will have their
credit ratings downgraded; the ability of the issuers of securities to meet
their obligations for payment of principal and interest when due or to
repurchase such securities as previously agreed; interest rate or market risk,
which is the potential for fluctuations in the prices of debt securities, due
to changing interest rates (e.g., when interest rates rise, bond prices
generally decline); and prepayment or call risk, which is the likelihood that,
during periods of falling interest rates, debt securities will be prepaid (or
"called") prior to maturity, requiring the proceeds to be invested by the
Municipal Fund or the New Municipal Fund at a generally lower interest rate;
and sector risk (because a substantial portion of the portfolios of the
Municipal Fund and the New Municipal Fund may be comprised of securities issued
or credit enhanced by companies in similar businesses or with other similar
characteristics, the Funds are more susceptible to any economic, business,
political or other developments which generally affect these issuers). In the
case of the Prime Cash Fund and the New Prime Cash Fund, as well as the Prime
Value Fund and the New Prime Value Fund, international economic and political
developments may have an impact on the issuers of securities owned by the
Funds. Each of these risks could result in a loss of value of an investment in
the Funds, or in the New Funds when they commence operations.
The permissible investments for the Municipal Fund and the New
Municipal Fund are identical. The investment policies and restrictions of the
New Municipal Fund have been established so as to be comparable to the current
investment policies and restrictions of the Municipal Fund. The differences
between the investment policies and restrictions of the Municipal Fund and
those of the New Municipal Fund result from the standardization of certain
investment policies and restrictions among the Federated Funds, including the
New Municipal Fund, and the elimination of certain investment limitations which
govern the Municipal Fund and had been previously required under state law. A
number of these investment limitations have been preempted and are no longer
applicable, and hence, the New Municipal Fund is not required to adopt them.
Appendix II-A to this Proxy Statement identifies the differences between the
investment policies and restrictions of the Municipal Fund and the New
Municipal Fund. (Appendix II-B to this Proxy Statement identifies the
differences between the investment policies and restrictions of the Prime Cash
Fund and the New Prime Cash Fund, and Appendix II-C to this Proxy Statement
identifies the differences between the investment policies and restrictions of
the Prime Value Fund and the New Prime Value Fund.) The investment adviser to
the Municipal Fund and the New Municipal Fund (as well as the investment
adviser to the Prime Cash Fund and New Prime Cash Fund, and to the Prime Value
Fund and the New Prime Value Fund) does not believe that the differences in
investment policies and restrictions are material. In addition, the adviser
believes that the level of risk of an investment in the Municipal Fund is
comparable to, and does not materially differ from, the level of risk of an
investment in the New Municipal Fund. Similarly, the investment adviser
believes that the level of risk of an investment in the Prime Cash Fund and the
Prime Value Fund is comparable to, and does not materially differ from, the
level of risk of an investment in the New Prime Cash Fund and the New Prime
Value Fund, respectively.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
The Trust and MMOT are each organized as a business trust pursuant to
a Declaration of Trust under the laws of the Commonwealth of Massachusetts. The
rights of shareholders of the Funds and of the shareholders of the New Funds
relating to voting, distributions and redemptions, as set forth in the
applicable Declaration of Trust and By-Laws, are substantively identical. Set
forth below is a brief summary of the significant rights of shareholders of the
Trust and of MMOT.
Neither the Trust nor MMOT is required to hold annual meetings of
shareholders. Shareholder approval is necessary only for certain changes in
operations or the election of Trustees under certain circumstances. A special
meeting of shareholders of the Trust or MMOT (or of a series of the Trust or
MMOT) for any permissible purpose may be called by the Trustees, and shall be
called by the Trustees upon the written request of the holders of at least 10%
of the outstanding shares of the respective trust (or series of the trust), as
the case may be. Each share of the Trust and MMOT is entitled to one vote. All
shares of MMOT have equal voting rights, except that only shares of an affected
fund is entitled to vote on matters only affecting that fund.
The Declaration of Trust of the Trust provides that a Fund may merge,
consolidate or sell its assets upon the affirmative vote of the holders of
two-thirds of the shares of the Fund outstanding and entitled to vote; provided,
however, that if such merger or consolidation is recommended by the Trust's
Board of Trustees, then the affirmative vote of the holders of a majority of
shares of the Fund shall be sufficient authorization. In the case of MMOT, the
Declaration of Trust provides that the affirmative vote of a majority of the
outstanding shares of a series is required to approve a merger, consolidation or
sale of assets. Under the Declarations of Trust of both the Trust and MMOT, a
majority of the Trustees may determine to liquidate a series or class. As an
alternative to Trustee approval, the Declaration of Trust for the Trust states
that a liquidation of a series or class may also be approved by the vote of the
holders of two-thirds of the shares of the affected series or class outstanding
and entitled to vote.
Under certain circumstances, shareholders of the Funds and shareholders
(and former shareholders) of the New Funds may be held personally liable as
partners under Massachusetts law for obligations of the Trust or of MMOT,
respectively. To protect their shareholders (and former shareholders, in the
case of MMOT), the Trust and MMOT have filed legal documents with the
Commonwealth of Massachusetts that expressly disclaim the liability of their
shareholders for such acts or obligations of the Trust or MMOT. These documents
require that notice and acceptance of this disclaimer be given in each
agreement, obligation or instrument that the Trust or MMOT or their Trustees
enter into or sign.
In the unlikely event a shareholder (or a former shareholder, in the
case of MMOT) is held personally liable for the Funds' or the New Funds'
obligations, the Funds and the New Funds are each required to use their property
to protect or compensate the shareholder. On request, the Funds and the New
Funds will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Funds or New Funds, as applicable. Therefore,
financial loss resulting from liability as a shareholder (or a former
shareholder, in the case of MMOT) will occur only if the Trust or MMOT cannot
meet its obligations to indemnify shareholders and pay judgments against them
from the assets of the Trust or MMOT, as applicable.
PURCHASE AND REDEMPTION INFORMATION, EXCHANGE PRIVILEGES, DISTRIBUTION AND
PRICING
The purchase, redemption, exchange privileges and distribution policies
of the Funds are identical to the purchase, redemption, exchange privileges and
distribution policies of the New Funds.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF EACH FUND
VOTE "FOR" APPROVAL OF THE FUND'S REORGANIZATION AGREEMENT
INFORMATION ABOUT THE TRUST
PROXIES, QUORUM AND VOTING AT THE MEETING
Only shareholders of record on the Record Date will be entitled to
vote at the Meeting. Each share of the Trust is entitled to one vote. Fractional
shares are entitled to proportionate shares of one vote. Under both the
Investment Company Act of 1940 and the Declaration of Trust, the favorable vote
of a "majority of the outstanding voting shares" of the Trust or a Fund means:
(a) the holders of 67% or more of the outstanding voting securities present at
the Meeting, if the holders of 50% or more of the outstanding voting securities
of the Trust or Fund are present or represented by proxy; or (b) the vote of the
holders of more than 50% of the outstanding voting securities, whichever is
less. The election of the Trustees is subject to a specific vote requirement
described under Proposal #1 in this Proxy Statement. The favorable vote of a
majority of the outstanding voting shares of each Fund will be required to
approve the Fund's proposed Reorganization.
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Trust. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. IF NO INSTRUCTION IS
GIVEN ON THE PROXY, THE PERSONS NAMED AS PROXIES WILL VOTE THE SHARES
REPRESENTED THEREBY IN FAVOR OF THE MATTERS SET FORTH IN THE ATTACHED NOTICE.
In order to hold the Meeting, a "quorum" of shareholders must be
present. The holders of a majority of outstanding shares of the Trust and each
Fund, as applicable, present in person or by proxy, shall be required to
constitute a quorum for the purpose of voting on the Proposals described in this
Proxy Statement.
For purposes of determining a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are PRESENT but which have not been VOTED. For
this reason, abstentions and broker non-votes will have the effect of a "no"
vote for purposes of obtaining the requisite approval of some of the proposals.
If a quorum is not present, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of one or more of
the proposals have not been received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitations of
proxies with respect to such proposal(s). All such adjournments will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote AGAINST any such adjournment those proxies which they are required to vote
against the proposal and will vote in FAVOR of the adjournment other proxies
which they are authorized to vote. A shareholder vote may be taken on other
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received for approval.
As referred to in this Proxy Statement, the "Federated Fund Complex,"
"The Funds" or "Funds" include the following investment companies: Cash Trust
Series, Inc.; Cash Trust Series II; CCB Funds; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated ARMs
Fund; Federated Core Trust; Federated Equity Funds; Federated Equity Income
Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Insurance Series; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated Stock and Bond
Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Edward D. Jones & Co. Daily Passport Cash Trust; Liberty Term Trust, Inc. -
1999; Liberty U.S. Government Money Market Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; Tax-Free Instruments Trust; The
Planters Funds; WesMark Funds; WCT Funds; World Investment Series, Inc.
SHARE OWNERSHIP OF THE TRUSTEES
Officers and Trustees of the Trust own less than 1% of each Fund's outstanding
shares.
At the close of business on the Record Date, the following persons
owned, to the knowledge of management, more than 5% of the outstanding shares of
the respective classes of the Funds:
MUNICIPAL FUND: At the close of business on the Record Date, the following
shareholders of the Institutional Shares class of the Municipal Fund owned, to
the knowledge of management, more than 5% of the outstanding shares of the Fund:
Sinclair Oil Corp., Salt Lake City, UT, owned approximately 37,800,000.0000
shares (7.41%); Evergreen Select Interest Tax-Exempt Bond Fund, Charlotte, NC,
owned approximately 37,000,000.0000 shares (7.25%); and Evergreen Florida Fund,
North Quincy, MA, owned approximately 31,500,000.0000 shares (6.17%). At the
close of business on the Record Date, no shareholder of the Institutional
Capital Shares class of the Municipal Fund owned, to the knowledge of
management, more than 5% of the outstanding shares of the Fund. At the close of
business on the Record Date, the following shareholder of the Institutional
Service Shares class of the Municipal Fund owned, to the knowledge of
management, more than 5% of the outstanding shares of the Fund: The Mark Travel
Corp., Milwaukee, WI, owned approximately 39,454,909.1400 shares (7.73%).
PRIME CASH FUND: At the close of business on the Record Date, the following
shareholder of the Institutional Shares class of the Prime Cash Fund owned, to
the knowledge of management, more than 5% of the outstanding shares of the Fund:
Frost National Bank, San Antonio, TX, owned approximately 235,217,896.5000
shares (7.35%). At the close of business on the Record Date, no shareholder of
the Institutional Capital Shares class of the Prime Cash Fund owned, to the
knowledge of management, more than 5% of the outstanding shares of the Fund. At
the close of business on the Record Date, the following shareholder of the
Institutional Service Shares class of the Prime Cash Fund owned, to the
knowledge of management, more than 5% of the outstanding shares of the Fund:
Harris Trust and Savings Bank, Chicago, IL, owned approximately 431,999,385.3100
shares (13.70%).
PRIME VALUE FUND: At the close of business on the Record Date, the following
shareholder of the Institutional Shares class of the Prime Value Fund owned, to
the knowledge of management, more than 5% of the outstanding shares of the Fund:
Federated Investors Management Company, Pittsburgh, PA, owned approximately
154,452,076.0500 shares (7.25%). To the knowledge of management, no shareholder
of either the Institutional Capital Shares or the Institutional Service Shares
classes of the Prime Value Fund owned more than 5% of the outstanding shares of
the Fund.
TRUSTEE COMPENSATION
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST1# FROM FUND COMPLEX+
- --------------------------- -------------------- ------------------------------------------------
John F. Donahue*@ $0 $0 for the Trust and
Chairman and Trustee 54 other investment companies in the Fund Complex
Thomas G. Bigley $3,092.74 $113,860.22 for the Trust and
Trustee 54 other investment companies in the Fund Complex
John T. Conroy, Jr. $3,402.52 $125,264.48 for the Trust and
Trustee 54 other investment companies in the Fund Complex
Nicholas P. Constantakis $2,671.50 $47,958.02 for the Trust and
Trustee 29 other investment companies in the Fund Complex
John F. Cunningham** $0 $0 for the Trust and
Trustee 26 other investment companies in the Fund Complex
J. Christopher Donahue* $0 $0 for the Trust and
President and Trustee 16 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D.* $3,092.74 $113,860.22 for the Trust and
Trustee 54 other investment companies in the Fund Complex
Peter E. Madden $3,092.74 $113,860.22 for the Trust and
Trustee 54 other investment companies in the Fund Complex
Charles F. Mansfield, Jr.** $0 $0 for the Trust and
Trustee 26 other investment companies in the Fund Complex
John E. Murray, Jr., J.D., S.J.D.@$3,092.74 $113,860.22 for the Trust and
Trustee 54 other investment companies in the Fund Complex
Marjorie P. Smuts $3,092.74 $113,860.22 for the Trust and
Trustee 54 other investment companies in the Fund Complex
John S. Walsh** $0 $0 for the Trust and
Trustee 23 other investment companies in the Fund Complex
1 Information is furnished for the fiscal year ended January 31, 1999.
# The aggregate compensation is provided for the Trust which is comprised of
three portfolios.
+ The information is provided for the last calendar year.
* The Trustee is deemed to be an "interested person" as defined in the 1940 Act.
@ Member of the Executive Committee.
**Messrs. Cunningham, Donahue, Mansfield and Walsh became members of the Board
of Trustees on January 1, 1999. They did not earn any fees for serving the Fund
Complex since these fees are reported as of the end of the last calendar year.
They did not receive any fees as of the fiscal year end of the Trust.
During the fiscal year ended January 31, 1999, there were four meetings
of the Board of Trustees. The interested Trustees, other than Dr. Ellis, do not
receive fees from the Trust. Dr. Ellis is an interested person by reason of the
employment of his son-in-law by Federated Securities Corp. All Trustees were
reimbursed for expenses for attendance at Board of Trustees meetings.
The Executive Committee of the Board of Trustees handles the
responsibilities of the Board between meetings of the Board. Other than its
Executive Committee, the Trust has one Board committee, the Audit Committee.
Generally, the function of the Audit Committee is to assist the Board of
Trustees in fulfilling its duties relating to the Trust's accounting and
financial reporting practices and to serve as a direct line of communication
between the Board of Trustees and the independent auditors. The specific
functions of the Audit Committee include recommending the engagement or
retention of the independent auditors, reviewing with the independent auditors
the plan and the results of the auditing engagement, approving professional
services provided by the independent auditors prior to the performance of such
services, considering the range of audit and non-audit fees, reviewing the
independence of the independent auditors, reviewing the scope and results of the
Trust's procedures for internal auditing, and reviewing the Trust's system of
internal accounting controls.
For the most recently completed fiscal year, Messrs. Conroy, Madden
and Murray served on the Audit Committee. These Trustees are not interested
Trustees of the Trust. During the fiscal year ended January 31, 1999, there were
four meetings of the Audit Committee. All of the members of the Audit Committee
were present for each meeting. Each member of the Audit Committee receives an
annual fee of $100 plus $25 for attendance at each meeting and is reimbursed for
expenses of attendance.
OFFICERS AND INCUMBENT TRUSTEES OF THE TRUST
The executive officers of the Trust are elected annually by the Board of
Trustees. Each officer holds the office until qualification of his successor.
The names and birthdates of the executive officers of the Trust, as well as of
the incumbent Trustees who have previously been elected by shareholders, and
their principal occupations during the last five years, are set forth below:
John F. Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Date Became an Officer and a Trustee: November 13, 1996
Chairman and Trustee, Federated Investors; Chairman and Director, Federated
Investment Management Company and Federated Global Research Corp.; Chairman,
Passport Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President of the
Trust and a Trustee.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
Date Became an Officer and a Trustee: November 13, 1996
President or Executive Vice President of the Federated Fund Complex; Director or
Trustee of some of the Funds in the Federated Fund Complex; President and
Director, Federated Investors, Inc.; President and Trustee, Federated Investment
Management Company; President and Director, Federated Global Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated Shareholder Services
Company; Director, Federated Services Company. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Date Became a Trustee: November 13, 1996
Director or Trustee of the Federated Fund Complex; Director and Member of
Executive Committee, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director and Member
of Executive Committee, University of Pittsburgh.
John T. Conroy, Jr.
Wood/IPC Commercial Dept.
John R. Wood Associates, Inc. Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
Date Became a Trustee: November 13, 1996
Director or Trustee of the Federated Fund Complex; President, Investment
Properties Corporation; Senior Vice President, John R. Wood and Associates,
Inc., Realtors; Partner or Trustee in private real estate ventures in Southwest
Florida; formerly: President, Naples Property Management, Inc. and Northgate
Village Development
Corporation.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue
Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Date Became a Trustee: November 13, 1996
Director or Trustee of the Federated Fund Complex; Professor of Medicine,
University of Pittsburgh; Medical Director, University of Pittsburgh Medical
Center Downtown; Hematologist, Oncologist, and Internist, University of
Pittsburgh Medical Center; Member, National Board of Trustees, Leukemia Society
of America.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Date Became a Trustee: November 13, 1996
Director or Trustee of the Federated Fund Complex; formerly:
Representative, Commonwealth of Massachusetts General Court; President, State
Street Bank and Trust Company and State Street Corporation. Previous Positions:
Director, VISA USA and VISA International; Chairman and Director, Massachusetts
Bankers Association; Director,
Depository Trust Corporation.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
Date Became a Trustee: November 13, 1996
Director or Trustee of the Federated Fund Complex; President, Law Professor,
Duquesne University; Consulting Partner, Mollica & Murray.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Date Became a Trustee: November 13, 1996
Director or Trustee of the Federated Fund Complex; Public
Relations/Marketing/Conference Planning. Previous Positions: National
Spokesperson, Aluminum Company of America; business owner.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Date Became an Officer: November 13, 1996
Trustee or Director of some of the Funds in the Federated Fund Complex;
President, Executive Vice President and Treasurer of some of the Funds in the
Federated Fund Complex; Vice Chairman, Federated Investors, Inc.; Vice
President, Federated Investment Management Company, Federated Global Research
Corp. and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services Company.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Date Become an Officer: November 13, 1996
Executive Vice President and Secretary of the Federated Fund Complex; Executive
Vice President, Secretary, and Director, Federated Investors, Inc.; Director,
Federated Investment Management Company; Director, Federated Global Research
Corp.; Director, Federated Services Company; Director, Federated Securities
Corp.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Date Became an Officer: November 13, 1996
President or Vice President of some of the Funds in the Federated Fund Complex;
Director or Trustee of some of the Funds in the Federated Fund Complex;
Executive Vice President, Federated Investors, Inc.; Chairman and Director,
Federated Securities Corp.
Richard J. Thomas
Federated Investors Tower
Pittsburgh, PA
Birthdate: June 17, 1954
Treasurer
Date Became an Officer: November 19, 1998
Treasurer of the Federated Fund Complex; Vice President - Funds Financial
Services Division, Federated Investors, Inc.
William D. Dawson, III
Federated Investors Tower
Pittsburgh, PA
Birthdate: March 3, 1949
Chief Investment Officer
Date Became an Officer: November 19, 1998
Chief Investment Officer of the Trust and various other Funds in the Federated
Fund Complex; Executive Vice President, Federated Investment Counseling,
Federated Global Research Corp., Federated Investment Management Company and
Passport Research, Ltd.; Registered Representative, Federated Securities Corp.;
Portfolio Manager, Federated Administrative Services; Vice President, Federated
Investors, Inc.
Deborah A. Cunningham
Federated Investors Tower
Pittsburgh, PA
Birthdate: September 15, 1959
Vice President
Date Became an Officer: November 19, 1998
Senior Vice President, Federated Investment Management Company.
Mary Jo Ochson
Federated Investors Tower
Pittsburgh, PA
Birthdate: September 12, 1953
Vice President
Date Became an Officer: November 19, 1998
Senior Vice President, Federated Investment Management Company.
None of the Officers of the Trust received salaries from the Trust
during the fiscal year ended January 31, 1999.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
The Trust is not required, and does not intend, to hold regular annual
meetings of shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to Money Market Obligations
Trust II, Federated Investors Funds, 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-7000, so that they are received within a reasonable time
before any such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment or postponement of the
Meeting, the persons named on the enclosed proxy card will vote on such matters
according to their best judgment in the interests of the Trust.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES.
By Order of the Board of Trustees,
John W. McGonigle
Secretary
August 10, 1999
MONEY MARKET OBLIGATIONS TRUST II
MUNICIPAL OBLIGATIONS FUND
PRIME CASH OBLIGATIONS FUND
PRIME VALUE OBLIGATIONS FUND
INVESTMENT ADVISER
FEDERATED INVESTMENT MANAGEMENT COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
DISTRIBUTOR
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
ADMINISTRATOR
FEDERATED SERVICES COMPANY
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of
Municipal Obligations Fund (the "Municipal Fund"), a portfolio of Money Market
Obligations Trust II (the "Trust"), hereby appoint Patricia F. Conner, Gail
Cagney, William Haas, Elisabeth A. Miller and Ann M. Scanlon, or any one of
them, true and lawful attorneys, with the power of substitution of each, to vote
all shares of the Municipal Fund which the undersigned is entitled to vote at
the Special Meeting of Shareholders (the "Meeting") to be held on September 23,
1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any
adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF MONEY MARKET
OBLIGATIONS TRUST II. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS.
BY CHECKING THE BOX "FOR" BELOW, YOU WILL VOTE TO APPROVE EACH OF THE PROPOSED
ITEMS IN THIS PROXY, AND TO ELECT EACH OF THE NOMINEES AS TRUSTEES OF THE TRUST
FOR [ ]
PROPOSAL 1 TO ELECT NICHOLAS P. CONSTANTAKIS, JR., JOHN F. CUNNINGHAM,
J. CHRISTOPHER DONAHUE, CHARLES F. MANSFIELD, JR. AND
JOHN S. WALSH AS TRUSTEES OF THE TRUST
FOR [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
VOTE FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR" a
particular nominee, mark the "VOTE FOR ALL EXCEPT" box
and strike a line through the name of each nominee for
whom you are NOT voting. Your shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE A PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN THE TRUST, ON BEHALF OF ITS SERIES, MUNICIPAL OBLIGATIONS
FUND (THE "MUNICIPAL FUND") AND MONEY MARKET OBLIGATIONS TRUST,
ON BEHALF OF ITS SERIES, MUNICIPAL OBLIGATIONS FUND (THE "NEW
MUNICIPAL FUND") WHEREBY THE NEW MUNICIPAL FUND WOULD ACQUIRE ALL
OF THE ASSETS OF THE MUNICIPAL FUND IN EXCHANGE FOR SHARES OF THE
NEW MUNICIPAL FUND TO BE DISTRIBUTED PRO RATA BY THE MUNICIPAL
FUND TO ITS SHAREHOLDERS IN COMPLETE LIQUIDATION AND TERMINATION
OF THE MUNICIPAL FUND
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT Please
complete, sign and return
this card as soon as
possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
YOU MAY ALSO VOTE YOUR SHARES BY TOUCHTONE PHONE BY CALLING 1-800-690-6903
OR THROUGH THE INTERNET AT WWW.PROXYVOTE.COM
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Prime
Cash Obligations Fund (the "Prime Cash Fund"), a portfolio of Money Market
Obligations Trust II (the "Trust"), hereby appoint Patricia F. Conner, Gail
Cagney, William Haas, Elisabeth A. Miller and Ann M. Scanlon, or any one of
them, true and lawful attorneys, with the power of substitution of each, to vote
all shares of the Prime Cash Fund which the undersigned is entitled to vote at
the Special Meeting of Shareholders (the "Meeting") to be held on September 23,
1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any
adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF MONEY MARKET
OBLIGATIONS TRUST II. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS.
BY CHECKING THE BOX "FOR" BELOW, YOU WILL VOTE TO APPROVE EACH OF THE PROPOSED
ITEMS IN THIS PROXY, AND TO ELECT EACH OF THE NOMINEES AS TRUSTEES OF THE TRUST
FOR [ ]
PROPOSAL 1 TO ELECT NICHOLAS P. CONSTANTAKIS, JR., JOHN F. CUNNINGHAM,
J. CHRISTOPHER DONAHUE, CHARLES F. MANSFIELD, JR. AND
JOHN S. WALSH AS TRUSTEES OF THE TRUST
FOR [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
VOTE FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR" a
particular nominee, mark the "VOTE FOR ALL EXCEPT" box
and strike a line through the name of each nominee for
whom you are NOT voting. Your shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE A PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN THE TRUST, ON BEHALF OF ITS SERIES, PRIME CASH
OBLIGATIONS FUND (THE "PRIME CASH FUND") AND MONEY MARKET
OBLIGATIONS TRUST, ON BEHALF OF ITS SERIES, PRIME CASH
OBLIGATIONS FUND (THE "NEW PRIME CASH FUND") WHEREBY THE NEW
PRIME CASH FUND WOULD ACQUIRE ALL OF THE ASSETS OF THE PRIME CASH
FUND IN EXCHANGE FOR SHARES OF THE NEW PRIME CASH FUND TO BE
DISTRIBUTED PRO RATA BY THE PRIME CASH FUND TO ITS SHAREHOLDERS
IN COMPLETE LIQUIDATION AND TERMINATION OF THE PRIME CASH FUND
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT Please
complete, sign and return
this card as soon as
possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
YOU MAY ALSO VOTE YOUR SHARES BY TOUCHTONE PHONE BY CALLING 1-800-690-6903
OR THROUGH THE INTERNET AT WWW.PROXYVOTE.COM
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned Shareholders of Prime
Value Obligations Fund (the "Prime Value Fund"), a portfolio of Money Market
Obligations Trust II (the "Trust"), hereby appoint Patricia F. Conner, Gail
Cagney, William Haas, Elisabeth A. Miller and Ann M. Scanlon, or any one of
them, true and lawful attorneys, with the power of substitution of each, to vote
all shares of the Prime Value Fund which the undersigned is entitled to vote at
the Special Meeting of Shareholders (the "Meeting") to be held on September 23,
1999, at 5800 Corporate Drive, Pittsburgh, Pennsylvania, at 2:00 p.m. and at any
adjournment thereof.
The attorneys named will vote the shares represented by this proxy in accordance
with the choices made on this ballot. If no choice is indicated as to the item,
this proxy will be voted affirmatively on the matters. Discretionary authority
is hereby conferred as to all other matters as may properly come before the
Meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF MONEY MARKET
OBLIGATIONS TRUST II. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS.
BY CHECKING THE BOX "FOR" BELOW, YOU WILL VOTE TO APPROVE EACH OF THE PROPOSED
ITEMS IN THIS PROXY, AND TO ELECT EACH OF THE NOMINEES AS TRUSTEES OF THE TRUST
FOR [ ]
PROPOSAL 1 TO ELECT NICHOLAS P. CONSTANTAKIS, JR., JOHN F. CUNNINGHAM,
J. CHRISTOPHER DONAHUE, CHARLES F. MANSFIELD, JR. AND
JOHN S. WALSH AS TRUSTEES OF THE TRUST
FOR [ ]
WITHHOLD AUTHORITY
TO VOTE [ ]
VOTE FOR ALL EXCEPT [ ]
If you do not wish your shares to be voted "FOR" a
particular nominee, mark the "VOTE FOR ALL EXCEPT" box
and strike a line through the name of each nominee for
whom you are NOT voting. Your shares will be voted for
the remaining nominees.
PROPOSAL 2 TO APPROVE A PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN THE TRUST, ON BEHALF OF ITS SERIES, PRIME VALUE
OBLIGATIONS FUND (THE "PRIME VALUE FUND"), AND MONEY MARKET
OBLIGATIONS TRUST, ON BEHALF OF ITS SERIES, PRIME VALUE
OBLIGATIONS FUND (THE "NEW PRIME VALUE FUND") WHEREBY THE NEW
PRIME VALUE FUND WOULD ACQUIRE ALL OF THE ASSETS OF PRIME VALUE
FUND IN EXCHANGE FOR SHARES OF THE NEW PRIME VALUE FUND TO BE
DISTRIBUTED PRO RATA BY THE PRIME VALUE FUND TO ITS SHAREHOLDERS
IN COMPLETE LIQUIDATION AND TERMINATION OF THE PRIME VALUE FUND
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
YOUR VOTE IS IMPORTANT Please
complete, sign and return
this card as soon as
possible.
Dated
Signature
Signature (Joint Owners)
Please sign this proxy exactly as your name appears on the books of the Trust.
Joint owners should each sign personally. Directors and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
YOU MAY ALSO VOTE YOUR SHARES BY TOUCHTONE PHONE BY CALLING 1-800-690-6903
OR THROUGH THE INTERNET AT WWW.PROXYVOTE.COM
APPENDIX I
THIS AGREEMENT AND PLAN OF REORGANIZATION DESCRIBES THE PROPOSED REORGANIZATION
OF THE MUNICIPAL FUND INTO THE NEW MUNICIPAL FUND. SUBSTANTIALLY IDENTICAL
AGREEMENTS AND PLANS OF REORGANIZATION WILL BE UTILIZED TO DESCRIBE THE PROPOSED
REORGANIZATION OF THE PRIME CASH FUND INTO THE NEW PRIME CASH FUND, AND THE
PRIME VALUE FUND INTO THE NEW PRIME VALUE FUND.
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of June 1, 1999 (the
"Agreement") between Money Market Obligations Trust II, a Massachusetts business
trust ("MMOT II"), on behalf of its portfolio, Municipal Obligations Fund (the
"Fund"), with its principal place of business at 5800 Corporate Drive,
Pittsburgh, Pennsylvania 15237-7000, and Money Market Obligations Trust, a
Massachusetts business trust (the "Trust"), with its principal place of business
located at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-7000, on behalf
of its newly-organized portfolio, Municipal Obligations Fund (the "Successor
Fund").
WHEREAS, the Board of Trustees of MMOT II and the Board of Trustees
of the Trust have determined that it is in the best interests of the Fund and
the Trust, respectively, that the assets of the Fund be acquired by the
Successor Fund pursuant to this Agreement; and
WHEREAS, the parties desire to enter into a plan of exchange which would
constitute a reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the "Code"):
NOW THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. PLAN OF EXCHANGE.
(a) Subject to the terms and conditions set forth herein, the
Fund shall assign, transfer and convey its assets, including all securities and
cash held by the Fund (subject to the liabilities of the Fund) to the Successor
Fund, and the Successor Fund shall acquire all of the assets of the Fund
(subject to the liabilities of the Fund) in exchange for full and fractional
shares of beneficial interest of the Successor Fund (the "Successor Fund
Shares"), to be issued by the Trust, having an aggregate net asset value equal
to the value of the net assets of the Fund. The value of the assets of the Fund
and the net asset value per share of the Successor Fund Shares shall be computed
as of the close of the New York Stock Exchange (normally 4:00 p.m. Eastern time)
on the Exchange Date (such time and date being hereinafter called the "Valuation
Time") in accordance with the procedures for determining the value of the
Successor Fund's assets set forth in the Successor Fund's organizational
documents and the then-current prospectus and statement of additional
information for the Successor Fund that forms a part of the Successor Fund's
Registration Statement on Form N-1A (the "Registration Statement"). In lieu of
delivering certificates for the Successor Fund Shares, the Trust shall credit
the Successor Fund Shares to the Fund's account on the share record books of the
Trust and shall deliver a confirmation thereof to the Fund. The Fund shall then
deliver written instructions to the Trust's transfer agent to establish accounts
for the shareholders on the share record books relating to the Successor
Fund.
(b) Delivery of the assets of the Fund to be transferred shall
be made on the Exchange Date (as defined herein). Assets transferred shall be
delivered to State Street Bank and Trust Company, the Trust's custodian (the
"Custodian"), for the account of the Trust and the Successor Fund with all
securities not in bearer or book entry form duly endorsed, or accompanied by
duly executed separate assignments or stock powers, in proper form for transfer,
with signatures guaranteed, and with all necessary stock transfer stamps,
sufficient to transfer good and marketable title thereto (including all accrued
interest and dividends and rights pertaining thereto) to the Custodian for the
account of the Trust and the Successor Fund free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered shall be in
the form of immediately available funds payable to the order of the Custodian
for the account of the Trust and the Successor Fund.
(c) MMOT II will pay or cause to be paid to the Trust any
interest received on or after the Exchange Date with respect to assets
transferred from the Fund to the Successor Fund hereunder and to the Trust and
any distributions, rights or other assets received by the Fund after the
Exchange Date as distributions on or with respect to the securities transferred
from the Fund to the Successor Fund hereunder. All such assets shall be deemed
included in assets transferred to the Successor Fund on the Exchange Date and
shall not be separately valued.
(d) The Exchange Date shall be November 1, 1999, or such earlier
or later date as may be mutually agreed upon by the parties.
(e) As soon as practicable after the Exchange Date, the Fund
shall distribute all of the Successor Fund Shares received by it among the
shareholders of the Fund in proportion to the number of shares each such
shareholder holds in the Fund and shall take all other steps necessary to effect
its dissolution and termination. After the Exchange Date, the Fund shall not
conduct any business except in connection with its dissolution and termination.
2. MMOT II'S REPRESENTATIONS AND WARRANTIES. MMOT II represents and
warrants to and agrees with the Trust on behalf of the Successor Fund as
follows:
(a) MMOT II is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts and has
power to own all of its properties and assets and, subject to the approval of
its shareholders as contemplated hereby, to carry out this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by MMOT II and is valid and binding on MMOT II, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity. The execution and delivery of this Agreement does not and
will not, and the consummation of the transactions contemplated by this
Agreement will not, violate MMOT II's Declaration of Trust or By-Laws or any
agreement or arrangement to which it is a party or by which it is bound.
(c) MMOT II is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and such registration has not been revoked or rescinded and is in full force and
effect.
(d) Except as shown on the audited financial statements of the
Fund for its most recently completed fiscal period and as incurred in the
ordinary course of the Fund's business since then, the Fund has no known
liabilities of a material amount, contingent or otherwise, and there are no
legal, administrative or other proceedings pending or, to the Fund's knowledge,
threatened against the Fund.
(e) On the Exchange Date, the Fund will have full right, power and
authority to sell, assign, transfer and deliver the Fund's assets to be
transferred by it hereunder.
3. THE TRUST'S REPRESENTATIONS AND WARRANTIES. The Trust, on behalf of
the Successor Fund, represents and warrants to and agrees with MMOT II as
follows:
(a) The Trust is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has power to carry on its business as it is now being
conducted and to carry out this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by the Trust and is valid and binding on the Trust, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity. The execution and delivery of this Agreement does not and
will not, and the consummation of the transactions contemplated by this
Agreement will not, violate the Trust's Declaration of Trust or By-Laws or any
agreement or arrangement to which it is a party or by which it is bound.
(c) The Trust is registered under the 1940 Act as an open-end management
investment company and such registration has not been revoked or rescinded and
is in full force and effect.
(d) The Successor Fund does not have any known liabilities of a
material amount, contingent or otherwise, and there are no legal, administrative
or other proceedings pending or, to the Trust's knowledge, threatened against
the Successor Fund. Other than organizational activities, the Successor Fund has
not engaged in any business activities.
(e) At the Exchange Date, the Successor Fund Shares to be
issued to the Fund (the only Successor Fund shares to be issued as of the
Exchange Date) will have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be legally and validly issued and will be fully
paid and non-assessable. No Trust or Successor Fund shareholder will have any
preemptive right of subscription or purchase in respect thereof.
4. THE TRUST'S CONDITIONS PRECEDENT. The obligations of the Trust hereunder
shall be subject to the following conditions:
(a) MMOT II shall have furnished to the Trust a statement of
the Fund's assets, including a list of securities owned by the Fund with their
respective tax costs and values determined as provided in Section 1 hereof, all
as of the Exchange Date.
(b) As of the Exchange Date, all representations and warranties
of MMOT II made in this Agreement shall be true and correct as if made at and as
of such date, and MMOT II shall have complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such date.
(c) A vote of the shareholders of the Fund approving this
Agreement and the transactions and exchange contemplated hereby shall have been
adopted by the vote required by applicable law.
5. MMOT II'S CONDITIONS PRECEDENT. The obligations of MMOT II
hereunder with respect to the Fund shall be subject to the condition that as of
the Exchange Date all representations and warranties of the Trust made in this
Agreement shall be true and correct as if made at and as of such date, and that
the Trust shall have complied with all of the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to such date.
6. THE TRUST'S AND MMOT II'S CONDITIONS PRECEDENT. The obligations of both
the Trust and MMOT II hereunder shall be subject to the following
conditions:
(a) The post-effective amendment to the Trust's Registration
Statement on Form N-1A relating to the Successor Fund under the Securities Act
of 1933, as amended, and the 1940 Act, if applicable, shall have become
effective, and any additional post-effective amendments to such Registration
Statement as are determined by the Trustees of the Trust to be necessary and
appropriate shall have been filed with the Commission and shall have become
effective.
(b) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency which seeks to restrain or
prohibit, or obtain damages or other relief in connection with, this Agreement
or the transaction contemplated herein.
(c) Each party shall have received an opinion of Dickstein
Shapiro Morin & Oshinsky LLP to the effect that the reorganization contemplated
by this Agreement qualifies as a "reorganization" under Section 368(a)(1)(F) of
the Code.
Provided, however, that at any time prior to the Exchange Date, any of
the foregoing conditions in this Section 6 may be waived by the parties if, in
the judgment of the parties, such waiver will not have a material adverse effect
on the benefits intended under this Agreement to the shareholders of the Fund.
7. TERMINATION OF AGREEMENT. This Agreement and the transactions
contemplated hereby may be terminated and abandoned by resolution of the Board
of Trustees of MMOT II or the Board of Trustees of the Trust at any time prior
to the Exchange Date (and notwithstanding any vote of the shareholders of the
Fund) if circumstances should develop that, in the opinion of either the Board
of Trustees of MMOT II or the Board of Trustees of the Trust, make proceeding
with this Agreement inadvisable.
If this Agreement is terminated and the exchange contemplated hereby is
abandoned pursuant to the provisions of this Section 7, this Agreement shall
become void and have no effect, without any liability on the part of any party
hereto or the Trustees, officers or shareholders of the Trust or the Trustees,
officers or shareholders of MMOT II, in respect of this Agreement.
8. WAIVER AND AMENDMENTS. At any time prior to the Exchange Date, any of
the conditions set forth in Section 4 may be waived by the Board of the Trust,
and any of the conditions set forth in Section 5 may be waived by the Board of
MMOT II, if, in the judgment of the waiving party, such waiver will not have a
material adverse effect on the benefits intended under this Agreement to the
shareholders of the Fund or the shareholders of the Successor Fund, as the case
may be. In addition, prior to the Exchange Date, any provision of this Agreement
may be amended or modified by the Boards of MMOT II and the Trust if such
amendment or modification would not have a material adverse effect upon the
benefits intended under this Agreement and would be consistent with the best
interests of shareholders of the Fund and the Successor Fund.
9. NO SURVIVAL OF REPRESENTATIONS. None of the representations and
warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
10. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflict of laws; provided, however, that the due
authorization, execution and delivery of this Agreement, in the case of MMOT II
and the Trust, shall be governed and construed in accordance with the laws of
the Commonwealth of Massachusetts without giving effect to principles of
conflict of laws.
11. CAPACITY OF TRUSTEES, ETC.
(a) (i) The names "Municipal Obligations Fund" and "Board of
Trustees of Money Market Obligations Trust II" refer, respectively, to the trust
created and the trustees, as trustees but not individually or personally, acting
from time to time under MMOT II's Declaration of Trust, which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of MMOT II. The
obligations of MMOT II entered into in the name or on behalf thereof by any of
the trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of MMOT II personally, but bind only the trust property, and all
persons dealing with any portfolio of shares of the Fund must look solely to the
trust property belonging to such portfolio for the enforcement of any claims
against the Fund.
(ii) Both parties specifically acknowledge and agree that
any liability of the Fund under this Agreement, or in connection with the
transactions
contemplated herein, shall be discharged only out of the assets of the Fund and
that no other portfolio of MMOT II shall be liable with respect thereto.
(b) (i) The names "Money Market Obligations Trust" and "Board of
Trustees of Money Market Obligations Trust" refer, respectively, to the trust
created and the trustees, as trustees but not individually or personally, acting
from time to time under the Trust's Declaration of Trust, which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of the Trust.
The obligations of the Trust entered into in the name or on behalf of the
Successor Fund by any of the trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
trustees, shareholders or representatives of the Trust personally, but bind only
the Successor Fund's trust property, and all persons dealing with any portfolio
of shares of the Trust must look solely to the trust property belonging to such
portfolio for the enforcement of any claims against the Trust.
(ii) Both parties specifically acknowledge and agree that
any liability of the Trust under this Agreement, or in connection with the
transactions
contemplated herein, shall be discharged only out of the assets of the Successor
Fund and that no other portfolio of the Trust shall be liable with respect
thereto.
12. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, MMOT II and the Trust have caused this Agreement
and Plan of Reorganization to be executed as of the date above first
written.
MONEY MARKET OBLIGATIONS TRUST II,
on behalf of its portfolio,
Municipal Obligations Fund
ATTEST: /S/ GAIL CAGNEY /S/ JOHN W. MCGONIGLE
Title: Assistant Secretary Title: Executive Vice President
MONEY MARKET OBLIGATIONS
TRUST, on behalf of its portfolio,
Municipal Obligations Fund
ATTEST: /S/ GAIL CAGNEY /S/ JOHN W. MCGONIGLE
Title: Assistant Secretary Title: Executive Vice President
APPENDIX II - A
Set forth below is a comparison of the investment policies and
restrictions of the Municipal Fund and the New Municipal Fund:
FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
PAYMENT OF EXEMPT INTEREST INCOME
MUNICIPAL FUND: "As a fundamental investment policy, at least 80% of the
Fund's annual interest income will be exempt from federal regular income tax."
NEW MUNICIPAL FUND: "As a fundamental investment policy, at least 80% of
the Fund's annual interest income will be exempt from federal regular income
tax."
INVESTMENTS IN MUNICIPAL SECURITIES
MUNICIPAL FUND: "Without approval of the holders of a majority of the
Fund's outstanding Shares, the Fund may not change its policy of investing at
least 80% of its total assets (except during temporary defensive periods) in
Municipal Securities."
NEW MUNICIPAL FUND: The New Municipal Fund is subject to a NON-fundamental
investment policy that provides: "Under normal market conditions, the Fund will
invest at least 80% of its total assets in Municipal Securities."
DIVERSIFICATION OF INVESTMENTS
MUNICIPAL FUND: "The Fund may not purchase securities of any one issuer if as a
result more than 5% of the value of the Fund's assets would be invested in the
securities of such issuer, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% limitation and provided
that there is no limitation with respect to investments in U.S. government
securities."
NEW MUNICIPAL FUND: "With respect to securities comprising 75% of the value of
its total assets, the Fund will not purchase securities of any one issuer (other
than cash; cash items; securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and securities of other
investment companies) if, as a result, more than 5% of the value of its total
assets would be invested in securities of that issuer, or the Fund would own
more than 10% of the outstanding voting securities of that issuer."
CONCENTRATION OF INVESTMENTS
MUNICIPAL FUND: "The Fund may not purchase any securities which would cause 25%
or more of the value of its total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their principal
business activities in the same industry, or in industrial development bonds or
other securities, the interest upon which is paid from revenues of similar types
of projects (unless the Fund is in a temporary defensive position), provided
that there is no limitation with respect to investments in U.S. government
securities."
NEW MUNICIPAL FUND: "The Fund will not make investments that will result in the
concentration of its investments in the securities of issuers primarily engaged
in the same industry. Government securities, municipal securities and bank
instruments are not deemed to constitute an industry. To conform to the current
view of the SEC that only domestic bank instruments may be excluded from
industry concentration limitations, as a matter of non-fundamental policy, the
Fund will not exclude foreign bank instruments from industry concentration
limits as long as the policy of the SEC remains in effect. As a non-fundamental
operating policy, the Fund will consider concentration to be the investment of
more than 25% of the value of its total assets in any one industry."
INVESTING IN REAL ESTATE
MUNICIPAL FUND: "The Fund may not purchase or sell real estate or real
estate limited partnerships, provided that the Fund may purchase securities of
issuers which invest in real estate or interests therein."
NEW MUNICIPAL FUND: "The Fund may not purchase or sell real estate, provided
that this restriction does not prevent the Fund from investing in issuers which
invest, deal, or otherwise engage in transactions in real estate or interests
therein, or investing in securities that are secured by real estate or interests
therein. The Fund may exercise its rights under agreements relating to such
securities, including the right to enforce security interests and to hold real
estate acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner."
UNDERWRITING SECURITIES
MUNICIPAL FUND: "The Fund may not act as an underwriter of securities,
except insofar as the Fund may be deemed an underwriter under applicable
securities laws in selling portfolio securities."
NEW MUNICIPAL FUND: "The Fund may not underwrite the securities of other
issuers, except that the Fund may engage in transactions involving the
acquisition, disposition or resale of its portfolio securities, under
circumstances where it may be considered to be an underwriter under the
Securities Act of 1933."
INVESTING IN COMMODITIES
MUNICIPAL FUND: "The Fund may not purchase or sell commodities contracts."
NEW MUNICIPAL FUND: "The Fund may not purchase or sell physical
commodities, provided that the Fund may purchase securities of companies that
deal in commodities."
INVESTING IN MINERALS
MUNICIPAL FUND: "The Fund may not invest in oil, gas or mineral exploration
or development programs or in mineral leases."
NEW MUNICIPAL FUND: The New Municipal Fund is not subject to a fundamental
investment limitation regarding investing in minerals.
ISSUING SENIOR SECURITIES, BORROWING MONEY AND PLEDGING ASSETS
MUNICIPAL FUND: "The Fund may not borrow money, except that the Fund may: (i)
borrow money for temporary or emergency purposes (not for leveraging or
investment) from banks or, subject to specific authorization by the SEC, from
funds advised by the adviser or an affiliate of the adviser; and (ii) engage in
reverse repurchase agreements, provided that (i) and (ii) in combination do not
exceed one-third of the value of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). The Fund may not mortgage,
pledge, or hypothecate its assets except in connection with such borrowings and
reverse repurchase agreements and then only in amounts not exceeding one-third
of the value of the Fund's total assets. Additional investments will not be made
when borrowings exceed 5% of the Fund's assets."
NEW MUNICIPAL FUND: "The Fund may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted under the 1940 Act." The
New Municipal Fund is subject to a NON-fundamental investment limitation
pertaining to pledging assets that provides: "The Fund will not mortgage, pledge
or hypothecate any of its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible borrowing or to
collateral arrangements in connection with permissible activities."
LENDING CASH OR SECURITIES
MUNICIPAL FUND: "The Fund may not make loans, except that the Fund may: (i)
purchase or hold debt obligations in accordance with its investment objective
and policies; (ii) enter into repurchase agreements for securities; (iii) lend
portfolio securities; and (iv) subject to specific authorization by the SEC,
lend money to other funds advised by the adviser or an affiliate of the
adviser."
NEW MUNICIPAL FUND: "The Fund may not make loans, provided that this restriction
does not prevent the Fund from purchasing debt obligations, entering into
repurchase agreements, lending its assets to broker/dealers or institutional
investors and investing in loans, including assignments and participation
interests."
NON-FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
PERMISSIBLE INVESTMENTS
MUNICIPAL FUND: "The Fund invests in a portfolio of high quality tax exempt
securities maturing in 13 months or less."
NEW MUNICIPAL FUND: "The Fund invests in a portfolio of high quality tax
exempt securities maturing in 397 days or less."
INVESTING IN TAX EXEMPT SECURITIES
MUNICIPAL FUND: "In order to enhance yield, the Fund's Adviser will seek to
invest a significant portion of the portfolio in tax exempt securities subject
to the alternative minimum tax."
NEW MUNICIPAL FUND: The New Municipal Fund is subject to an identical
non-fundamental investment policy.
INVESTMENT RATINGS
MUNICIPAL FUND: "The securities in which the Fund invests must be rated in
one of the two highest short-term rating categories by one or more nationally
recognized rating services or be of comparable quality to securities having such
ratings."
NEW MUNICIPAL FUND: The New Municipal Fund is subject to an identical
non-fundamental investment policy.
TEMPORARY DEFENSIVE INVESTMENTS
MUNICIPAL FUND: "During adverse market conditions, the Fund may temporarily
depart from its principal investment strategies by investing in securities
subject to federal regular income tax. Temporary investments will be of
comparable quality to other securities in which the Fund invests."
NEW MUNICIPAL FUND: The New Municipal Fund is subject to an identical
non-fundamental investment policy.
INVESTING IN ILLIQUID SECURITIES
MUNICIPAL FUND: "The Fund will not invest more than 10% of the value of its
net assets in illiquid securities including non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice."
NEW MUNICIPAL FUND: "The Fund will not purchase securities for which there is no
readily available market, or enter into repurchase agreements or purchase time
deposits maturing in more than seven days, if immediately after and as a result,
the value of such securities would exceed, in the aggregate, 10% of the Fund's
net assets."
SELLING SHORT AND BUYING ON MARGIN
MUNICIPAL FUND: "The Fund will not sell any securities short or purchase
any securities on margin but may obtain such short-term credits as are necessary
for clearance of transactions."
NEW MUNICIPAL FUND: The Fund is not subject to an investment limitation
regarding selling securities short. The Fund is subject to an investment
limitation relating to margin transactions that states: "The Fund will not
purchase securities on margin, provided that the Fund may obtain short-term
credits necessary for the clearance of purchases and sales of securities."
INVESTING IN OPTIONS
MUNICIPAL FUND: "The Fund will not invest in puts, calls, straddles,
spreads, or any combination of them."
NEW MUNICIPAL FUND: The New Municipal Fund is not subject to a comparable
investment policy pertaining to these investments.
REGULATORY COMPLIANCE
MUNICIPAL FUND: "The Fund may follow non-fundamental operational policies that
are more restrictive than its fundamental investment limitations, as set forth
in the Fund's prospectus and Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by nationally recognized rating services,
according to Rule 2a-7. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of its
shareholders."
NEW MUNICIPAL FUND: The New Municipal Fund is subject to an identical
operating policy.
APPENDIX II - B
Set forth below is a comparison of the investment policies and
restrictions of the Prime Cash Fund and the New Prime Cash Fund:
FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
DIVERSIFICATION OF INVESTMENTS
PRIME CASH FUND: "The Fund may not purchase securities of any one issuer if as a
result more than 5% of the value of the Fund's assets would be invested in the
securities of such issuer, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% limitation and provided
that there is no limitation with respect to investments in U.S. government
securities."
NEW PRIME CASH FUND: "With respect to securities comprising 75% of the value of
its total assets, the Fund will not purchase securities of any one issuer (other
than cash; cash items; securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and securities of other
investment companies) if, as a result, more than 5% of the value of its total
assets would be invested in securities of that issuer, or the Fund would own
more than 10% of the outstanding voting securities of that issuer."
CONCENTRATION OF INVESTMENTS
PRIME CASH FUND: "The Fund may not purchase any securities which would cause 25%
or more of the value of its total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their principal
business activities in the same industry (unless the Fund is in a temporary
defensive position), provided that there is no limitation with respect to
investments in U.S. government securities or, in bank instruments issued by
domestic banks."
NEW PRIME CASH FUND: "The Fund will not make investments that will result in the
concentration of its investments in the securities of issuers primarily engaged
in the same industry. Government securities, municipal securities and bank
instruments are not deemed to constitute an industry. To conform to the current
view of the SEC that only domestic bank instruments may be excluded from
industry concentration limitations, as a matter of non-fundamental policy, the
Fund will not exclude foreign bank instruments from industry concentration
limits as long as the policy of the SEC remains in effect. As a non-fundamental
operating policy, the Fund will consider concentration to be the investment of
more than 25% of the value of its total assets in any one industry."
INVESTING IN REAL ESTATE
PRIME CASH FUND: "The Fund may not purchase or sell real estate or real
estate limited partnerships, provided that the Fund may purchase securities of
issuers which invest in real estate or interests therein."
NEW PRIME CASH FUND: "The Fund may not purchase or sell real estate, provided
that this restriction does not prevent the Fund from investing in issuers which
invest, deal, or otherwise engage in transactions in real estate or interests
therein, or investing in securities that are secured by real estate or interests
therein. The Fund may exercise its rights under agreements relating to such
securities, including the right to enforce security interests and to hold real
estate acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner."
UNDERWRITING SECURITIES
PRIME CASH FUND: "The Fund may not act as an underwriter of securities,
except insofar as the Fund may be deemed an underwriter under applicable
securities laws in selling portfolio securities."
NEW PRIME CASH FUND: "The Fund may not underwrite the securities of other
issuers, except that the Fund may engage in transactions involving the
acquisition, disposition or resale of its portfolio securities, under
circumstances where it may be considered to be an underwriter under the
Securities Act of 1933."
INVESTING IN COMMODITIES
PRIME CASH FUND: "The Fund may not purchase or sell commodities contracts."
NEW PRIME CASH FUND: "The Fund may not purchase or sell physical
commodities, provided that the Fund may purchase securities of companies that
deal in commodities."
INVESTING IN MINERALS
PRIME CASH FUND: "The Fund may not invest in oil, gas or mineral
exploration or development programs or in mineral leases."
NEW PRIME CASH FUND: The New Prime Cash Fund is not subject to a
fundamental investment limitation regarding investing in minerals.
ISSUING SENIOR SECURITIES, BORROWING MONEY AND PLEDGING ASSETS
PRIME CASH FUND: "The Fund may not borrow money, except that the Fund may: (i)
borrow money for temporary or emergency purposes (not for leveraging or
investment) from banks or, subject to specific authorization by the SEC, from
funds advised by the adviser or an affiliate of the adviser; and (ii) engage in
reverse repurchase agreements, provided that (i) and (ii) in combination do not
exceed one-third of the value of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). The Fund may not mortgage,
pledge, or hypothecate its assets except in connection with such borrowings and
reverse repurchase agreements and then only in amounts not exceeding one-third
of the value of the Fund's total assets. Additional investments will not be made
when borrowings exceed 5% of the Fund's assets."
NEW PRIME CASH FUND: "The Fund may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted under the 1940 Act." The
New Prime Cash Fund is subject to a NON-fundamental investment limitation
pertaining to pledging assets that provides: "The Fund will not mortgage, pledge
or hypothecate any of its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible borrowing or to
collateral arrangements in connection with permissible activities."
LENDING CASH OR SECURITIES
PRIME CASH FUND: "The Fund may not make loans, except that the Fund may: (i)
purchase or hold debt obligations in accordance with its investment objective
and policies; (ii) enter into repurchase agreements for securities; (iii) lend
portfolio securities as described in the prospectus; and (iv) subject to
specific authorization by the SEC, lend money to other funds advised by the
adviser or an affiliate of the adviser."
NEW PRIME CASH FUND: "The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing debt obligations, entering
into repurchase agreements, lending its assets to broker/dealers or
institutional investors and investing in loans, including assignments and
participation interests."
NON-FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
PERMISSIBLE INVESTMENTS
PRIME CASH FUND: "The Fund invests in a portfolio of high quality fixed
income securities maturing in 13 months or less."
NEW PRIME CASH FUND: "The Fund invests in a portfolio of high quality fixed
income securities maturing in 397 days or less."
INVESTMENT RATINGS
PRIME CASH FUND: "The Fund invests in high-quality money market instruments that
are either rated in the highest short-term rating category by one or more
nationally recognized statistical rating organizations or are of comparable
quality to securities having such ratings."
NEW PRIME CASH FUND: The New Prime Cash Fund is subject to an identical
non-fundamental investment policy.
ENGAGING IN REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS AND
DELAYED DELIVERY TRANSACTIONS
PRIME CASH FUND: The Prime Cash Fund is authorized to engage in repurchase
agreements, reverse repurchase agreements and delayed delivery transactions.
NEW PRIME CASH FUND: The New Prime Cash Fund is authorized to engage in
repurchase agreements, reverse repurchase agreements and delayed delivery
transactions.
INVESTING IN ILLIQUID SECURITIES
PRIME CASH FUND: "The Fund will not invest more than 10% of the value of its net
assets in illiquid securities including non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice."
NEW PRIME CASH FUND: "The Fund will not purchase securities for which there is
no readily available market, or enter into repurchase agreements or purchase
time deposits maturing in more than seven days, if immediately after and as a
result, the value of such securities would exceed, in the aggregate, 10% of the
Fund's net assets."
SELLING SHORT AND BUYING ON MARGIN
PRIME CASH FUND: "The Fund will not sell any securities short or purchase
any securities on margin but may obtain such short-term credits as are necessary
for clearance of transactions."
NEW PRIME CASH FUND: The New Prime Cash Fund is not subject to an investment
limitation regarding selling securities short. The New Prime Cash Fund is
subject to an investment limitation relating to margin transactions that states:
"The Fund will not purchase securities on margin, provided that the Fund may
obtain short-term credits necessary for the clearance of purchases and sales of
securities."
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
PRIME CASH FUND: The Fund is not subject to an investment policy pertaining
to investing in securities of other investment companies.
NEW PRIME CASH FUND: "The Fund may invest its assets in securities of other
investment companies."
INVESTING IN OPTIONS
PRIME CASH FUND: "The Fund will not invest in puts, calls, straddles,
spreads, or any combination of them."
NEW PRIME CASH FUND: The New Prime Cash Fund is not subject to a comparable
investment limitation pertaining to investing in options.
INVESTING IN NEW ISSUERS
PRIME CASH FUND: "The Fund will not invest more than 15% of the value of
its total assets in securities of companies (including predecessors) with less
than three years of continuous operation."
NEW PRIME CASH FUND: The New Prime Cash Fund is not subject to a comparable
investment limitation pertaining to investing in new issuers.
REGULATORY COMPLIANCE
PRIME CASH FUND: "The Fund may follow non-fundamental operational policies that
are more restrictive than its fundamental investment limitations, as set forth
in the Fund's prospectus and Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by nationally recognized rating services,
according to Rule 2a-7. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of its
shareholders."
NEW PRIME CASH FUND: The New Prime Cash Fund is subject to an identical
operating policy.
APPENDIX II - C
Set forth below is a comparison of the investment policies and
restrictions of Prime Value Fund and the New Prime Value Fund:
FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
DIVERSIFICATION OF INVESTMENTS
PRIME VALUE FUND: "The Fund may not purchase securities of any one issuer if as
a result more than 5% of the value of the Fund's assets would be invested in the
securities of such issuer, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% limitation and provided
that there is no limitation with respect to investments in U.S. government
securities."
NEW PRIME VALUE FUND: "With respect to securities comprising 75% of the value of
its total assets, the Fund will not purchase securities of any one issuer (other
than cash; cash items; securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities; and securities of other
investment companies) if, as a result, more than 5% of the value of its total
assets would be invested in securities of that issuer, or the Fund would own
more than 10% of the outstanding voting securities of that issuer."
CONCENTRATION OF INVESTMENTS
PRIME VALUE FUND: "The Fund may not purchase any securities which would cause
25% or more of the value of its total assets at the time of such purchase to be
invested in the securities of one or more issuers conducting their principal
business activities in the same industry, except that the Fund intends to invest
25% or more of the value of its total assets in obligations of issuers in the
banking industry or in obligations, such as repurchase agreements, secured by
such obligations; provided that there is no limitation with respect to
investments in U.S. government securities or, in bank instruments issued or
enhanced by approved banks."
NEW PRIME VALUE FUND: "The Fund will not make investments that will result in
the concentration of its investments in the securities of issuers primarily
engaged in the same industry, except that the Fund intends to invest 25% or more
of the value of its total assets in obligations of issuers in the banking
industry or in obligations, such as repurchase agreements, secured by such
obligations. Government securities, municipal securities and bank instruments
are not deemed to constitute an industry. To conform to the current view of the
SEC that only domestic bank instruments may be excluded from industry
concentration limitations, as a matter of non-fundamental policy, the Fund will
not exclude foreign bank instruments from industry concentration limits as long
as the policy of the SEC remains in effect. As a non-fundamental operating
policy, the Fund will consider concentration to be the investment of more than
25% of the value of its total assets in any one industry."
INVESTING IN REAL ESTATE
PRIME VALUE FUND: "The Fund may not purchase or sell real estate or real
estate limited partnerships, provided that the Fund may purchase securities of
issuers which invest in real estate or interests therein."
NEW PRIME VALUE FUND: "The Fund may not purchase or sell real estate, provided
that this restriction does not prevent the Fund from investing in issuers which
invest, deal, or otherwise engage in transactions in real estate or interests
therein, or investing in securities that are secured by real estate or interests
therein. The Fund may exercise its rights under agreements relating to such
securities, including the right to enforce security interests and to hold real
estate acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner."
UNDERWRITING SECURITIES
PRIME VALUE FUND: "The Fund may not act as an underwriter of securities,
except insofar as the Fund may be deemed an underwriter under applicable
securities laws in selling portfolio securities."
NEW PRIME VALUE FUND: "The Fund may not underwrite the securities of other
issuers, except that the Fund may engage in transactions involving the
acquisition, disposition or resale of its portfolio securities, under
circumstances where it may be considered to be an underwriter under the
Securities Act of 1933."
INVESTING IN COMMODITIES
PRIME VALUE FUND: "The Fund may not purchase or sell commodities contracts."
NEW PRIME VALUE FUND: "The Fund may not purchase or sell physical
commodities, provided that the Fund may purchase securities of companies that
deal in commodities."
INVESTING IN MINERALS
PRIME VALUE FUND: "The Fund may not invest in oil, gas or mineral
exploration or development programs or in mineral leases."
NEW PRIME VALUE FUND: The New Prime Value Fund is not subject to a
fundamental investment limitation regarding investing in minerals.
ISSUING SENIOR SECURITIES, BORROWING MONEY AND PLEDGING ASSETS
PRIME VALUE FUND: "The Fund may not borrow money, except that the Fund may: (i)
borrow money for temporary or emergency purposes (not for leveraging or
investment) from banks or, subject to specific authorization by the SEC, from
funds advised by the adviser or an affiliate of the adviser; and (ii) engage in
reverse repurchase agreements, provided that (i) and (ii) in combination do not
exceed one-third of the value of the Fund's total assets (including the amount
borrowed) less liabilities (other than borrowings). The Fund may not mortgage,
pledge, or hypothecate its assets except in connection with such borrowings and
reverse repurchase agreements and then only in amounts not exceeding one-third
of the value of the Fund's total assets. Additional investments will not be made
when borrowings exceed 5% of the Fund's assets."
NEW PRIME VALUE FUND: "The Fund may borrow money, directly or indirectly, and
issue senior securities to the maximum extent permitted under the 1940 Act." The
New Prime Value Fund is subject to a NON-fundamental investment limitation
pertaining to pledging assets that provides: "The Fund will not mortgage, pledge
or hypothecate any of its assets, provided that this shall not apply to the
transfer of securities in connection with any permissible borrowing or to
collateral arrangements in connection with permissible activities."
LENDING CASH OR SECURITIES
PRIME VALUE FUND: "The Fund may not make loans, except that the Fund may: (i)
purchase or hold debt obligations in accordance with its investment objective
and policies; (ii) enter into repurchase agreements for securities; (iii) lend
portfolio securities as described in the prospectus; and (iv) subject to
specific authorization by the SEC, lend money to other funds advised by the
adviser or an affiliate of the adviser."
NEW PRIME VALUE FUND: "The Fund may not make loans, provided that this
restriction does not prevent the Fund from purchasing debt obligations, entering
into repurchase agreements, lending its assets to broker/dealers or
institutional investors and investing in loans, including assignments and
participation interests."
NON-FUNDAMENTAL INVESTMENT POLICIES AND LIMITATIONS
PERMISSIBLE INVESTMENTS
PRIME VALUE FUND: "The Fund invests in a portfolio of high quality fixed
income securities maturing in 13 months or less."
NEW PRIME VALUE FUND: "The Fund invests in a portfolio of high quality
fixed income securities maturing in 397 days or less."
INVESTMENT RATINGS
PRIME VALUE FUND: "The securities in which the Fund invests must be rated
in one of the two highest short-term rating categories by one or more nationally
recognized rating services or be of comparable quality to securities having such
ratings."
NEW PRIME VALUE FUND: The New Prime Value Fund is subject to an identical
non-fundamental investment policy.
ENGAGING IN REPURCHASE AGREEMENTS, REVERSE REPURCHASE AGREEMENTS AND
DELAYED DELIVERY TRANSACTIONS
PRIME VALUE FUND: The Prime Value Fund is authorized to engage in
repurchase agreements, reverse repurchase agreements and delayed delivery
transactions.
NEW PRIME VALUE FUND: The New Prime Value Fund is authorized to engage in
repurchase agreements, reverse repurchase agreements and delayed delivery
transactions.
INVESTING IN ILLIQUID SECURITIES
PRIME VALUE FUND: "The Fund will not invest more than 10% of the value of its
net assets in illiquid securities including non-negotiable time deposits and
repurchase agreements providing for settlement in more than seven days after
notice."
NEW PRIME VALUE FUND: "The Fund will not purchase securities for which there is
no readily available market, or enter into repurchase agreements or purchase
time deposits maturing in more than seven days, if immediately after and as a
result, the value of such securities would exceed, in the aggregate, 10% of the
Fund's net assets."
SELLING SHORT AND BUYING ON MARGIN
PRIME VALUE FUND: "The Fund will not sell any securities short or purchase
any securities on margin but may obtain such short-term credits as are necessary
for clearance of transactions."
NEW PRIME VALUE FUND: The New Prime Value Fund is not subject to an investment
limitation regarding selling securities short. The New Prime Value Fund is
subject to an investment limitation relating to margin transactions that states:
"The Fund will not purchase securities on margin, provided that the Fund may
obtain short-term credits necessary for the clearance of purchases and sales of
securities."
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
PRIME VALUE FUND: The Fund is not subject to an investment policy
pertaining to investing in securities of other investment companies.
NEW PRIME VALUE FUND: "The Fund may invest its assets in securities of
other investment companies."
INVESTING IN OPTIONS
PRIME VALUE FUND: "The Fund will not invest in puts, calls, straddles,
spreads, or any combination of them."
NEW PRIME VALUE FUND: The New Prime Value Fund is not subject to a
comparable investment limitation pertaining to investing in options.
INVESTING IN NEW ISSUERS
PRIME VALUE FUND: "The Fund will not invest more than 15% of the value of
its total assets in securities of companies (including predecessors) with less
than three years of continuous operation."
NEW PRIME VALUE FUND: The New Prime Value Fund is not subject to a
comparable investment limitation pertaining to investing in new issuers.
REGULATORY COMPLIANCE
PRIME VALUE FUND: "The Fund may follow non-fundamental operational policies that
are more restrictive than its fundamental investment limitations, as set forth
in the Fund's prospectus and Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by nationally recognized rating services,
according to Rule 2a-7. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of its
shareholders."
NEW PRIME VALUE FUND: The New Prime Value Fund is subject to an identical
operating policy.