MONEY MARKET MANAGEMENT, INC.
PROSPECTUS
The shares of Money Market Management, Inc. (the "Company") offered by this
prospectus represent interests in an open-end, diversified management investment
company (a mutual fund), investing in short-term money market securities to
achieve current income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE
COMPANY ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE
CAN BE NO ASSURANCE THAT THE COMPANY WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Company. Keep this prospectus for future reference.
The Company has also filed a Statement of Additional Information dated February
28, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information free of charge by calling 1-800-235-4669. To obtain other
information, or make inquiries about the Company, contact your financial
institution.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated February 28, 1995
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS 2
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GENERAL INFORMATION 3
- ------------------------------------------------------
FAMILY OF FUNDS 3
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Fortress Investment Program 3
INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 4
Investment Risks 7
Investment Limitations 7
Regulatory Compliance 7
COMPANY INFORMATION 7
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Management of the Company 7
Distribution of Shares 8
Administration of the Company 9
NET ASSET VALUE 10
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INVESTING IN THE COMPANY 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 12
Retirement Plans 12
EXCHANGE INFORMATION 12
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REDEEMING SHARES 13
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Through a Financial Institution 13
By Mail 13
Telephone Redemption 14
By a Systematic Withdrawal Program 15
Contingent Deferred Sales Charge 15
Accounts with Low Balances 15
SHAREHOLDER INFORMATION 16
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Voting Rights 16
TAX INFORMATION 16
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Federal Income Tax 16
Pennsylvania Personal Property Taxes 16
PERFORMANCE INFORMATION 16
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FINANCIAL STATEMENTS 18
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ADDRESSES 28
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SUMMARY OF FUND EXPENSES
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<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)...................................................................... None
Contingent Deferred Sales Charge* (as a percentage of original purchase
price or redemption proceeds, as applicable)............................................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee............................................................................................... None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee............................................................................................. 0.50%
12b-1 Fee.................................................................................................. None
Total Other Expenses....................................................................................... 0.64%
Shareholder Services Fee (1)............................................................... 0.08%
Total Operating Expenses......................................................................... 1.14%
</TABLE>
(1) The maximum Shareholder Services Fee is .25%.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs and
expenses, see "Redeeming Shares" and "Fund Information." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and
(2) redemption at the end of each time period.
As noted in the table above, the Fund charges no
contingent deferred sales charge*..................................... $12 $36 $63 $139
</TABLE>
- ---------
* A contingent deferred sales charge of 1% will be imposed only under certain
limited circumstances in which Fund shares being redeemed were acquired in
exchange for shares of another fund in the Fortress Investment Program.
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
MONEY MARKET MANAGEMENT, INC.
FINANCIAL HIGHLIGHTS
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(For a share outstanding throughout each period)
Reference is made to the Independent Auditors' Report on page 27.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990 1989 1988 1987 1986
- ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------
INCOME FROM
INVESTMENT OPERATIONS
- ------------------------
Net investment income 0.03 0.02 0.03 0.05 0.07 0.08 0.07 0.06 0.06
- ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- ------------------------
Dividends to
shareholders
from net investment
income (0.03) (0.02) (0.03) (0.05) (0.07) (0.08) (0.07) (0.06) (0.06)
- ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN* 3.31% 2.19% 2.86% 5.43% 7.65% 8.73% 7.03% 6.08% 6.28%
- ------------------------
RATIOS TO AVERAGE NET
ASSETS
- ------------------------
Expenses 1.14% 1.17% 1.11% 0.96% 0.89% 0.89% 0.91% 0.89% 0.84%
- ------------------------
Net investment income 3.27% 2.15% 2.85% 5.32% 7.38% 8.39% 6.81% 5.88% 6.12%
- ------------------------
Expense waiver/
reimbursement (a) 0.00% 0.07% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------
SUPPLEMENTAL DATA
- ------------------------
Net assets, end of
period (000 omitted) $114,588 $108,309 $127,711 $168,889 $194,836 $204,393 $188,239 $178,813 $205,723
- ------------------------
<CAPTION>
<S> <C>
1985
- ------------------------ ---------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00
- ------------------------
INCOME FROM
INVESTMENT OPERATIONS
- ------------------------
Net investment income 0.07
- ------------------------ ---------
LESS DISTRIBUTIONS
- ------------------------
Dividends to
shareholders
from net investment
income (0.07)
- ------------------------ ---------
NET ASSET VALUE, END OF
PERIOD $ 1.00
- ------------------------ ---------
TOTAL RETURN* 7.68%
- ------------------------
RATIOS TO AVERAGE NET
ASSETS
- ------------------------
Expenses 0.89%
- ------------------------
Net investment income 7.41%
- ------------------------
Expense waiver/
reimbursement (a) 0.00%
- ------------------------
SUPPLEMENTAL DATA
- ------------------------
Net assets, end of
period (000 omitted) $238,454
- ------------------------
</TABLE>
* Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
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The Company was organized as a Maryland corporation on October 30, 1973, and was
one of the first money market funds. The Company was reorganized as a
Massachusetts business trust on June 29, 1982, and then re-established as a
Maryland corporation under Articles of Incorporation dated August 19, 1992. The
Company is designed for investors with temporary cash balances and investors
with cash reserves as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio investing in short-term money
market securities. A minimum initial investment of $500 is required except for
retirement plans.
The Company attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price. However, a contingent deferred sales
charge may be imposed under certain circumstances.
FAMILY OF FUNDS
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The Company is a member of the Fortress Investment Program. This Family provides
flexibility and diversification for an investor's long-term investment planning.
The family enables an investor to meet the challenges of changing market
conditions by offering a convenient exchange privilege which gives access to a
number of investment vehicles and by providing the investment services of a
proven, professional investment adviser.
FORTRESS INVESTMENT PROGRAM
The funds in the Fortress Investment Program are: American Leaders Fund, Inc.;
California Municipal Income Funds; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Bond Fund; Fortress Municipal Income Fund, Inc.; Fortress
Utility Fund, Inc.; Government Income Securities, Inc.; Liberty Equity Income
Fund, Inc.; Limited Term Fund; Limited Term Municipal Fund; Money Market
Management, Inc.; New York Municipal Income Fund; Ohio Municipal Income Fund;
and World Utility Fund.
Each of the funds may also invest in certain other types of securities as
described in the prospectus of each fund.
Prospectuses for these funds are available by writing to Federated Securities
Corp.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Company is current income consistent with
stability of principal. While there is no assurance that the Company will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus. The investment objective and
the policies and limitations described below, unless indicated otherwise, cannot
be changed without shareholder approval.
INVESTMENT POLICIES
The Company pursues its investment objective by investing in a portfolio of
money market securities maturing in 13 months or less. The average maturity of
the securities in the Company's portfolio, computed on a dollar-weighted basis,
will be 90 days or less.
ACCEPTABLE INVESTMENTS. The Company invests in high quality money market
instruments that are either rated in one of the two highest short-term rating
categories by one or more nationally recognized statistical rating organizations
("NRSROs") or are of comparable quality to securities having such ratings.
Examples of these instruments include, but are not limited to:
. domestic issues of corporate debt obligations, including variable rate
demand notes;
. commercial paper (including Canadian Commercial Paper and Europaper);
. certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
. short-term credit facilities;
. asset-backed securities;
. obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
. other money market instruments.
The Company invests only in instruments denominated and payable in U.S. dollars.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Company with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear interest
at a rate that is intended to cause the securities to trade at par. The interest
rate may float or be adjusted at regular intervals (ranging from daily to
annually), and is normally based on a published interest rate or interest rate
index. Most variable rate demand notes allow the Company to demand the
repurchase of the security on not more than seven days prior notice. Other notes
only permit the Company to tender the security at the time of each interest rate
adjustment or at other fixed intervals. See "Demand Features." The Company
treats variable rate demand notes as maturing on the later of the date of the
next interest rate adjustment or the date on which the Company may next tender
the security for repurchase.
BANK INSTRUMENTS. The Company only invests in Bank Instruments either issued by
an institution having capital, surplus and undivided profits over $100 million,
or insured by the Bank Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF"). Bank Instruments may include Eurodollar Certificates of
Deposit ("ECDs"), Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar
Time Deposits ("ETDs"). The Company will treat securities credit enhanced with a
bank's letter of credit as Bank Instruments.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial interests in
special purpose trusts, limited partnership interests, or commercial paper or
other debt securities issued by a special purpose corporation. Although the
securities often have some form of credit or liquidity enhancement, payments on
the securities depend predominantly upon collections of the loans and
receivables held by the issuer.
SHORT-TERM CREDIT FACILITIES. The Company may enter into, or acquire
participations in, short-term borrowing arrangements with corporations,
consisting of either a short-term revolving credit facility or a master note
agreement payable upon demand. Under these arrangements, the borrower may
reborrow funds during the term of the facility. The Company treats any
commitments to provide such advances as a standby commitment to purchase the
borrower's notes.
RATINGS. An NRSRO's two highest rating categories are determined without regard
for sub-categories and gradations. For example, securities rated A-1+, A-1, or
A-2 by Standard & Poor's Ratings Group ("S&P"), Prime-1 or Prime-2 by Moody's
Investors Service, Inc. ("Moody's"), or F-1 (+ or -) or F-2 (+ or -) by Fitch
Investors Service, Inc. ("Fitch") are all considered rated in one of the two
highest short-term rating categories. The Company will limit its investments in
securities rated in the second highest short-term rating category e.g., A-2 by
S&P, Prime-2 by Moody's, or F-2 (+ or -) by Fitch, to not more than 5% of its
total assets, with not more than 1% invested in the securities of any one
issuer. The Company will follow applicable regulations in determining whether a
security rated by more than one NRSRO can be treated as being in one of the two
highest short-term rating categories; currently, such securities must be rated
by two NRSROs in one of their two highest rating categories. See "Regulatory
Compliance."
REPURCHASE AGREEMENTS. Certain securities in which the Company invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Company and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Company, the Company could
receive less than the repurchase price on any sale of such securities.
CREDIT ENHANCEMENT. Certain of the Company's acceptable investments may be
credit enhanced by a guaranty, letter of credit, or insurance. The Company
typically evaluates the credit quality and ratings of credit-enhanced securities
based upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, the
Company will not treat credit-enhanced securities as having been issued by the
credit enhancer for diversification purposes. However, under certain
circumstances applicable regulations may require the Company to treat the
securities as having been issued by both the issuer and the credit enhancer. The
bankruptcy, receivership, or default of the credit enhancer will adversely
affect the quality and marketability of the underlying security.
DEMAND FEATURES. The Company may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Company. The demand feature may be issued
by the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Company uses these arrangements to provide the Company with
liquidity and not to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership, or default by the issuer of
the demand feature, or a default on the underlying security or other event that
terminates the demand feature before its exercise, will adversely affect the
liquidity of the underlying security. Demand features that are exercisable even
after a payment default on the underlying security may be treated as a form of
credit enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Company may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Company purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Company to miss a price or yield considered to be advantageous.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Company may pay more or less than the market value of
the securities on the settlement date.
The Company may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Company may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Company may realize short-term profits or losses upon the sale of
such commitments.
RESTRICTED AND ILLIQUID SECURITIES. The Company may invest in restricted
securities. Restricted securities are any securities in which the Company may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Company will limit investments in illiquid securities, including certain
restricted securities not determined by the Directors to be liquid,
non-negotiable time deposits, and repurchase agreements providing for settlement
in more than seven days after notice, to 10% of its net assets.
The Company may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law, and is generally sold to institutional investors, such as the
Company, who agree that they are purchasing the paper for investment purposes
and not with a view to public distribution. Any resale by the purchaser must be
in an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors like the Company through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Company believes that Section 4(2)
commercial paper and possibly certain other restricted securities which meet the
criteria for liquidity established by the Directors of the Company are quite
liquid. The Company intends, therefore, to treat the restricted securities which
meet the criteria for liquidity established by the Directors, including Section
4(2) commercial paper, as determined by the Company's investment adviser, as
liquid and not subject to the investment limitation applicable to illiquid
securities. In addition, because Section 4(2) commercial paper is liquid, the
Company intends to not subject such paper to the limitation applicable to
restricted securities.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject to
different risks than domestic obligations of domestic banks or corporations.
Examples of these risks include international economic and political
developments, foreign governmental restrictions that may adversely affect the
payment of principal or interest, foreign withholding or other taxes on interest
income, difficulties in obtaining or enforcing a judgment against the issuing
entity, and the possible impact of interruptions in the flow of international
currency transactions. Risks may also exist for ECDs, ETDs, and Yankee CDs
because the banks issuing these instruments, or their domestic or foreign
branches, are not necessarily subject to the same regulatory requirements that
apply to domestic banks, such as reserve requirements, loan limitations,
examinations, accounting, auditing, recordkeeping, and the public availability
of information. These factors will be carefully considered by the Company's
adviser in selecting investments for the Company.
INVESTMENT LIMITATIONS
The Company will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Company sells a money market instrument
for a percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Company may
borrow up to one-third of the value of its total assets and pledge up to 10% of
the value of those assets to secure such borrowings. This investment limitation
cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Company may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its 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, as amended. In particular, the Company
will comply with the various requirements of Rule 2a-7 which regulates money
market mutual funds. For example, the Company will 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 NRSROs, according to Rule
2a-7. The Company may change these operational policies to reflect changes in
the laws and regulations without the approval of its shareholders.
COMPANY INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS. The Company is managed by a Board of Directors. The
Directors are responsible for managing the Company's business affairs and for
exercising all the Company's powers except those reserved for the shareholders.
An Executive Committee of the Board of Directors handles the Board's
responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Company are made by Federated
Advisers, the Company's investment adviser, subject to direction by the
Directors. The adviser continually conducts investment research and supervision
for the Company and is responsible for the purchase and sale of portfolio
instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
based on the Company's average net assets as shown in the chart below:
<TABLE>
<CAPTION>
ADVISORY FEE AS %
AVERAGE DAILY NET ASSETS OF AVERAGE DAILY NET ASSETS
<S> <C>
First $500 million .50 of 1%
Second $500 million .475 of 1%
Third $500 million .45 of 1%
Fourth $500 million .425 of 1%
Over $2 billion .40 of 1%
</TABLE>
The adviser has undertaken to reimburse the Company up to the amount of the
advisory fee for operating expenses in excess of limitations established by
certain states. The adviser also may voluntarily choose to waive a portion
of its fee or reimburse other expenses of the Company, but reserves the
right to terminate such waiver or reimbursement at any time at its sole
discretion.
ADVISER'S BACKGROUND. Federated Advisers, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Advisers and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956
as Federated Investors, Inc., develops and manages mutual funds primarily
for the financial industry. Federated Investors' track record of
competitive performance and its disciplined, risk averse investment
philosophy serve approximately 3,500 client institutions nationwide.
Through these same client institutions, individual shareholders also have
access to this same level of investment expertise.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for shares of the
Company. It is a Pennsylvania corporation organized on November 14, 1969, and is
the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
SHAREHOLDER SERVICES PLAN. The Company has adopted a Shareholder Services Plan
(the "Services Plan") under which it will pay Federated Shareholder Services, an
affiliate of Federated Investors, an amount not exceeding .25 of 1% of the
average daily net asset value of the Company to provide personal services and/or
maintenance of shareholder accounts to the Company and its shareholders. From
time to time and for such periods as deemed appropriate, the amount stated above
may be reduced voluntarily.
Federated Shareholder Services may elect to pay financial institutions fees
based upon shares owned by their clients or customers for services provided to
those clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by Federated
Shareholder Services.
The Glass-Steagall Act limits the ability of a depository institution (such as a
commercial bank or a savings and loan association) to become an underwriter or
distributor of securities. In the event the Glass-Steagall Act is deemed to
prohibit depository institutions from acting in the capacities described above
or should Congress relax current restrictions on depository institutions, the
Directors will consider appropriate changes in the administrative services.
State securities laws governing the ability of depository institutions acting as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.
ADMINISTRATION OF THE COMPANY
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the
Company. Federated Administrative Services provides these at an annual rate as
specified below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Company.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Pittsburgh, PA is transfer agent for the shares of, and dividend disbursing
agent for the Company.
INDEPENDENT AUDITORS. The independent auditors for the Company are Deloitte &
Touche LLP, Pittsburgh, PA.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Company attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Company
cannot guarantee that its net asset value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 4:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange each day the New York Stock Exchange is open.
INVESTING IN THE COMPANY
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales load, next determined
after an order is received, on days on which the New York Stock Exchange and the
Federal Reserve wire are open for business. Shares may be purchased as described
below. Accounts may be opened through a financial institution (such as a bank or
broker/dealer) or by completing, signing, and returning the new account form
available from the Company. In connection with any sale, Federated Securities
Corp. may from time to time offer certain items of nominal value to any
shareholder or investor. The Company reserves the right to reject any purchase
request.
The financial institution which maintains investor accounts with the Company
must do so on a fully disclosed basis unless it accounts for share ownership
periods used in calculating the contingent deferred sales charge (see
"Contingent Deferred Sales Charge"). In addition, advance payments made to
financial institutions may be subject to reclaim by the distributor for accounts
transferred to financial institutions which do not maintain investor accounts on
a fully disclosed basis and do not account for share ownership periods.
BY WIRE. To purchase by wire, call the Company before 12:00 noon (Eastern time)
to place an order. All information needed will be taken over the telephone, and
the order is considered received immediately. Payment by federal funds must be
received before 3 p.m. (Eastern time) that same day. Federal funds should be
wired as follows: Federated Services Company, c/o State Street Bank and Trust
Company, Boston, MA; Attention; EDGEWIRE; For Credit to: Money Market
Management, Inc.; Fund Number (this number can be found on the account statement
or by contacting the Company) Group Number or Order Number; Nominee or
Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Money Market
Management, Inc. to: Federated Services Company, State Street Bank and Trust
Company, P.O. Box 8606, Boston, MA 02266-8606. Orders by mail are considered
received when payment by check is converted into federal funds. This is normally
the next business day after the check is received.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Services Company, the transfer agent for shares of the Company.
Approximately two weeks after sending the form to Federated Services Company,
the shareholder may call Federated Services Company to purchase shares.
Federated Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the Automated
Clearing House ("ACH"). The shareholder's bank, which must be an ACH member,
will then forward the monies to Federated Services Company. The purchase is
normally entered the next business day after the initial phone request. For
further information and an application, call the Company.
BY DIRECT DEPOSIT. Shareholders of the Company may have their Social Security,
Railroad Retirement, VA Compensation or Pension, Civil Service Retirement, and
certain other retirement payments invested directly into their Company account.
Shareholders must complete an application and file it with Federated Services
Company prior to use of this program. Allow 60 to 90 days for the application to
be processed.
SYSTEMATIC INVESTMENT PROGRAM. Under this program, funds are automatically
withdrawn periodically from the shareholder's checking account at any ACH member
institution and invested in Company shares.
Shareholders should contact their financial institution and/or the Company to
participate in this program.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $500. Minimum subsequent investments must be
$100 except for retirement plans, which must be in amounts of at least $50. The
Company may from time to time waive the minimum investment requirements.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Company, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Company or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Company unless cash
payments are requested by writing to the Company. Shares purchased by wire
before 12:00 noon (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is converted
into federal funds.
CAPITAL GAINS
The Company does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Company will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
RETIREMENT PLANS
Shares of the Company can be purchased as an investment for retirement plans or
for IRA accounts. For further details, contact the Company and consult a tax
adviser.
EXCHANGE INFORMATION
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE. Shares in other funds in the Fortress Investment Program may
be exchanged for Company shares at net asset value. Company shares may also be
exchanged for shares in other funds in the Fortress Investment Program at net
asset value plus a 1% sales load, if applicable and not previously paid. No
additional fees are imposed on exchanges. This privilege is available to
shareholders resident in any state in which the fund shares being acquired may
be sold.
Shareholders using this privilege must exchange shares having a net asset value
of at least $1,500.
Before the exchange, the shareholder must receive a prospectus for the fund for
which the exchange is being made. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed, and
the proceeds invested in shares of the other fund. The Company reserves the
right to reject any exchange. The exchange privilege may be terminated or
modified at any time. Shareholders will be notified of the termination or
modification of the exchange privilege.
An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending on the circumstances, a short-term or long-term capital
gain or loss may be realized.
For further information on the exchange privilege and to obtain prospectuses,
contact the Company.
MAKING AN EXCHANGE. Instructions for exchanges may be given by telephone or in
writing. Telephone instructions may be recorded. Written instructions for
exchanges of $50,000 or more require a signature guarantee and may be sent to
Federated Services Company, Federated Investors Tower, Pittsburgh, PA
15222-3779. Orders for exchanges received by Federated Services Company,
Federated Investors Tower, Pittsburgh, PA, 15222-3779 on any day the Company is
open for business will be executed as of the close of business that day.
BY TELEPHONE. Before an exchange can be made by telephone, a properly executed
authorization form must be completed and on file with Federated Services
Company. Shares may be exchanged between two funds only if they have identical
shareholder registrations. Shares held in certificate form cannot be exchanged
by telephone until they are deposited to the shareholder's account at Federated
Services Company. If reasonable procedures are not followed by the Fund, it may
be liable for losses due to unauthorized or fraudulent telephone instructions.
Shareholders may have difficulty making exchanges by telephone during times of
drastic economic or market changes. If this occurs, it is recommended that an
exchange request be made in writing.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Company computes its net asset value. Redemption requests must
be received in proper form and can be made as described below.
THROUGH A FINANCIAL INSTITUTION
Shares may be redeemed by calling the shareholder's financial institution.
Shares will be redeemed at the net asset value next determined after the Company
receives the redemption request from the financial institution. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions. The financial institution may
charge customary fees and commissions for this service.
An authorization form permitting redemption requests by telephone must first be
completed. Authorization forms and information on this service are available
from Federated Securities Corp.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, another method of
redemption, such as "By Mail", should be considered.
RECEIVING PAYMENT. Pursuant to instructions from the financial institution,
redemptions will be made by check or by wire.
BY WIRE. Proceeds for redemption requests received before 12:00 noon, (Eastern
time) will be wired the same day but will not be entitled to that day's
dividend. Redemption requests received after 12:00 noon, (Eastern time) will
receive that day's dividends and will be wired the following business day.
BY MAIL
Shares may be redeemed by sending a written request to: Money Market Management,
Inc., P.O. Box 8606, Boston, MA 02266-8606. The written request should state:
Money Market Management, Inc.; shareholder's name; the account number; and the
share or dollar amount requested. Sign the request exactly as the shares are
registered. Shareholders should call the Company for assistance in redeeming by
mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Company, or a
redemption payable other than to the shareholder of record must have their
signatures guaranteed by:
. a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
. a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
. a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
. any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Company does not accept signatures guaranteed by a notary public.
The Company and the transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Company may elect in the
future to limit eligible signature guarantors to institutions that are members
of the signature guarantee program. The Company and its transfer agent reserve
the right to amend these standards at any time without notice. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after receipt of a proper written redemption request. Dividends are
paid up to and including the day that a redemption request is processed.
BY WRITING A CHECK. At the shareholder's request, State Street Bank and Trust
Company or Federated Services Company will establish a checking account for
redeeming shares. For further information, contact a representative of Federated
Securities Corp.
With this checking account, shares may be redeemed by writing a check for
$100.00 or more. The redemption will be made at the net asset value on the date
that the check is presented to the Company. A sufficient number of shares will
be redeemed to cover the contingent deferred sales charge, if applicable. A
check may not be written to close an account. A shareholder may obtain cash by
negotiating the check through the shareholder's local bank. Checks should never
be made payable or sent to State Street Bank and Trust Company or Federated
Services Company to redeem shares. Cancelled checks are sent to the shareholder
each month.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Company. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Company, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Company to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp.
If the redemption request is received before 12:00 noon (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after
12:00 noon (Eastern time). However, the proceeds are not wired until the
following business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Company shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
BY A SYSTEMATIC WITHDRAWAL PROGRAM
If a shareholder's account has a value of at least $10,000, a systematic
withdrawal program may be established whereby automatic redemptions are made
from the account and transferred electronically to any commercial bank, savings
bank, or credit union that is an ACH member. Shareholders may apply for
participation in this program through their financial institution.
CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge will be imposed only in certain instances in
which the Company shares being redeemed were acquired in exchange for shares of
another fund in the Fortress Investment Program. If Company shares were acquired
in exchange for shares of another fund in the Fortress Investment Program, a
redemption of those Company shares within four years of the initial Fortress
Investment Program fund purchase will be subject to a contingent deferred sales
charge of 1% of the lesser of the purchase price of the shares acquired in the
initial Fortress Investment Program purchase or the net asset value of the
Company shares acquired through the exchange. The contingent deferred sales
charge will not be imposed on Company shares obtained in exchange for shares of
another Fortress Investment Program fund if such shares were acquired through:
(i) the reinvestment of dividends or distributions of long-term capital gains;
or (ii) the exchange of shares of Government Income Securities, Inc., that were
purchased during that fund's Charter Offering Period. In imposing the contingent
deferred sales charge, if any, redemptions of Company shares are deemed to
relate first to shares of other Fortress Investment Program funds acquired
through the reinvestment of dividends and long-term capital gains, second to
purchases of shares occurring more than four years before the date of
redemption, and finally to purchases of such shares within the previous four
years.
Also, the contingent deferred sales charge will not be imposed in connection
with redemptions by the Company of accounts with low balances or when a
redemption results from a return under the following circumstances: (i) a total
or partial distribution from a qualified plan, other than an IRA, Keogh Plan, or
a custodial account, following retirement; (ii) a total or partial distribution
from an IRA, Keogh Plan, or a custodial account after the beneficial owner
attains age 59-1/2; or (iii) from the death or disability of the beneficial
owner. The exemption from the contingent deferred sales charge for qualified
plans, an IRA, Keogh Plan or a custodial account does not extend to account
transfers, rollovers, and other redemptions made for purposes of reinvestment.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Company may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $500 due to shareholder
redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Company gives the shareholder one vote in Director elections
and other matters submitted to shareholders for vote. As a Maryland corporation,
the Company is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Company's operation and
for election of Directors under certain circumstances.
Directors may be removed by the Directors or by shareholders at a special
meeting. A special meeting of the Company shall be called by the Directors upon
the written request of shareholders owning at least 10% of the Company's
outstanding shares.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Company will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA PERSONAL PROPERTY TAXES
Company shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
OTHER STATE AND LOCAL TAXES. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Company advertises its yield and effective yield.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Company after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Company may refer to ratings,
rankings, and other information in certain financial publications and/or compare
its performance to certain indices.
MONEY MARKET MANAGEMENT, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
BANKER'S ACCEPTANCE--3.5%
- -------------------------------------------------------------------------------------------------
$ 4,000,000 Republic National Bank of New York, 5.589%, 2/13/95 $ 3,973,722
----------------------------------------------------------------------------------- --------------
*COMMERCIAL PAPER--39.5%
- -------------------------------------------------------------------------------------------------
BANKING--12.1%
-----------------------------------------------------------------------------------
5,000,000 Bank of Nova Scotia, Toronto, 5.207%-5.869%, 1/9/95-4/25/95 4,943,596
-----------------------------------------------------------------------------------
2,000,000 Barclays Bank of Canada, (Guaranteed by Barclays Bank PLC, London), 5.379%, 1/6/95 1,998,527
-----------------------------------------------------------------------------------
1,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian Imperial Bank of
Commerce, Toronto), 5.246%, 2/24/95 992,350
-----------------------------------------------------------------------------------
2,000,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank AG, Frankfurt),
5.185%-5.583%, 1/30/95-3/30/95 1,982,658
-----------------------------------------------------------------------------------
1,000,000 Dresdner US Finance, 6.402%, 5/31/95 974,167
-----------------------------------------------------------------------------------
2,000,000 Southeast Paper Manufacturing, Inc., (Banque Paribas, Paris LOC), 5.236%, 2/22/95 1,985,267
-----------------------------------------------------------------------------------
1,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by Toronto-Dominion Bank),
5.219%, 3/9/95 990,546
----------------------------------------------------------------------------------- --------------
Total 13,867,111
----------------------------------------------------------------------------------- --------------
DIVERSIFIED--4.2%
-----------------------------------------------------------------------------------
5,000,000 Rockwell International Corp., 6.819%, 6/2/95 4,860,667
----------------------------------------------------------------------------------- --------------
FINANCE--COMMERCIAL--8.7%
-----------------------------------------------------------------------------------
3,000,000 Asset Securitization Cooperative Corp., 5.480%, 1/9/95 2,996,400
-----------------------------------------------------------------------------------
2,000,000 CIESCO, Inc., 5.429%, 1/3/95 1,999,406
-----------------------------------------------------------------------------------
2,000,000 CIT Group Holdings, Inc., 5.480%, 1/25/95 1,992,800
-----------------------------------------------------------------------------------
3,000,000 General Electric Capital Corp., 5.262%-5.837%, 1/12/95-4/6/95 2,981,046
----------------------------------------------------------------------------------- --------------
Total 9,969,652
----------------------------------------------------------------------------------- --------------
FINANCE--RETAIL--5.2%
-----------------------------------------------------------------------------------
4,000,000 Associates Corp. of North America, 4.997%, 1/4/95 3,998,360
-----------------------------------------------------------------------------------
FINANCE--RETAIL--CONTINUED
-----------------------------------------------------------------------------------
$ 1,000,000 Ford Credit Receivables Funding, Inc., 5.136%, 1/12/95 $ 998,469
-----------------------------------------------------------------------------------
1,000,000 New Center Asset Trust, A1+/P1 Series, 6.358%, 3/14/95 987,500
----------------------------------------------------------------------------------- --------------
Total 5,984,329
----------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--0.9%
-----------------------------------------------------------------------------------
1,000,000 Anheuser-Busch Companies, Inc., 5.921%, 5/1/95 980,833
----------------------------------------------------------------------------------- --------------
INSURANCE--6.7%
-----------------------------------------------------------------------------------
3,757,000 Prospect Street Senior Portfolio, L.P., (Guaranteed by Financial Security
Assurance, Inc.), 5.551%-6.041%, 1/17/95-2/28/95 3,735,295
-----------------------------------------------------------------------------------
4,000,000 Prudential Funding Corp., 5.012%-6.030%, 1/20/95-5/11/95 3,967,416
----------------------------------------------------------------------------------- --------------
Total 7,702,711
----------------------------------------------------------------------------------- --------------
PHARMACEUTICALS AND HEALTH CARE--1.7%
-----------------------------------------------------------------------------------
2,000,000 American Home Products Corp., 6.399%-6.770%, 5/22/95-6/12/95 1,946,287
----------------------------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 45,311,590
----------------------------------------------------------------------------------- --------------
CORPORATE NOTES--2.6%
- -------------------------------------------------------------------------------------------------
LEASING--2.6%
-----------------------------------------------------------------------------------
2,924,276 Copelco Capital Funding Corp. II Series 1994-A, 6.030%, 10/20/95 2,924,276
----------------------------------------------------------------------------------- --------------
**VARIABLE NOTES--37.0%
- -------------------------------------------------------------------------------------------------
BANKING--20.2%
-----------------------------------------------------------------------------------
1,845,000 Canton Township Equity Partners L.P., (Huntington National Bank, Columbus, OH LOC),
6.410%, 1/5/95 1,845,000
-----------------------------------------------------------------------------------
5,000,000 Mercy Health Systems, (Morgan Guaranty Trust Co., NY LOC), 6.380%, 1/4/95 5,000,000
-----------------------------------------------------------------------------------
1,335,000 North Center Properties, (Huntington National Bank, Columbus, OH LOC), 6.410%,
1/5/95 1,335,000
-----------------------------------------------------------------------------------
5,000,000 PHH/CFC Leasing, Inc., (Societe Generale, Paris LOC), 6.370%, 1/4/95 5,000,000
-----------------------------------------------------------------------------------
4,400,000 Poly Foam International Inc., (National City Bank, Cleveland, OH LOC), 6.200%,
1/5/95 4,400,000
-----------------------------------------------------------------------------------
$ 4,550,000 Ramsey Real Estate Enterprises, (National City Bank, Kentucky LOC), 6.200%, 1/5/95 $ 4,550,000
-----------------------------------------------------------------------------------
1,000,000 SMM Trust 1994-B, (Guaranteed by Morgan Guaranty Trust Co., NY), 5.892%, 2/13/95 999,652
----------------------------------------------------------------------------------- --------------
Total 23,129,652
----------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--0.7%
-----------------------------------------------------------------------------------
811,075 GS Funding Corp., (Guaranteed by General Electric Co.), 6.318%,
1/3/95 811,075
----------------------------------------------------------------------------------- --------------
FINANCE--AUTOMOTIVE--3.5%
-----------------------------------------------------------------------------------
3,000,000 Carco Auto Loan Master Trust, Series 1993-2, 6.400%, 1/15/95 3,000,000
-----------------------------------------------------------------------------------
1,000,000 State Industrial Development Authority (Alabama) Tax Revenue Bonds, Series 1994
(GMC Project), (General Motors Corp. Guarantee), 6.661%, 1/5/95 1,000,000
----------------------------------------------------------------------------------- --------------
Total 4,000,000
----------------------------------------------------------------------------------- --------------
FINANCE--RETAIL--4.3%
-----------------------------------------------------------------------------------
5,000,000 American Financial Services, Inc. (AFS) 1994-A, 6.743%, 1/15/95 5,000,000
----------------------------------------------------------------------------------- --------------
INSURANCE--8.3%
-----------------------------------------------------------------------------------
4,500,000 Sun Life Insurance Co. of America, 6.300%, 1/3/95 4,500,000
-----------------------------------------------------------------------------------
5,000,000 Travelers Insurance Co., 6.175%, 1/30/95 5,000,000
----------------------------------------------------------------------------------- --------------
Total 9,500,000
----------------------------------------------------------------------------------- --------------
TOTAL VARIABLE NOTES 42,440,727
----------------------------------------------------------------------------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--4.3%
- -------------------------------------------------------------------------------------------------
MICHIGAN--4.3%
-----------------------------------------------------------------------------------
5,000,000 Michigan State Hospital Finance Authority, 6.50% VRDNs, Series A (OSF Health Care
System)/(Northern Trust Company Liquidity Agreement), 1/5/95 5,000,000
----------------------------------------------------------------------------------- --------------
***REPURCHASE AGREEMENTS--12.0%
- -------------------------------------------------------------------------------------------------
$ 5,000,000 BZW Securities, Inc., 7.500%, 1/3/95 $ 5,000,000
-----------------------------------------------------------------------------------
4,700,000 PaineWebber Group, Inc., 6.050%, 1/3/95 4,700,000
-----------------------------------------------------------------------------------
4,000,000 S.G. Warburg & Co., 5.900%, 1/3/95 4,000,000
----------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 13,700,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 113,350,315+
----------------------------------------------------------------------------------- --------------
</TABLE>
+ Also represents cost for federal tax purposes.
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** Current rate and next demand date shown.
*** The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
Note: The categories of investments are shown as a percentage of net assets
($114,587,858) at December 31, 1994.
The following abbreviations are used in this portfolio:
LOC--Letter of Credit
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET MANAGEMENT, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------
Investments in repurchase agreements $ 13,700,000
- ----------------------------------------------------------------------------------
Investments in other securities 99,650,315
- ---------------------------------------------------------------------------------- -------------
Total Investments, at amortized cost and value $ 113,350,315
- -------------------------------------------------------------------------------------------------
Cash 1,123,118
- -------------------------------------------------------------------------------------------------
Receivable for capital stock sold 696,468
- -------------------------------------------------------------------------------------------------
Interest receivable 204,875
- ------------------------------------------------------------------------------------------------- --------------
Total assets 115,374,776
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for capital stock redeemed 620,235
- ----------------------------------------------------------------------------------
Dividends payable 41,031
- ----------------------------------------------------------------------------------
Accrued expenses 125,652
- ---------------------------------------------------------------------------------- -------------
Total liabilities 786,918
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 114,587,858 shares of capital stock outstanding $ 114,587,858
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share
($114,587,858 / 114,587,858 shares of capital stock outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET MANAGEMENT, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest income $ 5,305,713
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 601,172
- ----------------------------------------------------------------------------------------
Directors' fees 8,009
- ----------------------------------------------------------------------------------------
Administrative personnel and services 156,053
- ----------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 94,438
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 248,255
- ----------------------------------------------------------------------------------------
Shareholder services fee 100,518
- ----------------------------------------------------------------------------------------
Capital stock registration costs 45,319
- ----------------------------------------------------------------------------------------
Auditing fees 15,750
- ----------------------------------------------------------------------------------------
Legal fees 50,792
- ----------------------------------------------------------------------------------------
Printing and postage 17,941
- ----------------------------------------------------------------------------------------
Taxes 28,357
- ----------------------------------------------------------------------------------------
Insurance premiums 5,889
- ----------------------------------------------------------------------------------------
Miscellaneous 3,137
- ---------------------------------------------------------------------------------------- ----------
Total expenses 1,375,630
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 3,930,083
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET MANAGEMENT, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1994 1993
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 3,930,083 $ 2,438,206
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (3,930,083) (2,438,206)
- ------------------------------------------------------------------------------- --------------- ---------------
CAPITAL STOCK TRANSACTIONS--
- -------------------------------------------------------------------------------
Proceeds from sale of shares 187,854,032 175,602,925
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 3,517,693 2,287,236
- -------------------------------------------------------------------------------
Cost of shares redeemed (185,093,267) (197,291,489)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from capital stock transactions 6,278,458 (19,401,328)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 6,278,458 (19,401,328)
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 108,309,400 127,710,728
- ------------------------------------------------------------------------------- --------------- ---------------
End of period $ 114,587,858 $ 108,309,400
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Fund is registered under the Investment Company Act of 1940, as amended (the
"Act"), as no-load, open-end, diversified management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure that the value
of collateral at least equals the principal amount of the repurchase
agreement, including accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines
established by the Board of Directors (the "Directors"). Risks may arise
from the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS--Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue code, as amended (the
"Code"). Distributions to shareholders are recorded on the ex-dividend
date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year all of its taxable income. Accordingly, no
provisions for federal taxes are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. GENERAL--Investment transactions are accounted for on the trade date.
(3) CAPITAL STOCK
At December 31, 1994, there were 50,000,000,000 shares of $0.001 par value
capital stock authorized. Capital paid-in aggregated $114,587,858. Transactions
in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993
<S> <C> <C>
Shares sold 187,854,032 175,602,925
- ---------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 3,517,693 2,287,236
- ---------------------------------------------------------------------------------
Shares redeemed (185,093,267) (197,291,489)
- --------------------------------------------------------------------------------- -------------- --------------
Net change resulting from capital stock transactions 6,278,458 (19,401,328)
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Advisers, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee based on
the average daily net assets of the Fund as follows: 0.50% on the first $500
million, 0.475% on the next $500 million, 0.45% on the next $500 million, 0.425%
on the next $500 million, and 0.40% thereafter. The Adviser may voluntarily
choose to waive a portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with administrative personnel and services. Prior to March 1, 1994, these
services were provided at approximate cost. Effective March 1, 1994, the FAS fee
is based on the level of average aggregate daily net assets of all funds advised
by subsidiaries of Federated Investors for the period. The administrative fee
received during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay "FSS" up to .25
of 1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. The
FServ fee is based on the size, type, and number of accounts and transactions
made by shareholders.
Certain of the Officers and Directors of the Fund are Officers and Directors or
Trustees of the above companies.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
MONEY MARKET MANAGEMENT, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Money Market Management, Inc. as of December
31, 1994, the related statement of operations for the year then ended, the
statement of changes in net assets for the years ended December 31, 1994 and
1993, and the financial highlights (see page 2 of the prospectus) for each of
the years in the ten-year period ended December 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
December 31, 1994 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Money Market
Management, Inc. as of December 31, 1994, the results of its operations, the
changes in its net assets, and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 10, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Money Market Management, Inc.
Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Advisers Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company Boston, MA 02266-8606
- -----------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
MONEY MARKET
MANAGEMENT, INC.
PROSPECTUS
An Open-End, Diversified
Management Investment Company
Prospectus dated February 28, 1995
Federated Investors Tower
Pittsburgh, PA 15222-3779
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
609346200
8012811A (2/95)
Money Market Management, Inc.
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus of Money Market Management, Inc. (the "Company") dated
February 28, 1995. This Statement is not a prospectus. To receive
a copy of a prospectus, write or call the Company.
Federated Investors Tower
Pittsburgh, PA 15222-3779
Statement dated February 28, 1995
Federated Securities Corp.
Distributor
A subsidiary of
Federated Investors
Investment Policies 1
Acceptable Investments 1
Bank Instruments 1
When-Issued And Delayed
Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Investment Limitations 1
Selling Short and Buying on
Margin 1
Borrowing Money 2
Pledging Assets 2
Lending Cash or Securities 2
Investing in Commodities 2
Investing in Real Estate 2
Underwriting 2
Concentration of Investments 2
Diversification of Investments 2
Investing in Restricted
Securities 2
Investing for Control 2
Investing in Securities of
Other Investment Companies 3
Investing in New Issuers 3
Investing in Illiquid
Securities 3
Investing in Issuers Whose
Securities Are Owned by
Officers of the Company 3
Investing in Options 3
Investing in Minerals 3
Money Market Management, Inc.
Management 4
Share Ownership 7
Directors Compensation 7
Director Liability 8
Investment Advisory Services 8
Investment Adviser 8
Advisory Fees 9
State Expense Limitations 9
Company Administration 9
Shareholder Services Plan 9
Determining Net Asset Value 9
Redemption in Kind 10
The Company's Tax Status 10
Performance Information 10
Yield 10
Effective Yield 10
Total Return 11
Performance Comparisons 11
Investment Policies
Unless indicated otherwise, the policies described below may not be
changed by the Directors without shareholder approval.
Acceptable Investments
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of
the security, the issuer of any demand feature applicable to the
security, or any guarantor of either the security or any demand feature.
Bank Instruments
The instruments of banks and savings and loans whose deposits are
insured by the Bank Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF"), such as certificates of deposit, demand and
time deposits, savings shares, and bankers' acceptances, are not
necessarily guaranteed by those organizations. In addition to domestic
bank instruments, the Company may invest in: Eurodollar Certificates of
Deposit issued by foreign branches of U.S. or foreign banks; Eurodollar
Time Deposits, which are U.S. dollar-denominated deposits in foreign
branches of U.S. or foreign banks; Canadian Time Deposits, which are
U.S. dollar-denominated deposits issued by branches of major Canadian
banks located in the United States; and Yankee Certificates of Deposit,
which are U.S. dollar-denominated certificates of deposit issued by U.S.
branches of foreign banks and held in the United States.
When-Issued And Delayed Delivery Transactions
These transactions are made to secure what is considered to be an
advantageous price or yield for the Company. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Company sufficient to make payment for the securities to
be purchased are segregated on the Company's records at the trade date.
These assets are marked to market daily and are maintained until the
transaction has been settled. As a matter of operating policy, the
Company does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than
20% of the total value of its assets.
Repurchase Agreements
The Company or its custodian will take possession of the securities
subject to repurchase agreements, and these securities will be marked to
market daily. In the event that a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the
Company might be delayed pending court action. The Company believes
that under the regular procedures normally in effect for custody of the
Company's portfolio securities subject to repurchase agreements, a court
of competent jurisdiction would rule in favor of the Company and allow
retention or disposition of such securities. The Company will only
enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Company's adviser to be creditworthy pursuant to guidelines established
by the Directors.
Reverse Repurchase Agreements
The Company may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Company transfers possession of a portfolio instrument
in return for a percentage of the instrument's market value in cash and
agrees that on a stipulated date in the future the Company will
repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Company to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous,
but does not ensure this result. When effecting reverse repurchase
agreements, liquid assets of the Company, in a dollar amount sufficient
to make payment for the obligations to be purchased, are: segregated on
the Company's records at the trade date; marked to market daily; and
maintained until the transaction is settled.
Investment Limitations
Selling Short and Buying on Margin
The Company 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.
Borrowing Money
The Company will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in
excess of 5% of the value of its total assets. In addition, the Company
may enter into reverse repurchase agreements and otherwise borrow up to
one-third of the value of its total assets, including the amount
borrowed, in order to meet redemption requests without immediately
selling portfolio instruments. This latter practice is not for
investment leverage but solely to facilitate management of the portfolio
by enabling the Company to meet redemption requests when the liquidation
of portfolio instruments would be inconvenient or disadvantageous. The
Company may not purchase any portfolio instruments while any borrowings
(exclusive of reverse repurchase agreements) are outstanding.
The Company will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Company to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Company will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding.
Pledging Assets
The Company will not mortgage, pledge, or hypothecate any assets except
as necessary to secure permitted borrowings. In those cases, it may
mortgage, pledge or hypothecate assets having a market value not
exceeding the lesser of the dollar amounts borrowed or 10% of the value
of total assets at the time of the borrowing.
Lending Cash or Securities
The Company will not lend any of its assets, except that it may purchase
or hold portfolio securities permitted by its investment objective,
policies, and limitations.
Investing in Commodities
The Company will not purchase or sell commodities, or commodity
contracts.
Investing in Real Estate
The Company will not purchase or sell real estate although it may invest
in securities of issuers whose business involves the purchase or sale of
real estate or interests in real estate.
Underwriting
The Company will not underwrite any issue of securities, except as it
may be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
Concentration of Investments
The Company will not invest 25% or more of the value of its total assets
in any one industry. However, the Company may invest 25% or more of the
value of its total assets in cash, cash items, or securities issued or
guaranteed by the government of the United States or its agencies, or
instrumentalities and repurchase agreement collateralized by such U.S.
government securities.
Diversification of Investments
The Company will not invest more than 5% of the value of its assets in
securities of any one issuer, except cash or cash items and U.S.
government obligations.
With respect to 75% of the Company's assets, the Company will not
purchase securities, other than repurchase agreements, issued by any one
banking institution having a value of more than 5% of the value of the
Company's total assets.
Investing in Restricted Securities
The Company will not invest more than 10% of its total assets in
securities subject to restrictions on resale under federal securities
law, except for commercial paper issued under Section 4(2) of the
Securities Act of 1933.
Investing for Control
The Company will not invest in securities of a company for the purpose
of exercising control or management.
Investing in Securities of Other Investment Companies
The Company will not purchase securities of other investment companies.
The above limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the
Directors without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
Investing in New Issuers
The Company will not invest more than 5% of the value of its total
assets in securities of issuers which have records of less than three
years of continuous operations, including the operation of any
predecessor.
Investing in Illiquid Securities
The Company will not invest more than 10% of the value of its net assets
in illiquid securities.
Investing in Issuers Whose Securities Are Owned by Officers of the
Company
The Company will not purchase or retain the securities of any issuer if
the Officers and Directors of the Company or its investment adviser
owning individually more than .50 of 1% of the issuer's securities
together own more than 5% of the issuer's securities.
Investing in Options
The Company will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Minerals
The Company will not purchase or sell interests in oil, gas, or other
mineral exploration or development programs or leases, although it may
purchase the securities of issuers which invest in or sponsor such
programs.
For purposes of the above limitations, the Company considers instruments
issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items". Except with respect to borrowing
money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from
any change in value or net assets will not result in a violation of such
limitation.
The Company did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Board of Directors. The adviser may select brokers
and dealers who offer brokerage and research services. These services
may be furnished directly to the Company or to the adviser and may
include: advice as to the advisability of investing in securities;
security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services.
Research services provided by brokers and dealers may be used by the
adviser or its affiliates in advising the Company and other accounts.
To the extent that receipt of these services may supplant services for
which the adviser or its affiliates might otherwise have paid, it would
tend to reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended December 31, 1994,
1993, and 1992, the Company paid no brokerage commissions.
Although investment decisions for the Company are made independently
from those of the other accounts managed by the adviser, investments of
the type the Company may make may also be made by those other accounts.
When the Company and one or more other accounts managed by the adviser
are prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by the adviser to be equitable to each. In some cases,
this procedure may adversely affect the price paid or received by the
Company or the size of the position obtained or disposed of by the
Company. In other cases, however, it is believed that coordination and
the ability to participate in volume transactions will be to the benefit
of the Company.
Money Market Management, Inc. Management
Officers and Directors are listed with their addresses, present
positions with Money Market Management, Inc., and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Director
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life
and Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner
of the Funds; formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Director
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Director
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Director
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and
Director, Federated Research Corp.; President, Passport Research,
Ltd.; Trustee, Federated Administrative Services, Federated
Services Company, and Federated Shareholder Services; President or
Vice President of the Funds; Director, Trustee, or Managing
General Partner of some of the Funds. Mr. Donahue is the son of
John F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Director,
Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.
Edward L. Flaherty, Jr.@
Henny, Koehuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
225 Franklin Street
Boston, MA
Birthdate : April 16, 1942
Director
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation and Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer
Henny, Koehuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Director
Attorney-at-law; Partner, Henny, Koehuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
Management Center; Director, Trustee, or Managing General Partner of the
Funds; President Emeritus, University of Pittsburgh; formerly, Chairman,
National Advisory Council for Environmental Policy and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; Vice
President and Treasurer of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and
Secretary, Federated Research Corp. and Passport Research, Ltd.;
Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.
* This Director is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Directors handles the responsibilities of the
Board of Directors between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies:
American Leaders Fund, Inc.; Annuity Management Series; Arrow Funds;
Automated Cash Management Trust; Automated Government Money Trust;
California Municipal Cash Trust; Cash Trust Series II; Cash Trust
Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport
Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth
Trust; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Intermediate Government Trust; Federated Master Trust;
Federated Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated U.S. Government Bond Fund;
First Priority Funds; Fixed Income Securities, Inc.; Fortress Adjustable
Rate U.S. Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management Series; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc. -
1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Money Market Management, Inc.; Money Market Obligations Trust;
Money Market Trust; Municipal Securities Income Trust; Newpoint Funds;
New York Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The
Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds; The Starburst Funds
II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration Trust;
Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term
U.S. Government Securities; Trust for U.S. Treasury Obligations; The
Virtus Funds; and World Investment Series, Inc.
Share Ownership
Officers and Directors as a group own less than 1% of the Company's
outstanding shares.
Directors Compensation
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
COMPANY COMPANY* FROM FUND COMPLEX +
John F. Donahue,
Director $ 0 $0 for the Company and
65 other investment companies in the Fund
Complex
Thomas G. Bigley,
Director $ 282 $20,688 for the Company and
50 other investment companies in the Fund
Complex
John T. Conroy, Jr.
Director $ 1,227.75 $117,202 for the Company and
65 other investment companies in the Fund
Complex
William J. Copeland
Director $ 1,227.75 $ 117,202 for the Company and
65 other investment companies in the Fund
Complex
J. Christopher Donahue
Director $ 0 $0 for the Company and
15 other investment companies in the Fund
Complex
James E. Dowd
Director $ 1,227.75 $117,202 for the Company and
65 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D.
Director $ 1,114.50 $106,460 for the Company and
65 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr.
Director $ 1,227.75 $117,202 for the Company and
65 other investment companies in the Fund
Complex
Peter E. Madden
Director $ 945.50 $90,563 for the Company and
65 other investment companies in the Fund
Complex
Gregor F. Meyer
Director $ 1,114.50 $106,460 for the Company and
65 other investment companies in the Fund
Complex
Wesley W. Posvar
Director $ 1,114.50 $106,460 for the Company and
65 other investment companies in the Fund
Complex
Marjorie P. Smuts
Director $ 1,114.50 $106,460 for the Company and
65 other investment companies in the Fund
Complex
+The information provided is for the last calendar year end.
*Information is furnished for the fiscal year ended December 31, 1994.
Director Liability
The Articles of Incorporation provide that the Directors will not be
liable for errors of judgment or mistakes of fact or law. However, they
are not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
Investment Advisory Services
Investment Adviser
The Company's investment adviser is Federated Advisers. It is a
subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John
F. Donahue, his wife and his son, J. Christopher Donahue.
The adviser shall not be liable to the Company or any shareholder for
any losses that may be sustained in the purchase, holding, or sale of
any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with
the Company.
Advisory Fees
For its advisory services, Federated Advisers receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended December 31, 1994, 1993, and 1992, the adviser earned
$601,172, $566,814, and $755,133, respectively, of which $0, $79,605,
and $0, respectively, were voluntarily waived.
State Expense Limitations
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose
shares are registered for sale in those states. If the Company's
normal operating expenses (including the investment advisory fee,
but not including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2-1/2% per year of the first $30
million of average net assets, 2% per year of the next $70 million
of average net assets, and 1-1/2% per year of the remaining
average net assets, the adviser will reimburse the Company for its
expenses over the limitation.
If the Company's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by
the amount of the excess, subject to an annual adjustment. If the
expense limitation is exceeded, the amount to be reimbursed by the
adviser will be limited, in any single fiscal year, by the amount
of the investment advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
Company Administration
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Company for a fee
as described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Company's Administrator. (For purposes of this Statement
of Additional Information, Federated Administrative Services and
Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the "Administrators".) For the fiscal years ended
December 31, 1994, 1993, and 1992, the Administrators earned $156,053,
$324,918, and $307,106, respectively. Dr. Henry J. Gailliot, an officer
of Federated Advisers, the adviser to the Company, holds approximately
20% of the outstanding common stock and serves as a director of
Commercial Data Services, Inc., a company which provides computer
processing services to Federated Administrative Services.
Shareholder Services Plan
This arrangement permits the payment of fees to Federated Shareholder
Services and financial institutions to cause services to be provided
which are necessary for the maintenance of shareholder accounts and to
encourage personal services to shareholders by a representative who has
knowledge of the shareholder's particular circumstances and goals.
These activities and services may include, but are not limited to:
providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic
investments of client account cash balance; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses. By adopting the Shareholder Services Plan,
the Board of Directors expects that the Company will benefit by:
(1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail;
(3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their
accounts. For the fiscal period ending December 31, 1994, payments in
the amount of $100,518 were made pursuant to the Shareholder Services
Plan, all of which was paid to financial institutions.
Custodian and Portfolio Recordkeeper. State Street Bank and Trust
Company, Boston, MA, is custodian for the securities and cash of the
Company. It also provides certain accounting and recordkeeping services
with respect to the Company's portfolio investments.
Transfer Agent. As transfer agent, Federated Services Company maintains
all necessary shareholder records. For its services, the transfer agent
receives a fee based on the number of shareholder accounts.
Determining Net Asset Value
The Directors have decided that the best method for determining the
value of portfolio instruments is amortized cost. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Company computed by dividing
the annualized daily income on the Company's portfolio by the net asset
value computed as above may tend to be higher than a similar computation
made by using a method of valuation based upon market prices and
estimates. In periods of rising interest rates, the opposite may be
true.
The Company's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-
7 (the "Rule") promulgated by the Securities and Exchange Commission
under the Investment Company Act of 1940. Under the Rule, the Directors
must establish procedures reasonably designed to stabilize the net asset
value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market
conditions and the Company's investment objective. The procedures
include monitoring the relationship between the amortized cost value per
share and the net asset value per share based upon available indications
of market value. The Directors will decide what, if any, steps should be
taken if there is a difference of more than 0.5 of 1% between the two
values. The Directors will take any steps they consider appropriate
(such as redemption in kind or shortening the average portfolio
maturity) to minimize any material dilution or other unfair results
arising from differences between the two methods of determining net
asset value.
Redemption in Kind
The Company is obligated to redeem shares solely in cash up to $250,000
or 1% of the Company's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Directors determine that further
payments should be in kind. In such cases, the Company will pay all or
a portion of the remainder of the redemption in portfolio instruments
valued in the same way as the Company determines net asset value. The
portfolio instruments will be selected in a manner that the Directors
deem fair and equitable. Redemption in kind is not as liquid as a cash
redemption. If redemption is made in kind, shareholders who sell these
securities could receive less than the redemption value and could incur
certain transaction costs.
The Company's Tax Status
To qualify for the special tax treatment afforded to regulated
investment companies, the Company must, among other requirements:
derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities; derive less than 30% of its gross
income from the sale of securities held less than three months; invest
in securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
Performance Information
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in shares of the Company, the performance
will be reduced for those shareholders paying those fees.
Yield
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original one
share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the base
period return; and multiplying the base period return by 365/7.
The Company's yield for the seven-day period ended December 31, 1994,
was 4.94%.
Effective Yield
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to
the 365/7th power; and subtracting 1 from the result.
The Company's effective yield for the seven-day period ended December
31, 1994, was 5.06%.
Total Return
Average annual total return is the average compounded rate of return for
a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value
is computed by multiplying the number of shares owned at the end of the
period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number
of shares purchased at the beginning of the period with $1,000, adjusted
over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.
Performance Comparisons
Investors may use financial publications and/or indices to obtain a more
complete view of the Company's performance. When comparing performance,
investors should consider all relevant factors such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which
the Company uses in advertising may include:
o Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
o Donoghue's Money Fund Report publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the
same money funds.
o Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
o Bank Rate MonitorC National Index, Miami Beach, Florida, published
weekly, is an average of the interest rates of personal money
market deposit accounts at ten of the largest banks and thrifts in
each of the five largest Standard Metropolitan Statistical Areas.
If more than one rate is offered, the lowest rate is used. Account
minimums and compounding methods may vary.
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