MONEY MARKET MANAGEMENT, INC.
PROSPECTUS
The shares of Money Market Management, Inc. (the "Company") offered by this
prospectus represent interests in an open-end management investment company
(a mutual fund). The Company invests 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, 1997, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Company, contact your financial institution. The Statement of Additional
Information, material incorporated by reference into this document, and
other information regarding the Company is maintained electronically with
the SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated February 28, 1997
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF COMPANY EXPENSES 1
FINANCIAL HIGHLIGHTS 2
GENERAL INFORMATION 3
INVESTMENT INFORMATION 3
Investment Objective 3
Investment Policies 3
Investment Risks 6
Investment Limitations 6
COMPANY INFORMATION 6
Management of the Company 6
Distribution of Shares 7
Administration of the Company 8
NET ASSET VALUE 8
HOW TO PURCHASE SHARES 9
Contingent Deferred Sales Charge 9
Special Purchase Features 10
EXCHANGE PRIVILEGE 10
HOW TO REDEEM SHARES 11
Special Redemption Features 12
ACCOUNT AND SHARE INFORMATION 13
TAX INFORMATION 13
Federal Income Tax 13
State and Local Taxes 14
PERFORMANCE INFORMATION 14
FINANCIAL STATEMENTS 15
INDEPENDENT AUDITORS' REPORT 25
ADDRESSES 26
</TABLE>
SUMMARY OF COMPANY EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge 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
</TABLE>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<S> <C> <C>
Management Fee 0.50%
12b-1 Fee None
Total Other Expenses 0.56%
Shareholder Services Fee (after waiver)(1) 0.12%
Total Operating Expenses(2) 1.06%
</TABLE>
(1) The shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder
service provider can terminate this voluntary waiver at any time at its
sole discretion. The maximum shareholder services fee is 0.25%.
(2) The total operating expenses would have been 1.19% absent the voluntary
waiver of a portion of the shareholder services fee.
* A contingent deferred sales charge of 1% will be imposed only under
certain limited circumstances in which Company shares being redeemed were
acquired in exchange for Class F Shares of certain other Federated Funds
(see "Exchange Privilege" for additional information).
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Company will bear,
either directly or indirectly. For more complete descriptions of the various
costs and expenses, see "Redeeming Shares" and "Company 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 $11 $34 $58 $129
</TABLE>
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
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Independent Auditors' Report on page 25.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $ 1.00 $ 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 0.05 0.05 0.03 0.02 0.03 0.05 0.07 0.08 0.07 0.06
LESS DISTRIBUTIONS
Distributions
from net
investment income (0.05) (0.05) (0.03) (0.02) (0.03) (0.05) (0.07) (0.08) (0.07) (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 $ 1.00
TOTAL RETURN(A) 4.56% 5.13% 3.31% 2.19% 2.86% 5.43% 7.65% 8.73% 7.03% 6.08%
RATIOS TO
AVERAGE NET
ASSETS
Expenses 1.06% 1.08% 1.14% 1.17% 1.11% 0.96% 0.89% 0.89% 0.91% 0.89%
Net investment
income 4.46% 4.99% 3.27% 2.15% 2.85% 5.32% 7.38% 8.39% 6.81% 5.88%
Expense waiver/
reimbursement(b) 0.13% 0.15% 0.00% 0.07% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
SUPPLEMENTAL DATA
Net assets, end
of period (000
omitted) $87,381 $101,390 $114,588 $108,309 $127,711 $168,889 $194,836 $204,393 $188,239 $178,813
</TABLE>
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) 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
The Company was established 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.
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 complying with
the diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and 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. As a matter of
operating policy which can be changed without shareholder approval, 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.
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. Any
bankruptcy, receivership, or default of the party providing the credit
enhancement 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 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 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. These investment limitations cannot be changed without
shareholder approval.
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 PERCENTAGE OF AVERAGE
NET ASSETS 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. With over $76 billion invested across more
than 338 funds under management and/or administration by its subsidiaries,
as of December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,500
financial institutions nationwide.
Both the Company and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Company and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Company's shareholders and must place the interests of
shareholders ahead of the employees' own interests. Among other things, the
codes: require preclearance and periodic reporting of personal securities
transactions; prohibit personal transactions in securities being purchased
or sold, or being considered for purchase or sale, by the Company; prohibit
purchasing securities in initial public offerings; and prohibit taking
profits on securities held for less than sixty days. Violations of the codes
are subject to review by the Directors, and could result in severe
penalties.
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. The Company has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Company may make payments up to .25% of the
average daily net asset value of its shares, computed at an annual rate, to
obtain certain personal services for shareholders and to maintain
shareholder accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select financial
institutions to perform shareholder services. Financial institutions will
receive fees based upon shares owned by their 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 the Company and Federated Shareholder
Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to payments
made pursuant to the Shareholder Services Agreement, Federated Securities
Corp. and Federated Shareholder Services, from their own assets, may pay
financial institutions supplemental fees for the performance of substantial
sales services, distribution-related support services, or shareholder
services. The support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and engineering
computer software programs that emphasize the attributes of the Company.
Such assistance may be predicated upon the amount of shares the financial
institution sells or may sell, and/or upon the type and nature of sales or
marketing support furnished by the financial institution. Any payments made
by the distributor may be reimbursed by the Company's investment adviser or
its affiliates.
ADMINISTRATION OF THE COMPANY
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Company at an annual rate which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% 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.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 (Eastern time) and as of the
close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange, Monday through Friday, except on New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York Stock
Exchange is open for business. Shares may be purchased as described below,
either through a financial institution (such as a bank or broker/dealer) or
by wire or by check directly from the Company, with a minimum initial
investment of $500 or more or additional investments of as little as $100.
The minimum initial and subsequent investments for retirement plans are only
$50. Financial institutions may impose different minimum investment
requirements on their customers.
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. An account
must be established at a financial institution or by completing, signing,
and returning the new account form available from the Company before shares
can be purchased.
PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION. Investors may purchase
shares through a financial institution which has a sales agreement with the
distributor. Orders are considered received when the Company receives
payment by wire or converts payment by check from the financial institution
into federal funds. It is the financial institution's responsibility to
transmit orders promptly. Financial institutions may charge additional fees
for their services.
PURCHASING SHARES BY WIRE. Shares may be purchased by wire by calling the
Company before 3:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be received
before 3:00 p.m. (Eastern time) in order to begin earning dividends that
same day. Federal funds should be wired as follows: Federated Shareholder
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. Shares cannot be purchased by wire on holidays when
wire transfers are restricted. Questions on wire purchases should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to: Money Market Management,
Inc. Please include an account number on the check. Orders by mail are
considered received when payment by check is converted into federal funds
(normally the business day after the check is received), and shares begin
earning dividends the next day.
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
Class F Shares of certain other Federated Funds ("Participating Fund").
(Please see "Exchange Privilege.") If Company shares were acquired in
exchange for shares of a Participating Fund, a redemption of those Company
shares within four years of the initial Participating 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 Participating Fund
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 through the reinvestment of dividends or
distributions of long-term capital gains. In imposing the contingent
deferred sales charge, if any, redemptions of Company shares are deemed to
relate first to shares of other Participating 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,
Keough Plan, or a custodial account, following retirement; (ii) a total or
partial distribution from an IRA, Keough Plan, or a custodial account after
the beneficial owner attains age 591/2; or (iii) from the death or
disability of the last surviving beneficial owner. The exemption from the
contingent deferred sales charge for qualified plans, an IRA, Keough Plan or
a custodial account does not extend to account transfers, rollovers, and
other redemptions made for purposes of reinvestment.
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 Shareholder Services Company, the transfer agent for shares of the
Company. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder 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. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder 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 Shareholder Services Company prior to use of this program.
Allow 60 to 90 days for the application to be processed.
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM. A minimum of $100 can be automatically
withdrawn from the shareholder's checking account at an Automated Clearing
House ("ACH") member and invested in Company shares. Shareholders should
contact their financial institution or the Company to participate in this
program.
EXCHANGE PRIVILEGE
The Company has exchange privileges with the Class F Shares of Participating
Funds. Not all Federated Funds participate in the exchange privilege or
currently offer Class F Shares. Contact your financial institution regarding
the availability of Class F Shares of the Federated Funds.
Shares of the Participating Funds may be exchanged for Company shares at net
asset value. Company shares may also be exchanged for Participating Funds at
net asset value plus a 1% contingent deferred sales charge 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
funds share being acquired may be sold.
Shareholders using this privilege must exchange shares having a net asset
value of at least $1,500.
Each of the Participating Funds may also invest in certain other types of
securities as described in the prospectus of each fund.
Before the exchange, the shareholder must receive a prospectus for the fund
for which the exchange is being made.
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.
Please contact your financial institution directly or Federated Securities
Corp. at 1-800-245-5051 for information on and prospectuses for the
Participating Funds into which Company shares may be exchanged.
MAKING AN EXCHANGE. Instructions for exchanges may be given in writing or by
telephone. Written instructions may be sent to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. Orders for exchanges
received by Federated Shareholder Services Company on any day the Company is
open for business will be executed as of the close of business that day.
Before an exchange can be made by telephone, a properly executed
authorization form must be completed and on file with Federated Shareholder
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 Shareholder Services Company. Telephone
instructions may be recorded. 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION. Shares may be redeemed by
contacting the shareholder's financial institution. Shares will be redeemed
at the net asset value next determined after Federated Shareholder Services
Company receives the redemption request. According to the shareholder's
instructions, redemption proceeds can be sent to the financial institution
or to the shareholder by check or by wire. The financial institution is
responsible for promptly submitting redemption requests and providing proper
written redemption instructions. Customary fees and commissions may be
charged by the financial institution for this service.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Company provided the Company has a properly completed
authorization form. These forms can be obtained from Federated Securities
Corp. Proceeds from redemption requests received before 3:00 p.m. (Eastern
time) 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, but will
not include that day's dividend. Proceeds from redeemed shares purchased by
check or through ACH will not be wired until that method of payment has
cleared. Proceeds from redemption requests received after that time include
that day's dividend but will be wired the following business day. Proceeds
from redemption requests on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions
on days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares by Mail" should be considered. If at any time the Company shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Company name; the account name as
registered with the Company; the account number; and the number of shares to
be redeemed or the dollar amount requested. All owners of the account must
sign the request exactly as the shares are registered. Normally, a check for
the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request.
Dividends are paid up to and including the day that a redemption request is
processed.
Shareholders requesting 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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
SPECIAL REDEMPTION FEATURES
CHECK WRITING. Upon request, a checking account will be established to allow
shareholders to redeem their Company shares. Shareholder accounts will
continue to receive the daily dividend declared on the shares to be redeemed
until the check is presented to UMB Bank, N.A., the bank responsible for
administering the check writing program, for payment. However, checks should
never be made payable or sent to UMB Bank, N.A. or the Company to redeem
shares, and a check may not be written to close an account.
SYSTEMATIC WITHDRAWAL PROGRAM. If a shareholder's account has a value of at
least $10,000, other than retirement accounts subject to required minimum
distributions, 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 institutions or the Company.
ACCOUNT AND SHARE INFORMATION
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 3:00 p.m. (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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Company, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Company
or Federated Shareholder Services Company in writing. Monthly confirmations
are sent to report all transactions as well as dividends paid during the
month.
ACCOUNTS WITH LOW BALANCES. Due to the high cost of maintaining accounts
with low balances, the Company may redeem shares in any account, except
accounts maintained by retirement plans, 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.
VOTING RIGHTS. Each share of the Company owned by a shareholder gives that
shareholder one vote in Director elections and other matters submitted to
shareholders for vote. 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 shall be called by the Directors upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Company.
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.
STATE AND LOCAL TAXES
Company shares are exempt from personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania.
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, effective yield and
total return.
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.
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 the Company's performance to certain indices.
MONEY MARKET MANAGEMENT, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
BANK NOTES -- 1.1%
BANKING -- 1.1%
$ 1,000,000 Harris Trust & Savings Bank, Chicago, 5.500%, 3/26/1997 $ 999,867
CERTIFICATES OF DEPOSIT -- 10.3%
BANKING -- 10.3%
2,000,000 Abbey National Treasury Services, PLC, (Guaranteed by Abbey
National Bank PLC, London), 5.410%, 5/27/1997 2,000,053
1,000,000 Bank of Scotland, Edinburgh, 5.480%, 6/5/1997 999,763
2,000,000 Dresdner Bank AG, Frankfurt, 5.026%, 2/26/1997 1,999,880
1,000,000 Mellon Bank NA, Pittsburgh, 5.620%, 2/24/1997 1,000,000
1,000,000 Societe Generale, Paris, 5.420%, 5/8/1997 1,000,885
2,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska
Handelsbanken, Stockholm), 5.420%, 5/27/1997 2,000,066
TOTAL CERTIFICATES OF DEPOSIT 9,000,647
(A)COMMERCIAL PAPER -- 36.4%
BANKING -- 10.2%
2,500,000 Bank of Nova Scotia, Toronto, 5.510%, 1/6/1997 2,498,115
1,500,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank AG,
Frankfurt), 5.709%, 3/18/1997 1,482,425
1,000,000 Commonwealth Bank of Australia, Sydney, 5.560%, 2/28/1997 991,284
1,000,000 National Australia Funding, Inc., (Guaranteed by National Australia
Bank, Ltd., Melbourne), 5.540%, 2/3/1997 995,059
2,500,000 Societe Generale North America, Inc., (Guaranteed by Societe
Generale, Paris), 5.500% - 5.620%, 3/27/1997 - 4/9/1997 2,465,239
500,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska
Handelsbanken, Stockholm), 5.531%, 2/12/1997 496,862
Total 8,928,984
BROKERAGE -- 1.1%
1,000,000 Merrill Lynch & Co., Inc., 5.372%, 2/18/1997 992,933
</TABLE>
MONEY MARKET MANAGEMENT, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER -- CONTINUED
FINANCE - AUTOMOTIVE -- 2.2%
$ 2,000,000 General Motors Acceptance Corp., 5.456% - 5.465%,
5/12/1997 - 6/9/1997 $ 1,957,189
FINANCE - COMMERCIAL -- 12.3%
3,800,000 Beta Finance, Inc., 5.552% - 5.775%, 2/19/1997 - 3/13/1997 3,769,099
3,000,000 Falcon Asset Securitization Corp., 5.398%, 1/14/1997 2,994,237
2,000,000 General Electric Capital Corp., 5.508% - 5.764%, 1/29/1997 - 4/10/1997 1,975,712
2,000,000 Transamerica Finance Corp., 5.782%, 1/6/1997 1,998,439
Total 10,737,487
FINANCE - RETAIL -- 3.8%
1,000,000 McKenna Triangle National Corp., 5.415%, 2/26/1997 991,724
2,300,000 New Center Asset Trust, A1+/P1 Series, 5.402% - 5.527%,
1/27/1997 - 2/7/1997 2,289,466
Total 3,281,190
INSURANCE -- 4.5%
3,900,000 CXC, Inc., 5.382%, 2/12/1997 3,875,839
OIL & OIL FINANCE -- 2.3%
2,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.), 5.389%,
2/14/1997 1,987,020
TOTAL COMMERCIAL PAPER 31,760,642
CORPORATE NOTES -- 9.8%
BANKING -- 1.2%
1,000,000 (b)SALTS III Cayman Island Corp., (Bankers Trust International, PLC
Swap Agreement), 5.681%, 1/23/1997 1,000,000
FINANCE - EQUIPMENT -- 8.6%
1,544,613 Capita Equipment Receivables Trust 1996-1, 5.600%, 10/15/1997 1,544,613
2,000,000 Silver REMIC Trust I 1996-1, 5.700%, 1/15/1998 2,000,000
4,000,000 WFS Financial Owner Trust, (Series 1996-D), 5.500%, 1/16/1998 4,000,000
Total 7,544,613
TOTAL CORPORATE NOTES 8,544,613
</TABLE>
MONEY MARKET MANAGEMENT, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)NOTES - VARIABLE -- 35.9%
BANKING -- 17.7%
$ 1,000,000 Alabama State IDA, (GMC Projects), Tax Revenue Bonds (Series 1994),
(General Motors Corp. LOC), 5.800%, 1/1/1997 $ 1,000,000
4,000,000 Bank One, Milwaukee, WI N.A., 5.260%, 12/31/1996 3,997,756
1,785,000 Canton Township Equity Partners L.P., (Huntington National Bank,
Columbus, OH LOC), 5.930%, 1/2/1997 1,785,000
4,000,000 Liquid Asset Backed Securities Trust, (Series 1996-3), (Westdeutsche
Landesbank Girozentrale Swap Agreement), 5.626%, 1/13/1997 4,000,000
1,145,000 North Center Properties, (Huntington National Bank, Columbus, OH
LOC), 5.930%, 1/2/1997 1,145,000
3,500,000 Poly Foam Intl, Inc., (National City Bank, Cleveland, OH LOC),
5.950%, 1/2/1997 3,500,000
Total 15,427,756
FINANCE - RETAIL -- 8.0%
4,000,000 (b)AFS Insurance Premium Receivables Trust, (Series 1994-A), 6.162%,
1/15/1997 4,000,000
3,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class A1),
5.465%, 1/15/1997 3,000,000
Total 7,000,000
INSURANCE -- 5.1%
4,500,000 General American Life Insurance Co., 5.806%, 1/23/1997 4,500,000
RETAIL -- 5.1%
4,458,000 Congregate Care Corp., (Union Bank of California LOC), 5.914%,
1/1/1997 4,458,000
TOTAL NOTES - VARIABLE 31,385,756
TIME DEPOSIT -- 1.1%
BANKING -- 1.1%
1,000,000 Bank of Nova Scotia, Toronto, 7.125%, 1/2/1997 1,000,000
</TABLE>
MONEY MARKET MANAGEMENT, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY -- 3.5%
U.S. TREASURY NOTES -- 3.5%
$ 3,000,000 6.875%-7.500%, 1/31/1997-3/31/1997 $ 3,007,010
(D)REPURCHASE AGREEMENTS -- 4.1%
2,000,000 CS First Boston, Inc., 6.500%, dated 12/31/1996, due 1/2/1997 2,000,000
1,600,000 Swiss Bank Capital Markets, 6.800%, dated 12/31/1996, due 1/2/1997 1,600,000
TOTAL REPURCHASE AGREEMENTS 3,600,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 89,298,535
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for
discount issues, or the coupon for interest bearing issues.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At December 31, 1996, these securities
amounted to $5,000,000 which represents 5.7% of net assets.
(c) Current rate and next reset date shown.
(d) 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.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($87,380,818) at December 31, 1996.
The following acronyms are used throughout this portfolio:
IDA -- Industrial Development Authority
LOC -- Letter of Credit
PLC -- Public Limited Company
REMIC -- Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET MANAGEMENT, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 3,600,000
Investments in other securities 85,698,535
Total investments in securities, at amortized cost and value $ 89,298,535
Cash 331,854
Income receivable 485,105
Receivable for shares sold 363,945
Total assets 90,479,439
LIABILITIES:
Payable for shares redeemed 3,025,369
Income distribution payable 19,195
Accrued expenses 54,057
Total liabilities 3,098,621
Net Assets for 87,380,818 shares outstanding $ 87,380,818
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$87,380,818 / 87,380,818 shares 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, 1996
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 5,574,904
EXPENSES:
Investment advisory fee $ 504,807
Administrative personnel and services fee 125,000
Custodian fees 38,800
Transfer and dividend disbursing agent fees and expenses 132,072
Directors'/Trustees' fees 16,128
Auditing fees 13,868
Legal fees 4,950
Portfolio accounting fees 39,847
Shareholder services fee 252,403
Share registration costs 26,533
Printing and postage 12,645
Insurance premiums 3,253
Taxes 29,227
Miscellaneous 2,682
Total expenses 1,202,215
Waivers --
Waiver of shareholder services fee (131,280)
Net expenses 1,070,935
Net investment income $ 4,503,969
</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,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 4,503,969 $ 5,190,615
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income (4,503,969) (5,190,615)
SHARE TRANSACTIONS --
Proceeds from sale of shares 121,628,840 115,132,036
Net asset value of shares issued to shareholders in
payment of distributions declared 4,216,111 4,728,001
Cost of shares redeemed (139,854,088) (133,057,940)
Change in net assets resulting from share transactions (14,009,137) (13,197,903)
Change in net assets (14,009,137) (13,197,903)
NET ASSETS:
Beginning of period 101,389,955 114,587,858
End of period $ 87,380,818 $ 101,389,955
</TABLE>
(See Notes which are an integral part of the Financial Statements)
MONEY MARKET MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION
Money Market Management, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The investment objective of the Fund
is to obtain current income consistent with stability of principal.
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.
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.
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 under repurchase agreement
transactions. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
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 and/or
standards reviewed or 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.
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.
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 substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At December 31, 1996, the Fund, for federal tax purposes, had a capital loss
carryforward of $1,779, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<C> <C>
2002 $1,779
</TABLE>
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.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be sold upon registration under federal securities laws or in transactions
exempt from such registration.
Many restricted securities may be resold in the secondary market in
transactions exempt from registration. In some cases, the restricted
securities may be resold without registration upon exercise of a demand
feature. Such restricted securities may be determined to be liquid under
criteria established by the Board of Directors. The Fund will not incur any
registration costs upon such resales. Restricted securities are valued at
amortized cost in accordance with Rule 2a-7 under the Investment Company Act
of 1940.
Additional information on each restricted security held at December 31, 1996
is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
SALTS III Caymen Island Corp. 10/31/96 $ 1,000,000
AFS Insurance Premium Receivables Trust 8/16/94 4,000,000
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. CAPITAL STOCK
At December 31, 1996, there were 50,000,000,000 shares of $0.001 par value
capital stock authorized. Capital paid-in aggregated $87,380,818.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995
<S> <C> <C>
Shares sold 121,628,840 115,132,036
Shares issued to shareholders in payment of distributions declared 4,216,111 4,728,001
Shares redeemed (139,854,088) (133,057,940)
Net change resulting from share transactions (14,009,137) (13,197,903)
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Advisors, 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 any portion of its
fee. The Adviser can modify or terminate this voluntary waiver at any time
at its sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors 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 0.25% of average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
GENERAL -- 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, 1996, the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended December
31, 1996 and 1995, and the financial highlights for the periods presented.
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, 1996, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. 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, 1996, 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 princples.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
February 7, 1997
ADDRESSES
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 Co. P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222-5401
MONEY MARKET
MANAGEMENT, INC.
PROSPECTUS
An Open-End, Diversified,
Management Investment Company
Prospectus dated February 28, 1997
[Graphic]
FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 609346200
8012811A (2/97)
[Graphic]
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, 1997.
This Statement is not a prospectus. You may request a copy of a prospectus
or a paper copy of this Statement, if you have received it electronically,
free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated February 28, 1997
[Graphic]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 609346200
8012811B (2/97)
[Graphic]
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT POLICIES 1
Acceptable Investments 1
U.S. Government Securities 1
Bank Instruments 1
Ratings 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 2
Credit Enhancement 2
INVESTMENT LIMITATIONS 2
Selling Short and Buying on Margin 2
Borrowing Money 2
Pledging Assets 2
Lending Cash or Securities 2
Investing in Commodities and Real Estate 2
Underwriting 2
Concentration of Investments 2
Diversification of Investments 3
Investing in Restricted Securities 3
Investing in Securities of Other Investment
Companies 3
Investing for Control 3
Investing in Illiquid Securities 3
Regulatory Compliance 3
MONEY MARKET MANAGEMENT, INC. MANAGEMENT 4
Share Ownership 7
Directors Compensation 8
Director Liability 8
INVESTMENT ADVISORY SERVICES 8
Investment Adviser 8
Advisory Fees 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 9
Company Administration 9
Custodian and Portfolio Accountant 9
Transfer Agent 10
Independent Public Accountants 10
SHAREHOLDER SERVICES 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 11
THE COMPANY'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 11
Total Return 11
Performance Comparisons 12
Economic and Market Information 12
ABOUT FEDERATED INVESTORS 12
Mutual Fund Market 13
Institutional Clients 13
Bank Marketing 13
Broker/Dealers and Bank
Broker/Dealer Subsidiaries 13
</TABLE>
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may not be changed
by the Board of 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.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Company may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are backed
by:
* the full faith and credit of the U.S. Treasury;
* the issuer's right to borrow from the U.S. Treasury;
* the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
* the credit of the agency or instrumentality issuing the obligations.
BANK INSTRUMENTS
The instruments of banks and savings associations 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.
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."
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. 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 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. However,
liquid assets of the Company, in a dollar amount sufficient to make payment
for the securities 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.
CREDIT ENHANCEMENT
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 being issued by the credit enhancer for diversification
purposes. However, under certain circumstances applicable regulations may
require the Company to treat securities as having been issued by both the
issuer and the credit enhancer.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Company will not sell any securities short or purchase any securities on
margin.
BORROWING MONEY
The Company will not borrow money except as a temporary measure for
extraordinary purposes and then only in amounts not in excess of 5% of the
value of its net 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 any 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. Interest paid on borrowed funds will not be available
for investment. The Company may not purchase any portfolio instruments while
any borrowings (exclusive of reverse repurchase agreements) 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 money market instruments permitted by its investment objective and
policies.
INVESTING IN COMMODITIES AND REAL ESTATE
The Company will not invest in commodities, commodity contracts, or real
estate, except that it may purchase money market instruments issued by
companies that invest in real estate or interests in real estate.
UNDERWRITING
The Company will not act as underwriter of securities issued by others,
except as it may be deemed to be an underwriter under the Securities Act of
1933 in connection with the sale of restricted securities which the Company
may purchase pursuant to its investment objective, policies, and
limitations.
CONCENTRATION OF INVESTMENTS
The Company will not purchase money market instruments if, as a result of
such purchase, more than 25% of the value of its total assets would be
invested in any one industry. However, investing in bank instruments (such
as time and demand deposits and certificates of deposit), U.S. government
obligations, or instruments secured by these money market instruments, such
as repurchase agreements, shall not be considered investments in any one
industry.
DIVERSIFICATION OF INVESTMENTS
The Corporation 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 net 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 IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Company will not invest in securities issued by any other investment
company.
INVESTING FOR CONTROL
The Company will not invest in securities of a company for the purpose of
exercising control or management.
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 ILLIQUID SECURITIES
The Company will not invest more than 10% of the value of its net assets in
illiquid securities.
For purposes of the above limitations, the Company considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association 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.
REGULATORY COMPLIANCE
The Company may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply
with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the
Company will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. For example, with limited exceptions,
Rule 2a-7 prohibits the investment of more than 5% of the Company's total
assets in the securities of any one issuer, although the Company's
investment limitation only requires such 5% diversification with respect to
75% of its assets. The Company will invest more than 5% of its assets in any
one issuer only under the circumstances permitted by Rule 2a-7. The Company
will also determine the effective maturity of its investments, as well as
its ability to consider a security as having received the requisite
short-term ratings by 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.
MONEY MARKET MANAGEMENT, INC. MANAGEMENT
Officers and Directors are listed with their addresses, birthdates, 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. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds.
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. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company,
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Director of the Company.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Director
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Director
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Director
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Director
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Director
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Director
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the
Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Director
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Director
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University, U.S. Space Foundation and Czech
Management Center; President Emeritus, University of Pittsburgh; Founding
Chairman, National Advisory Council for Environmental Policy and Technology,
Federal Emergency Management Advisory Board and Czech Management Center;
Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Director
Public Relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Shareholder Services Company; Trustee or Director of some of the
Funds; President, Executive Vice President and Treasurer of some of the
Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and Secretary
of the Funds; Treasurer of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
* This Director is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board of
Directors handles the responsibilities of the Board between meetings of the
Board.
As referred to in the list of Directors and Officers, "Funds" includes the
following investment companies:
111 Corcoran Funds; Arrow Funds; Automated Government Money Trust; Blanchard
Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash
Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily Passport
Cash Trust; Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income
Securities, Inc.; Federated Government Trust; Federated High Income Bond
Fund, Inc.; Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Investment Portfolios;
Federated Investment Trust; Federated Master Trust; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.;
Federated Municipal Trust; Federated Short-Term Municipal Trust; Federated
Short-Term U.S. Government Trust; Federated Stock and Bond Fund, Inc.;
Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5
Years; Federated U.S. Government Securities Fund: 5-10 Years; Federated
Utility Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.;
High Yield Cash Trust; Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
SHARE OWNERSHIP
Officers and Directors as a group own less than 1% of the Company's
outstanding shares.
As of February 5, 1997, the following shareholders of record owned 5% or
more of the outstanding shares of the Money Market Management, Inc.:
Gertrude Hendley, c/o MFM Capital Management, Kissimmee, FL, owned
approximately 75,623 shares (11.13%); Diane D. Cady, Westport, CT, owned
approximately 61,214 shares (9.01%); Monica M. Hoffman, Clive, IA, owned
approximately 61,116 shares (8.99%); and State Street Bank & Trust Co.,
Glendale, CA, owned approximately 36,473 shares (5.37%).
DIRECTORS COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
COMPANY COMPANY* FROM FUND COMPLEX+
<S> <C> <C>
John F. Donahue $ -0- $-0- for the Company and
Chairman and Director 56 other investment companies in the Fund Complex
J. Christopher Donahue $ -0- $-0- for the Company and
President and Director 18 other investment companies in the Fund Complex
Thomas G. Bigley++ $1,098.45 $108,725 for the Company and
Director 56 other investment companies in the Fund Complex
John T. Conroy, Jr. $1,208.48 $119,615 for the Company and
Director 56 other investment companies in the Fund Complex
William J. Copeland $1,208.48 $119,615 for the Company and
Director 56 other investment companies in the Fund Complex
James E. Dowd $1,208.48 $119,615 for the Company and
Director 56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $1,098.45 $108,725 for the Company and
Director 56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $1,208.48 $119,615 for the Company and
Director 56 other investment companies in the Fund Complex
Peter E. Madden $1,098.45 $108,725 for the Company and
Director 56 other investment companies in the Fund Complex
Gregor F. Meyer $1,098.45 $108,725 for the Company and
Director 56 other investment companies in the Fund Complex
John E. Murray, Jr. $1,098.45 $108,725 for the Company and
Director 56 other investment companies in the Fund Complex
Wesley W. Posvar $1,098.45 $108,725 for the Company and
Director 56 other investment companies in the Fund Complex
Marjorie P. Smuts $1,098.45 $108,725 for the Company and
Director 56 other investment companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended December 31, 1996.
+ The information is provided for the last calendar year.
++ Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds.
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 Money Market Management, Inc. 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 Money
Market Management, Inc.
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, 1996, 1995, and 1994, the adviser earned $504,807, $519,840,
and $601,172, respectively, of which $0, $0 and $0, respectively, were
waived.
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 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, 1996, 1995 and 1994, the Company paid total
brokerage commissions of $0, $0 and $0, respectively.
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.
OTHER SERVICES
COMPANY ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Company for a fee as described
in the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services served as the Company's Administrator. Prior to
March 1, 1994, Federated Administrative Services, Inc. served as the
Company's Administrator. Both former Administrators are subsidiaries of
Federated Investors. For purposes of this Statement of Additional
Information, Federated Services Company, Federated Administrative Services
and Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended December 31,
1996, 1995, and 1994, the Administrators earned $125,000, $125,002, and
$156,053, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Company.
Federated Services Company, Pittsburgh, PA, provides certain accounting and
recordkeeping services with respect to the Company's portfolio investments.
The fee paid for this service is based upon the level of the Company's
average net assets for the period plus out-of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records.
For its services, the transfer agent receives a fee based on the number of
shareholder accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Company are Deloitte & Touche
LLP, Pittsburgh, PA.
SHAREHOLDER SERVICES
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
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Shareholder Services Agreement, the Directors expect 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 year ending December 31, 1996, payments in the amount of
$252,403 were made pursuant to the Shareholder Services Agreement, $131,280
of which was waived.
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, 1996, was
4.53%.
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, 1996, was 4.64%.
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.
The Company's average annual total returns for the one-five-and ten-year
period ended December 31, 1996 were 4.56%, 3.60% and 5.28%, respectively.
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:
* 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.
* IBC/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.
* MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
* BANK RATE MONITOR(C) 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.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Company's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Company
can compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Company may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by fund portfolio managers and their views and analysis on how
such developments could affect the fund. In addition, advertising and sales
literature may quote statistics and give general information about the
mutual fund industry, including the growth of the industry, from sources
such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making --structured, straightforward,
and consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts,
and traders dedicated to specific market sectors. These traders handle
trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in the
mutual fund industry in 1974 with the creation of the first institutional
money market fund. Simultaneously, the company pioneered the use of the
amortized cost method of accounting for valuing shares of money market
funds, a principal means used by money managers today to value money market
fund shares. Other innovations include the first institutional tax-free
money market fund. As of December 31, 1996, Federated Investors managed more
than $50.3 billion in assets across 50 money market funds, including 18
government, 11 prime and 21 municipal with assets approximating $28.0
billion, $12.8 billion and $9.5 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high-yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees the
management of Federated Investors' international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3.5 trillion to the more than 6,000 funds
available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for
a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional clients is
headed by John B. Fisher, President, Institutional Sales Division.
BANK MARKETING
Other institutional clients include close relationships with more than 1,600
banks and trust organizations. Virtually all of the trust divisions of the
top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide -- we have over 2,200 broker/
dealer and bank broker/dealer relationships across the country -- supported
by more wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR, Inc. DALBAR is recognized as
the industry benchmark for service quality measurement. The marketing effort
to these firms is headed by James F. Getz, President, Federated Securities
Corp.
* Source: Investment Company Institute
