TOWER U.S. GOVERNMENT INCOME FUND
(A Portfolio of Tower Mutual Funds)
SUPPLEMENT TO COMBINED PROSPECTUS DATED OCTOBER 31, 1996
Please be advised that effective immediately, Tower U.S. Government Income
Fund may invest up to 20% of its total assets in corporate debt obligations
and asset-backed securities rated `A'' or better by a nationally
recognized statistical rating organization or of comparable quality as
determined by the Fund's investment adviser.
Accordingly, please insert the following as the fifth paragraph of the sub-
section entitled `ACCEPTABLE INVESTMENTS'' on page 20:
`CORPORATE BONDS. The Fund may invest in domestic issues of
corporate debt obligations rated `A'' or better by Moody's, S&P or
Fitch, or which, if unrated, are deemed to be of comparable quality by
the investment adviser. If a debt security's rating falls below `A''
after the Fund has purchased it, the Fund is not required to drop the
debt security from the portfolio, but will consider appropriate
action. A description of the rating categories is contained in the
Appendix to the Statement of Additional Information. The prices of
fixed income securities fluctuate inversely to the direction of
interest rates.''
In addition, please note that the section entitled `ASSET-BACKED
SECURITIES''on page 18 applies also to Tower U.S. Government Income Fund.
April 29, 1997
Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 891836405
G01034-05 (4/97)
TOWER U.S. TREASURY MONEY MARKET FUND
(A Portfolio of Tower Mutual Funds)
- -------------------------------------------------------------------------------
SUPPLEMENT TO THE COMBINED PROSPECTUS DATED OCTOBER 31, 1996
A. Please delete the "Summary of Fund Expenses--Money Market Funds" on page
4 and replace it with the following:
SUMMARY OF FUND EXPENSES--MONEY MARKET FUNDS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TREASURY
CASH MONEY
RESERVE MARKET
FUND FUND
------- -------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price)........................... None None
Maximum Sales Charge Imposed on Reinvested Dividends (as
a percentage of offering price)......................... None None
Contingent Deferred Sales Charge (as a percentage of
original purchase price or redemption proceeds, as
applicable)............................................. None None
Redemption Fee (as a percentage of amount redeemed, if
applicable)............................................. None None
Exchange Fee............................................. None None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fees ......................................... 0.40% 0.40%
12b-1 Fees (1)........................................... 0.25% 0.00%
Total Other Expenses..................................... 0.22% 0.26%
Total Operating Expenses (2)........................... 0.87% 0.66%
</TABLE>
- ------
(1) Under the Rule 12b-1 distribution plan, U.S. Treasury Money Market Fund
can pay the distributor up to 0.25% as a 12b-1 fee. The 12b-1 fee has been
reduced to reflect the voluntary waiver of a portion of the 12b-1 fee for
the U.S. Treasury Money Market Fund. The distributor can terminate this
voluntary waiver at any time at its sole discretion.
(2) The Total Operating Expenses for U.S. Treasury Money Market Fund in the
table above are based on expenses expected during the fiscal year ending
August 31, 1997. The Total Operating Expenses for U.S. Treasury Money
Market Fund were 0.44% for the fiscal year ended August 31, 1996, and
would have been 0.66% absent the voluntary waiver of a portion of the
management fee by the adviser.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS
AND EXPENSES, SEE "TOWER MUTUAL FUNDS INFORMATION" AND "INVESTING IN THE
FUNDS." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
EXAMPLE
- -------
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. The Funds
charge no redemption fees.
<TABLE>
<CAPTION>
U.S. TREASURY
CASH MONEY
RESERVE MARKET
FUND FUND
------- -------------
<S> <C> <C>
1 Year.................................................... $ 9 $ 7
3 Years................................................... $ 28 $21
5 Years................................................... $ 48 $37
10 Years.................................................. $107 $82
</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.
April 29, 1997
Federated Securities Corp. is the distributor of the Fund [RECYCLED LOGO]
and is a subsidiary of Federated Investors.
Cusip 891836603
G01034-06 (4/97)
