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GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Government Obligations Fund (the
"Fund") offered by this prospectus represent interests in a
diversified portfolio of Money Market Obligations Trust (the
"Trust"), an open-end management investment company (a mutual fund).
The Fund invests in U.S. government securities to achieve current
income consistent with stability of principal. Shares of the Fund are
offered for sale as an investment vehicle for large institutions,
corporations and fiduciaries.
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 FUND ATTEMPTS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
July 5, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a
copy of the Statement of Additional Information free of charge by
calling 1-800-235-4669. To obtain other information, or make
inquiries about the Fund, contact the Fund at the address listed in
the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated July 5, 1994
TABLE OF CONTENTS
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<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
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GENERAL INFORMATION 2
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INVESTMENT INFORMATION 2
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Investment Objective 2
Investment Policies 2
Investment Limitations 4
Regulatory Compliance 4
TRUST INFORMATION 4
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Management of the Trust 4
Distribution of Shares 5
Administration of the Fund 6
Expenses of the Fund and
Institutional Service Shares 6
NET ASSET VALUE 7
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INVESTING IN THE FUND 7
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Share Purchases 7
Minimum Investment Required 8
Subaccounting Services 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
REDEEMING SHARES 9
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By Mail 9
Telephone Redemption 9
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
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Voting Rights 10
Massachusetts Partnership Law 10
TAX INFORMATION 11
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Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 11
PERFORMANCE INFORMATION 11
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OTHER CLASSES OF SHARES 12
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FINANCIAL HIGHLIGHTS 13
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ADDRESSES INSIDE BACK COVER
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</TABLE>
SUMMARY OF FUND EXPENSES
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<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES*
(As a percentage of projected average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)...................................................... 0.09%
12b-1 Fee (2).......................................................................... 0.00%
Total Other Expenses................................................................... 0.36%
Shareholder Services Fee........................................................... 0.25%
Total Institutional Service Shares Operating Expenses (3)...................... 0.45%
<FN>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 0.20%.
(2) The Institutional Service Shares have no present intention of paying or
accruing the 12b-1 fee during the period ending July 31, 1994. If the
Institutional Service Shares were paying or accruing the 12b-1 fee, the
Class would be able to pay up to 0.25% of its average daily net assets for
the 12b-1 fee. See "Trust Information".
(3) The Total Institutional Service Shares Operating Expenses are estimated to
be 0.56% absent the anticipated voluntary waiver of a portion of the
management fee.
* Total Institutional Service Shares Operating Expenses are estimated based on
average expenses expected to be incurred during the period ending July 31, 1994.
During the course of this period, expenses may be more or less than the average
amount shown.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
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<S> <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............................. $5 $14
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING JULY 31,
1994.
The information set forth in the foregoing table and example relates only to
Institutional Service Shares of the Fund. The Fund also offers another class of
shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of this
prospectus, the Trustees have established two classes of shares known as
Institutional Service Shares and Institutional Shares. This prospectus relates
only to Institutional Service Shares ("Shares") of the Fund, which are designed
primarily for financial institutions as a convenient means of accumulating an
interest in a professionally managed, diversified portfolio investing only in
short-term U.S. government securities. A minimum initial investment of $25,000
is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Trust.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with stability
of principal. This investment objective cannot be changed without shareholder
approval. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio of
U.S. government securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Unless indicated otherwise, investment policies may be
changed by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. government securities.
These instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Central Bank for Cooperatives, Farm Credit
System, Farmers Home Administration, Federal Farm Credit Banks, Federal
Farm Credit System, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association, Government National Mortgage
Association, and Student Loan Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These instrumentalities are supported by:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, brokers/dealers, and other recognized financial
institutions sell securities to the Fund 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 Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, up to one-third of the value of its total assets to broker/dealers, banks,
or other institutional borrowers of securities. The Fund will only enter into
loan arrangements with broker/dealers, banks, or other institutions which the
adviser has determined are creditworthy under guidelines established by the
Fund's Trustees and will receive collateral at all times equal to at least 100%
of the value of the securities loaned.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund 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 Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund 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 Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, 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 Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy serve
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. 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.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Fund will pay to the distributor an amount, computed at an annual rate of
.25 of 1% of the average daily net asset value of the Institutional Service
Shares to finance any activity which is principally intended to result in the
sale of shares subject to the Distribution Plan. The distributor may select
financial institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide sales support services as
agents for their clients or customers. In addition, the Fund has adopted a
Shareholder Services Plan (the "Services Plan") under which it will pay
financial institutions an amount not exceeding .25 of 1% of the average daily
net asset value of the Institutional Service Shares to provide administrative
support services to their customers who own shares of the Fund. From time to
time and for such periods as deemed appropriate, the amounts stated above may be
reduced voluntarily. Activities and services under these arrangements may
include, but are not limited to, providing advertising and marketing materials
to prospective shareholders, providing personal services to shareholders, and
maintaining shareholder accounts.
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 Fund or the
distributor, as appropriate.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it
from the Fund, interest, carrying or other financing charges in connection with
excess amounts expended, or the distributor's overhead expenses. However, the
distributor may be able to recover such amounts or may earn a profit from future
payments made by the Fund under the Distribution Plan.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides certain administrative personnel and services
(including certain legal and financial reporting services) necessary to operate
the Fund. Federated Administrative Services provides these at an annual rate
which relates to the average aggregate daily net assets of all Federated Funds
as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts is transfer agent for the shares of, and dividend
disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston and Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of Shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, the only expenses allocated to the Shares as a class are expenses
under the Fund's Rule 12b-1 Plan and Shareholder Services Plan which relate to
the Shares. However, the Board of Trustees reserves the right to allocate
certain other expenses to holders of Shares as it deems appropriate "Class
Expenses." In any case, Class Expenses would be limited to: transfer agent fees
as identified by the transfer agent as attributable to holders of Shares;
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Trustees' fees incurred as a result of
issues relating solely to Shares.
NET ASSET VALUE
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The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to Shares from
the value of Fund assets attributable to Shares, and dividing the remainder by
the number of Shares outstanding. The Fund 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, 3:00 p.m., and 4:00 p.m.
(Boston time) Monday through Friday except on: (i) days on which there are not
sufficient changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or (iii)
the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
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SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.,
(Boston time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m., (Boston time) that
day. Federal funds should be wired as follows: State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Government
Obligations Fund -- Institutional Service Shares: Fund Number (this number can
be found on the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Fund -- Institutional Service Shares to: Government Obligations
Fund, P.O. Box 8602, Boston, Massachusetts 02266-8602. Orders by mail are
considered received when payment by check is converted into federal funds. This
is normally the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services and any restrictions and
limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Shares purchased by wire before
3:00 p.m. (Boston time) begin earning dividends that day. Shares purchased by
check begin earning dividends on the day after the check is converted into
federal funds. Dividends are automatically reinvested in additional Shares
unless cash payments are requested by contacting the Fund.
CAPITAL GAINS
Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If, for some extraordinary reason, the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.
REDEEMING SHARES
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Shares are redeemed at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Fund, P.O. Box 8602, Boston, Massachusetts 02266-8602. The written request
should state: Government Obligations Fund -- Institutional Service Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to the shareholder of record must have their
signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
- a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. If the redemption request is
received before 12:00 noon (Boston time), the proceeds will be wired the same
day to the shareholder's account at a domestic commercial bank which is a member
of the Federal Reserve System, and those shares redeemed will not be entitled to
that day's dividend. A daily dividend will be paid on shares redeemed if the
redemption request is received after 12:00 noon (Boston time). However, the
proceeds are not wired until the following business day. Under limited
circumstances, arrangements may be
made with the distributor for same-day payment of proceeds, without that day's
dividend, for redemption requests received before 3:00 p.m., Boston time.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail," should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified. If reasonable procedures
are not followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 or the aggregate
investment in Federated Funds falls below the required minimum of $200,000,000
to be maintained from and after twelve months from account opening, due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
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VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of June 28, 1994, Var &
Co., St. Paul, Minnesota owned 28% of the voting securities of the Fund, and,
therefore, may, for certain purposes, be deemed to control the Fund and be able
to affect the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of its
shareholders for acts or obligations of the Trust. These documents require
notice of this disclaimer to be given in each agreement, obligation, or
instrument the Trust or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund 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. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
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. Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local tax laws.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
- the Fund is not subject to Pennsylvania corporate or personal property
taxes; and
- Fund shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that
the portfolio securities in the Fund would be subject to such taxes if
owned directly by residents of those jurisdictions.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its yield and effective yield for Shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
Performance figures will be calculated separately for each class of shares.
Because each class of shares is subject to different expenses, the performance
of Institutional Shares will exceed the yield and effective yield of
Institutional Service Shares for the same period.
From time to time the Fund may advertise its performance using certain financial
publications and/or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Shares are sold at net asset value to accounts for which financial
institutions act in an agency or fiduciary capacity. Investments in
Institutional Shares are subject to a minimum initial investment of $25,000.
Institutional Shares are not sold pursuant to a 12b-1 Plan.
Financial institutions providing distribution or administrative services may
receive different compensation depending upon which class of shares of the Fund
is sold. The amount of dividends payable to shareholders of Institutional Shares
will exceed that payable to the shareholders of Institutional Service Shares by
the difference between class expenses and any 12b-1 Plan expenses borne by
Institutional Service Shares. The stated advisory fee is the same for both
classes of shares.
GOVERNMENT OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES
- ---------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent auditors. Their report dated September 10, 1993, is included in the
Statement of Additional Information. This table should be read in conjunction
with the Fund's financial statements and notes thereto, which may be obtained
free of charge from the Fund.
Institutional Service Shares were not being offered as of July 31, 1993.
Accordingly, there is no Financial Highlights for such shares. The Financial
Highlights presented below are historical information for institutional shares.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------
1993 1992 1991 1990*
- ------------------------------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------
Net investment income 0.0317 0.0460 0.0697 0.0277
- -------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------
Dividends to shareholders from net investment income (0.0317) (0.0460) (0.0697) (0.0277)
- ------------------------------------------------------- ----------- ----------- ----------- -------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------- ----------- ----------- ----------- -------------
TOTAL RETURN 3.22% 4.70% 7.20% 2.80%(c)
- -------------------------------------------------------
RATIOS /SUPPLEMENTAL DATA
- -------------------------------------------------------
Net assets, end of period (000 omitted) $707,146 $679,533 $331,454 $148,598
- -------------------------------------------------------
Ratio of expenses to average net assets 0.20%(b) 0.20%(b) 0.20%(b) 0.20%(a)(b)
- -------------------------------------------------------
Ratio of net investment income to average net assets 3.16%(b) 4.55%(b) 6.77%(b) 8.24%(a)(b)
- -------------------------------------------------------
<FN>
* Reflects operations for the period from March 31, 1990 (date of initial
public investment) to July 31, 1990.
(a) Computed on an annualized basis.
(b) For the fiscal years ended July 31, 1993, 1992, and 1991 and for the period
from March 31, 1990 (date of initial public investment) to July 31, 1990,
the investment adviser voluntarily waived all or a portion of its fee and/or
reimbursed certain other operating expenses of the Fund. Had the adviser not
undertaken such action, the ratios of expenses and net investment income
would have been 0.31% and 3.05%, 0.32% and 4.43%, 0.42% and 6.55%, and 0.54%
and 7.90%, respectively.
(c) Cumulative total return.
(See Notes to Financial Statements)
</TABLE>
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Government Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston and Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated July 5, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
[LOGO]
RECYCLED
9110205A-SS (7/94) PAPER
GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
Institutional Shares
Institutional Service Shares
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Government Obligations Fund (the "Fund") dated
July 5, 1994 and September 30, 1993. This Statement is not a
prospectus. To receive a copy of a prospectus, write or call the
Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated July 5, 1994
[LOGO]
DISTRIBUTOR
A SUBSIDIARY OF FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT POLICIES 1
- ---------------------------------------------------------
Variable Rate U.S. Government Securities 1
When-Issued And Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 2
- ---------------------------------------------------------
BROKERAGE TRANSACTIONS 3
- ---------------------------------------------------------
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 4
- ---------------------------------------------------------
Officers and Trustees 4
The Funds 6
Share Ownership 6
Trustee Liability 7
INVESTMENT ADVISORY SERVICES 7
- ---------------------------------------------------------
Investment Adviser(s) 7
Advisory Fees 7
FUND ADMINISTRATION 7
- ---------------------------------------------------------
SHAREHOLDER SERVICES PLAN 8
- ---------------------------------------------------------
DISTRIBUTION PLAN 8
- ---------------------------------------------------------
DETERMINING NET ASSET VALUE 8
- ---------------------------------------------------------
REDEMPTION IN KIND 9
- ---------------------------------------------------------
THE FUND'S TAX STATUS 9
- ---------------------------------------------------------
PERFORMANCE INFORMATION 9
- ---------------------------------------------------------
Yield 9
Effective Yield 9
Total Return 9
Performance Comparisons 9
FINANCIAL STATEMENTS 10
- ---------------------------------------------------------
</TABLE>
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
Unless indicated otherwise, the policies described below may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
VARIABLE RATE U.S. GOVERNMENT SECURITIES
Some of the short-term U.S. government securities the Fund may purchase carry
variable interest rates. These securities have a rate of interest subject to
adjustment at least annually. This adjusted interest rate is ordinarily tied to
some objective standard, such as the 91-day U.S. Treasury bill rate. Variable
interest rates will reduce the changes in the market value of such securities
from their original purchase prices. Accordingly, the potential for capital
appreciation or capital depreciation should not be greater than that of fixed
interest rate U.S. government securities having maturities equal to the interest
rate adjustment dates of the variable rate U.S. government securities. The Fund
may purchase variable rate U.S. government securities upon the determination by
the Board of Trustees that the interest rate as adjusted will cause the
instrument to have a current market value that approximates its par value on the
adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. 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. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market daily
and are maintained until the transaction has been settled. The Fund 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 Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. 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 guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
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 Fund 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 Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but does not ensure
this result. When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are: segregated on the Fund's records at the trade date; marked to
market daily; and maintained until the transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
- --------------------------------------------------------------------------------
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on margin
but may obtain such short-term credits as are necessary for clearance of
transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow money
directly or through reverse repurchase agreements in amounts up to one-third of
the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is deemed
to be inconvenient or disadvantageous. The Fund will not purchase any securities
while borrowings in excess of 5% of the value of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding, the Fund will restrict the purchase of portfolio securities to
money market instruments maturing on or before the expiration date of the
reverse repurchase agreements, but only to the extent necessary to assure
completion of the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to secure
permitted borrowings. In those cases, it may pledge assets having a market value
not exceeding the lesser of the dollar amounts borrowed or 15% of the value of
total assets of the Fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding bonds, debentures, notes,
certificates of indebtedness or other debt securities, entering into repurchase
agreements or engaging in other transactions where permitted by its investment
objective, policies and limitations or Declaration of Trust.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited partnership
interests, although it may invest in securities of issuers whose business
involves the purchase or sale of real estate or in securities which are secured
by real estate or interests in real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be deemed
to be an underwriter under the Securities Act of 1933 in connection with the
sale of securities in accordance with its investment objective, policies, and
limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any one
industry, except that the Fund may invest 25% or more of the value of its total
assets in cash, cash items, or securities issued or guaranteed by the government
of the United States or its agencies, or instrumentalities and repurchase
agreement collateralized by such U.S. government securities.
- --------------------------------------------------------------------------------
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities of any one issuer (other than cash, cash
items, or securities issued or guaranteed by the government of the United States
or its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities) if as a result more than 5% of the value of its
total assets would be invested in the securities of that issuer, or if it would
own more than 10% of the outstanding voting securities of that issuer.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest in securities subject to restrictions on resale under
federal securities law.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except as
part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of continuous
operations, including the operation of any predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or its investment adviser owning individually
more than .50 of 1% of the issuer's securities together own more than 5% of the
issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any combination
of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items". Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not borrow money, issue senior securities, pledge securities,
invest in illiquid securities, or engage in when-issued and delayed delivery
transactions or reverse repurchase agreements in excess of 5% of the value of
its net assets during the last fiscal period and has no present intent to do so
during the coming fiscal year.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
guidelines established by the Board of Trustees. The adviser may select brokers
and dealers who offer brokerage and research services. These services may be
furnished directly to the Fund 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 Trust 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 year(s) ended July 31, 1993, 1992 and 1991, the Trust paid no
brokerage commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund 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 Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Administrative
Services, Inc./Federated Administrative Services, and the Funds (as defined
below).
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John F. Donahue+* Chairman and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Trustee Trustee, Federated Advisers, Federated Management, and
Tower Federated Research; Director, AEtna Life and Casualty
Pittsburgh, PA Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, President and Trustee of
the Trust.
- ----------------------------------------------------------------------------------------------------------------------
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-
Wood/IPC Commercial President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation;
John R. Wood and General Partner or Trustee in private real estate ventures
Associates, Inc., Realtors in Southwest Florida; Director, Trustee, or Managing General
3255 Tamiami Trail North Partner of the Funds; formerly, President, Naples Property
Naples, FL Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee Director and Member of the Executive Committee, Michael
One PNC Plaza - 23rd Baker, Inc.; Director, Trustee, or Managing General Partner
Floor of the Funds; formerly, Vice Chairman and Director, PNC
Pittsburgh, PA Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue* President and President and Trustee, Federated Investors; Trustee;
Federated Investors Trustee Federated Advisers, Federated Management, and Federated
Tower Research; President and Director, Federated Administrative
Pittsburgh, PA Services/ Federated Administrative Services, Inc.; Trustee,
Federated Services Company; President or Vice President of
the Funds; Director, Trustee, or Managing General Partner of
some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.
- ----------------------------------------------------------------------------------------------------------------------
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.
- ----------------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant;
1202 Cathedral of Trustee, Carnegie Endowment for International Peace, RAND
Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
- ----------------------------------------------------------------------------------------------------------------------
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
- ----------------------------------------------------------------------------------------------------------------------
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Chairman and Director, Federated Securities Corp.; President
Tower or Vice President of the Funds; Director or Trustee of some
Pittsburgh, PA of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer, and Trustee, Federated Investors;
Federated Investors and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Tower Management, and Federated Research; Executive Vice
Pittsburgh, PA President, Treasurer, and Director, Federated Securities
Corp.; Trustee, Federated Services Company; Chairman,
Treasurer, and Director, Federated Administrative
Services/Federated Administrative Services, Inc.; Trustee or
Director of some of the Funds; Vice President and Treasurer
of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Tower Federated Advisers, Federated Management, and Federated
Pittsburgh, PA Research; Trustee, Federated Services Company; Executive
Vice President, Secretary, and Director, Federated
Administrative Services/Federated Administrative Services,
Inc.; Director and Executive Vice President, Federated
Securities Corp.; Vice President and Secretary of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Vice President, Federated Securities Corp.; President and
Tower Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of some of the Funds;
formerly, Vice President, The Standard Fire Insurance
Company and President of its Federated Research Division.
- ----------------------------------------------------------------------------------------------------------------------
<FN>
* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
+ Member of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
</TABLE>
THE FUNDS
"The Funds," and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fund for U.S. Government Securities, Inc.; Government Income Securities, Inc.;
High Yield Cash Trust; Insight Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc.--1999;
Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; Peachtree Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Signet Select
Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees own less than 1% of the Trust's outstanding shares.
As of June 28, 1994, the following shareholders of record owned 5% or more of
the outstanding Institutional Shares of the Fund: EDRAYCO, Gainesville, GA,
owned approximately 45,883,384 shares (5.8%); Parcol & Co., Akron, OH, owned
approximately 53,812,240 shares (6.9%); First New Hampshire Investment Services,
Concord, NH, owned approximately 117,848,339 shares (15.1%); Var & Co., St.
Paul, MN, owned approximately 218,573,620 shares (28%); and Commonwealth of
Pennsylvania State Treasury Fund 99 owned approximately 62,562,250 shares (8%).
- --------------------------------------------------------------------------------
As of June 28, 1994, there were no shareholders of record who owned 5% or more
of the outstanding Institutional Service Shares of the Fund.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes or 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(S)
The Government Obligations Fund's investment adviser is Federated Management. 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 Trust, the Fund, or any shareholder of the
Fund 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 Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended July 31,
1993, 1992 and 1991, the Fund's adviser earned $1,343,686, $910,523, and
$434,684, respectively for services provided on behalf of Institutional Shares,
of which $768,184, $552,320, and $434,684, respectively, were voluntarily waived
because of undertakings to limit the Fund's expenses.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses) exceed
2 1/2% per year of the first $30 million of average net assets, 2% per
year of the next $70 million of average net assets, and 1 1/2% per year of
the remaining average net assets, the adviser will reimburse the Fund for
its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this limitation,
the investment advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the adviser will be limited, in
any single fiscal year, by the amount of the investment advisory fees.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
FUND ADMINISTRATION
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Trust for a fee as described in the
prospectus for each class of shares of the Fund. For the fiscal years ended July
31, 1993, 1992, and 1991, Federated Administrative Services, Inc., the Trust's
former administrator, earned $377,706, $274,492, and $253,110, respectively.
John A. Staley, IV, an officer of the Trust and Dr. Henry J. Gailliot, an
officer of Federated Management, the adviser to the Fund, each hold
approximately 15% and 20%, respectively, of the outstanding common stock of
Commercial Data Services, Inc., a company which provides computer processing
services to Federated Administrative Services, Inc., and Federated
Administrative Services. For the fiscal years ended December 31, 1993, 1992, and
1991, Federated Administrative Services, Inc. paid approximately $161,547,
$201,799, and $170,529, respectively for services provided by Commercial Data
Services, Inc., to the Funds.
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Shareholder
Services Plan. This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly to financial institutions to cause services
to be provided 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
designation, and addresses.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Plan
pursuant to Rule 12b-1 which was promulgated by the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940. The Plan permits the
payment of fees to brokers for distribution and administrative services and to
administrators for administrative services. The Plan is designed to (i)
stimulate brokers to provide distribution and administrative support services to
shareholders and (ii) stimulate administrators to render administrative support
services to shareholders. The administrative services are provided by a
representative who has knowledge of the shareholder's particular circumstances
and goals. By adopting the Plan, the Board of Trustees expects that the Fund
will be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in seeking to achieve its investment objectives.
By identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to curb
sharp fluctuations in rates of redemptions and sales. Other benefits may
include: (1) an efficient and effective administrative system; (2) a more
efficient use of shareholder assets by having them rapidly invested with a
minimum of delay and administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to shareholder requests and
inquiries concerning their accounts.
CUSTODIAN AND PORTFOLIO RECORDKEEPER. State Street Bank and Trust Company,
Boston, Massachusetts is custodian for the securities and cash of the Fund.
Federated Services Company, Pittsburgh, Pennsylvania provides certain accounting
and recordkeeping services with respect to the Fund's portfolio investments.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trustees 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
Fund computed by dividing the annualized daily income on the Fund'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 Fund'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 Trustees 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 Fund'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 Trustees 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 Trustees 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 Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund'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
Trustees determine that further payments should be in kind. In such cases, the
Fund will pay all or a portion of the remainder of the redemption in portfolio
instruments valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees 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 FUND'S TAX STATUS
- --------------------------------------------------------------------------------
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund 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 Fund, the performance will be reduced for those shareholders paying those
fees.
YIELD
The Fund calculates its yield 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.
EFFECTIVE YIELD
The Fund calculates its effective yield 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.
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 compounded by
multiplying the number of shares owned at the end of the period by the net asset
value per share at the end of the period. The number of shares owned at the end
of the period is based on the number of shares purchased at the beginning of the
period with $1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund'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 net asset value. The financial
publications and/or indices which the Fund 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.
- 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.
- SALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
- SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
- DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES, is a weekly
quote of the average daily offering price for selected federal agency
issues maturing in 30 days.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements for the six-month period ended January 31, 1994 are
incorporated herein by reference to the Fund's Semi-Annual Report dated January
31, 1994 (File No. 811-5950). A copy of the Semi-Annual Report may be obtained
without charge by contacting the Fund at the address located on the back cover
of the prospectus. Following are the financial statements for the fiscal year
ended July 31, 1993.
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
The obligations listed below are issued or guaranteed by the U.S. government,
its agencies or instrumentalities, or secured by such obligations.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------------------------------------------- -------------
SHORT-TERM OBLIGATIONS--34.3%
- -------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK NOTE--0.5%
-------------------------------------------------------------------------------
$4,000,000 3.32%, 5/2/94 $ 4,001,439
-------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK NOTE--0.6%
-------------------------------------------------------------------------------
4,000,000 9.55%, 4/25/94 4,179,131
-------------------------------------------------------------------------------
* FEDERAL HOME LOAN BANK, DISCOUNT NOTE--2.1%
-------------------------------------------------------------------------------
15,000,000 3.14%-3.57%, 11/4/93-1/19/94 14,831,217
-------------------------------------------------------------------------------
** FEDERAL HOME LOAN MORTGAGE CORPORATION FLOATING RATE--0.4%
-------------------------------------------------------------------------------
3,000,000 3.08%, 8/30/93 3,000,000
-------------------------------------------------------------------------------
* FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES--9.1%
65,000,000 3.00%-3.61%, 9/13/93-3/30/94 64,314,750
-------------------------------------------------------------------------------
** STUDENT LOAN MARKETING ASSOCIATION FLOATING RATE NOTES--2.0%
-------------------------------------------------------------------------------
14,000,000 3.67%-3.87%, 8/6/93 13,992,564
-------------------------------------------------------------------------------
U.S. TREASURY BILLS--6.4%
-------------------------------------------------------------------------------
46,000,000 3.11%-3.46%, 11/18/93-5/5/94 45,236,095
-------------------------------------------------------------------------------
U.S. TREASURY NOTES--13.2%
-------------------------------------------------------------------------------
92,000,000 5.50%-11.75%, 8/15/93-4/15/94 93,309,356
------------------------------------------------------------------------------- -------------
TOTAL SHORT-TERM OBLIGATIONS 242,864,552
------------------------------------------------------------------------------- -------------
***REPURCHASE AGREEMENTS--63.7%
- -------------------------------------------------------------------------------------------
30,000,000 B.T. Securities Corp., 3.12%, dated 7/30/93, due 8/2/93 30,000,000
-------------------------------------------------------------------------------
20,000,000 Bear, Stearns & Co., Inc., 3.12%, dated 7/30/93, due 8/2/93 20,000,000
-------------------------------------------------------------------------------
30,000,000 Carroll McEntee & McGinley, Inc., 3.15%, dated 7/30/93, due 8/2/93 30,000,000
-------------------------------------------------------------------------------
30,000,000 Deutsche Bank Government Securities, Inc., 3.12%, dated 7/30/93, due 8/2/93 30,000,000
-------------------------------------------------------------------------------
30,000,000 Fuji Securities, Inc., 3.12%, dated 7/30/93, due 8/2/93 30,000,000
-------------------------------------------------------------------------------
50,000,000 Greenwich Capital Markets, Inc., 3.15%, dated 7/30/93, due 8/2/93 50,000,000
-------------------------------------------------------------------------------
60,000,000 Kidder, Peabody & Co., Inc., 3.12%, dated 7/30/93, due 8/2/93 60,000,000
-------------------------------------------------------------------------------
500,000 Morgan Stanley & Co., Inc. 3.10%, dated 7/30/93, due 8/2/93 500,000
-------------------------------------------------------------------------------
65,000,000 PaineWebber, Inc., 3.20%, dated 7/30/93, due 8/2/93 65,000,000
-------------------------------------------------------------------------------
30,000,000 S.G. Warburg & Co., Inc. 3.14%, dated 7/30/93, due 8/2/93 30,000,000
-------------------------------------------------------------------------------
50,000,000 UBS Securities, Inc., 3.15%, dated 7/30/93, due 8/2/93 50,000,000
-------------------------------------------------------------------------------
15,000,000 (a)Greenwich Capital Markets, Inc., 3.15%, dated 5/21/93, due 8/19/93 15,000,000
-------------------------------------------------------------------------------
12,000,000 (a)Greenwich Capital Markets, Inc., 3.18%, dated 7/19/93, due 10/18/93 12,000,000
-------------------------------------------------------------------------------
15,000,000 (a)Lehman Brothers, Inc., 3.25%, dated 6/9/93, due 8/6/93 15,000,000
-------------------------------------------------------------------------------
13,000,000 (a)Nomura Securities International, Inc., 3.18%, dated 5/24/93, due 8/23/93 13,000,000
------------------------------------------------------------------------------- -------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 450,500,000
------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 693,364,552+
------------------------------------------------------------------------------- -------------
<FN>
* Each issue shows the rate of discount at the time of purchase.
</TABLE>
GOVERNMENT OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<S> <C>
** Current rate and next demand date shown.
*** 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 repurchase agreements are through participation in joint
accounts with other Federated funds.
(a) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($707,146,430) at July 31, 1993.
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $450,500,000
- -----------------------------------------------------------------------------------
Investments in U.S. government obligations 242,864,552
- ----------------------------------------------------------------------------------- ------------
Total investments, at amortized cost and value (Notes 2A and 2B) $693,364,552
- -------------------------------------------------------------------------------------------------
Cash 401,949
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 12,000,000
- -------------------------------------------------------------------------------------------------
Interest receivable 3,271,985
- -------------------------------------------------------------------------------------------------
Prepaid/deferred expenses (Note 2F) 11,887
- ------------------------------------------------------------------------------------------------- ------------
Total assets 709,050,373
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Dividends payable 1,851,650
- -----------------------------------------------------------------------------------
Accrued expenses 52,293
- ----------------------------------------------------------------------------------- ------------
Total liabilities 1,903,943
- ------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 707,146,430 shares of beneficial interest outstanding $707,146,430
- ------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share ($707,146,430
DIVIDED BY 707,146,430 shares of beneficial interest outstanding) $ 1.00
- ------------------------------------------------------------------------------------------------- ------------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
13
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------
Interest income (Note 2C) $22,588,452
- -----------------------------------------------------------------------------------------------
EXPENSES-
- -----------------------------------------------------------------------------------------------
Investment advisory fee (Note 5) $1,343,686
- -----------------------------------------------------------------------------------
Trustees' fees 5,785
- -----------------------------------------------------------------------------------
Administrative personnel and services fee (Note 5) 377,706
- -----------------------------------------------------------------------------------
Custodian, transfer agent, dividend disbursing agent fees and expenses 164,875
- -----------------------------------------------------------------------------------
Recordkeeping fee (Note 5) 93,995
- -----------------------------------------------------------------------------------
Auditing fees 13,160
- -----------------------------------------------------------------------------------
Legal fees 8,537
- -----------------------------------------------------------------------------------
Printing and postage 7,265
- -----------------------------------------------------------------------------------
Fund share registration costs 70,155
- -----------------------------------------------------------------------------------
Insurance Premiums 15,271
- -----------------------------------------------------------------------------------
Taxes 8,741
- -----------------------------------------------------------------------------------
Miscellaneous 2,694
- ----------------------------------------------------------------------------------- ----------
Total expenses 2,111,870
- -----------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 768,184
- ----------------------------------------------------------------------------------- ----------
Net expenses 1,343,686
- ----------------------------------------------------------------------------------------------- -----------
Net investment income $21,244,766
- ----------------------------------------------------------------------------------------------- -----------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------
1993 1992
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------------
OPERATIONS-
- -----------------------------------------------------------------------------------
Net investment income $ 21,244,766 $ 20,703,025
- ----------------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------------------------
Dividends to sharesholders from net investment income ($0.0317 and $0.0460 per
share, respectively) (21,244,766) (20,703,025)
- ----------------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------------------------
Proceeds from sale of shares 3,260,455,593 1,597,698,338
- -----------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive payment of
dividends in Fund shares 365,899 4,630
- -----------------------------------------------------------------------------------
Cost of shares redeemed (3,233,207,743) (1,249,623,948)
- ----------------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions 27,613,749 348,079,020
- ----------------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 27,613,749 348,079,020
- -----------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------
Beginning of period 679,532,681 331,453,661
- ----------------------------------------------------------------------------------- ---------------- ----------------
End of period $ 707,146,430 $ 679,532,681
- ----------------------------------------------------------------------------------- ---------------- ----------------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Government Obligations Fund (the "Fund") is a diversified portfolio and one of
the portfolios of Money Market Obligations Trust (the "Trust"), a no-load,
open-end, management investment company, which is registered under the
Investment Company Act of 1940, as amended. The financial statements of the
other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
(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. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Board of Trustees ("Trustees") has determined
that the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940, as amended.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor on a daily basis, the market value of each repurchase agreement's
underlying securities to ensure the existence of a proper level of
collateral.
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 guidelines established by
the Trustees. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code, plus realized net
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to investment companies and to distribute
to shareholders each year all of its taxable income. Accordingly, no
provision for federal tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
the purpose of investment leverage. The Fund will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Fund will maintain security positions such
that sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method through December, 1994.
G. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
GOVERNMENT OBLIGATIONS FUND
- ------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At July
31, 1993, capital paid-in aggregated $707,146,430. Transactions in Fund shares
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------
1993 1992
- ----------------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Shares outstanding, beginning of period 679,532,681 331,453,661
- -----------------------------------------------------------------------------------
Shares sold 3,260,455,593 1,597,698,338
- -----------------------------------------------------------------------------------
Shares issued to shareholders electing to receive payment of dividends in Fund
shares 365,899 4,630
- -----------------------------------------------------------------------------------
Shares redeemed (3,233,207,743) (1,249,623,948)
- ----------------------------------------------------------------------------------- ---------------- ----------------
Shares outstanding, end of period 707,146,430 679,532,681
- ----------------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser ("Adviser"), receives for
its services an annual investment advisory fee equal to 0.20 of 1% of the Fund's
average daily net assets. For the year ended July 31, 1993, the Adviser
voluntarily agreed to waive the amount, limited to the amount of the advisory
fee, by which the Fund's aggregate annual operating expenses (including its
investment advisory fee but excluding interest, taxes, brokerage commissions,
insurance premiums, and extraordinary expenses) exceed 0.20 of 1% of its average
daily net assets. This does not include reimbursement to the Fund of any
expenses incurred by shareholders who use the transfer agent's subaccounting
facilities. The Adviser can terminate this voluntary agreement at any time at
its sole discretion. For the year ended July 31, 1993, the Adviser earned an
investment advisory fee of $1,343,686 of which $768,184 was voluntarily waived
in accordance with such agreement.
Federated Services Company, the Fund's recordkeeper, received for its services a
fee of $93,995 for the year ended July 31, 1993.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain Officers and Trustees of the
Trust are Officers and Directors of the above corporation.
(6) INVESTMENT TRANSACTIONS
Purchases, and sales and maturities of investments, excluding securities subject
to repurchase agreements, for the year ended July 31, 1993, were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
<S> <C>
PURCHASES--
- -----------------------------------------------------------------------------------
Short-term investments $401,870,019
- ----------------------------------------------------------------------------------- ------------
SALES AND MATURITIES--
- -----------------------------------------------------------------------------------
Short-term investments $397,308,113
- ----------------------------------------------------------------------------------- ------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST (Government Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of July 31, 1993, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights (see page 2 of the
prospectus) for each of the three years in the period then ended and for the
period from March 31, 1990 (date of initial public investment) to July 31, 1990.
These financial statements and financial highlights are the responsibility of
the Trusts 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
July 31, 1993, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1993, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended and for the period from March 31, 1990 (date of initial public
investment) to July 31, 1990, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
September 10, 1993
9110205B-SS (7/94)
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PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Prime Obligations Fund (the
"Fund") offered by this prospectus represent interests in a
diversified portfolio of Money Market Obligations Trust (the "Trust")
an open-end management investment company (a mutual fund). The Fund
invests in money market securities to achieve current income
consistent with stability of principal. Shares of the Fund are
offered for sale as an investment vehicle for large institutions,
corporations and fiduciaries.
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 FUND ATTEMPTS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
July 5, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a
copy of the Statement of Additional Information free of charge by
calling 1-800-235-4669. To obtain other information, or make
inquiries about the Fund, contact the Fund at the address listed in
the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated July 5, 1994
TABLE OF CONTENTS
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<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- --------------------------------------------------
GENERAL INFORMATION 2
- --------------------------------------------------
INVESTMENT INFORMATION 2
- --------------------------------------------------
Investment Objective 2
Investment Policies 2
Investment Risks 6
Investment Limitations 6
Regulatory Compliance 6
TRUST INFORMATION 6
- --------------------------------------------------
Management of the Trust 6
Distribution of Shares 7
Administration of the Fund 8
Expenses of the Fund and
Institutional Service Shares 9
NET ASSET VALUE 9
- --------------------------------------------------
INVESTING IN THE FUND 9
- --------------------------------------------------
Share Purchases 9
Minimum Investment Required 10
Subaccounting Services 10
Certificates and Confirmations 10
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- --------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
- --------------------------------------------------
Voting Rights 12
Massachusetts Partnership Law 13
TAX INFORMATION 13
- --------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 13
PERFORMANCE INFORMATION 14
- --------------------------------------------------
OTHER CLASSES OF SHARES 14
- --------------------------------------------------
FINANCIAL HIGHLIGHTS 15
- --------------------------------------------------
ADDRESSES INSIDE BACK COVER
- --------------------------------------------------
</TABLE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES*
(As a percentage of projected average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)...................................................... 0.11%
12b-1 Fee (2).......................................................................... 0.00%
Total Other Expenses................................................................... 0.34%
Shareholder Services Fee............................................................. 0.25%
Total Institutional Service Shares Operating Expenses (3)...................... 0.45%
<FN>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 0.20%.
(2) The Institutional Service Shares have no present intention of paying or
accruing the 12b-1 fee during the period ending July 31, 1994. If the
Institutional Service Shares were paying or accruing the 12b-1 fee, the
Class would be able to pay up to 0.25% of its average daily net assets for
the 12b-1 fee. See "Trust Information".
(3) The Total Institutional Service Shares Operating Expenses are estimated to
be 0.54% absent the anticipated voluntary waiver of a portion of the
management fee.
* Total Institutional Service Shares Operating Expenses are estimated based on
average expenses expected to be incurred during the period ending July 31,
1994. During the course of this period, expenses may be more or less than
the average amount shown.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ----------------------------------------------------------------------------------- --------- ---------
<S> <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........................... $5 $14
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING JULY 31,
1994.
The information set forth in the foregoing table and example relates only to
Institutional Service Shares of the Fund. The Fund also offers another class of
shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of this
prospectus, the Trustees have established two classes of shares known as
Institutional Service Shares and Institutional Shares. This prospectus relates
only to Institutional Service Shares ("Shares") of the Fund, which are designed
primarily for financial institutions 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 $25,000 is
required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Trust.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with stability
of principal. This investment objective cannot be changed without shareholder
approval. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of money
market securities maturing in 13 months or less. The average maturity of the
securities in the Fund's portfolio, computed on a dollar-weighted basis, will be
90 days or less. Unless indicated otherwise, investment policies may be changed
by the Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical
rating organizations ('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
("Government Securities"); and
- other money market instruments.
The Fund 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 Fund
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 an interest index or a stated percentage of a prime rate or
another published rate. Most variable rate demand notes allow the Fund to demand
the repurchase of the security on not more than seven days' prior notice. Other
notes only permit the Fund to tender the security at the time of each interest
rate adjustment or at other fixed intervals. See "Demand Features." The Fund
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 Fund may next tender the
security for repurchase.
BANK INSTRUMENTS. The Fund 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 Fund will treat securities credit enhanced with a bank's
letter of credit as Bank Instruments.
SHORT-TERM CREDIT FACILITIES. The Fund 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 Fund treats any commitments
to provide such advances as a standby commitment to purchase the borrower's
notes.
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.
RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Corporation ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch") are
all considered rated in the highest short-term rating category. The Fund will
follow applicable regulations in determining whether a security rated by more
than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund 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 Fund
will not treat credit enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain circumstances
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
DEMAND FEATURES. The Fund 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 Fund. 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 Fund uses these arrangements to provide the Fund 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.
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, brokers/dealers, and other recognized financial
institutions sell securities to the Fund 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 Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities
not determined by the Trustees 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 Fund 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 Fund, 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 Fund 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 Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees of the Fund are quite liquid. The Fund
intends, therefore, to treat the restricted securities which meet the criteria
for liquidity established by the Trustees, including Section 4(2) commercial
paper, as determined by the Fund's investment adviser, as liquid and not subject
to the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not subject
such paper to the limitation applicable to restricted securities.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, up to one-third of the value of its total assets to broker/dealers, banks,
or other institutional borrowers of securities. The Fund will only enter into
loan arrangements with broker/dealers, banks, or other institutions which the
adviser has determined are creditworthy under guidelines established by the
Fund's Trustees and will receive collateral at all times equal to at least 100%
of the value of the securities loaned.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous.
CONCENTRATION OF INVESTMENTS. Generally, in excess of 50% of the assets of the
Fund will be invested in commercial paper and variable rate demand notes. The
Fund will invest 25% or more of its total assets in commercial paper issued by
finance companies. The finance companies in which the Fund intends to invest can
be divided into two categories, commercial finance companies and consumer
finance companies. Commercial finance companies are principally engaged in
lending to corporations or other businesses. Consumer finance companies are
primarily engaged in lending to individuals. Captive finance companies or
finance subsidiaries which exist to facilitate the marketing and financial
activities of their parent will, for purposes of industry concentration, be
classified in the industry of their parent's corporation. Concentrating
investments in any one industry may subject the Fund to more risk than if it did
not concentrate investments.
In addition, the Fund may invest 25% or more of the value of its total assets in
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings and loan having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, CCPs 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 Fund's adviser in selecting investments for the
Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund 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 Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings. This investment limitation cannot be changed without shareholder
approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7 which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund 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 Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, 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 Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy serve
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. 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.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Fund will pay to the distributor an amount, computed at an annual rate of
.25 of 1% of the average daily net asset value of the Institutional Service
Shares to finance any activity which is principally intended to result in the
sale of shares subject to the Distribution Plan. The distributor may select
financial institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide sales support services as
agents for their clients or customers. In addition, the Fund has adopted a
Shareholder Services Plan (the "Services Plan") under which it will pay
financial institutions an amount not exceeding .25 of 1% of the average daily
net asset value of the Institutional Service Shares to provide administrative
support services to their customers who own shares of the Fund. From time
to time and for such periods as deemed appropriate, the amounts stated above may
be reduced voluntarily. Activities and services under these arrangements may
include, but are not limited to, providing advertising and marketing materials
to prospective shareholders, providing personal services to shareholders, and
maintaining shareholder accounts.
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 Fund or the
distributor, as appropriate.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Distribution Plan.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides certain administrative personnel and services
(including certain legal and financial reporting services) necessary to operate
the Fund. Federated Administrative Services provides these at an annual rate
which relates to the average aggregate daily net assets of all Federated Funds
as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts is transfer agent for the shares of, and dividend
disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston and Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of Shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, the only expenses allocated to the Shares as a class are expenses
under the Fund's Rule 12b-1 Plan and Shareholder Services Plan which relate to
the Shares. However, the Board of Trustees reserves the right to allocate
certain other expenses to holders of Shares as it deems appropriate "Class
Expenses." In any case, Class Expenses would be limited to: transfer agent fees
as identified by the transfer agent as attributable to holders of Shares;
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Trustees' fees incurred as a result of
issues relating solely to Shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to Shares from
the value of Fund assets attributable to Shares, and dividing the remainder by
the number of Shares outstanding. The Fund 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, 3:00 p.m., and 4:00 p.m.
(Boston time) Monday through Friday except on: (i) days on which there are not
sufficient changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or (iii)
the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are
open for business. Shares may be purchased either by wire or mail. The Fund
reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.,
(Boston time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m., (Boston time) that
day. Federal funds should be wired as follows: State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Prime
Obligations Fund -- Institutional Service Shares: Fund Number (this number can
be found on the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Prime Obligations
Fund -- Institutional Service Shares to: Prime Obligations Fund, P.O. Box 8602,
Boston, Massachusetts 02266-8602. Orders by mail are considered received when
payment by check is converted into federal funds. This is normally the next
business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services and any restrictions and
limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Shares purchased by wire before
3:00 p.m. (Boston time) begin earning dividends that day. Shares purchased by
check begin earning dividends on the day after the check is converted into
federal funds. Dividends are automatically reinvested in additional Shares
unless cash payments are requested by contacting the Fund.
CAPITAL GAINS
Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If, for some extraordinary reason, the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Prime Obligations Fund,
P.O. Box 8602, Boston, Massachusetts 02266-8602. The written request should
state: Prime Obligations Fund -- Institutional Service Shares; shareholder's
name; the account number; and the share or dollar amount requested. Sign the
request exactly as the shares are registered. Shareholders should call the Fund
for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to the shareholder of record must have their
signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
- a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to
institutions that are members of the signature guarantee program. The Fund and
its transfer agent reserve the right to amend these standards at any time
without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. If the redemption request is
received before 12:00 noon (Boston time), the proceeds will be wired the same
day to the shareholder's account at a domestic commercial bank which is a member
of the Federal Reserve System, and those shares redeemed will not be entitled to
that day's dividend. A daily dividend will be paid on shares redeemed if the
redemption request is received after 12:00 noon (Boston time). However, the
proceeds are not wired until the following business day. Under limited
circumstances, arrangements may be made with the distributor for same-day
payment of proceeds, without that day's dividend, for redemption requests
received before 3:00 p.m., Boston time.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail," should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 or the aggregate
investment in Federated Funds falls below the required minimum of $200,000,000
to be maintained from and after twelve months from account opening, due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that
portfolio or class are entitled to vote. As a Massachusetts business trust, the
Trust is not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Trust's or the Fund's operation
and for the election of Trustees under certain circumstances. As of April 28,
1994, Var & Co., St. Paul, Minnesota, owned 32.3% of the voting securities of
the Fund, and, therefore, may for certain purposes be deemed to control the Fund
and be able to affect the outcome of certain matters presented for a vote of
shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund 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. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
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. Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local tax laws.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
- the Fund is not subject to Pennsylvania corporate or personal property
taxes; and
- Fund shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that
the portfolio securities in the Fund would be subject to such taxes if
owned directly by residents of those jurisdictions.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its yield and effective yield for Shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
Performance figures will be calculated separately for each class of shares.
Because each class of shares is subject to different expenses, the performance
of Institutional Shares will exceed the yield and effective yield of
Institutional Service Shares for the same period.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance with certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Shares are sold at net asset value to accounts for which financial
institutions act in an agency or fiduciary capacity. Investments in
Institutional Shares are subject to a minimum initial investment of $25,000.
Institutional Shares are not sold pursuant to a 12b-1 Plan.
Financial institutions providing distribution or administrative services may
receive different compensation depending upon which class of shares of the Fund
is sold. The amount of dividends payable to shareholders of Institutional Shares
will exceed that payable to the shareholders of Institutional Service Shares by
the difference between class expenses and any 12b-1 Plan expenses borne by
Institutional Service Shares. The stated advisory fee is the same for both
classes of shares.
PRIME OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent auditors. Their report dated September 10, 1993, is included in the
Statement of Additional Information. This table should be read in conjunction
with the Fund's financial statements and notes thereto, which may be obtained
free of charge from the Fund.
Institutional Service Shares were not being offered as of July 31, 1993.
Accordingly, there are no Financial Highlights for such Shares. The Financial
Highlights presented below are historical information for Institutional Shares.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------------
1993 1992 1991 1990*
- ---------------------------------------------------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- ----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------
Net investment income 0.0320 0.0464 0.0707 0.0286
- ----------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------
Dividends to shareholders from net investment income (0.0320) (0.0464) (0.070) (0.0286)
- ---------------------------------------------------------- ------------- ------------- ------------- -------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------- ------------- ------------- ------------- -------
TOTAL RETURN 3.25% 4.74% 7.30% 2.89%(c)
- ----------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------
Net assets, end of period (000 omitted) $1,098,159 $917,418 $473,593 $34,777
- ----------------------------------------------------------
Ratio of expenses to average net assets 0.20%(b) 0.20%(b) 0.20%(b) 0.20%(a)(b)
- ----------------------------------------------------------
Ratio of net investment income to average net assets 3.20%(b) 4.53%(b) 6.54%(b) 8.21%(a)(b)
- ----------------------------------------------------------
<FN>
* Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
(a) Computed on an annualized basis.
(b) For the fiscal years ended July 31, 1993, 1992, and 1991 and for the period
from March 26, 1990 (date of initial public investment) to July 31, 1990,
the investment adviser voluntarily waived all or a portion of its fee
and/or reimbursed certain other operating expenses of the Fund. Had the
adviser not undertaken such action, the ratio of expenses and net
investment income would have been 0.29% and 3.11%, 0.30% and 4.43%, 0.44%
and 6.30%, and 0.88% and 7.53%, respectively.
(c) Cumulative total return.
</TABLE>
(See Notes to Financial Statements)
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Prime Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston and Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
PRIME OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated July 5, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
[LOGO]
RECYCLED
9110204A-SS (7/94) PAPER
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
Institutional Shares
Institutional Service Shares
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Prime Obligations Fund (the "Fund") dated July 5,
1994 and September 30, 1993. This Statement is not a prospectus. To
receive a copy of a prospectus, write or call the Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated July 5, 1994
[LOGO]
DISTRIBUTOR
A SUBSIDIARY OF FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT POLICIES 1
- ---------------------------------------------------------
Bank Instruments 1
When-Issued And Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
U.S. Government Obligations 1
Lending of Portfolio Securities 2
INVESTMENT LIMITATIONS 2
- ---------------------------------------------------------
BROKERAGE TRANSACTIONS 3
- ---------------------------------------------------------
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 4
- ---------------------------------------------------------
Officers and Trustees 4
The Funds 6
Share Ownership 7
Trustee Liability 7
INVESTMENT ADVISORY SERVICES 7
- ---------------------------------------------------------
Investment Adviser(s) 7
Advisory Fees 7
FUND ADMINISTRATION 7
- ---------------------------------------------------------
SHAREHOLDER SERVICES PLAN 8
- ---------------------------------------------------------
DISTRIBUTION PLAN 8
- ---------------------------------------------------------
DETERMINING NET ASSET VALUE 8
- ---------------------------------------------------------
REDEMPTION IN KIND 9
- ---------------------------------------------------------
THE FUND'S TAX STATUS 9
- ---------------------------------------------------------
PERFORMANCE INFORMATION 9
- ---------------------------------------------------------
Yield 9
Effective Yield 9
Total Return 9
Performance Comparisons 9
FINANCIAL STATEMENTS 10
- ---------------------------------------------------------
</TABLE>
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
Unless indicated otherwise, the policies described below may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
BANK INSTRUMENTS
The instruments of banks and savings and loans whose deposits are insured by the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF")
such as certificates of deposit, demand and time deposits, savings shares, and
bankers' acceptances, are not necessarily guaranteed by those organizations. In
addition to domestic bank instruments, the Fund may invest in: Eurodollar
Certificates of Deposit issued by foreign branches of U.S. or foreign banks;
Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in foreign
branches of U.S. or foreign banks; Canadian Time Deposits, which are U.S.
dollar-denominated deposits issued by branches of major Canadian banks located
in the United States; and Yankee Certificates of Deposit, which are U.S.
dollar-denominated certificates of deposit issued by U.S. branches of foreign
banks and held in the United States.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. 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. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund"s records at the trade date. These assets are marked to market daily
and are maintained until the transaction has been settled. The Fund 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 Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. 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 guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
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 Fund 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 Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but does not ensure
this result. When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are: segregated on the Fund's records at the trade date; marked to
market daily; and maintained until the transaction is settled.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund 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.
- --------------------------------------------------------------------------------
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on margin
but may obtain such short-term credits as are necessary for clearance of
transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow money
directly or through reverse repurchase agreements in amounts up to one-third of
the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is deemed
to be inconvenient or disadvantageous. The Fund will not purchase any securities
while borrowings in excess of 5% of the value of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding, the Fund will restrict the purchase of portfolio securities to
money market instruments maturing on or before the expiration date of the
reverse repurchase agreements, but only to the extent necessary to assure
completion of the reverse repurchase agreement.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to secure
permitted borrowings. In those cases, it may pledge assets having a market value
not exceeding the lesser of the dollar amounts borrowed or 15% of the value of
total assets of the Fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any assets, except portfolio securities. This shall not
prevent the Fund from purchasing or holding bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by the Fund's
investment objective, policies, and limitations or Declaration of Trust.
INVESTING IN COMMODITIES AND REAL ESTATE
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. The Fund will not purchase or sell real estate,
including limited partnership interests, although it may invest in securities of
issuers whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be deemed
to be an underwriter under the Securities Act of 1933 in connection with the
sale of securities in accordance with its investment objective, policies, and
limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any one
industry except that the Fund will generally invest 25% or more of the value of
its total assets in commercial paper issued by finance companies. The Fund may
invest 25% or more of the value of its total assets in cash, cash items, or
securities
- --------------------------------------------------------------------------------
issued or guaranteed by the government of the United States or its agencies or
instrumentalities and repurchase agreements collateralized by such U.S.
government securities.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities issued by any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities) if as a result more than 5%
of the value of its total assets would be invested in the securities of that
issuer, or if it would own more than 10% of the outstanding voting securities of
that issuer.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
securities subject to legal or contractual restrictions on resale, except for
commercial paper issued under Section 4(2) of the Securities Act of 1933.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except as
part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of continuous
operations, including the operation of any predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or its investment adviser owning individually
more than .50 of 1% of the issuer's securities together own more than 5% of the
issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any combination
of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items." Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not issue senior securities, pledge securities, invest in illiquid
securities, or engage in when-issued and delayed delivery transactions or
reverse repurchase agreements in excess of 5% of the value of its net assets
during the last fiscal period and has no present intent to do so during the
coming fiscal year.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those
- --------------------------------------------------------------------------------
who are recognized dealers in specific portfolio instruments, except when a
better price and execution of the order can be obtained elsewhere. The adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to guidelines established by the Board of Trustees. The adviser may
select brokers and dealers who offer brokerage and research services. These
services may be furnished directly to the Fund 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
Trust 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
year(s) ended July 31, 1993, 1992 and 1991, the Trust paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund 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 Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Administrative
Services, Inc./Federated Administrative Services, and the Funds (as defined
below).
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John F. Donahue*+ Chairman and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Trustee Trustee, Federated Advisers, Federated Management, and
Tower Federated Research; Director, AEtna Life and Casualty
Pittsburgh, PA Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, President and Trustee of
the Trust.
- ----------------------------------------------------------------------------------------------------------------------
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior
Wood/IPC Commercial Vice-President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation;
John R. Wood and General Partner or Trustee in private real estate ventures
Associates, Inc., Realtors in Southwest Florida; Director, Trustee, or Managing General
3255 Tamiami Trail North Partner of the Funds; formerly, President, Naples Property
Naples, FL Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee Director and Member of the Executive Committee, Michael
One PNC Plaza - 23rd Baker, Inc.; Director, Trustee, or Managing General Partner
Floor of the Funds; formerly, Vice Chairman and Director, PNC
Pittsburgh, PA Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
J. Christopher Donahue* President and President and Trustee, Federated Investors; Trustee;
Federated Investors Trustee Federated Advisers, Federated Management, and Federated
Tower Research; President and Director, Federated Administrative
Pittsburgh, PA Services/ Federated Administrative Services, Inc.; Trustee,
Federated Services Company; President or Vice President of
the Funds; Director, Trustee, or Managing General Partner of
some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
- ----------------------------------------------------------------------------------------------------------------------
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Suite 1111 Montefiore Hospitals; Clinical Professor of Medicine and
Pittsburgh, PA Trustee, University of Pittsburgh; Director, Trustee, or
Managing General Partner of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.
- ----------------------------------------------------------------------------------------------------------------------
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.
- ----------------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant;
1202 Cathedral of Trustee, Carnegie Endowment for International Peace, RAND
Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
- ----------------------------------------------------------------------------------------------------------------------
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
- ----------------------------------------------------------------------------------------------------------------------
Richard B. Fisher Federated Vice President Executive Vice President and Trustee, Federated Investors;
Investors Chairman and Director, Federated Securities Corp.; President
Tower or Vice President of the Funds; Director or Trustee of some
Pittsburgh, PA of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Edward C. Gonzales Vice President Vice President, Treasurer, and Trustee, Federated Investors;
Federated Investors and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Tower Management, and Federated Research; Executive Vice
Pittsburgh, PA President, Treasurer, and Director, Federated Securities
Corp.; Trustee, Federated Services Company; Chairman,
Treasurer, and Director, Federated Administrative
Services/Federated Administrative Services, Inc.; Trustee or
Director of some of the Funds; Vice President and Treasurer
of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
John W. McGonigle Federated Vice President Vice President, Secretary, General Counsel, and Trustee,
Investors and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Tower Federated Advisers, Federated Management, and Federated
Pittsburgh, PA Research; Trustee, Federated Services Company; Executive
Vice President, Secretary, and Director, Federated
Administrative Services/Federated Administrative Services,
Inc.; Director and Executive Vice President, Federated
Securities Corp.; Vice President and Secretary of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Vice President, Federated Securities Corp.; President and
Tower Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of some of the Funds;
formerly, Vice President, The Standard Fire Insurance
Company and President of its Federated Research Division.
- ----------------------------------------------------------------------------------------------------------------------
<FN>
* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
+ Member of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
</TABLE>
THE FUNDS
"The Funds," and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fund for U.S. Government Securities, Inc.; Government Income Securities, Inc.;
High Yield Cash Trust; Insight Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc. - 1999;
Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; Peachtree Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Signet Select
Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; World Investment Series, Inc.
- --------------------------------------------------------------------------------
SHARE OWNERSHIP
Officers and Trustees own less than 1% of the Trust's outstanding shares.
As of June 28, 1994, the following shareholders of record owned 5% or more of
the outstanding Institutional Shares of the Fund: Ombit Co., Omaha, NE, owned
approximately 211,811,084 shares (11.4%); ESI Money Pool, Energy Services, Inc.,
New Orleans, LA, owned approximately 301,725,727 shares (16.3%); and Var & Co.,
St. Paul, MN, owned approximately 401,169,194 shares (21.7%).
As of June 28, 1994, there were no shareholders of record who owned 5% of more
of the outstanding Institutional Service Shares of the Fund.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes or 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(S)
The Prime Obligations Fund's investment adviser is Federated Management. 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 Trust, the Fund, or any shareholder of the
Fund 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 Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended July 31,
1993, 1992 and 1991, the Fund's adviser earned $2,033,502, $1,227,947, and
$453,389, respectively, for services provided on behalf of Institutional Shares,
of which $955,268, $633,165, and $453,389, respectively, were voluntarily waived
because of undertakings to limit the Fund's expenses.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses) exceed
2 1/2% per year of the first $30 million of average net assets, 2% per
year of the next $70 million of average net assets, and 1 1/2% per year of
the remaining average net assets, the adviser will reimburse the Fund for
its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this limitation,
the investment advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the adviser will be limited, in
any single fiscal year, by the amount of the investment advisory fees.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
FUND ADMINISTRATION
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Trust for a fee as described in the
prospectus for each class of shares of the Fund. For the fiscal years ended July
31, 1993, 1992, and 1991, Federated Administrative Services, Inc., the Trust's
former administrator, earned $455,288, $283,251, and $248,329, respectively.
John A. Staley, IV, an officer of the Trust and Dr. Henry J. Gailliot, an
officer of Federated Management, the adviser to the Fund, each hold
approximately 15% and 20%,
- --------------------------------------------------------------------------------
respectively, of the outstanding common stock of Commercial Data Services, Inc.,
a company which provides computer processing services to Federated
Administrative Services, Inc., and Federated Administrative Services. For the
fiscal years ended December 31, 1993, 1992, and 1991, Federated Administrative
Services, Inc. paid approximately $161,547, $201,799, and $170,529, respectively
for services provided by Commercial Data Services, Inc., to the Funds.
SHAREHOLDER SERVICES PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Shareholder
Services Plan. This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly to financial institutions to cause services
to be provided 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
designation, and addresses.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Plan
pursuant to Rule 12b-1 which was promulgated by the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940. The Plan permits the
payment of fees to brokers for distribution and administrative services and to
administrators for administrative services. The Plan is designed to (i)
stimulate brokers to provide distribution and administrative support services to
shareholders and (ii) stimulate administrators to render administrative support
services to shareholders. The administrative services are provided by a
representative who has knowledge of the shareholder's particular circumstances
and goals. By adopting the Plan, the Board of Trustees expects that the Fund
will be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in seeking to achieve its investment objectives.
By identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to curb
sharp fluctuations in rates of redemptions and sales. Other benefits may
include: (1) an efficient and effective administrative system; (2) a more
efficient use of shareholder assets by having them rapidly invested with a
minimum of delay and administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to shareholder requests and
inquiries concerning their accounts.
CUSTODIAN AND PORTFOLIO RECORDKEEPER. State Street Bank and Trust Company,
Boston, Massachusetts is custodian for the securities and cash of the Fund.
Federated Services Company, Pittsburgh, Pennsylvania provides certain accounting
and recordkeeping services with respect to the Fund's portfolio investments.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trustees 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
Fund computed by dividing the annualized daily income on the Fund'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 Fund'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 Trustees 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 Fund'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 Trustees 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 Trustees 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 Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund'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
Trustees determine that further payments should be in kind. In such cases, the
Fund will pay all or a portion of the remainder of the redemption in portfolio
instruments valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees 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 FUND'S TAX STATUS
- --------------------------------------------------------------------------------
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund 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 Fund, the performance will be reduced for those shareholders paying those
fees.
YIELD
The Fund calculates its yield 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.
EFFECTIVE YIELD
The Fund calculates its effective yield 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.
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 compounded by
multiplying the number of shares owned at the end of the period by the net asset
value per share at the end of the period. The number of shares owned at the end
of the period is based on the number of shares purchased at the beginning of the
period with $1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund'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 net asset value. The financial
publications and/or indices which the Fund 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.
- 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.
- 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.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements for the six-month period ended January 31, 1994 are
incorporated herein by reference to the Fund's Semi-Annual Report dated January
31, 1994 (File No. 811-5950). A copy of the Semi-Annual Report may be obtained
without charge by contacting the Fund at the address located on the back cover
of the prospectus. Following are the financial statements for the fiscal year
ended July 31, 1993.
PRIME OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
BANK NOTES--1.8%
- -------------------------------------------------------------------------------------------
$20,000,000 NBD Bank N.A., 3.22%, 1/18/94 $ 19,996,179
------------------------------------------------------------------------------- -------------
CERTIFICATE OF DEPOSIT--2.7%
- -------------------------------------------------------------------------------------------
30,000,000 Credit Suisse, 3.52%, 3/11/94 30,007,127
------------------------------------------------------------------------------- -------------
*COMMERCIAL PAPER--42.8%
- -------------------------------------------------------------------------------------------
BANKING--2.1%
-------------------------------------------------------------------------------
8,000,000 Barclays U.S. Funding Corp. (Guaranteed by Barclays Bank) 3.28%, 9/28/93 7,959,271
-------------------------------------------------------------------------------
15,000,000 Queensland Alumina Ltd. (Credit Suisse LOC) 3.17%, 10/26/93 14,886,408
------------------------------------------------------------------------------- -------------
Total 22,845,679
------------------------------------------------------------------------------- -------------
FINANCE-AUTOMOTIVE--1.0%
-------------------------------------------------------------------------------
11,000,000 Ford Credit Receivables Funding, Inc. 3.08%, 8/11/93 10,990,589
------------------------------------------------------------------------------- -------------
FINANCE-COMMERCIAL--6.4%
-------------------------------------------------------------------------------
21,000,000 CIT Group Holdings, Inc. 3.18%-3.25%, 8/4/93-1/6/94 20,896,044
-------------------------------------------------------------------------------
50,000,000 General Electric Capital Corp. 3.10%-3.43%, 9/16/93-3/14/94 49,377,818
------------------------------------------------------------------------------- -------------
Total 70,273,862
------------------------------------------------------------------------------- -------------
FINANCE-RETAIL--3.8%
-------------------------------------------------------------------------------
30,000,000 American General Finance Corp. 3.06-3.07%, 8/2/93 29,999,147
-------------------------------------------------------------------------------
12,000,000 Associates Corp. of North America 3.15%, 9/22/93 11,945,400
------------------------------------------------------------------------------- -------------
Total 41,944,547
------------------------------------------------------------------------------- -------------
FUNDING CORPORATION--21.6%
-------------------------------------------------------------------------------
20,000,000 Asset Securitization Cooperative Corp. 3.20%-3.35%, 9/27/93-12/21/93 19,817,194
-------------------------------------------------------------------------------
53,000,000 Beta Finance, Inc. 3.15%-3.44%, 8/16/93-4/28/94 52,839,232
-------------------------------------------------------------------------------
22,300,000 CIESCO 3.10%-3.17%, 11/3/93-11/4/93 22,116,481
-------------------------------------------------------------------------------
49,000,000 Corporate Asset Funding Co., Inc. 3.11%-3.35%, 8/5/93-1/18/94 48,663,088
-------------------------------------------------------------------------------
49,575,000 Falcon Asset Securitization Corp. 3.07%-3.17%, 8/5/93-10/21/93 49,464,584
-------------------------------------------------------------------------------
36,100,000 PREFCO 3.10%-3.15%, 8/19/93-10/12/93 35,985,545
-------------------------------------------------------------------------------
8,000,000 Sheffield Receivables Corp. 3.16%, 10/6/93 7,953,947
------------------------------------------------------------------------------- -------------
Total 236,840,071
------------------------------------------------------------------------------- -------------
INSURANCE--6.6%
-------------------------------------------------------------------------------
23,289,000 Prospect St. Sr. Loan Portfolio, L.P. (Guaranteed by FSA) 3.10%-3.25%,
8/2/93-10/27/93 23,192,668
-------------------------------------------------------------------------------
50,000,000 Prudential Funding Corp. 3.00%-3.33%, 8/2/93-1/27/94 49,641,651
------------------------------------------------------------------------------- -------------
Total 72,834,319
------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--1.3%
-------------------------------------------------------------------------------
15,000,000 AT&T Corp. 3.30%, 1/5/94 14,784,125
------------------------------------------------------------------------------- -------------
TOTAL COMMERCIAL PAPER 470,513,192
------------------------------------------------------------------------------- -------------
SHORT-TERM NOTES--6.6%
- -------------------------------------------------------------------------------------------
FINANCE-AUTOMOTIVE--6.0%
-------------------------------------------------------------------------------
5,088,963 Capital Auto Receivables Asset Trust 1992-1 Class A-1 3.73%, 12/15/93 5,090,541
-------------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
- -------------------------------------------------------------------------------------------
FINANCE-AUTOMOTIVE--CONTINUED
-------------------------------------------------------------------------------
$21,000,000 Capital Auto Receivables Asset Trust 1993-1 Class A-2 3.31%, 8/16/93 $ 21,000,161
-------------------------------------------------------------------------------
5,563,277 Capital Auto Receivables Asset Trust 1993-2 Class A-1 3.35%, 6/15/94 5,562,159
-------------------------------------------------------------------------------
4,449,601 ML Asset Backed Corp., Class A 3.55%, 1/18/94 4,449,601
-------------------------------------------------------------------------------
19,948,346 Premier Auto Trust 1993-2 Class A-1 3.23%, 4/15/94 19,948,346
-------------------------------------------------------------------------------
9,808,704 Premier Auto Trust 1993-3 Class A-1 3.38%, 6/15/94 9,803,243
------------------------------------------------------------------------------- -------------
Total 65,854,051
------------------------------------------------------------------------------- -------------
FINANCE-EQUIPMENT--0.6%
-------------------------------------------------------------------------------
6,193,284 Case Equipment Loan Trust 3.80%, 12/15/93 6,195,108
------------------------------------------------------------------------------- -------------
TOTAL SHORT-TERM NOTES 72,049,159
------------------------------------------------------------------------------- -------------
**VARIABLE RATE INSTRUMENTS--26.7%
- -------------------------------------------------------------------------------------------
BANKING--15.7%
-------------------------------------------------------------------------------
15,214,000 Adesa Funding Corp. (Bank One, Indianapolis LOC) 3.35%, 8/5/93 15,214,000
-------------------------------------------------------------------------------
10,000,000 Advanta Credit Card Master Trust 3.20%, 8/5/93 10,000,000
-------------------------------------------------------------------------------
8,750,000 Alexandria Executive Club L.P. (Huntington National Bank LOC) 3.26%, 8/5/93 8,750,000
-------------------------------------------------------------------------------
800,000 Arrow Molded Plastics, Inc. (Huntington National Bank LOC) 3.26%, 8/5/93 800,000
-------------------------------------------------------------------------------
20,000,000 Beverly California Corp. (PNC Bank N.A. LOC) 3.20%, 8/2/93 20,000,000
-------------------------------------------------------------------------------
4,145,000 Eastwinds Investments L.P. (Huntington National Bank LOC) 3.26%, 8/5/93 4,145,000
-------------------------------------------------------------------------------
2,545,000 Grote Family L.P. (Huntington National Bank LOC) 3.25%, 8/5/93 2,545,000
-------------------------------------------------------------------------------
24,000,000 Holy Cross Health System Corp. (Swiss Bank Corp. LOC) 3.43%, 8/4/93 24,000,000
-------------------------------------------------------------------------------
5,000,000 Hunt Club (Huntington National Bank LOC) 3.26%, 8/5/93 5,000,000
-------------------------------------------------------------------------------
14,050,000 John W. Rooker, Series 1992 (Wachovia Bank of Georgia LOC) 3.25%, 8/4/93 14,050,000
-------------------------------------------------------------------------------
5,400,000 Kokosing Construction Co., Inc., Series 1992 (National City Bank Cleveland LOC)
3.30%, 8/5/93 5,400,000
-------------------------------------------------------------------------------
2,800,000 Ramsey Real Estate Enterprises Ltd. (First National Bank of Louisville LOC)
3.30%, 8/5/93 2,800,000
-------------------------------------------------------------------------------
7,680,000 Shenandoah Partners, L.P. (Huntington National Bank LOC) 3.26%, 8/5/93 7,680,000
-------------------------------------------------------------------------------
35,000,000 SMM Trust 1992-B (Guaranteed by Morgan Guaranty Trust Co.) 3.23%, 8/13/93 35,000,000
-------------------------------------------------------------------------------
10,000,000 SMM Trust 1993-A (Guaranteed by Morgan Guaranty Trust Co.) 3.36%, 9/20/93 10,000,000
-------------------------------------------------------------------------------
7,051,000 Vista Funding Corp. (Bank One, Akron N.A. LOC) 3.35%, 8/5/93 7,051,000
------------------------------------------------------------------------------- -------------
Total 172,435,000
------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--2.9%
-------------------------------------------------------------------------------
13,950,600 GS Funding Corp. (Guaranteed by General Electric Co.) 3.20%, 8/2/93 13,950,600
-------------------------------------------------------------------------------
6,000,000 Lauda Air Luftfahrt AG (Guaranteed by General Electric Co.) 3.21%, 8/2/93 6,000,000
-------------------------------------------------------------------------------
11,963,102 Northwest Airlines, Inc. (Guaranteed by General Electric Co.) 3.21%, 8/2/93 11,963,102
------------------------------------------------------------------------------- -------------
Total 31,913,702
------------------------------------------------------------------------------- -------------
FINANCE-AUTOMOTIVE--3.2%
-------------------------------------------------------------------------------
35,000,000 Money Market Auto Loan Trust 3.31%, 8/16/93 35,000,000
------------------------------------------------------------------------------- -------------
INSURANCE--2.3%
-------------------------------------------------------------------------------
25,000,000 Peoples Security Life Insurance 3.41%, 8/2/93 25,000,000
------------------------------------------------------------------------------- -------------
</TABLE>
PRIME OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------------------- -------------
<C> <S> <C>
**VARIABLE RATE INSTRUMENTS--CONTINUED
- -------------------------------------------------------------------------------------------
LEASING--2.6%
-------------------------------------------------------------------------------
$29,000,000 PHH/CFC Leasing (Societe Generale LOC) 3.25%, 8/4/93 $ 29,000,000
------------------------------------------------------------------------------- -------------
TOTAL VARIABLE RATE INSTRUMENTS 293,348,702
------------------------------------------------------------------------------- -------------
***REPURCHASE AGREEMENTS--19.4%
- -------------------------------------------------------------------------------------------
45,000,000 Daiwa Securities America, Inc., 3.06%, dated 7/30/93, due 8/2/93 45,000,000
-------------------------------------------------------------------------------
42,000,000 Donaldson Lufkin & Jenrette Securities Corp., 3.07%, dated 7/30/93, due 8/2/93 42,000,000
-------------------------------------------------------------------------------
6,600,000 Goldman, Sachs & Co., 3.00%, dated 7/30/93, due 8/2/93 6,600,000
-------------------------------------------------------------------------------
10,000,000 Greenwich Capital Markets, Inc., 3.20%, dated 7/23/93, due 10/21/93 10,000,000
-------------------------------------------------------------------------------
20,000,000 Lehman Government Securities, 3.25%, dated 6/8/93, due 8/16/93 20,000,000
-------------------------------------------------------------------------------
10,000,000 PaineWebber, Inc., 3.10%, dated 7/30/93, due 8/2/93 10,000,000
-------------------------------------------------------------------------------
38,300,000 S.G. Warburg & Co., Inc., 3.07%, dated 7/30/93, due 8/2/93 38,300,000
-------------------------------------------------------------------------------
41,050,000 Salomon Brothers, Inc., 3.10%, dated 7/30/93, due 8/2/93 41,050,000
------------------------------------------------------------------------------- -------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 212,950,000
------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS, AT AMORTIZED COST $1,098,864,359
------------------------------------------------------------------------------- -------------
<FN>
The following abbreviations are used in this portfolio:
FSA-Financial Security Assurance
LOC-Letter(s) of Credit
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** Current rate and next reset date shown.
*** 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 repurchase agreements were through participation in joint
accounts with other Federated funds.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,098,159,186) at July 31, 1993.
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
PRIME OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------------------------------
Investments in other securities $885,914,359
- --------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) 212,950,000
- -------------------------------------------------------------------------------- ------------
Total investments, at amortized cost and value (Notes 2A and 2B) $1,098,864,359
- ----------------------------------------------------------------------------------------------
Cash 42,081
- ----------------------------------------------------------------------------------------------
Interest receivable 1,940,826
- ----------------------------------------------------------------------------------------------
Prepaid/deferred expenses (Note 2F) 3,160
- ---------------------------------------------------------------------------------------------- --------------
Total assets 1,100,850,426
- ----------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------
Dividends payable 2,586,762
- --------------------------------------------------------------------------------
Accrued expenses 104,478
- -------------------------------------------------------------------------------- ------------
Total liabilities 2,691,240
- ---------------------------------------------------------------------------------------------- --------------
NET ASSETS for 1,098,159,186 shares of beneficial interest outstanding $1,098,159,186
- ---------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share ($1,098,159,186
DIVIDED BY 1,098,159,186 shares of beneficial interest outstanding) $ 1.00
- ---------------------------------------------------------------------------------------------- --------------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
PRIME OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------
Interest income (Note 2C) $34,583,709
- ----------------------------------------------------------------------------------------------
EXPENSES-
- ----------------------------------------------------------------------------------------------
Investment advisory fee (Note 5) $2,033,502
- -----------------------------------------------------------------------------------
Trustees' fee 7,998
- -----------------------------------------------------------------------------------
Administrative personnel and services fee (Note 5) 455,288
- -----------------------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 214,678
- -----------------------------------------------------------------------------------
Recordkeeping fee (Note 5) 125,198
- -----------------------------------------------------------------------------------
Auditing fees 13,170
- -----------------------------------------------------------------------------------
Legal fees 5,407
- -----------------------------------------------------------------------------------
Printing and postage 7,523
- -----------------------------------------------------------------------------------
Fund share registration costs 82,911
- -----------------------------------------------------------------------------------
Insurance premiums 19,580
- -----------------------------------------------------------------------------------
Taxes 18,674
- -----------------------------------------------------------------------------------
Miscellaneous 4,842
- ----------------------------------------------------------------------------------- ---------
Total expenses 2,988,771
- -----------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 955,268
- ----------------------------------------------------------------------------------- ---------
Net expenses 2,033,503
- ---------------------------------------------------------------------------------------------- ----------
Net investment income $32,550,206
- ---------------------------------------------------------------------------------------------- ----------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
PRIME OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------
1993 1992
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 32,550,206 $ 27,842,760
- --------------------------------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment income ($0.0320 and $0.0464
per share, respectively) (32,550,206) (27,842,760)
- --------------------------------------------------------------------------- ------------- -------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 5,287,583,256 2,602,137,961
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive
payment of dividends in Fund shares 1,429,731 104,138
- ---------------------------------------------------------------------------
Cost of shares redeemed (5,108,271,778) (2,158,417,417)
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets from Fund share transactions 180,741,209 443,824,682
- --------------------------------------------------------------------------- ------------- -------------
Change in net assets 180,741,209 443,824,682
- ---------------------------------------------------------------------------
NET ASSETS:
Beginning of period 917,417,977 473,593,295
- --------------------------------------------------------------------------- ------------- -------------
End of period $1,098,159,186 $ 917,417,977
- --------------------------------------------------------------------------- ------------- -------------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
PRIME OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Prime Obligations Fund (the "Fund") is a diversified portfolio and one of the
portfolios of Money Market Obligations Trust (the "Trust"), a no-load, open-end,
management investment company, which is registered under the Investment Company
Act of 1940, as amended. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
(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. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Board of Trustees ("Trustees") has determined
that the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940, as amended.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying securities to ensure the existence of a proper level of
collateral.
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 guidelines established by
the Trustees. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code, plus realized net
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to investment companies and to distribute
to shareholders each year all of its taxable income. Accordingly, no
provision for federal tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
the purpose of investment leverage. The Fund will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Fund will maintain security positions such
that sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expenses of registering the shares, have been deferred and are being
amortized using the straight-line method through December, 1994.
G. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily, and immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
PRIME OBLIGATIONS FUND
- ------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At July
31, 1993, capital paid-in aggregated $1,098,159,186. Transactions in Fund shares
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------
1993 1992
- -------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Shares outstanding, beginning of period 917,417,977 473,593,295
- --------------------------------------------------------------------------------
Shares sold 5,287,583,256 2,602,137,961
- --------------------------------------------------------------------------------
Shares issued to shareholders electing to receive payment of dividends in Fund
shares 1,429,731 104,138
- --------------------------------------------------------------------------------
Shares redeemed (5,108,271,778) (2,158,417,417)
- -------------------------------------------------------------------------------- --------------- ---------------
Shares outstanding, end of period 1,098,159,186 917,417,977
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser ("Adviser"), receives for
its services an annual investment advisory fee equal to 0.20 of 1% of the Fund's
average daily net assets. For the year ended July 31, 1993, the Adviser
voluntarily agreed to waive the amount, limited to the amount of the advisory
fee, by which the Fund's aggregate annual operating expenses (including its
investment advisory fee but excluding interest, taxes, brokerage commissions,
insurance premiums, and extraordinary expenses) exceed 0.20 of 1% of its average
daily net assets. This does not include reimbursement to the Fund of any
expenses incurred by shareholders who use the transfer agent's subaccounting
facilities. The Adviser can terminate this voluntary agreement at any time in
its sole discretion. For the year ended July 31, 1993, the Adviser earned an
investment advisory fee of $2,033,502 of which $955,268 was voluntarily waived
in accordance with such agreement.
Federated Services Company, the Fund's recordkeeper, received for its services a
fee of $125,198 for the year ended July 31, 1993.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain Officers and Trustees of the
Trust are Officers and Directors of the above corporations.
(6) INVESTMENT TRANSACTIONS
Purchases, and sales and maturities, of investments, excluding securities
subject to repurchase agreements, for the year ended July 31, 1993, were as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
PURCHASES--
- --------------------------------------------------------------------------------
Short-term investments $ 3,854,915,683
- -------------------------------------------------------------------------------- ---------------
SALES AND MATURITIES--
- --------------------------------------------------------------------------------
Short-term investments $ 3,740,219,162
- -------------------------------------------------------------------------------- ---------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST (Prime Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1993, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights (see page 2 of this prospectus)
for each of the three years in the period then ended and for the period from
March 26, 1990 (date of initial public investment) to July 31, 1990. These
financial statements and financial highlights are the responsibility of the
Trust'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
July 31, 1993, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust) as
of July 31, 1993, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the three years in the period then
ended and for the period from March 26, 1990 (date of initial public investment)
to July 31, 1990, in conformity with generally accepted accounting principles.
Pittsburgh, Pennsylvania ARTHUR ANDERSEN & CO.
September 10, 1993
APPENDIX
- --------------------------------------------------------------------------------
CORPORATE BOND RATING DEFINITIONS
STANDARD AND POOR'S CORPORATION
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Corporation. Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree. A-Debt rated A
has a strong capacity to pay interest and repay principal although it is
somewhat more susceptible to the adverse effect of changes in circumstances and
economic conditions than debt in higher rated categories.
MOODY'S INVESTORS SERVICE, INC.
AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. AA-Bonds which are rated AA are
judged to be of high quality by all standards. Together with the AAA group, they
comprise what are generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in AAA
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in AAA securities. A-Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
COMMERCIAL PAPER RATING DEFINITIONS
STANDARD & POOR'S CORPORATION
A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
MOODY'S INVESTORS SERVICE, INC.
P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:
conservative capitalization structure with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial charges
and high internal cash generation; well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-2--Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of short-term promissory obligations. This will normally be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
SHORT-TERM DEBT RATING DEFINITIONS
FITCH INVESTORS SERVICE, INC.
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues rated
F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as the
F-1+ and F-1 categories.
9110204B-SS (7/94)
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Tax-Free Obligations Fund (the
"Fund") offered by this prospectus represent interests in a
diversified portfolio of Money Market Obligations Trust (the
"Trust"), an open-end management investment company (a mutual fund).
The Fund invests in municipal securities to achieve dividend income
exempt from federal regular income tax consistent with stability of
principal. Shares of the Fund are offered for sale as an investment
vehicle for large institutions, corporations and fiduciaries.
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 FUND ATTEMPTS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
July 5, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a
copy of the Statement of Additional Information free of charge by
calling 1-800-235-4669. To obtain other information, or make
inquiries about the Fund, contact the Fund at the address listed in
the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated July 5, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- --------------------------------------------------
GENERAL INFORMATION 2
- --------------------------------------------------
INVESTMENT INFORMATION 2
- --------------------------------------------------
Investment Objective 2
Investment Policies 2
Municipal Securities 5
Investment Risks 6
Investment Limitations 6
Regulatory Compliance 6
TRUST INFORMATION 6
- --------------------------------------------------
Management of the Trust 6
Distribution of Shares 7
Administration of the Fund 8
Expenses of the Fund and
Institutional Service Shares 9
NET ASSET VALUE 9
- --------------------------------------------------
INVESTING IN THE FUND 10
- --------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
Subaccounting Services 10
Certificates and Confirmations 10
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- --------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
- --------------------------------------------------
Voting Rights 12
Massachusetts Partnership Law 13
TAX INFORMATION 13
- --------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 14
State and Local Taxes 14
PERFORMANCE INFORMATION 14
- --------------------------------------------------
OTHER CLASSES OF SHARES 15
- --------------------------------------------------
FINANCIAL HIGHLIGHTS 16
- --------------------------------------------------
ADDRESSES INSIDE BACK COVER
- --------------------------------------------------
</TABLE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES*
(As a percentage of projected average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)...................................................... 0.06%
12b-1 Fee (2).......................................................................... 0.00%
Total Other Expenses................................................................... 0.39%
Shareholder Services Fee........................................................... 0.25%
Total Institutional Service Shares Operating Expenses (3)...................... 0.45%
<FN>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 0.20%.
(2) The Institutional Service Shares have no present intention of paying or
accruing the 12b-1 fee during the period ending July 31, 1994. If the
Institutional Service Shares were paying or accruing the 12b-1 fee, the
Class would be able to pay up to 0.25% of its average daily net assets for
the 12b-1 fee. See "Trust Information".
(3) The Total Institutional Service Shares Operating Expenses are estimated to
be 0.59% absent the anticipated voluntary waiver of a portion of the
management fee.
* Total Institutional Service Shares Expenses are estimated based on average
expenses expected to be incurred during the period ending July 31, 1994. During
the course of this period, expenses may be more or less than the average amount
shown.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ----------------------------------------------------------------------------------- --------- ---------
<S> <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........................... $5 $14
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING JULY 31,
1994.
The information set forth in the foregoing table and example relates only to
Institutional Service Shares of the Fund. The Fund also offers another class of
shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of this
prospectus, the Trustees have established two classes of shares known as
Institutional Service Shares and Institutional Shares. This prospectus relates
only to Institutional Service Shares ("Shares") of the Fund, which are designed
primarily for financial institutions 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 $25,000 is
required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Trust.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is dividend income exempt from federal
regular income tax consistent with stability of principal. This investment
objective cannot be changed without shareholder approval. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities (as defined below) maturing in 13 months or less. As a
matter of investment policy, which cannot be changed without shareholder
approval, at least 80% of the Fund's annual interest income will be exempt from
federal regular income tax. (Federal regular income tax does not include the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations.) The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, investment policies may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued
by or on behalf of states, territories, and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of qualified
legal counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:
- tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
- bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
- municipal commercial paper and other short-term notes;
- variable rate demand notes;
- municipal bonds (including bonds having serial maturities and pre-refunded
bonds) and leases;
- construction loan notes insured by the Federal Housing Administration and
financed by the Federal or Government National Mortgage Associations; and
- participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the Fund
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 an interest rate or interest rate index. Most variable rate
demand notes allow the Fund to demand the repurchase of the security on not more
than seven days prior notice. Other notes only permit the Fund to tender the
security at the time of each interest rate adjustment or at other fixed
intervals. See "Demand Features." The Fund 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 Fund may next tender the security for repurchase.
PARTICIPATION INTERESTS. The Fund may purchase interests in Municipal
Securities from financial institutions such as commercial and investment banks,
savings and loan associations, and insurance companies. These interests may take
the form of participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows the Fund to treat
the income from the investment as exempt from federal income tax. The Fund
invests in these participation interests in order to obtain credit enhancement
or demand features that would not be available through direct ownership of the
underlying Municipal Securities.
MUNICIPAL LEASES. The Fund may purchase municipal securities in the form of
participation interests that represent an undivided proportional interest in
lease payments by a governmental or nonprofit entity. The lease payments and
other rights under the lease provide for and secure payments on the
certificates. Lease obligations may be limited by municipal charter or the
nature of the appropriation for the lease. Furthermore, a lease may provide that
the participants cannot
accelerate lease obligations upon default. The participants would only be able
to enforce lease payments as they became due. In the event of a default or
failure of appropriation, unless the participation interests are credit
enhanced, it is unlikely that the participants would be able to obtain an
acceptable substitute source of payment.
RATINGS. The securities in which the Fund invests must be rated in the highest
short-term rating category by one or more nationally recognized statistical
rating organizations ("NRSROs") or be of comparable quality to securities having
such ratings. An NRSRO's highest rating category is determined without regard
for sub-categories and gradations. For example, securities rated SP-1+ or SP-1
by Standard & Poor's Corporation ("S&P"), MIG-1 by Moody's Investors Service,
Inc. ("Moody's"), or FIN-1+ or FIN-1 by Fitch Investors Service, Inc. ("Fitch")
are all considered rated in the highest short-term rating category. The Fund
will follow applicable regulations in determining whether a security rated by
more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."
Further, the Fund has the ability but no present intention of investing in:
securities that are rated MIG-2 or VMIG-2 by Moody's, SP-2 by S&P, FIN-2 by
Fitch; tax-exempt commercial paper that is rated P-2 by Moody's, A-2 by S&P, or
F-2 by Fitch; and securities that are not rated but are deemed to be of
comparable quality. Shareholders will be notified should the Fund decide to
invest in these securities.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund 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. However, credit
enhanced securities will not be treated as having been issued by the credit
enhancer for diversification purposes, unless the Fund has invested more than
10% of its assets in securities issued, guaranteed or otherwise credit enhanced
by the credit enhancer, in which case the securities will be treated as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
The Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.
DEMAND FEATURES. The Fund 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 Fund. 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 Fund uses these arrangements to provide the Fund 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.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities, to 10% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous.
TEMPORARY INVESTMENTS. From time to time, when the investment adviser
determines that market conditions call for a temporary defensive posture, the
Fund may invest in tax-exempt or taxable securities such as: obligations issued
by or on behalf of municipal or corporate issuers having the same quality
characteristics as described above; obligations issued or guaranteed by the U.S.
government, its agencies, or instrumentalities; instruments issued by a U.S.
branch of a domestic bank or other deposit institution having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment; and
repurchase agreements (arrangements in which the organization selling the Fund a
temporary investment agrees at the time of sale to repurchase it at a mutually
agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention to do so. However, the interest from certain Municipal
Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Fund to achieve its
investment objective also depends on the continuing ability of the issuers of
Municipal Securities and participation interests, or the credit enhancers of
either, to meet their obligations for the payment of interest and principal when
due. In addition, from time to time, the supply of Municipal Securities
acceptable for purchase by the Fund could become limited.
The Fund may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or whose
issuers are located in the same state. Sizable investments in these Municipal
Securities could involve an increased risk to the Fund should any of these
related projects or facilities experience financial difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings. This investment limitation
cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved
for the shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund 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 Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, 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 Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy serve
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. 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.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Fund will pay to the distributor an amount, computed at an annual rate of
.25 of 1% of the average daily net asset value of the Institutional Service
Shares to finance any activity which is principally intended to result in the
sale of shares subject to the Distribution Plan. The distributor may select
financial institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide sales support services as
agents for their clients or customers. In addition, the Fund has adopted a
Shareholder Services Plan (the "Services Plan") under which it will pay
financial institutions an
amount not exceeding .25 of 1% of the average daily net asset value of the
Institutional Service Shares to provide administrative support services to their
customers who own shares of the Fund. From time to time and for such periods as
deemed appropriate, the amounts stated above may be reduced voluntarily.
Activities and services under these arrangements may include, but are not
limited to, providing advertising and marketing materials to prospective
shareholders, providing personal services to shareholders, and maintaining
shareholder accounts.
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 Fund or the
distributor, as appropriate.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Distribution Plan.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides certain administrative personnel and services
(including certain legal and financial reporting services) necessary to operate
the Fund. Federated Administrative Services provides these at an annual rate
which relates to the average aggregate daily net assets of all Federated Funds
as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts is transfer agent for the shares of, and dividend
disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston and Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of Shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, the only expenses allocated to the Shares as a class are expenses
under the Fund's Rule 12b-1 Plan and Shareholder Services Plan which relate to
the Shares. However, the Board of Trustees reserves the right to allocate
certain other expenses to holders of Shares as it deems appropriate "Class
Expenses." In any case, Class Expenses would be limited to: transfer agent fees
as identified by the transfer agent as attributable to holders of Shares;
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Trustees' fees incurred as a result of
issues relating solely to Shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to Shares from
the value of Fund assets attributable to Shares, and dividing the remainder by
the number of Shares outstanding. The Fund 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, 3:00 p.m., and 4:00 p.m.
(Boston time) Monday through Friday except on: (i) days on which there are not
sufficient changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or (iii)
the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.,
(Boston time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m., (Boston time) that
day. Federal funds should be wired as follows: State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Tax-Free
Obligations Fund -- Institutional Service Shares: Fund Number (this number can
be found on the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Tax-Free Obligations
Fund -- Institutional Service Shares to: Tax-Free Obligations Fund, P.O. Box
8602, Boston, Massachusetts 02266-8602. Orders by mail are considered received
when payment by check is converted into federal funds. This is normally the next
business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services and any restrictions and
limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Shares purchased by wire before
3:00 p.m. (Boston time) begin earning dividends that day. Shares purchased by
check begin earning dividends on the day after the check is converted into
federal funds. Dividends are automatically reinvested in additional Shares
unless cash payments are requested by contacting the Fund.
CAPITAL GAINS
Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If, for some extraordinary reason, the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Tax-Free Obligations
Fund, P.O. Box 8602, Boston, Massachusetts 02266-8602. The written request
should state: Tax-Free Obligations Fund -- Institutional Service Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail. If share certificates
have been issued, they must be properly endorsed and should be sent by
registered or certified mail with the written request. Shareholders requesting a
redemption of $50,000 or more, a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption payable other
than to the shareholder of record must have their signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
- a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to
institutions that are members of the signature guarantee program. The Fund and
its transfer agent reserve the right to amend these standards at any time
without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. If the redemption request is
received before 12:00 noon (Boston time), the proceeds will be wired the same
day to the shareholder's account at a domestic commercial bank which is a member
of the Federal Reserve System, and those shares redeemed will not be entitled to
that day's dividend. A daily dividend will be paid on shares redeemed if the
redemption request is received after 12:00 noon (Boston time). However, the
proceeds are not wired until the following business day.
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail," should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 or the aggregate
investment in Federated Funds falls below the required minimum of $200,000,000
to be maintained from and after twelve months from account opening, due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in
the Trust's or the Fund's operation and for the election of Trustees under
certain circumstances. As of June 28, 1994, Var & Co., St. Paul, Minnesota,
owned 25.7% of the voting securities of the Fund, and, therefore, may for
certain purposes be deemed to control the Fund and be able to affect the outcome
of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
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FEDERAL INCOME TAX
The Fund 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.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest earned on certain "private activity" bonds issued
after August 7, 1986, may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The Fund may purchase all types of municipal bonds, including private activity
bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
- the Fund is not subject to Pennsylvania corporate or personal property
taxes; and
- Fund shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that
the portfolio securities in the Fund would be subject to such taxes if
owned directly by residents of those jurisdictions.
STATE AND LOCAL TAXES
Because interest received by Fund may not be exempt from all state and local
income taxes, shareholders may be required to pay state and local taxes on
dividends received from the Fund. 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 Fund advertises its yield, effective yield and
tax-equivalent yield for Shares.
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. The tax-equivalent yield is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that would have to be earned to equal
the Shares' tax exempt yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
The performance figures will be calculated separately for each class of shares.
Because each class of shares is subject to different expenses, the yield,
effective yield, and tax-equivalent yield of Institutional Shares will exceed
the yield, effective yield and tax-equivalent yield of Institutional Service
Shares for the same period.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Shares are sold at net asset value to accounts for which financial
institutions act in an agency or fiduciary capacity. Investments in
Institutional Shares are subject to a minimum initial investment of $25,000.
Institutional Shares are not sold pursuant to a 12b-1 Plan.
Financial institutions providing distribution or administrative services may
receive different compensation depending upon which class of shares of the Fund
is sold. The amount of dividends payable to shareholders of Institutional Shares
will exceed that payable to the shareholders of Institutional Service Shares by
the difference between class expenses and any 12b-1 Plan expenses borne by
Institutional Service Shares. The stated advisory fee is the same for both
classes of shares.
TAX-FREE OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES
- ---------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent auditors. Their report dated September 10, 1993, is included in the
Statement of Additional Information. This table should be read in conjunction
with the Fund's financial statements and notes thereto, which may be obtained
free of charge from the Fund.
Institutional Service Shares were not being offered as of July 31, 1993.
Accordingly, there are no Financial Highlights for such Shares. The Financial
Highlights presented below are historical information for Institutional Shares.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------------------------------
1993 1992 1991 1990*
- ------------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------
Net investment income 0.0251 0.0368 0.0501 0.0365
- -------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------
Dividends to shareholders from net investment income (0.0251) (0.0368) (0.0501) (0.0365)
- ------------------------------------------------------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------- ------- ------- ------- -------
TOTAL RETURN 2.54% 3.73% 5.13% 3.70%(c)
- -------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------
Net assets, end of period (000 omitted) $454,119 $308,855 $165,669 $145,552
- -------------------------------------------------------
Ratio of expenses to average net assets 0.20%(b) 0.20%(b) 0.20%(b) 0.20%(a)(b)
- -------------------------------------------------------
Ratio of net investment income to average net assets 2.49%(b) 3.58%(b) 4.93%(b) 5.75%(a)(b)
- -------------------------------------------------------
<FN>
* Reflects operations for the period from December 12, 1989 (date of initial
public investment) to July 31, 1990.
(a) Computed on an annualized basis.
(b) For the fiscal years ended July 31, 1993, 1992, and 1991 and for the period
from December 12, 1989 (date of initial public investment) to July 31, 1990,
the investment adviser voluntarily waived all or a portion of its fee and/or
reimbursed certain other operating expenses of the Fund. Had the adviser not
undertaken such action, the ratio of expenses and net investment income
would have been 0.34% and 2.35%, 0.37% and 3.41%, 0.46% and 4.67%, and 0.41%
and 5.54%, respectively.
(c) Cumulative total return.
(See Notes to Financial Statements)
</TABLE>
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Tax-Free Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston and Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
TAX-FREE OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated July 5, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
[LOGO]
RECYCLED
9110207A-SS (7/94) PAPER
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
Institutional Shares
Institutional Service Shares
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Tax-Free Obligations Fund (the "Fund") dated July
5, 1994 and September 30, 1993. This Statement is not a prospectus.
To receive a copy of a prospectus, write or call the Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated July 5, 1994
[LOGO]
DISTRIBUTOR
A SUBSIDIARY OF FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT POLICIES 1
- ---------------------------------------------------------
Characteristics of Municipal Securities. 1
Municipal Leases 1
When-Issued and Delayed Delivery
Transactions 1
Temporary Investments 1
Repurchase Agreements 2
Investment Risks 2
INVESTMENT LIMITATIONS 2
- ---------------------------------------------------------
BROKERAGE TRANSACTIONS 4
- ---------------------------------------------------------
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 5
- ---------------------------------------------------------
Officers and Trustees 5
The Funds 7
Share Ownership 7
Trustee Liability 7
INVESTMENT ADVISORY SERVICES 8
- ---------------------------------------------------------
Investment Adviser(s) 8
Advisory Fees 8
FUND ADMINISTRATION 8
- ---------------------------------------------------------
SHAREHOLDER SERVICES PLAN 8
- ---------------------------------------------------------
DISTRIBUTION PLAN 9
- ---------------------------------------------------------
DETERMINING NET ASSET VALUE 9
- ---------------------------------------------------------
REDEMPTION IN KIND 9
- ---------------------------------------------------------
THE FUND'S TAX STATUS 10
- ---------------------------------------------------------
PERFORMANCE INFORMATION 10
- ---------------------------------------------------------
Yield 10
Effective Yield 10
Tax-Equivalent Yield 10
Tax-Equivalency Table 11
Total Return 11
Performance Comparisons 11
FINANCIAL STATEMENTS 12
- ---------------------------------------------------------
</TABLE>
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
Unless indicated otherwise, the policies described below may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
CHARACTERISTICS OF MUNICIPAL SECURITIES.
When determining whether a municipal security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of a
municipal security, the issuer of a demand feature if the Fund has the
unconditional right to demand payment for the municipal security, or any
guarantor of payment by either of those issuers.
The Fund is not required to sell a municipal security if the security's rating
is reduced below the required minimum subsequent to the Fund's purchase of the
security. The investment adviser considers this event, however, in its
determination of whether the Fund should continue to hold the security in its
portfolio. If ratings made by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P") or Fitch Investors Service, Inc. ("Fitch")
change because of changes in those organizations or in their rating systems, the
Fund will try to use comparable ratings as standards in accordance with the
investment policies described in the Fund's prospectus.
MUNICIPAL LEASES
In determining the liquidity of municipal lease securities, the investment
adviser, under the authority delegated by the Board of Trustees, will base its
determination on the following factors: whether the lease can be terminated by
the lessee; the potential recovery, if any, from a sale of the leased property
upon termination of the lease; the lessee's general credit strength (e.g., its
debt, administrative, economic and financial characteristics and prospects); the
likelihood that the lessee will discontinue appropriating funding for the leased
property because the property is no longer deemed essential to its operations
(e.g., the potential for an "event of non-appropriation"); and any credit
enhancement or legal recourse provided upon an event of non-appropriation or
other termination of the lease.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. 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. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These assets are marked to market daily
and are maintained until the transaction has been settled. The Fund 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.
The Fund may also sell municipal securities on a delayed delivery basis with
settlement taking place more than five days after the sale as a normal form of
portfolio transaction. It is the investment adviser's experience that it is not
unusual in the municipal securities market for settlement periods to be slightly
longer than this period.
TEMPORARY INVESTMENTS
The Fund may also invest in high quality, temporary investments from time to
time for temporary defensive purposes.
1
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, brokers/dealers, and other recognized financial institutions sell
securities to the Fund 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 Fund, the Fund could receive less
than the repurchase price on any sale of such securities. The Fund or its
custodian will take possession of the securities subject to repurchase
agreements, and these securities will be marked to market daily. In the
event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in
effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such securities.
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 guidelines
established by the Trustees.
INVESTMENT RISKS
Litigation or legislation could affect the validity of certain municipal
securities or their tax-free interest. For example, litigation challenging the
validity of systems of financing public education has been initiated or
adjudicated in a number of states. The Fund will not investigate such
legislation or litigation unless it deems it necessary to do so. To the extent
that litigation or legislation has an adverse effect on the ratings ascribed to
a particular municipal security, there is some protection to the Fund's
shareholders from the Fund's policy of buying only high-rated securities.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money in amounts up to one-third of the value of its total assets,
including the amounts borrowed.
The Fund will not borrow money for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management
of the portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or
15% of the value of total assets of the Fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets. This shall not prevent the Fund
from purchasing or holding bonds, debentures, notes, certificates of
indebtedness or other debt securities or engaging in other transactions
where permitted by the Fund's investment objective, policies, and
limitations or Declaration of Trust.
INVESTING IN COMMODITIES AND REAL ESTATE
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. The Fund will not purchase or sell real
estate, including limited partnership interests, although it may invest in
securities of issuers whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or interests in
real estate.
- --------------------------------------------------------------------------------
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such U.S. government securities)
if as a result more than 5% of the value of its total assets would be
invested in the securities of that issuer.
Under this limitation, each governmental subdivision, including states and
the District of Columbia, territories, possessions of the United States,
or their political subdivisions, agencies, authorities, instrumentalities,
or similar entities, will be considered a separate issuer if its assets
and revenues are separate from those of the governmental body creating it
and the security is backed only by its own assets and revenues. If in the
case of an industrial development bond or governmental-issued security, a
governmental or other entity guarantees the security, such guarantee would
be considered a separate security issued by the guarantor as well as the
other issuer, subject to limited exclusions allowed by the Investment
Company Act of 1940.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such purchase,
25% or more of the value of its total assets would be invested in any one
industry or in industrial development bonds or other securities, the
interest upon which is paid from revenues of similar type projects.
The Fund may invest, as temporary investments, 25% or more of the value of
its total assets in cash or cash items, securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or instruments
secured by these money market instruments, such as repurchase agreements.
The Fund does not intend to purchase securities that would increase the
percentage of its assets invested in the securities of governmental
subdivisions located in any one state, territory, or U.S. possession to
25% or more. However, the Fund may invest 25% or more of the value of its
assets in tax-exempt project notes guaranteed by the U.S. government,
regardless of the location of the issuing municipality.
If the value of Fund assets invested in the securities of a governmental
subdivision changes because of changing values, the Fund will not be
required to make any reduction in its holdings.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
securities which are subject to legal or contractual restrictions on
resale.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers (including companies responsible for paying
principal and interest on industrial development bonds) which have records
of less than three years of continuous operations, including the operation
of any predecessor.
- --------------------------------------------------------------------------------
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or its investment adviser owning
individually more than .50 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items". Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not issue senior securities, pledge securities, invest in illiquid
securities, or engage in when-issued and delayed delivery transactions in excess
of 5% of the value of its net assets during the last fiscal period and has no
present intent to do so during the coming fiscal year.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
guidelines established by the Board of Trustees. The adviser may select brokers
and dealers who offer brokerage and research services. These services may be
furnished directly to the Fund 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 Trust 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
year(s) ended July 31, 1993, 1992 and 1991, the Trust paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund 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 Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
- --------------------------------------------------------------------------------
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Federated Management,
Federated Investors, Federated Securities Corp., Federated Administrative
Services, Inc./Federated Administrative Services, and the Funds (as defined
below).
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John F. Donahue*+ Chairman and Chairman and Trustee, Federated Investors; Chairman and
Federated Investors Trustee Trustee, Federated Advisers, Federated Management, and
Tower Federated Research; Director, AEtna Life and Casualty
Pittsburgh, PA Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds; formerly, Director,
The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, President and Trustee of
the Trust.
- ----------------------------------------------------------------------------------------------------------------------
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-
Wood/IPC Commercial Department President, John R. Wood and Associates, Inc., Realtors;
John R. Wood and President, Northgate Associates, Inc., Realtors Village
Associates, Inc., Realtors Development Corporation; General Partner or Trustee in
3255 Tamiami Trail North private real estate ventures in Southwest Florida; Director,
Naples, FL Trustee, or Managing General Partner of the Funds; formerly,
President, Naples Property Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee Director and Member of the Executive Committee, Michael
One PNC Plaza - 23rd Floor Baker, Inc.; Director, Trustee, or Managing General Partner
Pittsburgh, PA of the Funds; formerly, Vice Chairman and Director, PNC
Bank, N.A., and PNC Bank Corp. and Director, Ryan Homes,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue* President and President and Trustee, Federated Investors; Trustee;
Federated Investors Trustee Federated Advisers, Federated Management, and Federated
Tower Research; President and Director, Federated Administrative
Pittsburgh, PA Services/ Federated Administrative Services, Inc.; Trustee,
Federated Services Company; President or Vice President of
the Funds; Director, Trustee, or Managing General Partner of
some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
- ----------------------------------------------------------------------------------------------------------------------
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and
3471 Fifth Avenue Montefiore Hospitals; Clinical Professor of Medicine and
Suite 1111 Trustee, University of Pittsburgh; Director, Trustee, or
Pittsburgh, PA Managing General Partner of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State Street Bank
and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.
- ----------------------------------------------------------------------------------------------------------------------
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant;
1202 Cathedral Trustee, Carnegie Endowment for International Peace, RAND
of Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
- ----------------------------------------------------------------------------------------------------------------------
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
- ----------------------------------------------------------------------------------------------------------------------
Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors;
Federated Investors Chairman and Director, Federated Securities Corp.; President
Tower or Vice President of the Funds; Director or Trustee of some
Pittsburgh, PA of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer, and Trustee, Federated Investors;
Federated Investors and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Tower Management, and Federated Research; Executive Vice
Pittsburgh, PA President, Treasurer, and Director, Federated Securities
Corp.; Trustee, Federated Services Company; Chairman,
Treasurer, and Director, Federated Administrative
Services/Federated Administrative Services, Inc.; Trustee or
Director of some of the Funds; Vice President and Treasurer
of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Tower Federated Advisers, Federated Management, and Federated
Pittsburgh, PA Research; Trustee, Federated Services Company; Executive
Vice President, Secretary, and Director, Federated
Administrative Services/Federated Administrative Services,
Inc.; Director and Executive Vice President, Federated
Securities Corp.; Vice President and Secretary of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Vice President, Federated Securities Corp.; President and
Tower Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of some of the Funds;
formerly, Vice President, The Standard Fire Insurance
Company and President of its Federated Research Division.
- ----------------------------------------------------------------------------------------------------------------------
<FN>
* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
+ Member of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
</TABLE>
THE FUNDS
"The Funds," and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-Intermediate Government
Trust; Federated Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fund for U.S. Government Securities, Inc.; Government Income Securities, Inc.;
High Yield Cash Trust; Insight Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.;
Liberty U.S. Government Money Market Trust; Liberty Term Trust, Inc. - 1999;
Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Mark Twain
Funds; Money Market Management, Inc.; Money Market Obligations Trust; Money
Market Trust; Municipal Securities Income Trust; New York Municipal Cash Trust;
111 Corcoran Funds; Peachtree Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Signet Select
Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees own less than 1% of the Trust's outstanding shares.
As of June 28, 1994, the following shareholders of record owned 5% or more of
the outstanding Institutional Shares of the Fund: Boatmen's Trust Company, St.
Louis, MO, owned approximately 69,518,248 shares (9.9%); Commerce Bank of Kansas
City, Kansas City, MO, owned approximately 43,101,894 shares (6.1%); First Union
National Bank, Charlotte, NC, owned approximately 169,944,514 shares (24.3%);
Wachovia Bank of North Carolina, Winston-Salem, NC, owned approximately
42,029,035 shares (6%); and Var & Co., St. Paul, MN, owned approximately
180,089,371 shares (25.7%).
As of June 28, 1994, there were no shareholders who owned 5% or more of the
outstanding Institutional Service Shares of the Fund.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes or 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(S)
The Tax-Free Obligations Fund's investment adviser is Federated Management. 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 Trust, the Fund, or any shareholder of the
Fund 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 Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended July 31,
1993, 1992 and 1991, the Fund's adviser earned $820,734, $469,718 and $295,082,
respectively for services provided on behalf of Institutional Shares, of which
$582,656, $402,871, and $295,082 were voluntarily waived because of undertakings
to limit the Fund's expenses.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states.
If the Fund's normal operating expenses (including the investment advisory
fee, but not including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2 1/2% per year of the first $30 million of
average net assets, 2% per year of the next $70 million of average net
assets, and 1 1/2% per year of the remaining average net assets, the
adviser will reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this limitation,
the investment advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the adviser will be limited, in
any single fiscal year, by the amount of the investment advisory fees.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
FUND ADMINISTRATION
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Trust for a fee as described in the
prospectus for each class of shares of the Fund. For the fiscal years ended July
31, 1993, 1992, and 1991, Federated Administrative Services, Inc., the Trust's
former administrator, earned $284,326, $210,978, and $214,524, respectively.
John A. Staley, IV, an officer of the Trust and Dr. Henry J. Gailliot, an
officer of Federated Management, the adviser to the Fund, each hold
approximately 15% and 20%, respectively, of the outstanding common stock of
Commercial Data Services, Inc., a company which provides computer processing
services to Federated Administrative Services, Inc., and Federated
Administrative Services. For the fiscal years ended December 31, 1993, 1992, and
1991, Federated Administrative Services, Inc. paid approximately $161,547,
$201,799, and $170,529, respectively for services provided by Commercial Data
Services, Inc., to the Funds.
SHAREHOLDER SERVICES PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Shareholder
Services Plan. This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly to financial institutions to cause services
to be provided 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 designation, and addresses.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Plan
pursuant to Rule 12b-1 which was promulgated by the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940. The Plan permits the
payment of fees to brokers for distribution and administrative services and to
administrators for administrative services. The Plan is designed to (i)
stimulate brokers to provide distribution and administrative support services to
shareholders and (ii) stimulate administrators to render administrative support
services to shareholders. The administrative services are provided by a
representative who has knowledge of the shareholder's particular circumstances
and goals. By adopting the Plan, the Board of Trustees expects that the Fund
will be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in seeking to achieve its investment objectives.
By identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to curb
sharp fluctuations in rates of redemptions and sales. Other benefits may
include: (1) an efficient and effective administrative system; (2) a more
efficient use of shareholder assets by having them rapidly invested with a
minimum of delay and administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to shareholder requests and
inquiries concerning their accounts.
CUSTODIAN AND PORTFOLIO RECORDKEEPER. State Street Bank and Trust Company,
Boston, Massachusetts is custodian for the securities and cash of the Fund.
Federated Services Company, Pittsburgh, Pennsylvania provides certain accounting
and recordkeeping services with respect to the Fund's portfolio investments.
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trustees 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
Fund computed by dividing the annualized daily income on the Fund'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 Fund'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 Trustees 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 Fund'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 Trustees 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 Trustees 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 Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund'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
Trustees determine that further payments should be in kind. In such cases, the
Fund will pay all or a portion of the remainder of the redemption in portfolio
instruments valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees 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 FUND'S TAX STATUS
- --------------------------------------------------------------------------------
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund 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 Fund, the performance will be reduced for those shareholders paying those
fees.
YIELD
The Fund calculates its yield 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.
EFFECTIVE YIELD
The Fund calculates its effective yield 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.
TAX-EQUIVALENT YIELD
The tax-equivalent yield of the Fund is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that the Fund would have had to earn to
equal its actual yield, assuming a 39.6% tax rate (the maximum effective federal
rate for individuals and assuming that income is 100% exempt.
- --------------------------------------------------------------------------------
TAX-EQUIVALENCY TABLE
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal bonds in the Fund's portfolio
generally remains free from federal regular income tax* and is often free from
state and local taxes as well.* As the table below indicates, a "tax-exempt"
investment is an attractive choice for investors, particularly in times of
narrow spreads between tax-free and taxable yields.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
JOINT RETURN: $1-38,000 $38,001-91,850 $91,851-140,000 $140,001-250,000 OVER $250,000
SINGLE RETURN: $1-22,750 $22,751-55,100 $55,101-115,000 $115,001-250,000 OVER $250,000
- --------------------------------------------------------------------------------------------------
<CAPTION>
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
<FN>
Note: The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. The chart above is for illustrative purposes only. It
is not an indicator of past or future performance of the Fund.
*Some portion of the Fund's income may be subject to the federal alternative
minimum tax and state and local taxes.
</TABLE>
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 compounded by
multiplying the number of shares owned at the end of the period by the net asset
value per share at the end of the period. The number of shares owned at the end
of the period is based on the number of shares purchased at the beginning of the
period with $1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund'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 net asset value. The financial
publications and/or indices which the Fund 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.
- 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.
- SALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
- SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
- DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES, is a weekly
quote of the average daily offering price for selected federal agency
issues maturing in 30 days.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements for the six-month period ended January 31, 1994 are
incorporated herein by reference to the Fund's Semi-Annual Report dated January
31, 1994 (File No. 811-5950). A copy of the Semi-Annual Report may be obtained
without charge by contacting the Fund at the address located on the back cover
of the prospectus. Following are the financial statements for the fiscal year
ended July 31, 1993.
12
<PAGE>
TAX-FREE OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P**
AMOUNT (NOTE 7) VALUE
- ---------- --------------------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--100.5%
- ---------------------------------------------------------------------------------
ALABAMA--0.5%
---------------------------------------------------------------------
$ 840,000 Huntsville, AL, IDA Weekly VRDNs (Parkway)/(First Alabama Bank LOC) P-1 $ 840,000
---------------------------------------------------------------------
1,500,000 Mobile, AL, IDA Weekly VRDNs (McRae's Inc.)/(NationsBank, North
Carolina N.A. LOC) A-1+ 1,500,000
--------------------------------------------------------------------- -----------
TOTAL 2,340,000
--------------------------------------------------------------------- -----------
ARKANSAS--1.5%
---------------------------------------------------------------------
1,200,000 Arkansas Hospital, AR, Equipment Finance Authority Weekly VRDNs
(Series 85)/(Credit Suisse LOC) VMIG1 1,200,000
---------------------------------------------------------------------
3,600,000 Arkansas Hospital, AR, Weekly VRDNs (Jefferson Hospital Association)/
(Credit Commerciale De France LOC) VMIG1 3,600,000
---------------------------------------------------------------------
1,000,000 Sheridan, AR, IDA Weekly VRDNs (Series A)/(H.H. Robertson Co.)/(PNC
Bank N.A. LOC) VMIG 1,000,000
---------------------------------------------------------------------
1,000,000 Sheridan, AR, IDA Weekly VRDNs (Series B)/(H.H. Robertson Co.)/(PNC
Bank N.A. LOC) VMIG1 1,000,000
--------------------------------------------------------------------- -----------
TOTAL 6,800,000
--------------------------------------------------------------------- -----------
CALIFORNIA--5.9%
---------------------------------------------------------------------
5,000,000 Alameda, CA, 3.00% TRANs, 6/30/94 MIG1 5,011,069
---------------------------------------------------------------------
5,000,000 California School Cash Reserve Program Authority, 3.40% TANs (Series
1993A)/(California School Boards Pooled Loan Program), 7/5/94 SP-1+ 5,022,457
---------------------------------------------------------------------
5,000,000 California State, 2.20% RANs, 12/23/93 SP-1 4,998,014
---------------------------------------------------------------------
5,000,000 California State, 3.50% RANs (Series 1993-94), 6/28/94 SP-1 5,024,700
---------------------------------------------------------------------
6,750,000 San Bernardino County, CA, 3.25% Multi-Term TOBs, Optional Tender
6/8/94 NR 6,780,814
--------------------------------------------------------------------- -----------
TOTAL 26,837,054
--------------------------------------------------------------------- -----------
COLORADO--0.7%
---------------------------------------------------------------------
2,875,000 Denver (City & County), CO, 3.50% Annual TOBs (Blake Street
Compendium)/(Norwest Bank LOC), Mandatory Tender 12/15/93 A-1+ 2,875,000
--------------------------------------------------------------------- -----------
CONNECTICUT--0.3%
---------------------------------------------------------------------
1,500,000 Connecticut State Transportation Infrastructure Authority Weekly
VRDNs (Industrial Bank of Japan, Ltd. LOC) A-1+ 1,500,000
--------------------------------------------------------------------- -----------
FLORIDA--9.0%
---------------------------------------------------------------------
8,000,000 Brevard County, FL, 3.35% TANs (Series 1992), 8/24/93 MIG1 8,001,717
---------------------------------------------------------------------
6,170,000 Florida Board of Education, 2.60% Semi-Annual TOBs (Series 1989A),
Optional Tender 12/1/93 NR(2) 6,170,000
---------------------------------------------------------------------
2,500,000 Florida Municipal Loan Council, 2.80% CP (Series 1985-1)/(Florida
League of Cities)/(Sumitomo Bank, Ltd. LOC), Mandatory Tender 9/10/93 VMIG1 2,500,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P**
AMOUNT (NOTE 7) VALUE
- ---------- --------------------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$3,100,000 Key West, FL, Community Redevelopment Authority Weekly VRDNs (Pier
House Joint Venture)/ (PNC Bank, N.A. LOC) P-1 $ 3,100,000
---------------------------------------------------------------------
2,015,000 Palm Beach County, FL, IDA Weekly VRDNs (Palm Jewish Community Campus
Corp.)/(Sun Bank, N.A. LOC) A-1+ 2,015,000
---------------------------------------------------------------------
15,000,000 Sarasota County, FL, 2.30% CP (Sarasota Memorial Hospital Guaranty),
Mandatory Tender 8/20/93 VMIG1 15,000,000
---------------------------------------------------------------------
2,000,000 University of Florida Athletic Association Weekly VRDNs (University
of Florida Stadium)/(Sun Bank, N.A. LOC) VMIG1 2,000,000
---------------------------------------------------------------------
1,825,000 Volusia County, FL, IDA Weekly VRDNs (Crane Cams)/(First Union
National Bank LOC) P-1 1,825,000
--------------------------------------------------------------------- -----------
TOTAL 40,611,717
--------------------------------------------------------------------- -----------
GEORGIA--3.6%
---------------------------------------------------------------------
1,960,000 DeKalb County, GA, IDA Weekly VRDNs (Three Score Inc.)/(Sovran Bank
N.A. LOC) P-1 1,960,000
---------------------------------------------------------------------
3,100,000 DeKalb County, GA, Revenue Anticipation Certificates Weekly VRDNs
(Series 1992)/(DeKalb County Hospital Authority)/(Trust Company Bank
LOC) A-1+ 3,100,000
---------------------------------------------------------------------
1,600,000 DeKalb County, GA, Weekly VRDNs (Series 1992)/ (American Cancer
Society, GA Division, Inc.)/(Trust Company Bank LOC) P-1 1,600,000
---------------------------------------------------------------------
465,000 Georgia State, HFA Residential Finance Authority, 2.60% Semi-Annual
TOBs, Optional Tender 12/1/93 NR(2) 465,000
---------------------------------------------------------------------
1,380,000 Georgia State, HFA Single Family Mortgage Bonds (CR-92), 2.55% Semi-
Annual TOBs, Optional Tender 9/1/93 NR(2) 1,380,000
---------------------------------------------------------------------
8,000,000 Municipal Electric Authority, GA, 3.00% Semi-Annual TOBs (Morgan
Guaranty Trust Co. BPA), Optional Tender 9/1/93 VMIG1 8,000,000
--------------------------------------------------------------------- -----------
TOTAL 16,505,000
--------------------------------------------------------------------- -----------
ILLINOIS--2.4%
---------------------------------------------------------------------
3,000,000 Illinois Development Finance Authority Weekly VRDNs (Newlywed Food)/
(Mellon Bank N.A. LOC) A-1 3,000,000
---------------------------------------------------------------------
1,930,000 Illinois Health Facilities Authority Weekly VRDNs (Perkin Memorial
Hospital)/(Algemene Bank Nederland N.V. LOC) VMIG1 1,930,000
---------------------------------------------------------------------
6,000,000 Illinois Health Facilities Authority, 2.65% Annual TOBs (Highland
Park Hospital)/(FGIC Insured), Optional Tender 6/1/94 A-1+ 6,000,000
--------------------------------------------------------------------- -----------
TOTAL 10,930,000
--------------------------------------------------------------------- -----------
INDIANA--2.4%
---------------------------------------------------------------------
2,200,000 Bluffton, IN, Economic Development Refunding Revenue Bonds Weekly
VRDNs (Blount Inc.)/(Credit Lyonnais, Paris LOC) P-1 2,200,000
---------------------------------------------------------------------
1,370,000 Dale, IN, IDA Weekly VRDNs (Spencer Industries, Inc.)/(National City
Bank, Kentucky LOC) P-1 1,370,000
---------------------------------------------------------------------
2,850,000 Indiana Bond Bank, 3.15% RANs (Series A2), 1/18/94 SP-1+ 2,855,165
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P**
AMOUNT (NOTE 7) VALUE
- ---------- --------------------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
INDIANA--CONTINUED
---------------------------------------------------------------------
$3,050,000 Indiana Health Facilities Finance Authority Weekly VRDNs
Rehabilitation Center)/(Bank One, Indianapolis N.A. LOC) A-1 $ 3,050,000
---------------------------------------------------------------------
1,500,000 Marion County, IN, 2.75% GO Notes, 6/30/94 SP-1+ 1,500,000
--------------------------------------------------------------------- -----------
TOTAL 10,975,165
--------------------------------------------------------------------- -----------
LOUISIANA--0.5%
---------------------------------------------------------------------
2,000,000 Hammond, LA, IDA Daily VRDNs (Jack Eckerd, Inc.)/(Westpac Banking
Corp. LOC) P-1 2,000,000
--------------------------------------------------------------------- -----------
MARYLAND--1.1%
---------------------------------------------------------------------
2,900,000 Baltimore County, MD, IDA Weekly VRDNs (Mine Safety Appliances Co.)/
Sanwa Bank, Ltd. LOC) P-1 2,900,000
---------------------------------------------------------------------
2,100,000 Baltimore County, MD, Port Facility Weekly VRDNs (Occidential
Petroleum)/(National Westminister Bank LOC) A-1+ 2,100,000
--------------------------------------------------------------------- -----------
TOTAL 5,000,000
--------------------------------------------------------------------- -----------
MASSACHUSETTS--1.2%
---------------------------------------------------------------------
5,500,000 Massachusetts Bay Transit Authority, 2.55% Semi-Annual TOBs (Long
Term Credit Bank of Japan Ltd. LOC), 9/1/93 A-1 5,500,000
--------------------------------------------------------------------- -----------
MICHIGAN--1.6%
---------------------------------------------------------------------
7,400,000 Michigan State, 2.85% GO RANs, 9/30/93 SP-1+ 7,406,197
--------------------------------------------------------------------- -----------
MINNESOTA--5.2%
---------------------------------------------------------------------
3,500,000 Eagan, MN, Multi-Family Housing Weekly VRDNs (Series 1992A)/
(Cinnamon Ridge)/(Mellon Bank N.A. LOC) VMIG1 3,500,000
---------------------------------------------------------------------
3,800,000 Minnesota Higher Education Facilities Authority Weekly VRDNs (Carlton
College Guaranty) VMIG1 3,800,000
---------------------------------------------------------------------
8,510,000 Minnesota State Higher Education Coordinating Board Weekly VRDNs
(Mitsubishi Bank Ltd. LOC) MIG1 8,510,000
---------------------------------------------------------------------
1,000,000 Rochester, MN, Health Care Facilities Weekly VRDNs (Mayo Clinic
Foundation Guaranty) VMIG1 1,000,000
---------------------------------------------------------------------
2,500,000 Rochester, MN, Hospital Authority Weekly VRDNs (Mayo Clinic
Foundation Guaranty) VMIG1 2,500,000
---------------------------------------------------------------------
4,500,000 Saint Paul Port Authority, MN, Tax Increment Weekly VRDNs (Series
1991)/(First Bank Minneapolis, N.A. LOC) A-1 4,500,000
--------------------------------------------------------------------- -----------
TOTAL 23,810,000
--------------------------------------------------------------------- -----------
MISSISSIPPI--0.4%
---------------------------------------------------------------------
1,895,000 Hinds County, MS, Urban Renewal Refunding Weekly VRDNs (Series
1991)/North State Street)/ (AmSouth Bank N.A. LOC) VMIG1 1,895,000
--------------------------------------------------------------------- -----------
MISSOURI--0.9%
---------------------------------------------------------------------
4,200,000 Popular Bluff, MO, IDA Weekly VRDNs (Series 1987)/(Gates Rubber Co.)/
(National Bank of Detroit LOC) A-1+ 4,200,000
--------------------------------------------------------------------- -----------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P**
AMOUNT (NOTE 7) VALUE
- ---------- --------------------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
NEW JERSEY--0.5%
---------------------------------------------------------------------
$2,000,000 Mercer County, NJ, Improvement Authority Weekly VRDNs (Credit Suisse
LOC) A-1+ $ 2,000,000
--------------------------------------------------------------------- -----------
NEW YORK--6.3%
---------------------------------------------------------------------
15,000,000 New York State, 2.75% TRANs 12/31/93 SP-1+ 15,022,495
---------------------------------------------------------------------
13,800,000 New York, NY, Energy Research Development Authority Daily VRDNs
(Niagara Mohawk)/(Long Term Credit Bank of Japan Ltd. LOC) A-1 13,800,000
--------------------------------------------------------------------- -----------
TOTAL 28,822,495
--------------------------------------------------------------------- -----------
NORTH CAROLINA--4.6%
---------------------------------------------------------------------
15,000,000 Martin County, NC, IFA Weekly VRDNs (Series 1993)/(Weyerhauser, Inc.
Guaranty) A-1 15,000,000
---------------------------------------------------------------------
1,750,000 NCNB Pooled Tax-Exempt Trust Weekly VRDNs (Series 1990A)/
(NationsBank of North Carolina N.A. LOC) P-1 1,750,000
---------------------------------------------------------------------
4,000,000 North Carolina Municipal Power Agency #1, 2.40% CP (Catawba
Electric), Mandatory Tender 9/23/93 A-1 4,000,000
--------------------------------------------------------------------- -----------
TOTAL 20,750,000
--------------------------------------------------------------------- -----------
OHIO--13.7%
---------------------------------------------------------------------
2,675,000 Ashland County, OH, Health Care Weekly VRDNs (Brethren Care, Inc.)/
(National City Bank, Cleveland LOC) P-1 2,675,000
---------------------------------------------------------------------
3,000,000 Cincinnati, OH, 2.68% GO UT BANs, 8/30/93 NR(2) 3,000,184
---------------------------------------------------------------------
1,200,000 Cuyahoga County, OH, Hospital Authority Weekly VRDNs (St. Luke's
Hospital)/(First National Bank of Chicago LOC) VMIG1 1,200,000
---------------------------------------------------------------------
2,850,000 Cuyahoga County, OH, IDA Weekly VRDNs (H.P. Parking Co.)/(First Union
National Bank LOC) P-1 2,850,000
---------------------------------------------------------------------
3,900,000 Franklin County, OH, Hospital Authority Weekly VRDNs (Riverside
United Methodist Hospital)/(National City Bank, Cleveland LOC) VMIG1 3,900,000
---------------------------------------------------------------------
3,200,000 Franklin County, OH, Weekly VRDNs (Series 1992)/ (Rickenbacker
Holdings, Inc.)/(Bank One, Columbus N.A. LOC) P-1 3,200,000
---------------------------------------------------------------------
1,000,000 Hamilton County, OH, Health System Weekly VRDNs (West Park Retirement
Community, Inc.)/(Fifth Third Bank LOC) VMIG1 1,000,000
---------------------------------------------------------------------
2,500,000 Hamilton County, OH, Hospital Authority Revenue Bonds Weekly VRDNs
(Series 1986A)/(Good Samaritan Hospital Guaranty) A-1 2,500,000
---------------------------------------------------------------------
2,700,000 Kettering, OH, IDA Weekly VRDNs (Center-Plex Venture, Inc.)/(First
Union National Bank LOC) P-1 2,700,000
---------------------------------------------------------------------
2,885,000 Lorain County, OH, Hospital Facilities Weekly VRDNs (Series 1992A)/
(Elyria Methodist Hospital)/(Fifth Third Bank LOC) P-1 2,885,000
---------------------------------------------------------------------
350,000 Lucas County, OH, Health Care Improvement Weekly VRDNs (Sunshine
Children's Home)/(National City Bank, Cleveland LOC) P-1 350,000
---------------------------------------------------------------------
4,800,000 Lucas County, OH, HFA Weekly VRDNs (Riverside Hospital)/(Huntington
National Bank LOC) P-1 4,800,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P**
AMOUNT (NOTE 7) VALUE
- ---------- --------------------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
OHIO--CONTINUED
---------------------------------------------------------------------
$2,000,000 Lucas County, OH, Weekly VRDNs (Series 1991)/(Ohio Citizens Bank)/
(National City Bank, Cleveland LOC) P-1 $ 2,000,000
---------------------------------------------------------------------
2,900,000 Marion County, OH, Hospital Authority, 2.65% Semi-Annual TOBs (Series
1991)/(Pooled LeaseProgram)/(Bank One, Columbus N.A. LOC), Optional
Tender 10/1/93 A-1+ 2,900,000
---------------------------------------------------------------------
5,150,000 Mayfield Village, OH, IDA Weekly VRDNs (Beta Campus Co.)/(First Union
National Bank LOC) P-1 5,150,000
---------------------------------------------------------------------
1,730,000 Montgomery County, OH, IDA Weekly VRDNs (Bethesda Two Ltd.
Partnership)/(Huntington National Bank LOC) P-1 1,730,000
---------------------------------------------------------------------
900,000 Montgomery County, OH, IDA Weekly VRDNs (Center-Plex Venture,
Inc.)/(Society Bank, Cleveland LOC) P-1 900,000
---------------------------------------------------------------------
4,900,000 Muskingham County, OH, Hospital Facilities Authority Weekly VRDNs
(Bethesda Care Systems)/(BancOhio National Bank LOC) P-1 4,900,000
---------------------------------------------------------------------
4,000,000 Ohio State Air Quality Development Authority, 3.00% CP (Cincinnati
Gas & Electric Co.)/(Westpac Banking Corp. LOC), Mandatory Tender
8/16/93 A-1 4,000,000
---------------------------------------------------------------------
2,500,000 Ohio State GO Infrastructure Improvement Weekly VRDNs (Series
1992R)/(Morgan Guaranty Trust Co. LOC) VMIG1 2,500,000
---------------------------------------------------------------------
2,300,000 Scioto County, OH, Hospital Facility Weekly VRDNs (Volunteer Hospital
of America)/(AMBAC Insured) A-1 2,300,000
---------------------------------------------------------------------
2,000,000 Seneca County, OH, Hospital Facility Weekly VRDNs (St. Francis Home)/
(National City Bank Cleveland LOC) VMIG1 2,000,000
---------------------------------------------------------------------
900,000 Solon, OH, IDA Weekly VRDNs (Solon Industries)/ (First Union National
Bank LOC) P-1 900,000
---------------------------------------------------------------------
705,000 Summit County, OH, IDR 2.65% Semi-Annual TOBs (SGS Tool Co.)/
(National City Bank, Cleveland LOC), 11/1/93 P-1 705,000
---------------------------------------------------------------------
1,200,000 Twinsburg, OH, IDA Weekly VRDNs (Carl Massara)/(Society National Bank
LOC) P-1 1,200,000
--------------------------------------------------------------------- -----------
TOTAL 62,245,184
--------------------------------------------------------------------- -----------
OKLAHOMA--0.7%
---------------------------------------------------------------------
3,000,000 Tulsa County, OK, IDA, 2.40% Semi-Annual TOBs (Laureate Psychiatric
Clinic & Hospital)/ (Escrowed), Mandatory Tender 12/15/93 A-1+ 3,000,000
--------------------------------------------------------------------- -----------
PENNSYLVANIA--4.0%
---------------------------------------------------------------------
3,200,000 Allegheny County, PA, Health Facilities Authority Daily VRDNs
(Presbyterian University Hospital)/(PNC Bank N.A. LOC) VMIG1 3,200,000
---------------------------------------------------------------------
4,860,000 Allegheny County, PA, Hospital Development Authority Daily VRDNs
(Series B)/(Presbyterian University Hospital)/(Credit Suisse LOC) VMIG1 4,860,000
---------------------------------------------------------------------
1,000,000 Authority for Improvements in Municipalities, PA, Weekly VRDNs
(Pooled Hospital & Equipment Leasing Program)/(MBIA Insured) VMIG1 1,000,000
---------------------------------------------------------------------
7,000,000 Beaver County, PA IDR, 2.90% PCR Refunding Bonds(Series 1992A)/(Ohio
Edison Co.)/(Barclays Bank PLC LOC), Mandatory Tender 10/1/93 P-1 7,000,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P**
AMOUNT (NOTE 7) VALUE
- ---------- --------------------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
---------------------------------------------------------------------
$6,500,000 Dauphin County, PA, Hospital Authority Weekly VRDNs (Hapsco Group)/
(Toronto-Dominion Bank LOC) A-1+ $ 6,500,000
---------------------------------------------------------------------
6,000,000 Delaware County, PA, PCA, 2.70% CP (Philadelphia Electric Co.)/(FGIC
Insured), Mandatory Tender 9/24/93 A-1+ 6,000,000
---------------------------------------------------------------------
5,100,000 Delaware County, PA, Weekly VRDNs (The American College)/(Provident
National Bank LOC) P-1 5,100,000
---------------------------------------------------------------------
6,500,000 Millcreek Township School District, PA, 2.73% TRANs, 6/30/94 NR(3) 6,502,266
---------------------------------------------------------------------
1,800,000 Pennsylvania State Higher Education Facility Weekly VRDNs (Series A)/
(Carnegie-Mellon University Guaranty) A-1+ 1,800,000
---------------------------------------------------------------------
5,000,000 Philadelphia, PA, 3.25% TANs (Series B)/(Corestates Bank N.A. LOC),
6/15/94 A-1 5,021,200
---------------------------------------------------------------------
4,900,000 Quakertown, PA, HDA Weekly VRDNs (The HPS Group Pooled Finance)/
(First National Bank, Chicago LOC) VMIG1 4,900,000
---------------------------------------------------------------------
1,500,000 Sayre, PA, Health Care Facility Authority Hospital Weekly VRDNs
(Series C)/(VHA of PA Capital Asset Program)/(AMBAC Insured) VMIG1 1,500,000
---------------------------------------------------------------------
5,000,000 Upper Allegheny, PA, Joint Sanitary Authority, 2.85% Annual TOBs
(Series 1986C)/(AIG Investment Agreement), Mandatory Tender 7/15/94 A-1+ 5,000,000
---------------------------------------------------------------------
5,000,000 Washington County, PA, Weekly VRDNs (Eye & Ear Hospital)/(Pittsburgh
National Bank LOC) P-1 5,000,000
--------------------------------------------------------------------- -----------
TOTAL 63,383,466
--------------------------------------------------------------------- -----------
PUERTO RICO--3.5%
---------------------------------------------------------------------
16,000,000 Government Development Bank of Puerto Rico Weekly VRDNs (Credit
Suisse and Sumitomo Bank Ltd. LOCs) A-1+ 16,000,000
--------------------------------------------------------------------- -----------
RHODE ISLAND--2.1%
---------------------------------------------------------------------
9,400,000 Pawtucket, RI, 3.00% BANs, 1/25/94 NR(3) 9,415,796
--------------------------------------------------------------------- -----------
SOUTH CAROLINA--2.0%
---------------------------------------------------------------------
4,000,000 Charleston, SC, 2.62% TANs, (Series 1993), 3/15/94 NR(2) 4,000,460
---------------------------------------------------------------------
3,250,000 Charleston, SC, 3.09% GO BANs, 9/17/93 NR(2) 3,250,360
---------------------------------------------------------------------
2,000,000 York County, SC, PCR, 2.25% CP (Series 1990)/(Duke Power Co.
Guaranty), Mandatory Tender 8/17/93 A-1+ 2,000,000
--------------------------------------------------------------------- -----------
TOTAL 9,250,820
--------------------------------------------------------------------- -----------
TENNESSEE--2.1%
---------------------------------------------------------------------
8,600,000 Chattanooga, TN, HEFA Weekly VRDNs (Siskin Hospital for Physical
Rehabilitation, Inc.)/ (Sumitomo Bank Ltd. LOC) A-1+ 8,600,000
---------------------------------------------------------------------
1,000,000 Jackson County, TN, IDB Daily VRDNs (Essette Co.)/ (Morgan Guaranty
Trust Co. LOC) A-1+ 1,000,000
--------------------------------------------------------------------- -----------
TOTAL 9,600,000
--------------------------------------------------------------------- -----------
TEXAS--5.4%
---------------------------------------------------------------------
9,000,000 Arlington, TX, ISD, 3.50% RANs (Series 1992), 8/31/93 MIG1 9,002,152
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
MOODY'S,
PRINCIPAL OR S&P**
AMOUNT (NOTE 7) VALUE
- ---------- --------------------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
TEXAS--CONTINUED
---------------------------------------------------------------------
$3,000,000 Houston, TX, HFDC Daily VRDNs (Methodist Hospital Guaranty) A-1+ $ 3,000,000
---------------------------------------------------------------------
3,300,000 Houston, TX, HFDC Daily VRDNs (Methodist Hospital Guaranty) A-1+ 3,300,000
---------------------------------------------------------------------
2,120,000 North Richland Hills, TX, IDC Weekly VRDNs (Technol, Inc.)/
(NationsBank of North Carolina N.A. LOC) P-1 2,120,000
---------------------------------------------------------------------
5,000,000 Texas State Public Property Finance Corporation, 3.73% Notes (Series
1992A), 8/26/93 MIGI 5,001,923
---------------------------------------------------------------------
2,000,000 Texas State, 3.25% TRANs, 8/31/93 MIG1 2,000,149
--------------------------------------------------------------------- -----------
TOTAL 24,424,224
--------------------------------------------------------------------- -----------
UTAH--0.9%
---------------------------------------------------------------------
4,237,700 Variable Rate Trust Certificate X, UT, Weekly VRDNs (Intermountain
Power Authority)/(Prerefunded) NR(1) 4,237,700
--------------------------------------------------------------------- -----------
VIRGINIA--1.8%
---------------------------------------------------------------------
4,000,000 Arlington County, VA, Weekly VRDNs (Ballston Public
Parking)/(Citibank N.A. LOC) A-1 4,000,000
---------------------------------------------------------------------
1,050,000 Fairfax County, VA, EDA Weekly VRDNs (William Byrd Press)/(Sovran
Bank, N.A. LOC) P-1 1,050,000
---------------------------------------------------------------------
3,200,000 Virginia Beach, VA, Development Authority Weekly VRDNs (GSC Diamond
Associates)/(Sovran Bank N.A. LOC) P-1 3,200,000
--------------------------------------------------------------------- -----------
TOTAL 8,250,000
--------------------------------------------------------------------- -----------
WISCONSIN--0.2%
---------------------------------------------------------------------
1,100,000 Seymour, WI, IDA Weekly VRDNs (Beatrice Cheese, Inc.)/(Bank of New
York LOC) P-1 1,100,000
--------------------------------------------------------------------- -----------
WYOMING--3.3%
---------------------------------------------------------------------
1,125,000 Natrona County, WY, IDA, 3.90% CP (W.W. Grainger, Inc. Guaranty),
Mandatory Tender 12/1/93 P-1 1,125,000
---------------------------------------------------------------------
1,725,000 Rock Springs, WY, IDA, 2.40% Semi-Annual TOBs (Safeway,
Inc.)/(Bankers Trust Co. LOC), Mandatory Tender 9/1/93 A-1+ 1,725,000
---------------------------------------------------------------------
12,200,000 Wyoming Community Development Authority, 2.60% Semi-Annual TOBs
(Series 1986C), Optional Tender 12/1/93 NR(2) 12,200,000
--------------------------------------------------------------------- -----------
TOTAL 15,050,000
--------------------------------------------------------------------- -----------
OTHER--2.2%
---------------------------------------------------------------------
7,740,701 LaSalle National Bank Bustops Trust Weekly VRDNs (Series 1993A)/
(LaSalle National Bank BPA) A-1+ 7,740,700
---------------------------------------------------------------------
2,091,000 Variable Rate Trust Certificate XVI Weekly VRDNs (Prerefunded) NR(1) 2,091,000
--------------------------------------------------------------------- -----------
TOTAL 9,831,700
--------------------------------------------------------------------- -----------
TOTAL INVESTMENTS, AT AMORTIZED COST $456,546,518+
--------------------------------------------------------------------- -----------
<FN>
+ Also represents cost for federal tax purposes.
** See Notes to Portfolio of Investments on page 21.
Note: The categories of investments are shown as a percentage of net assets
($454,118,797) at July 31, 1993.
</TABLE>
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC American Municipal Bond Assurance
Corporation
BANs Bond Anticipation Notes
BPA Bond Purchase Agreement
CP Commercial Paper
EDA Economic Development Authority
FGIC Financial Guaranty Insurance Company
GO General Obligation
HDA Hospital Development Authority
HEFA Health and Education Facilities Authority
HFA Housing Finance Authority
HFDC Health Facility Development Corporation
IDA Industrial Development Authority
IDB Industrial Development Bond
IDR Industrial Development Revenue
IFA Industrial Finance Authority
ISD Independent School District
LOC Letter(s) of Credit
MBIA Municipal Bond Investors Assurance
PCA Pollution Control Authority
PCR Pollution Control Revenue
RANs Revenue Anticipation Notes
TANs Tax Anticipation Notes
TOBs Tender Option Bonds
TRANs Tax and Revenue Anticipation Notes
UT Utah/Unlimited Tax
VRDNs Variable Rate Demand Notes
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
S&P
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes.
<TABLE>
<S> <C>
SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
</TABLE>
MOODY'S
Moody's short-term ratings are designated Moody's Investment Grade (MIG or VMIG
(see below). The purpose of the MIG or VMIG ratings is to provide investors with
a simple system by which the relative investment qualities of short-term
obligations may be evaluated.
<TABLE>
<S> <C>
MIG1 This designation denotes best quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG2 This designation denotes high quality. Margins of protection are ample although not so large as in
the preceding group.
</TABLE>
VARIABLE RATE DEMAND NOTES (VRDNS)
AND
TENDER OPTION BONDS (TOBS)
RATINGS
S&P
Standard & Poor's assigns dual ratings to all long-term debt issues that have as
part of their provisions a variable rate demand feature. The first rating
(long-term rating) addresses the likelihood of repayment of principal and
interest when due, and the second rating (short-term rating) describes the
demand characteristics. Several examples are AAA/A-1+, AA/A-1+, and A/A-1. (The
definitions for the long-term and the short-term ratings are provided below.)
MOODY'S
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity.
In this case, two ratings are usually assigned, (for example, Aaa/VMIG-1), with
the first representing an evaluation of the degree of risk associated with
scheduled principal and interest payments, and the second representing an
evaluation of the degree of risk associated with the demand feature. The VMIG
rating can be assigned a 1 or 2 designation using the same definitions described
above for the MIG rating.
COMMERCIAL PAPER (CP) RATINGS
S&P
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.
<TABLE>
<S> <C>
A-1 This designation indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined to possess overwhelming safety characteristics
are denoted with a plus (+) designation.
A-2 Capacity for timely payment on issues with this designation is strong. However, the relative degree
of safety is not as high as for issues designated "A-1".
MOODY'S
P-1 Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment
of short-term promissory obligations.
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
P-2 Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of
short-term promissory obligations.
LONG-TERM DEBT RATINGS
S&P
AAA Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest and
repay principal is extremely strong.
AA Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the
highest rated issues only in small degree.
A Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories.
MOODY'S
AAA Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments are protected by a
large margin and principal is secure. While the various protective elements are likely to change,
such changes which can be foreseen are most unlikely to impair the fundamentally strong position of
such issues.
AA Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A Bonds that are rated A possess many favorable investment attributes and are to be considered as
upper medium grade obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present that suggest a susceptibility to impairment some time in the
future.
NR Indicates that both the bonds and the obligor or credit enhancer are not currently rated by S&P's
or Moody's with respect to short-term indebtedness. However, management considers them to be of
comparable quality to securities rated A-1 or P-1.
NR(1) The underlying issuer/obligor/guarantor has other outstanding debt rated "AAA" by Standard & Poor's
or "Aaa" by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding debt rated "AA" by Standard & Poor's
or "Aa" by Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding debt rated "A" by Standard & Poor's
or Moody's.
</TABLE>
(The accompanying Notes are an integral part of the financial statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $456,546,518
- ---------------------------------------------------------------------------------------------
Cash 1,140,567
- ---------------------------------------------------------------------------------------------
Interest receivable 2,414,760
- ---------------------------------------------------------------------------------------------
Prepaid/deferred expenses (Note 2E) 10,678
- --------------------------------------------------------------------------------------------- -----------
Total assets 460,112,523
- ---------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Payable for investments purchased $5,027,577
- ----------------------------------------------------------------------------------
Dividends payable 877,291
- ----------------------------------------------------------------------------------
Accrued expenses and other liabilities 88,858
- ---------------------------------------------------------------------------------- ---------
</TABLE>
<TABLE>
<S> <C>
Total liabilities 5,993,726
- --------------------------------------------------------------------------------------------- -----------
NET ASSETS for 454,142,623 shares of beneficial interest outstanding $454,118,797
- --------------------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------
Paid-in Capital $454,142,623
- ---------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (23,826)
- --------------------------------------------------------------------------------------------- -----------
TOTAL $454,118,797
- --------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($454,118,797 DIVIDED BY 454,142,623 shares of beneficial interest outstanding) $ 1.00
- --------------------------------------------------------------------------------------------- -----------
</TABLE>
(The accompanying Notes are an integral part of the financial statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------
Interest income (Note 2B) $11,042,978
- ----------------------------------------------------------------------------------------------
EXPENSES--
- ----------------------------------------------------------------------------------------------
Investment advisory fee (Note 5) $ 820,734
- -------------------------------------------------------------------------------
Trustees' Fee 4,154
- -------------------------------------------------------------------------------
Administrative personnel and services fees (Note 5) 284,326
- -------------------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 125,659
- -------------------------------------------------------------------------------
Recordkeeping fees (Note 5) 72,752
- -------------------------------------------------------------------------------
Auditing fees 13,145
- -------------------------------------------------------------------------------
Legal fees 6,777
- -------------------------------------------------------------------------------
Printing and postage 11,380
- -------------------------------------------------------------------------------
Fund share registration costs 51,126
- -------------------------------------------------------------------------------
Insurance premiums 11,712
- -------------------------------------------------------------------------------
Miscellaneous 1,669
- ------------------------------------------------------------------------------- -------------
Total expenses 1,403,434
- -------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 582,656
- ------------------------------------------------------------------------------- -------------
Net expenses 820,778
- ---------------------------------------------------------------------------------------------- ----------
Net investment income $10,222,200
- ---------------------------------------------------------------------------------------------- ----------
REALIZED (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------
Proceeds from sales 1,783,914,949
- -------------------------------------------------------------------------------
Cost of investments sold (1,783,938,775)
- ------------------------------------------------------------------------------- -------------
Net realized loss on investments (23,826)
- ---------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $10,198,374
- ---------------------------------------------------------------------------------------------- ----------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
TAX-FREE OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
1993 1992
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 10,222,200 $ 8,411,093
- -----------------------------------------------------------------------------
Net realized loss on investments ($23,826 as computed for federal tax
purposes) (23,826) --
- ----------------------------------------------------------------------------- ------------- ------------
Change in net assets resulting from operations 10,198,374 8,411,093
- ----------------------------------------------------------------------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -----------------------------------------------------------------------------
Dividends to sharesholders from net investment income ($0.0251 and $0.0368
per share, respectively) (10,222,200) (8,411,093)
- ----------------------------------------------------------------------------- ------------- ------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 1,565,436,002 653,138,363
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive payment
of dividends in Fund shares 8,569 8
- -----------------------------------------------------------------------------
Cost of shares redeemed (1,420,156,576) (509,952,306)
- ----------------------------------------------------------------------------- ------------- ------------
Change in net assets from Fund share transactions 145,287,995 143,186,065
- ----------------------------------------------------------------------------- ------------- ------------
Change in net assets 145,264,169 143,186,065
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 308,854,628 165,668,563
- ----------------------------------------------------------------------------- ------------- ------------
End of period $ 454,118,797 $308,854,628
- ----------------------------------------------------------------------------- ------------- ------------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
TAX-FREE OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Tax-Free Obligations Fund (the "Fund") is a diversified portfolio and one of the
portfolios of Money Market Obligations Trust (the "Trust"), a no-load, open-end,
management investment company, which is registered under the Investment Company
Act of 1940, as amended. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated, and a
shareholder's interest is limited to the portfolio in which shares are held.
(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. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Board of Trustees ("Trustees") has determined
that the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940, as amended.
B. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest earned net of premium, and original issue discount as
required by the Internal Revenue Code.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to investment companies and to distribute
to shareholders each year all of its taxable income. Accordingly, no
provision for federal tax is necessary. Dividends paid by the Fund
representing net interest received on tax-exempt municipal securities are
not includable by shareholders as gross income for federal regular tax
purposes because the Fund intends to meet certain requirements of the
Internal Revenue Code applicable to regulated investment companies which
will enable the Fund to pay tax-exempt interest dividends. The portion of
such interest, if any, earned on private activity bonds issued after August
7, 1986 may be considered a tax preference item to shareholders.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages
in such trasnactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
the purpose of investment leverage. The Fund will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Fund will maintain 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.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its firsts fiscal year, excluding the initial
expenses of registering the shares, have been deferred and are being
amortized using the straight-line method through December, 1994.
F. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
TAX-FREE OBLIGATIONS FUND
- ------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At July
31, 1993, capital paid-in aggregated $454,142,623. Transactions in Fund shares
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1993 1992
- -------------------------------------------------------------------------------- ---------------- ---------------
<S> <C> <C>
Shares outstanding, beginning of period 308,854,628 165,668,563
- --------------------------------------------------------------------------------
Shares sold 1,565,436,002 653,138,363
- --------------------------------------------------------------------------------
Shares issued to shareholders electing to receive payment of dividends in Fund
shares 8,569 8
- --------------------------------------------------------------------------------
Shares redeemed (1,420,156,576) (509,952,306)
- -------------------------------------------------------------------------------- ---------------- ---------------
Shares outstanding, end of period 454,142,623 308,854,628
- -------------------------------------------------------------------------------- ---------------- ---------------
</TABLE>
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser ("Adviser"), receives for
its services an annual investment advisory fee equal to 0.20 of 1% of the Funds
average daily net assets. For the year ended July 31, 1993, the Adviser
voluntarily agreed to waive the amount, limited to the amount of the advisory
fee, by which the Fund's aggregate annual operating expenses (including its
investment advisory fee but excluding interest, taxes, brokerage commissions,
insurance premiums, and extraordinary expenses) exceed 0.20 of 1% of its average
daily net assets. This does not include reimbursement to the Fund of any
expenses incurred by shareholders who use the transfer agent's subaccounting
facilities. The Adviser can terminate this voluntary agreement at any time in
its sole discretion. For the year ended July 31, 1993, the Adviser earned an
investment advisory fee of $820,734 of which $582,656 was voluntarily waived in
accordance with such agreement.
During the fiscal year ended July 31, 1993, the Fund engaged in purchase and
sale transactions with other funds advised by the Adviser pursuant to Rule 17a-7
of the Investment Company Act of 1940, as amended, amounting to $632,525,000 and
$696,725,000, respectively. These purchases and sales were conducted on an
arms-length basis insofar as they were transacted for cash consideration only,
at independent current market prices and without brokerage commission, fee or
other remuneration.
Federated Services Company, Pittsburgh, Pennsylvania, assumed the role of the
Fund's recordkeeper, as of August 1, 1992. For the fiscal year ended July 31,
1993, Federated Services Company received for its services a fee of $72,752.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain Officers and Trustees of the
Trust are Officers and Directors of the above corporations.
(6) INVESTMENT TRANSACTIONS
Purchases and sales and maturities of investments for the fiscal year ended July
31, 1993, were as follows:
<TABLE>
<S> <C>
PURCHASES--
- --------------------------------------------------------------------------------
Short-term investments $1,934,096,293
- -------------------------------------------------------------------------------- --------------
SALES AND MATURITIES--
- --------------------------------------------------------------------------------
Short-term investments $1,783,914,949
- -------------------------------------------------------------------------------- --------------
</TABLE>
(7) CURRENT CREDIT RATINGS
Current credit ratings and related notes are unaudited.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST (Tax-Free Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Tax-Free
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1993, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights (see page 2 of the prospectus)
for each of the three years in the period then ended and for the period from
December 12, 1989 (date of initial public investment) to July 31, 1990. These
financial statements and financial highlights are the responsibility of the
Trusts 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
July 31, 1993, by correspondence with the custodian and brokers. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Tax-Free Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1993, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended and for the period from December 12, 1989 (date of initial
public investment) to July 31, 1990, in conformity with generally accepted
accounting principles.
Pittsburgh, Pennsylvania ARTHUR ANDERSEN & CO.
September 10, 1993
9110207B-SS (7/94)
- --------------------------------------------------------------------------------
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Treasury Obligations Fund (the
"Fund") offered by this prospectus represent interests in a
diversified portfolio of Money Market Obligations Trust (the
"Trust"), an open-end management investment company (a mutual fund).
The Fund invests only in U.S. Treasury securities only to achieve
current income consistent with stability of principal. Shares of the
Fund are offered for sale as an investment vehicle for large
institutions, corporations and fiduciaries.
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 FUND ATTEMPTS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
July 5, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a
copy of the Statement of Additional Information free of charge by
calling 1-800-235-4669. To obtain other information, or make
inquiries about the Fund, contact the Fund at the address listed in
the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated July 5, 1994
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- --------------------------------------------------
GENERAL INFORMATION 2
- --------------------------------------------------
INVESTMENT INFORMATION 2
- --------------------------------------------------
Investment Objective 2
Investment Policies 2
Investment Limitations 3
Regulatory Compliance 3
TRUST INFORMATION 3
- --------------------------------------------------
Management of the Trust 3
Distribution of Shares 4
Administration of the Fund 5
Expenses of the Fund and
Institutional
Service Shares 6
NET ASSET VALUE 6
- --------------------------------------------------
INVESTING IN THE FUND 6
- --------------------------------------------------
Share Purchases 6
Minimum Investment Required 7
Subaccounting Services 7
Certificates and Confirmations 7
Dividends 8
Capital Gains 8
REDEEMING SHARES 8
- --------------------------------------------------
By Mail 8
Telephone Redemption 9
Accounts with Low Balances 9
SHAREHOLDER INFORMATION 9
- --------------------------------------------------
Voting Rights 9
Massachusetts Partnership Law 10
TAX INFORMATION 10
- --------------------------------------------------
Federal Income Tax 10
Pennsylvania Corporate and Personal
Property Taxes 10
PERFORMANCE INFORMATION 11
- --------------------------------------------------
OTHER CLASSES OF SHARES 11
- --------------------------------------------------
FINANCIAL HIGHLIGHTS 12
- --------------------------------------------------
ADDRESSES INSIDE BACK COVER
- --------------------------------------------------
</TABLE>
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............................................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)................................ None
Exchange Fee...................................................................................... None
<CAPTION>
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES*
(As a percentage of projected average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)...................................................... 0.13%
12b-1 Fee (2).......................................................................... 0.00%
Total Other Expenses................................................................... 0.32%
Shareholder Services Fee........................................................... 0.25%
Total Institutional Service Shares Operating Expenses (3)...................... 0.45%
<FN>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion. The
maximum management fee is 0.20%.
(2) The Institutional Service Shares have no present intention of paying or
accruing the 12b-1 fee during the period ending July 31, 1994. If the
Institutional Service Shares were paying or accruing the 12b-1 fee, the
Class would be able to pay up to 0.25% of its average daily net assets for
the 12b-1 fee. See "Trust Information."
(3) The Total Institutional Service Shares Operating Expenses are estimated to
be 0.52% absent the anticipated voluntary waiver of a portion of the
management fee.
* Total Institutional Service Shares Operating Expenses are estimated based on
average expenses expected to be incurred during the period ending July 31, 1994.
During the course of this period, expenses may be more or less than the average
amount shown.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ------------------------------------------------------------------------------------- --------- ---------
<S> <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............................. $5 $14
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING JULY 31,
1994.
The information set forth in the foregoing table and example relates only to
Institutional Service Shares of the Fund. The Fund also offers another class of
shares called Institutional Shares. Institutional Service Shares and
Institutional Shares are subject to certain of the same expenses; however,
Institutional Shares are not subject to a 12b-1 fee. See "Other Classes of
Shares."
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of this
prospectus, the Trustees have established two classes of shares known as
Institutional Service Shares and Institutional Shares. This prospectus relates
only to Institutional Service Shares ("Shares") of the Fund, which are designed
primarily for financial institutions 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 $25,000 is
required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Trust.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with stability
of principal. This investment objective cannot be changed without shareholder
approval. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. Treasury
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United States.
They mature in 13 months or less from the date of acquisition unless they are
purchased under a repurchase agreement that provides for
repurchase by the seller within one year from the date of acquisition. The Fund
may also purchase these instruments on a when-issued or delayed delivery basis.
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, brokers/dealers, and other recognized financial
institutions sell securities to the Fund 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 Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund 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 Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, 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 Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. Total assets under management or
administration by these and other subsidiaries of Federated Investors are
approximately $70 billion. Federated Investors, which was founded in 1956 as
Federated Investors, Inc., develops and manages mutual funds primarily for
the financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy serve
approximately 3,500 client institutions nationwide. Through these same
client institutions, individual shareholders also have access to this same
level of investment expertise.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. 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.
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS. Under a distribution plan adopted
in accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"),
the Fund will pay to the distributor an amount, computed at an annual rate of
.25 of 1% of the average daily net asset value of the Institutional Service
Shares to finance any activity which is principally intended to result in the
sale of shares subject to the Distribution Plan. The distributor may select
financial institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide sales support services as
agents for their clients or customers. In addition, the Fund has adopted a
Shareholder Services Plan (the "Services Plan") under which it will pay
financial institutions an amount not exceeding .25 of 1% of the average daily
net asset value of the Institutional Service Shares to provide administrative
support services to their customers who own shares of the Fund. From time
to time and for such periods as deemed appropriate, the amounts stated above may
be reduced voluntarily. Activities and services under these arrangements may
include, but are not limited to, providing advertising and marketing materials
to prospective shareholders, providing personal services to shareholders, and
maintaining shareholder accounts.
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 Fund or the
distributor, as appropriate.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Distribution Plan.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides certain administrative personnel and services
(including certain legal and financial reporting services) necessary to operate
the Fund. Federated Administrative Services provides these at an annual rate
which relates to the average aggregate daily net assets of all Federated Funds
as specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY NET ASSETS
ADMINISTRATIVE FEE OF THE FEDERATED FUNDS
-------------------- ------------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Administrative Services may choose voluntarily to waive a portion of
its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts is
custodian for the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts is transfer agent for the shares of, and dividend
disbursing agent for the Fund.
LEGAL COUNSEL. Legal counsel is provided by Houston, Houston and Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, L.L.P., Washington,
D.C.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen & Co., Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of Shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of Shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and Shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, the only expenses allocated to the Shares as a class are expenses
under the Fund's Rule 12b-1 Plan and Shareholder Services Plan which relate to
the Shares. However, the Board of Trustees reserves the right to allocate
certain other expenses to holders of Shares as it deems appropriate "Class
Expenses." In any case, Class Expenses would be limited to: transfer agent fees
as identified by the transfer agent as attributable to holders of Shares;
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Trustees' fees incurred as a result of
issues relating solely to Shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to Shares from
the value of Fund assets attributable to Shares, and dividing the remainder by
the number of Shares outstanding. The Fund 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, 3:00 p.m., and 4:00 p.m.
(Boston time) Monday through Friday except on: (i) days on which there are not
sufficient changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; or (iii)
the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are
open for business. Shares may be purchased either by wire or mail. The Fund
reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.,
(Boston time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m., (Boston time) that
day. Federal funds should be wired as follows: State Street Bank and Trust
Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit to: Treasury
Obligations Fund -- Institutional Service Shares: Fund Number (this number can
be found on the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Treasury Obligations
Fund -- Institutional Service Shares to: Treasury Obligations Fund, P.O. Box
8602, Boston, Massachusetts 02266-8602. Orders by mail are considered received
when payment by check is converted into federal funds. This is normally the next
business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services and any restrictions and
limitations imposed.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Shares purchased by wire before
3:00 p.m. (Boston time) begin earning dividends that day. Shares purchased by
check begin earning dividends on the day after the check is converted into
federal funds. Dividends are automatically reinvested in additional Shares
unless cash payments are requested by contacting the Fund.
CAPITAL GAINS
Capital Gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If, for some extraordinary reason, the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after the Fund
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests must be received in
proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Treasury Obligations
Fund, P.O. Box 8602, Boston, Massachusetts 02266-8602. The written request
should state: Treasury Obligations Fund -- Institutional Service Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to the shareholder of record must have their
signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
- a member firm of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to
institutions that are members of the signature guarantee program. The Fund and
its transfer agent reserve the right to amend these standards at any time
without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. If the redemption request is
received before 12:00 noon (Boston time), the proceeds will be wired the same
day to the shareholder's account at a domestic commercial bank which is a member
of the Federal Reserve System, and those shares redeemed will not be entitled to
that day's dividend. A daily dividend will be paid on shares redeemed if the
redemption request is received after 12:00 noon (Boston time). However, the
proceeds are not wired until the following business day. Under limited
circumstances, arrangements may be made with the distributor for same-day
payment of proceeds, without that day's dividend, for redemption requests
received before 3:00 p.m., (Boston time).
An authorization form permitting the Fund to accept telephone requests must
first be completed. Authorization forms and information on this service are
available from Federated Securities Corp. Telephone redemption instructions may
be recorded.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail," should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 or the aggregate
investment in Federated Funds falls below the required minimum of $200,000,000
to be maintained from and after twelve months from account opening, due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that
portfolio or class are entitled to vote. As a Massachusetts business trust, the
Trust is not required to hold annual shareholder meetings. Shareholder approval
will be sought only for certain changes in the Trust's or the Fund's operation
and for the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund 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.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
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. Shareholders are urged to consult their own tax advisers
regarding the status of their accounts under state and local tax laws.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston & Donnelly, counsel to the Fund:
- the Fund is not subject to Pennsylvania corporate or personal property
taxes; and
- Fund shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that
the portfolio securities in the Fund would be subject to such taxes if
owned directly by residents of those jurisdictions.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its yield and effective yield for Shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is then annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
Performance figures will be calculated separately for each class of shares.
Because each class of shares is subject to different expenses, the performance
of Institutional Shares will exceed the yield and effective yield of
Institutional Service Shares for the same period.
From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Institutional Shares are sold at net asset value to accounts for which financial
institutions act in an agency or fiduciary capacity. Investments in
Institutional Shares are subject to a minimum initial investment of $25,000.
Institutional Shares are not sold pursuant to a 12b-1 Plan.
Financial institutions providing distribution or administrative services may
receive different compensation depending upon which class of shares of the Fund
is sold. The amount of dividends payable to shareholders of Institutional Shares
will exceed that payable to the shareholders of Institutional Service Shares by
the difference between class expenses and any 12b-1 Plan expenses borne by
Institutional Service Shares. The stated advisory fee is the same for both
classes of shares.
TREASURY OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES
- ---------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by Arthur Andersen & Co., the Fund's
independent auditors. Their report dated September 10, 1993 is included in the
Statement of Additional Information. This table should be read in conjunction
with the Fund's financial statements and notes thereto, which may be obtained
free of charge from the Fund.
Institutional Service Shares were not being offered as of July 31, 1993.
Accordingly, there are no Financial Highlights for such Shares. The Financial
Highlights presented below are historical information for Institutional Shares.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------------
1993 1992 1991 1990*
- ------------------------------------------------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------
Net investment income 0.0310 0.0452 0.0688 0.0350
- ------------------------------------------------------- ------------- ------------- ------------- -------
LESS DISTRIBUTIONS
- -------------------------------------------------------
Dividends to shareholders from net investment income (0.0310) (0.0452) (0.0688) (0.0350)
- ------------------------------------------------------- ------------- ------------- ------------- -------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------- ------------- ------------- ------------- -------
TOTAL RETURN 3.15% 4.61% 7.11% 5.09%(c)
- -------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------
Net assets, end of period (000 omitted) $2,532,482 $2,432,037 $1,678,880 $576,048
- -------------------------------------------------------
Ratio of expenses to average net assets 0.20%(b) 0.20%(b) 0.20%(b) 0.20%(a)(b)
- -------------------------------------------------------
Ratio of net investment income to average net assets 3.11%(b) 4.49%(b) 6.65%(b) 8.16%(a)(b)
- -------------------------------------------------------
* Reflects operations for the period from February 23, 1990 (date of initial public investment) to July 31, 1990.
For the period from the start of business, November 16, 1989, to February 22, 1990, net investment income
aggregating $.014753 per share ($1,475) was distributed to the Fund's adviser. Such distribution represented the
net income of the fund prior to the date of initial public investment, February 23, 1990.
(a) Computed on an annualized basis.
(b) For the fiscal years ended July 31, 1993, 1992, and 1991, and the period from the date of initial public
investment, February 23, 1990, to July 31, 1990, the investment adviser voluntarily waived all or a portion of
its fee. Had the adviser not undertaken such action, the ratios of expenses and net investment income to average
net assets would have been 0.27% and 3.04%, 0.28% and 4.41%, 0.29% and 6.56%, and 0.35% and 8.01%, respectively,
on an annualized basis.
(c) Cumulative total return.
(See Notes to Financial Statements)
</TABLE>
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Treasury Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8602
Boston, Massachusetts 02266-8602
- -------------------------------------------------------------------------------------------
Legal Counsel
Houston, Houston and Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
Legal Counsel
Dickstein, Shapiro & Morin, L.L.P. 2101 L Street, N.W.
Washington, D.C. 20037
- -------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen & Co. 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- -------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
TREASURY OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated July 5, 1994
[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
[LOGO]
RECYCLED
PAPER
9110208A-SS (7/94)
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Treasury Obligations Fund (the "Fund") dated July
5, 1994 and September 30, 1993. This Statement is not a prospectus.
To receive a copy of a prospectus, write or call the Trust.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated July 5, 1994
[LOGO]
DISTRIBUTOR
A SUBSIDIARY OF FEDERATED INVESTORS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT POLICIES 1
- ---------------------------------------------------------
When-Issued And Delayed Delivery
Transactions 1
Repurchase Agreements 1
INVESTMENT LIMITATIONS 1
- ---------------------------------------------------------
BROKERAGE TRANSACTIONS 3
- ---------------------------------------------------------
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 3
- ---------------------------------------------------------
Officers and Trustees 3
The Funds 5
Share Ownership 6
Trustee Liability 6
INVESTMENT ADVISORY SERVICES 6
- ---------------------------------------------------------
Investment Adviser(s) 6
Advisory Fees 6
FUND ADMINISTRATION 7
- ---------------------------------------------------------
SHAREHOLDER SERVICES PLAN 7
- ---------------------------------------------------------
DISTRIBUTION PLAN 7
- ---------------------------------------------------------
DETERMINING NET ASSET VALUE 8
- ---------------------------------------------------------
REDEMPTION IN KIND 8
- ---------------------------------------------------------
THE FUND'S TAX STATUS 8
- ---------------------------------------------------------
PERFORMANCE INFORMATION 8
- ---------------------------------------------------------
Yield 8
Effective Yield 9
Total Return 9
Performance Comparisons 9
FINANCIAL STATEMENTS 9
- ---------------------------------------------------------
</TABLE>
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
Unless indicated otherwise, the policies described below may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. 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. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund`s records at the trade date. These assets are marked to market daily
and are maintained until the transaction has been settled. The Fund 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 Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. 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 guidelines established by the Trustees.
INVESTMENT LIMITATIONS
- --------------------------------------------------------------------------------
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on margin
but may obtain such short-term credits as are necessary for clearance of
transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow money
in amounts up to one-third of the value of its total assets, including the
amounts borrowed.
The Fund will not borrow money for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while borrowings in
excess of 5% of the value of its total assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In those case, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts borrowed or
15% of the value of total assets of the Fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding bonds, debentures, notes,
certificates of indebtedness or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by its investment
objective, policies and limitations or Declaration of Trust.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited partnership
interests.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be deemed
to be an underwriter under the Securities Act of 1933 in connection with the
sale of securities in accordance with its investment objective, policies, and
limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any one
industry, except that the Fund may invest 25% or more of the value of its total
assets in cash, cash items, or securities issued or guaranteed by the government
of the United States or its agencies, or instrumentalities and repurchase
agreement collateralized by such U.S. government securities.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities of any one issuer (other than cash, cash
items, or securities issued or guaranteed by the government of the United States
or its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities) if as a result more than 5% of the value of its
total assets would be invested in the securities of that issuer, or if it would
own more than 10% of the outstanding voting securities of that issuer.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest in securities subject to restrictions on resale under
federal securities law.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except as
part of a merger, consolidation, or other acquisition.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of continuous
operations, including the operation of any predecessor.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS OF THE TRUST
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or its investment adviser owning individually
more than .50 of 1% of the issuer's securities together own more than 5% of the
issuer's securities.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any combination
of them.
INVESTING IN MINERALS
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items." Except with respect
to borrowing money, if a
- --------------------------------------------------------------------------------
percentage limitation is adhered to at the time of investment, a later increase
or decrease in percentage resulting from any change in value or net assets will
not result in a violation of such limitation.
The Fund did not issue senior securities, pledge securities, invest in illiquid
securities, or engage in when issued and delayed delivery transactions in excess
of 5% of the value of its net assets during the last fiscal period and has no
present intent to do so during the coming fiscal year.
BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
guidelines established by the Board of Trustees. The adviser may select brokers
and dealers who offer brokerage and research services. These services may be
furnished directly to the Fund 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 Trust 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
year(s) ended July 31, 1993, 1992 and 1991, the Trust paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund 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 Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
- --------------------------------------------------------------------------------
OFFICERS AND TRUSTEES. Officers and Trustees are listed with their addresses,
principal occupations, and present positions, including any affiliation with
Federated Management, Federated Investors, Federated Securities Corp., Federated
Administrative Services, Inc./Federated Administrative Services, and the Funds
(as defined below).
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John F. Donahue*+ Chairman and Chairman and Trustee, Federated Advisers, Federated
Federated Investors Trustee Management, and Federated Research; Director, AEtna Life and
Tower Casualty Company; Chief Executive Officer and Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds; formerly,
Director, The Standard Fire Insurance Company. Mr. Donahue
is the father of J. Christopher Donahue, President and
Trustee of the Trust.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-
Wood/IPC Commercial President, John R. Wood and Associates, Inc., Realtors;
Department President, Northgate Village Development Corporation;
John R. Wood and General Partner or Trustee in private real estate ventures
Associates, Inc., Realtors in Southwest Florida; Director, Trustee, or Managing General
3255 Tamiami Trail North Partner of the Funds; formerly, President, Naples Property
Naples, FL Management, Inc.
- ----------------------------------------------------------------------------------------------------------------------
William J. Copeland Trustee Trustee Executive Committee, Michael Baker, Inc.; Director,
One PNC Plaza - 23rd Trustee, or Managing General Partner of the Funds; formerly,
Floor Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Pittsburgh, PA Corp. and Director, Ryan Homes, Inc.
- ----------------------------------------------------------------------------------------------------------------------
J. Christopher Donahue* President and President and Trustee, Federated Investors; Trustee;
Federated Investors Trustee Federated Advisers, Federated Management, and Federated
Tower Research; President and Director, Federated Administrative
Pittsburgh, PA Services/ Federated Administrative Services, Inc.; Trustee,
Federated Services Company; President or Vice President of
the Funds; Director, Trustee, or Managing General Partner of
some of the Funds. Mr. Donahue is the son of John F.
Donahue, Chairman and Trustee of the Trust.
- ----------------------------------------------------------------------------------------------------------------------
James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.;
571 Hayward Mill Road Director, Trustee, or Managing General Partner of the Funds;
Concord, MA formerly, Director, Blue Cross of Massachusetts, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Lawrence D. Ellis, M.D. Trustee Trustee Hematologist, Oncologist, and Internist,
3471 Fifth Avenue Presbyterian and Montefiore Hospitals; Clinical Professor of
Suite 1111 Medicine and Trustee, University of Pittsburgh; Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward L. Flaherty, Jr.+ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director,
5916 Penn Mall Eat'N Park Restaurants, Inc., and Statewide Settlement
Pittsburgh, PA Agency, Inc.; Director, Trustee, or Managing General Partner
of the Funds; formerly, Counsel, Horizon Financial, F.A.,
Western Region.
- ----------------------------------------------------------------------------------------------------------------------
Peter E. Madden Trustee Consultant; State Representative, Commonwealth of
225 Franklin Street Massachusetts; Director, Trustee, or Managing General
Boston, MA Partner of the Funds; formerly, President, State StreetBank
and Trust Company and State Street Boston Corporation and
Trustee, Lahey Clinic Foundation, Inc.
- ----------------------------------------------------------------------------------------------------------------------
Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman,
5916 Penn Mall Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
formerly, Vice Chairman, Horizon Financial, F.A.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant;
1202 Cathedral of Trustee, Carnegie Endowment for International Peace, RAND
Learning Corporation, Online Computer Library Center, Inc., and U.S.
University of Pittsburgh Space Foundation; Chairman, Czecho Slovak Management Center;
Pittsburgh, PA Director, Trustee, or Managing General Partner of the Funds;
President Emeritus, University of Pittsburgh; formerly,
Chairman, National Advisory Council for Environmental Policy
and Technology.
- ----------------------------------------------------------------------------------------------------------------------
Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or
4905 Bayard Street Managing General Partner of the Funds.
Pittsburgh, PA
- ----------------------------------------------------------------------------------------------------------------------
Richard B. Fisher Vice President Executive Vice President and Federated Investors Trustee,
Federated Investors Federated Investors; Chairman and Director, Federated
Tower Securities Corp.; President or Vice President of the Funds;
Pittsburgh, PA Director or Trustee of some of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
Edward C. Gonzales Vice President Vice President, Treasurer, and Trustee, Federated Investors;
Federated Investors and Treasurer Vice President and Treasurer, Federated Advisers, Federated
Tower Management, and Federated Research; Executive Vice
Pittsburgh, PA President, Treasurer, and Director, Federated Securities
Corp.; Trustee, Federated Services Company; Chairman,
Treasurer, and Director, Federated Administrative
Services/Federated Administrative Services, Inc.; Trustee or
Director of some of the Funds; Vice President and Treasurer
of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee,
Federated Investors and Secretary Federated Investors; Vice President, Secretary, and Trustee,
Tower Federated Advisers, Federated Management, and Federated
Pittsburgh, PA Research; Trustee, Federated Services Company; Executive
Vice President, Secretary, and Director, Federated
Administrative Services/Federated Administrative Services,
Inc.; Director and Executive Vice President, Federated
Securities Corp.; Vice President and Secretary of the Funds.
- ----------------------------------------------------------------------------------------------------------------------
John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive
Federated Investors Vice President, Federated Securities Corp.; President and
Tower Trustee, Federated Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Vice President of the Funds; Director,
Trustee, or Managing General Partner of some of the Funds;
formerly, Vice President, The Standard Fire Insurance
Company and President of its Federated Research Division.
- ----------------------------------------------------------------------------------------------------------------------
<FN>
* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
+ Member of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.
</TABLE>
THE FUNDS
"The Funds," and "Funds" mean the following investment companies: American
Leaders Fund, Inc.; Annuity Management Series; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities
- --------------------------------------------------------------------------------
Trust; Federated Income Trust; Federated Index Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal Trust; Federated
Short-Intermediate Government Trust; Federated Short-Term U.S. Government Trust;
Federated Stock Trust; Federated Tax-Free Trust; Federated U.S. Government Bond
Fund; First Priority Funds; Fixed Income Securities, Inc.; Fortress Adjustable
Rate U.S. Government Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress
Utility Fund, Inc.; Fund for U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Insight Institutional Series, Inc.;
Insurance Management Series; Intermediate Municipal Trust; International Series,
Inc.; Investment Series Funds, Inc.; Investment Series Trust; Liberty Equity
Income Fund, Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty Term
Trust, Inc. -- 1999; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; Mark Twain Funds; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust; New
York Municipal Cash Trust; 111 Corcoran Funds; Peachtree Funds; The Planters
Funds; Portage Funds; RIMCO Monument Funds; The Shawmut Funds; Short-Term
Municipal Trust; Signet Select Funds; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; Trademark Funds; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; World Investment
Series, Inc.
SHARE OWNERSHIP
Officers and Trustees own less than 1% of the Trust`s outstanding shares.
As of June 28, 1994, the following shareholders of record owned 5% or more of
the outstanding Institutional Shares of the Fund: Firstier Bank NA, Omaha, NE,
owned approximately 254,328,250 (10.1%) shares; Shawmut Bank, N.A., Boston, MA,
owned approximately 220,294,710 shares (8.7%) and approximately 289,739,719
shares (11.5%); First Union National Bank, Charlotte, NC, owned approximately
178,639,922 shares (7.1%); and Var & Co., St. Paul, MN, owned approximately
277,456,619 shares (11%) and approximately 201,832,708 shares (8%).
As of June 28, 1994, there were no shareholders of record who owned 5% or more
of the outstanding Institutional Service Shares of the Fund.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes or 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(S)
The Treasury Obligations Fund's investment adviser is Federated Management. 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 Trust, the Fund, or any shareholder of the
Fund 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 Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended July 3l,
l993, l992 and l991, the Fund's adviser earned $4,563,447, $4,375,739 and
$1,740,856, respectively for services provided on behalf of Institutional
Shares, of which $1,647,164, $1,711,388 and $784,040, respectively, were
voluntarily waived because of undertakings to limit the Fund's expenses.
STATE EXPENSE LIMITATIONS
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes,
- --------------------------------------------------------------------------------
and extraordinary expenses) exceed 2 1/2% per year of the first $30
million of average net assets, 2% per year of the next $70 million of
average net assets, and 1 1/2% per year of the remaining average net
assets, the adviser will reimburse the Fund for its expenses over the
limitation.
If the Fund's monthly projected operating expenses exceed this limitation,
the investment advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the adviser will be limited, in
any single fiscal year, by the amount of the investment advisory fees.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
FUND ADMINISTRATION
- --------------------------------------------------------------------------------
Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Trust for a fee as described in the
prospectus for each class of shares of the Fund. For the fiscal years ended July
31, 1993, 1992, and 1991, Federated Administrative Services, Inc., the Trust's
former administrator, earned $770,936, $660,557 and $445,387, respectively. John
A. Staley, IV, an officer of the Trust and Dr. Henry J. Gailliot, an officer of
Federated Management, the adviser to the Fund, each hold approximately l5% and
20%, respectively, of the outstanding common stock of Commercial Data Services,
Inc., a company which provides computer processing services to Federated
Administrative Services, Inc., and Federated Administrative Services. For the
fiscal years ended December 31, 1993, 1992, and 1991, Federated Administrative
Services, Inc. paid approximately $161,547, $201,799 and $170,529, respectively
for services provided by Commercial Data Services, Inc., to the Funds.
SHAREHOLDER SERVICES PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Shareholder
Services Plan. This arrangement permits the payment of fees to Federated
Shareholder Services and, indirectly to financial institutions to cause services
to be provided 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
designation, and addresses.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
With respect to Institutional Service Shares the Fund has adopted a Plan
pursuant to Rule 12b-1 which was promulgated by the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940. The Plan permits the
payment of fees to brokers for distribution and administrative services and to
administrators for administrative services. The Plan is designed to (i)
stimulate brokers to provide distribution and administrative support services to
shareholders and (ii) stimulate administrators to render administrative support
services to shareholders. The administrative services are provided by a
representative who has knowledge of the shareholder's particular circumstances
and goals. By adopting the Plan, the Board of Trustees expects that the Fund
will be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in seeking to achieve its investment objectives.
By identifying potential investors whose needs are served by the Fund's
objectives, and properly servicing these accounts, it may be possible to curb
sharp fluctuations in rates of redemptions and sales. Other benefits may
include: (1) an efficient and effective administrative system; (2) a more
efficient use of shareholder assets by having them rapidly invested with a
minimum of delay and administrative detail; and (3) an efficient and reliable
shareholder records system and prompt responses to shareholder requests and
inquiries concerning their accounts.
CUSTODIAN AND PORTFOLIO RECORDKEEPER. State Street Bank and Trust Company,
Boston, Massachusetts is custodian for the securities and cash of the Fund.
Federated Services Company, Pittsburgh, Pennsylvania provides certain accounting
and recordkeeping services with respect to the Fund's portfolio investments.
- --------------------------------------------------------------------------------
DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------
The Trustees 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
Fund computed by dividing the annualized daily income on the Fund'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 Fund'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 Trustees 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 Fund'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 Trustees 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 Trustees 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 Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund'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
Trustees determine that further payments should be in kind. In such cases, the
Fund will pay all or a portion of the remainder of the redemption in portfolio
instruments valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees 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 FUND'S TAX STATUS
- --------------------------------------------------------------------------------
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund 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 Fund, the performance will be reduced for those shareholders paying those
fees.
YIELD
The Fund calculates its yield 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).
EFFECTIVE YIELD
The Fund calculates its effective yield 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.
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 compounded by
multiplying the number of shares owned at the end of the period by the net asset
value per share at the end of the period. The number of shares owned at the end
of the period is based on the number of shares purchased at the beginning of the
period with $1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund'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 net asset value. The financial
publications and/or indices which the Fund 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.
- 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.
- SALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
- SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
- DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES, is a weekly
quote of the average daily offering price for selected federal agency
issues maturing in 30 days.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements for the six-month period ended January 31, 1994 are
incorporated herein by reference to the Fund's Semi-Annual Report dated January
31, 1994 (File No. 811-5950). A copy of the Semi-Annual Report may be obtained
without charge by contacting the Fund at the address located on the back cover
of the prospectus. Following are the financial statements for the fiscal year
ended July 31, 1993.
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------------------- --------------
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--31.6%
- -----------------------------------------------------------------------------------------
U.S. TREASURY BILLS--7.1%
----------------------------------------------------------------------------
$182,500,000 3.065%--3.475%, 9/16/93--7/28/94 $ 179,256,638
---------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--24.5%
----------------------------------------------------------------------------
614,000,000 4.875%--11.75%, 8/15/93--5/15/94 622,148,172
---------------------------------------------------------------------------- -------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 801,404,810
---------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENTS--66.9%
- -----------------------------------------------------------------------------------------
115,000,000 B.T. Securities Corp., 3.05%, dated 7/30/93, due 8/2/93 115,000,000
----------------------------------------------------------------------------
110,000,000 BZW Securities, Inc., 3.07%, dated 7/30/93, due 8/2/93 110,000,000
----------------------------------------------------------------------------
110,000,000 Daiwa Securities America, Inc., 3.06%, dated 7/30/93, due 8/2/93 110,000,000
----------------------------------------------------------------------------
100,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 3.07%, dated 7/30/93, due
8/2/93 100,000,000
----------------------------------------------------------------------------
105,000,000 Fuji Securities, Inc., 3.05%, dated 7/30/93, due 8/2/93 105,000,000
----------------------------------------------------------------------------
200,000,000 Greenwich Capital Markets, Inc., 3.10%, dated 7/30/93, due 8/2/93 200,000,000
----------------------------------------------------------------------------
60,000,000 J.P. Morgan Securities, Inc., 3.05%, dated 7/30/93, due 8/2/93 60,000,000
----------------------------------------------------------------------------
45,000,000 J.P. Morgan Securities, Inc., 3.10%, dated 7/30/93, due 8/2/93 45,000,000
----------------------------------------------------------------------------
70,000,000 Kidder Peabody & Co., 3.07%, dated 7/30/93, due 8/2/93 70,000,000
----------------------------------------------------------------------------
219,300,000 Morgan Stanley & Co., Inc., 3.10%, dated 7/30/93, due 8/2/93 219,300,000
----------------------------------------------------------------------------
105,000,000 Nikko Securities Co. International, Inc., 3.05%, dated 7/30/93, due 8/2/93 105,000,000
----------------------------------------------------------------------------
110,000,000 Sanwa--BGK Securities Co., 3.05%, dated 7/30/93, due 8/2/93 110,000,000
----------------------------------------------------------------------------
100,000,000 Smith Barney, Harris Upham & Co., Inc., 3.10%, dated 7/30/93, due 8/2/93 100,000,000
----------------------------------------------------------------------------
100,000,000 UBS Securities Inc., 3.05%, dated 7/30/93, due 8/2/93 100,000,000
----------------------------------------------------------------------------
26,000,000 Lehman Brothers, Inc., 3.20%, dated 7/30/93, due 8/6/93 26,000,000
----------------------------------------------------------------------------
25,000,000 (a)Goldman, Sachs & Co., 3.125%, dated 7/26/93, due 8/31/93 25,000,000
----------------------------------------------------------------------------
48,000,000 (a)Goldman, Sachs & Co., 3.11%, dated 7/9/93, due 10/6/93 48,000,000
----------------------------------------------------------------------------
46,000,000 (a)Kidder Peabody & Co., Inc., 3.15% dated 7/16/93, due 10/14/93 46,000,000
---------------------------------------------------------------------------- -------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 1,694,300,000
---------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $2,495,704,810+
---------------------------------------------------------------------------- --------------
<FN>
* Repurchase agreements are fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio. The investments in
repurchase agreements were through participation in joint accounts with other
Federated funds.
(a) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,532,481,542) at July 31, 1993.
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $1,694,300,000
- ----------------------------------------------------------------------
Investments in U.S. Treasury obligations 801,404,810
- ----------------------------------------------------------------------- -------------
Total investments, at amortized cost and value (Notes 2A and 2B) $2,495,704,810
- --------------------------------------------------------------------------------------
Cash 506,622
- --------------------------------------------------------------------------------------
Receivable for investments sold 45,446,773
- --------------------------------------------------------------------------------------
Interest receivable 16,865,030
- --------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 54,095
- -------------------------------------------------------------------------------------- -------------
Total Assets 2,558,577,330
- --------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------
Payable for investments purchased 19,845,047
- ----------------------------------------------------------------------
Dividends payable 6,121,789
- ----------------------------------------------------------------------
Accrued expenses 128,952
- ---------------------------------------------------------------------- ------------
Total liabilities 26,095,788
- ------------------------------------------------------------------------------------- ------------
NET ASSETS for 2,532,481,542 shares of beneficial interest outstanding $2,532,481,542
- ------------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($2,532,481,542 DIVIDED BY 2,532,481,542 shares of beneficial
interest outstanding) $ 1.00
- ---------------------------------------------------------------------- ------------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
TREASURY OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------
Interest income (Note 2C) $75,537,760
- ---------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------
Investment advisory fee (Note 5) $4,563,447
- ---------------------------------------------------------------------------------
Trustees' Fees 20,449
- ---------------------------------------------------------------------------------
Administrative personnel and services fee (Note 5) 770,936
- ---------------------------------------------------------------------------------
Custodian, transfer and dividend disbursing agent fees and expenses 423,469
- ---------------------------------------------------------------------------------
Recordkeeping fee (Note 5) 267,644
- ---------------------------------------------------------------------------------
Auditing fees 13,225
- ---------------------------------------------------------------------------------
Legal fees 6,272
- ---------------------------------------------------------------------------------
Printing and postage 6,808
- ---------------------------------------------------------------------------------
Fund share registration costs 42,146
- ---------------------------------------------------------------------------------
Insurance premiums 49,054
- ---------------------------------------------------------------------------------
Taxes 34,894
- ---------------------------------------------------------------------------------
Miscellaneous 12,267
- --------------------------------------------------------------------------------- ---------
Total expenses 6,210,611
- ---------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 1,647,164
- --------------------------------------------------------------------------------- ---------
Net expenses 4,563,447
- --------------------------------------------------------------------------------------------- ---------
Net investment income $70,974,313
- --------------------------------------------------------------------------------------------- ----------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------
1993 1992
------------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------
Net investment income $ 70,974,313 $ 98,273,424
- ------------------------------------------------------------------------ ------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- ------------------------------------------------------------------------
Dividends to shareholders from net investment income ($0.0310 and $0.0452 per share,
respectively) (70,974,313) (98,273,424)
- ------------------------------------------------------------------------ ------------------- -----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- ------------------------------------------------------------------------
Proceeds from sale of shares 10,440,738,782 9,788,368,114
- ------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive payment of dividends
in Fund shares 1,335,315 1,184,933
- ------------------------------------------------------------------------
Cost of shares redeemed (10,341,629,978) (9,036,395,818)
- ------------------------------------------------------------------------ ------------------- -----------------
Change in net assets from Fund share transactions 100,444,119 753,157,229
- ------------------------------------------------------------------------ ------------------- -----------------
Change in net assets 100,444,119 753,157,229
- ------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------
Beginning of period 2,432,037,423 1,678,880,194
- ------------------------------------------------------------------------ ------------------- -----------------
End of period $ 2,532,481,542 $ 2,432,037,423
- ------------------------------------------------------------------------ ------------------- -----------------
<FN>
(The accompanying Notes are an integral part of the financial statements)
</TABLE>
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1993
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Treasury Obligations Fund (the "Fund") is a diversified portfolio and one of the
portfolios of Money Market Obligations Trust (the "Trust"), a no-load, open-end,
management investment company, which is registered under the Investment Company
Act of 1940, as amended. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
(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. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATION--The Board of Trustees ("Trustees") has determined that
the best method currently available for valuing portfolio securities is
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940, as amended.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System or to have segregated within the custodian bank's vault,
all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Fund to
monitor, on a daily basis, the market value of each repurchase agreement's
underlying securities to ensure the existence of a proper level of
collateral.
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 guidelines established by
the Trustees. Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral securities.
C. INCOME--Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium), including original
issue discount as required by the Internal Revenue Code, plus realized net
gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Internal Revenue Code applicable to investment companies and to distribute
to shareholders each year all of its taxable income. Accordingly, no
provision for federal tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. To the extent the Fund engages
in such transactions, it will do so for the purpose of acquiring portfolio
securities consistent with its investment objectives and policies and not
for the purpose of investment leverage. The Fund will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Fund will maintain security positions such
that sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method through December, 1994.
G. OTHER--Investment transactions are accounted for on the date of the
transaction.
(3) DIVIDENDS
The Fund computes its net income daily and, immediately prior to the calculation
of its net asset value at the close of business, declares and records dividends
to shareholders of record at the time of the previous computation of the Fund's
net asset value. Payment of dividends is made monthly in cash, or in additional
shares at the net asset value on the payable date.
TREASURY OBLIGATIONS FUND
- ----------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At July
31, 1993, capital paid-in aggregated $2,532,481,542. Transactions in Fund shares
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------
1993 1992
- -------------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Shares outstanding, beginning of period 2,432,037,423 1,678,880,194
- --------------------------------------------------------------------------------
Shares sold 10,440,738,782 9,788,368,114
- --------------------------------------------------------------------------------
Shares issued to shareholders electing to receive payment in Fund shares 1,335,315 1,184,933
- --------------------------------------------------------------------------------
Shares redeemed (10,341,629,978) (9,036,395,818)
- -------------------------------------------------------------------------------- ----------------- ----------------
Shares outstanding, end of period 2,532,481,542 2,432,037,423
- -------------------------------------------------------------------------------- ----------------- ----------------
</TABLE>
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Federated Management, the Fund's investment adviser ("Adviser"), receives for
its services an annual investment advisory fee equal to 0.20 of 1% of the Fund's
average daily net assets. For the fiscal year ended July 31, 1993, Adviser
voluntarily agreed to waive the amount, limited to the amount of the advisory
fee, by which the Fund's aggregate annual operating expenses (including its
investment advisory fee but excluding interest, taxes, brokerage commissions,
insurance premiums, and extraordinary expenses) exceed 0.20 of 1% of its average
daily net assets. This does not include reimbursement to the Fund of any
expenses incurred by shareholders who use the transfer agent's subaccounting
facilities. Adviser can terminate this voluntary agreement at any time at its
sole discretion. For the fiscal year ended July 31, 1993, Adviser earned an
investment advisory fee of $4,563,447 of which $1,647,164 was voluntarily waived
in accordance with such agreement.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Certain Officers and Trustees of the
Trust are Officers and Directors of the above corporations.
Federated Services Company, the Funds recordkeeper, received for its services a
fee of $267,644 for the year ended July 31, 1993.
(6) INVESTMENT TRANSACTIONS
Purchases, and sales and maturities of investments, excluding securities subject
to repurchase agreements, for the year ended July 31, 1993, were as follows:
<TABLE>
<S> <C>
PURCHASES--
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Short-term investments $1,313,348,946
- ------------------------------------------------------------------------------------------- -------------
SALES AND MATURITIES--
- -------------------------------------------------------------------------------------------
Short-term investments $1,209,906,075
- ------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
MONEY MARKET OBLIGATIONS TRUST (Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Treasury
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1993, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights (see page 2 of the prospectus)
for each of the three years in the period then ended, and for the period from
February 23, 1990 (date of initial public investment) to July 31, 1990. These
financial statements and financial highlights are the responsibility of the
Trust'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 securities owned as of July
31, 1993, by correspondence with the custodian and brokers. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Treasury Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1993, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended and for the period from February 23, 1990 (date of initial
public investment) to July 31, 1990, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN & CO.
Pittsburgh, Pennsylvania
September 10, 1993
9110208B-SS (7/94)
