- ----------------------------------------------------------------------------
GOVERNMENT
- ----------------------------------------------------------------------------
OBLIGATIONS
- ----------------------------------------------------------------------------
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JANUARY 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
1022001 (3/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Government
Obligations Fund. The report covers the six-month period ended January 31,
1994. It begins with the Fund's Investment Review, followed by Financial
Statements, which include the Portfolio of Investments.
The Fund pursues current income, stability of principal* and daily access to
your money. At the end of the period, the portfolio was invested in repurchase
agreements fully collateralized by U.S. government securities and in short-term
U.S. government obligations.
During the six-month reporting period, dividends paid to shareholders totaled
$9.8 million. At the end of the period, net assets stood at $621.9 million.
Thank you for your confidence in Government Obligations Fund. As always, your
questions and comments are always welcome.
Sincerely,
LOGO
J. Christopher Donahue President
March 15, 1994
* Although no money market mutual fund can guarantee a stable $1.00 share
value, the Fund has done so since its inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Government Obligations Fund is invested in direct U.S. Treasury and agency
obligations and in repurchase agreements which have these securities as
collateral. As agency yield spreads over Treasuries widened, the Fund's agency
position increased, and the Fund continued to invest in issues of the Federal
National Mortgage Association, Student Loan Marketing Association, Federal Farm
Credit Bank System, Federal Home Loan Bank System, and Federal Home Loan
Mortgage Corp. The Fund has been combining attractive yields from overnight
repurchase agreements collateralized by mortgage-backed securities with short-
term agency floating rate notes and longer maturity Treasury and agency
securities. Recently, the Fund has been managed with an average maturity of 45-
55 days.
During the semi-annual reporting period, the Federal Reserve continued to
target a Federal funds rate of 3%. With the Federal Reserve on hold, movements
in short rates over the period were driven by market sentiment. Short rates
declined through late September, as inflationary worries subsided in the face
of weaker economic growth and favorable reports on consumer and producer
prices. Confronted with strong fourth quarter economic growth, short rates
climbed higher through November on speculation that the Federal Reserve might
be moved to tighten monetary policy in the first half of 1994 if the growth
proved to be sustainable. Rates then drifted lower through the end of the
reporting period. A comparison of six-month Treasury bill rates during the same
time frame showed a decline from 3.33% to 3.11% in late September, followed by
a rise to 3.40% at the end of November and then a decline to 3.24% by the end
of January, 1994. As a yield advantage continued to exist for investments in
repurchase agreements versus direct investments in short-term Treasury and
agency securities, a substantial percentage of the Fund's investments remained
in repurchase agreements. The Fund maintained a barbelled portfolio structure
of a significant position in overnight repurchase agreements combined with
securities with longer maturities of six to twelve months.
Shortly after the end of the reporting period, on February 4, 1994, the Federal
Reserve surprised the market by tightened monetary policy by moving the target
rate for Federal funds from 3% to 3.25%, in the first change in stance by the
Federal Reserve since September, 1992. In an unusual move, Chairman Greenspan
announced the action, rather than let the market discern it in the traditional
method through interpretation of the Federal Reserve's open market operations.
Recent comments by Federal Reserve officials have indicated an uneasiness with
what they perceive to be the still accomodative nature of its monetary policy,
and market expectations are for another tightening by the Federal Reserve. The
Fund's average maturity has been drifting shorter to reflect the uncertainty in
Federal Reserve policy and based on specific relative yield opportunities
available in the current market environment. However, changing economic and
market developments are continuously monitored to best serve our clients
attracted to the short-term U.S. government market.
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
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--41.4%
---------------------------------------------------------------
FEDERAL FARM CREDIT BANK NOTE--0.6%
--------------------------------------------------
$ 4,000,000 3.32%, 5/2/94 $ 4,000,473
--------------------------------------------------
*FEDERAL FARM CREDIT BANK, DISCOUNT NOTE--0.7%
--------------------------------------------------
4,500,000 3.22%, 4/19/94 4,469,008
--------------------------------------------------
FEDERAL HOME LOAN BANK NOTE--0.7%
--------------------------------------------------
4,000,000 9.55%, 4/25/94 4,055,685
--------------------------------------------------
*FEDERAL HOME LOAN BANK, DISCOUNT NOTE--1.1%
--------------------------------------------------
7,000,000 3.27%, 7/25/94 6,892,748
--------------------------------------------------
**FEDERAL NATIONAL MORTGAGE ASSOCIATION FLOATING
RATE NOTE--1.6%
--------------------------------------------------
10,000,000 3.42%, 6/10/94 10,179,487
--------------------------------------------------
*FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT
NOTES--20.6%
--------------------------------------------------
129,865,000 3.15%-3.63%, 2/7/94-11/25/94 128,205,830
--------------------------------------------------
**STUDENT LOAN MARKETING ASSOCIATION FLOATING RATE
NOTES--2.3%
--------------------------------------------------
14,000,000 3.52%-3.72%, 2/4/94-2/7/94 13,995,380
--------------------------------------------------
U.S. TREASURY BILLS--7.0%
--------------------------------------------------
44,000,000 3/10/94-11/17/94 43,585,401
--------------------------------------------------
U.S. TREASURY NOTES--6.8%
--------------------------------------------------
42,000,000 5.375%-8.875%, 2/15/94--11/15/94 42,372,468
-------------------------------------------------- ------------
TOTAL SHORT-TERM OBLIGATIONS 257,756,480
-------------------------------------------------- ------------
***REPURCHASE AGREEMENTS--58.5%
---------------------------------------------------------------
39,900,000 Barclays de Zoete Wedd Securities, Inc., 3.17%-
3.26%, dated 1/31/94, due 2/1/94 39,900,000
--------------------------------------------------
</TABLE>
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -------------------------------------------------- ------------
<C> <S> <C>
***REPURCHASE AGREEMENTS--CONTINUED
--------------------------------------------------------------
$30,000,000 Deutsche Bank Government Securities, Inc., 3.24%,
dated 1/31/94,
due 2/1/94 $ 30,000,000
--------------------------------------------------
Fuji Securities, Inc., 3.24%, dated 1/31/94, due
20,000,000 2/1/94 20,000,000
--------------------------------------------------
60,000,000 Greenwich Capital Markets, Inc., 3.25%, dated
1/31/94, due 2/1/94 60,000,000
--------------------------------------------------
Kidder, Peabody & Co., Inc., 3.24%, dated 1/31/94,
50,000,000 due 2/1/94 50,000,000
--------------------------------------------------
PaineWebber, Inc., 3.39%, dated 1/31/94, due
40,000,000 2/1/94 40,000,000
--------------------------------------------------
S.G. Warburg & Co., Inc., 3.27%, dated 1/31/94,
30,000,000 due 2/1/94 30,000,000
--------------------------------------------------
UBS Securities, Inc., 3.28%, dated 1/31/94, due
20,000,000 2/1/94 20,000,000
--------------------------------------------------
12,000,000 (a)First Boston Corp., 3.16%, dated 1/4/94, due
2/3/94 12,000,000
--------------------------------------------------
9,000,000 (a)Nomura Securities International, Inc., 3.30%,
dated 11/8/94, due 2/7/94 9,000,000
--------------------------------------------------
14,000,000 (a)Greenwich Capital Markets, Inc., 3.14%, dated
1/19/94, due 2/14/94 14,000,000
--------------------------------------------------
(a)Lehman Brothers Inc., 3.10%, dated 1/14/94, due
10,000,000 2/14/94 10,000,000
--------------------------------------------------
(a)Kidder, Peabody & Co., Inc., 3.16%, dated
13,000,000 1/10/94, due 3/14/94 13,000,000
--------------------------------------------------
(a)Greenwich Capital Markets, Inc., 3.19%, dated
16,000,000 1/28/94, due 4/28/94 16,000,000
-------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 363,900,000
-------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $621,656,480+
-------------------------------------------------- ------------
</TABLE>
*Each issue shows the rate of discount at the time of purchase.
**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
($621,983,481) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C> <C>
- ----------------------------------------------
Investments in repurchase agreements (Note 2B) $363,900,000
- ----------------------------------------------
Investments in U.S. government obligations 257,756,480
- ---------------------------------------------- ------------
Total investments, at amortized cost and value (Notes 2A
and 2B) $621,656,480
- ------------------------------------------------------------
Cash 241,860
- ------------------------------------------------------------
Interest receivable 1,580,065
- ------------------------------------------------------------
Prepaid/deferred expenses (Note 2F) 46,631
- ------------------------------------------------------------ ------------
Total assets 623,525,036
- ------------------------------------------------------------ ------------
LIABILITIES:
- ------------------------------------------------------------
Dividends payable 1,541,555
- ------------------------------------------------------------ ------------
NET ASSETS for 621,983,481 shares of beneficial interest
outstanding $621,983,481
- ------------------------------------------------------------ ------------
NET ASSET VALUE, Offering Price, and
Redemption Price Per Share
($621,983,481 / 621,983,481 shares of $1.00
beneficial interest outstanding)
- ------------------------------------------------------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------
Interest income (Note 2C) $10,471,635
- ---------------------------------------------
EXPENSES--
- ---------------------------------------------
Investment advisory fee
(Note 5) $640,985
- ---------------------------------------------
Trustees' fees 2,795
- ---------------------------------------------
Administrative personnel
and services (Note 5) 202,952
- ---------------------------------------------
Custodian fee 65,176
- ---------------------------------------------
Recordkeeping fee (Note
5) 23,442
- ---------------------------------------------
Transfer and dividend
disbursing agent fees
and expenses (Note 5) 9,049
- ---------------------------------------------
Auditing fees 6,572
- ---------------------------------------------
Legal fees 4,500
- ---------------------------------------------
Printing and postage 3,750
- ---------------------------------------------
Fund share registration
costs 19,214
- ---------------------------------------------
Insurance premiums 8,844
- ---------------------------------------------
Taxes 4,250
- ---------------------------------------------
Miscellaneous 1,996
- ---------------------------------------------
Total expenses 993,525
- ---------------------------------------------
Deduct--Waiver of in-
vestment advisory fee
(Note 5) 352,541
- ---------------------------------------------
Net expenses 640,984
- ---------------------------------------------
Net investment income $9,830,651
- ---------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------
<S> <C> <C>
1994* 1993
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------
OPERATIONS--
- -------------------------------------------
Net investment income $ 9,830,651 $ 21,244,766
- ------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -------------------------------------------
Dividends to shareholders from net invest-
ment income (9,830,651) (21,244,766)
- ------------------------------------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 4)--
- -------------------------------------------
Proceeds from sale of shares 1,219,853,532 3,260,455,593
- -------------------------------------------
Net asset value of shares issued to share-
holders electing to
receive payment of dividends in Fund shares 500,479 365,899
- -------------------------------------------
Cost of shares redeemed (1,305,516,960) (3,233,207,743)
- ------------------------------------------- --------------- ---------------
Change in net assets from Fund share
transactions (85,162,949) 27,613,749
- ------------------------------------------- --------------- ---------------
Change in net assets (85,162,949) 27,613,749
- -------------------------------------------
NET ASSETS:
- -------------------------------------------
Beginning of period 707,146,430 679,532,681
- ------------------------------------------- --------------- ---------------
End of period $ 621,983,481 $ 707,146,430
- ------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------------------
1994* 1993 1992 1991 1990**
- --------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------
INCOME FROM INVESTMENT OP-
ERATIONS
- ---------------------------
Net investment income 0.02 0.03 0.05 0.07 0.03
- ---------------------------
LESS DISTRIBUTIONS
- ---------------------------
Dividends to shareholders
from net
investment income (0.02) (0.03) (0.05) (0.07) (0.03)
- --------------------------- ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PE- $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
RIOD ------ ------ ------ ------ ------
- ---------------------------
TOTAL RETURN*** 1.56% 3.22% 4.70% 7.20% 2.80%
- ---------------------------
RATIOS TO AVERAGE NET AS-
SETS
- ---------------------------
Expenses 0.20%(a) 0.20% 0.20% 0.20% 0.20%(a)
- ---------------------------
Net investment income 3.07%(a) 3.16% 4.55% 6.77% 8.24%(a)
- ---------------------------
Expense
waiver/reimbursement (b) 0.11%(a) 0.11% 0.12% 0.22% 0.20%(a)
- ---------------------------
SUPPLEMENTAL DATA
- ---------------------------
Net assets, end of period
(000 omitted) $621,983 $707,146 $679,533 $331,454 $148,598
- ---------------------------
</TABLE>
*Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from March 31, 1990 (date of initial
public investment) to July 31, 1990.
*** Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1994 (UNAUDITED)
- -------------------------------------------------------------------------------
(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, as amended, 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, as amended, applicable to regulated investment
companies and to distribute to shareholders each year all of its taxable
income. Accordingly, no provisions for federal tax are 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.
(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
January 31, 1994, capital paid in aggregated $621,983,481. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------
1994* 1993
- --------------------------------------------- -------------- --------------
<S> <C> <C>
Shares outstanding, beginning of period 707,146,430 679,532,681
- ---------------------------------------------
Shares sold 1,219,853,532 3,260,455,593
- ---------------------------------------------
Shares issued to shareholders electing to re-
ceive payment
of dividends in Fund shares 500,479 365,899
- ---------------------------------------------
Shares redeemed (1,305,516,960) (3,233,207,743)
- --------------------------------------------- -------------- --------------
Shares outstanding, end of period 621,983,481 707,146,430
- --------------------------------------------- -------------- --------------
</TABLE>
* Six months ended January 31, 1994.
(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. The Adviser has voluntarily agreed to waive a
portion of its fee. The Adviser can modify or terminate this voluntary waiver
at any time at its sole discretion. For the six months ended January 31, 1994,
the Adviser earned an investment advisory fee of $640,985 of which $352,541 was
voluntarily waived in accordance with such agreement.
Federated Services Company, the Fund's recordkeeper, transfer and dividend
disbursing agent, received for its services a fee of $32,491 for the six months
ended January 31, 1994.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Effective March 1, 1994, Federated
Administrative Services ("FAS"), will provide administrative personnel and
services at an annual rate of 0.15 of 1% on the first $250 million of average
aggregate net assets of the total Federated Funds; 0.125 of 1% on the next $250
million; 0.10 of 1% on the next $250 million; and 0.075 of 1% on average
aggregate net assets in excess of $750 million. 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. Certain Officers and Trustees of the Trust are
Officers and Directors of the above corporations.
Trustees Officers
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland J. Christopher Donahue
J. Christopher Donahue President
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Jeannette Fisher-Garber
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information
- ----------------------------------------------------------------------------
PRIME
- ----------------------------------------------------------------------------
OBLIGATIONS
- ----------------------------------------------------------------------------
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JANUARY 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
1022002 (3/94)
President's Message
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Prime
Obligations Fund. The report covers the six-month period ended January 31, 1994.
It begins with the Fund's Investment Review, followed by Financial Statements,
which include the Portfolio of Investments.
The Fund pursues current income, stability of principal* and daily access to
your money through a diversified portfolio of short-term, high-quality money
market securities.
During the six-month reporting period, dividends paid to shareholders totaled
$17 million. At the end of the period, net assets reached $1.2 billion.
Thank you for your confidence in Prime Obligations Fund. We welcome your
questions and comments.
Sincerely,
J. Christopher Donahue
President
March 15, 1994
*Although no money market mutual fund can guarantee a stable $1.00 share value,
the Fund has done so since its inception.
Investment Review
- --------------------------------------------------------------------------------
During the past year, the U.S. economy has grown at a very modest pace
commensurate with a low inflation environment. October, 1993, was the first
month when almost all economic releases were positive and the trend continued
for both November and December. Consumer spending, especially on durable goods,
housing and business investment, should continue to push the economy forward.
But a variety of other factors, including slow growth abroad, continued
corporate restructuring and a tighter federal budget, should help prevent the
economy from overheating. In this mild recovery, inflation has remained under
control with respect to both the CPI and PPI. Strength in the CRB index has been
attributed to problems resulting from the flooding in the Midwest.
The money supply has been steadily increasing during the last six months
following a very weak period over the prior several months. In aggregate, money
supply has been growing, although the measures are still below Federal Reserve
("Fed") targets. The annualized growth rate for M2 over the past six months has
been 2.8%. Utilizing the other aggregates, M1 expanded by 11.8% while M3
increased by 2.6%. It is unlikely that a strong recovery can occur without an
uptick in liquidity for sustenance.
Over the past six months short-term rates have held steady in the low 3% range.
Both the Federal funds rate and the discount rate have stayed at 3% during the
period. The Fed changed from a neutral position to being biased to tighten in
August but then reverted back to neutrality in September.
Given these low short-term interest rates, but taking into consideration the
fact that inflation has started to rise, the target effective average maturity
range for Prime Obligations Fund has been 50-60 days throughout the past six
months. This reflects a belief that short-term rates may have bottomed but
should not be rising quickly. This also reflects a modest lengthening of about
five days throughout the period. In structuring the Fund, there is continued
emphasis placed on positioning 25%-30% of the Fund's assets in variable rate
demand notes and accomplishing a modest barbell structure.
During the six months ending January 31, 1994, the net assets of Prime
Obligations Fund increased from $1,098.2 million to $1,175.4 million while the
7-day net yield remained unchanged at 3.09%*. The effective average maturity of
the Fund on January 31, was 50 days.
* Data quoted represent past performance and are not indicative of future
results. Yield will vary.
Prime Obligations Fund
Portfolio of Investments
January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- -------------- ----------------------------------------------------------------------------- -----------------
Certificates of Deposit--3.5%
- ---------------------------------------------------------------------------------------------
Banking--3.5%
-----------------------------------------------------------------------------
Canadian Imperial Bank of Commerce
-----------------------------------------------------------------------------
$ 36,000,000 3.40%-3.52%, 7/5/94-8/5/94 $ 36,000,000
-----------------------------------------------------------------------------
Rabobank Nederland
-----------------------------------------------------------------------------
5,000,000 3.52%, 8/16/94 4,999,258
----------------------------------------------------------------------------- -----------------
Total Certificates of Deposit 40,999,258
----------------------------------------------------------------------------- -----------------
*Commercial Paper--36.8%
- ---------------------------------------------------------------------------------------------
Banking--13.9%
-----------------------------------------------------------------------------
Abbey National N.A. Corp. (Guaranteed by Abbey National
Bank PLC)
-----------------------------------------------------------------------------
60,000,000 3.27%-3.44%, 3/21/94-7/21/94 59,426,393
-----------------------------------------------------------------------------
Bank of Nova Scotia
-----------------------------------------------------------------------------
10,000,000 3.38%, 6/27/94 9,866,167
-----------------------------------------------------------------------------
Barclays Bank of Canada
-----------------------------------------------------------------------------
20,000,000 3.46%, 7/25/94 19,493,000
-----------------------------------------------------------------------------
Canadian Imperial Holdings
-----------------------------------------------------------------------------
5,000,000 3.24%, 3/14/94 4,981,835
-----------------------------------------------------------------------------
Queensland Alumina Ltd. (Credit Suisse LOC)
-----------------------------------------------------------------------------
58,402,000 3.14%-3.37%, 2/24/94-5/3/94 58,101,445
-----------------------------------------------------------------------------
Toronto Dominion Holdings (USA), Inc.
-----------------------------------------------------------------------------
12,000,000 3.30%, 7/13/94 11,824,500
----------------------------------------------------------------------------- -----------------
Total 163,693,340
----------------------------------------------------------------------------- -----------------
Finance--Automotive--3.1%
-----------------------------------------------------------------------------
Ford Credit Receivables Funding, Inc.
-----------------------------------------------------------------------------
36,500,000 3.17%-3.31%, 2/18/94-5/4/94 36,396,407
----------------------------------------------------------------------------- -----------------
Finance-Commercial--5.6%
-----------------------------------------------------------------------------
CIT Group Holdings, Inc.
-----------------------------------------------------------------------------
$ 26,000,000 3.31%-3.43%, 4/18/94-10/7/94 $ 25,591,086
-----------------------------------------------------------------------------
General Electric Capital Corp.
-----------------------------------------------------------------------------
41,000,000 3.37%-3.51%, 2/3/94-10/3/94 40,533,598
----------------------------------------------------------------------------- -----------------
Total 66,124,684
----------------------------------------------------------------------------- -----------------
Food & Beverage--1.7%
-----------------------------------------------------------------------------
Anheuser-Busch Cos., Inc.
-----------------------------------------------------------------------------
20,000,000 3.51%-3.54%, 9/7/94-9/9/94 19,581,856
----------------------------------------------------------------------------- -----------------
Funding Corporation--9.5%
-----------------------------------------------------------------------------
Beta Finance, Inc.
-----------------------------------------------------------------------------
35,000,000 3.27%-3.44%, 2/15/94-7/25/94 34,735,421
-----------------------------------------------------------------------------
CIESCO
-----------------------------------------------------------------------------
15,000,000 3.34%-3.40%, 2/1/94-2/3/94 14,999,069
-----------------------------------------------------------------------------
Corporate Asset Funding Co., Inc.
-----------------------------------------------------------------------------
16,000,000 3.18%, 5/2/94 15,874,000
-----------------------------------------------------------------------------
New Center Asset Trust (Series A1+/ P1)
-----------------------------------------------------------------------------
21,000,000 3.17%-3.41%, 2/4/94-4/20/94 20,886,125
-----------------------------------------------------------------------------
PREFCO
-----------------------------------------------------------------------------
25,550,000 3.14%-3.37%, 2/1/94-5/6/94 25,468,533
----------------------------------------------------------------------------- -----------------
Total 111,963,148
----------------------------------------------------------------------------- -----------------
Insurance--2.7%
-----------------------------------------------------------------------------
Prospect St. Sr. Loan Port. L.P. (Guaranteed by FSA)
-----------------------------------------------------------------------------
19,281,000 3.15%-3.51%, 2/23/94-7/14/94 19,138,922
-----------------------------------------------------------------------------
Prudential Funding Corp.
-----------------------------------------------------------------------------
12,000,000 3.35%, 2/2/94 11,998,900
----------------------------------------------------------------------------- -----------------
Total 31,137,822
----------------------------------------------------------------------------- -----------------
Telecommunications--0.3%
-----------------------------------------------------------------------------
AT&T Corp.
-----------------------------------------------------------------------------
$ 4,000,000 3.26%, 2/24/94 $ 3,991,797
----------------------------------------------------------------------------- -----------------
Total Commercial Paper 432,889,054
----------------------------------------------------------------------------- -----------------
**Variable Rate Instruments--29.3%
- ---------------------------------------------------------------------------------------------
Banking--17.2%
-----------------------------------------------------------------------------
500 South Front St. L.P. Series A (Huntington National Bank LOC)
-----------------------------------------------------------------------------
4,100,000 3.16%, 2/3/94 4,100,000
-----------------------------------------------------------------------------
500 South Front St. L.P. Series B (Huntington National Bank LOC)
-----------------------------------------------------------------------------
7,000,000 3.16%, 2/3/94 7,000,000
-----------------------------------------------------------------------------
Adesa Funding Corp. (Bank One, Indianapolis LOC)
-----------------------------------------------------------------------------
14,206,000 3.30%, 2/3/94 14,206,000
-----------------------------------------------------------------------------
Alexandria Executive Club L.P. (Huntington National Bank LOC)
-----------------------------------------------------------------------------
8,750,000 3.16%, 2/3/94 8,750,000
-----------------------------------------------------------------------------
Arrow Molded Plastics, Inc. (Huntington National Bank LOC)
-----------------------------------------------------------------------------
800,000 3.16%, 2/3/94 800,000
-----------------------------------------------------------------------------
Beverly California Corp. (PNC Bank N.A. LOC)
-----------------------------------------------------------------------------
16,900,000 3.16%, 2/7/94 16,900,000
-----------------------------------------------------------------------------
Eastwinds Investments L.P. (Huntington National Bank LOC)
-----------------------------------------------------------------------------
4,085,000 3.16%, 2/3/94 4,085,000
-----------------------------------------------------------------------------
Grote Family L.P. (Huntington National Bank LOC)
-----------------------------------------------------------------------------
2,485,000 3.16%, 2/3/94 2,485,000
-----------------------------------------------------------------------------
Holy Cross Health System Corp. (Swiss Bank Corp. LOC)
-----------------------------------------------------------------------------
24,000,000 3.35%, 2/2/94 24,000,000
-----------------------------------------------------------------------------
Hunt Club (Huntington National Bank LOC)
-----------------------------------------------------------------------------
5,000,000 3.16%, 2/3/94 5,000,000
-----------------------------------------------------------------------------
John W. Rooker (Wachovia Bank of Georgia LOC)
-----------------------------------------------------------------------------
13,750,000 3.17%, 2/2/94 13,750,000
-----------------------------------------------------------------------------
Kokosing Construction Co., Inc. (National City Bank
Cleveland LOC)
-----------------------------------------------------------------------------
$ 5,100,000 3.20%, 2/3/94 $ 5,100,000
-----------------------------------------------------------------------------
Olen Corp. Series 1993 (National City Bank Cleveland LOC)
-----------------------------------------------------------------------------
5,000,000 3.20%, 2/3/94 5,000,000
-----------------------------------------------------------------------------
PHH/CFC Leasing (Banque Nationale de Paris)
-----------------------------------------------------------------------------
29,000,000 3.19%, 2/2/94 29,000,000
-----------------------------------------------------------------------------
Ramsey Real Estate Enterprises Ltd. (National City Bank,
Kentucky LOC)
-----------------------------------------------------------------------------
2,800,000 3.20%, 2/3/94 2,800,000
-----------------------------------------------------------------------------
Shenandoah Partners, L.P. (Huntington National Bank LOC)
-----------------------------------------------------------------------------
7,360,000 3.16%, 2/3/94 7,360,000
-----------------------------------------------------------------------------
SMM Trust 1993-A (Guaranteed by Morgan Guaranty Trust Co.)
-----------------------------------------------------------------------------
10,000,000 3.36%, 3/18/94 10,000,000
-----------------------------------------------------------------------------
SMM Trust 1993-B (Guaranteed by Morgan Guaranty Trust Co.)
-----------------------------------------------------------------------------
35,000,000 3.55%, 2/14/94 35,000,000
-----------------------------------------------------------------------------
Vista Funding Corp. (Bank One, Akron N.A. LOC)
-----------------------------------------------------------------------------
6,820,000 3.30%, 2/3/94 6,820,000
----------------------------------------------------------------------------- -----------------
Total 202,156,000
----------------------------------------------------------------------------- -----------------
Electrical Equipment--3.9%
-----------------------------------------------------------------------------
GS Funding Corp. (Guaranteed by General Electric Co.)
-----------------------------------------------------------------------------
18,168,300 3.16%, 2/7/94 18,168,300
-----------------------------------------------------------------------------
Lauda Air Luftfahrt AG (Guaranteed by General Electric Co.)
-----------------------------------------------------------------------------
6,000,000 3.17%, 2/7/94 6,000,000
-----------------------------------------------------------------------------
Northwest Airlines, Inc. (Guaranteed by General Electric Co.)
-----------------------------------------------------------------------------
21,363,112 3.17%, 2/7/94 21,363,112
----------------------------------------------------------------------------- -----------------
Total 45,531,412
----------------------------------------------------------------------------- -----------------
Finance-Automotive--6.1%
-----------------------------------------------------------------------------
Carco Auto Loan Master Trust Certificates, Series 1993-2, Class A-1
-----------------------------------------------------------------------------
$ 32,000,000 3.19%, 2/15/94 $ 32,000,000
-----------------------------------------------------------------------------
Money Market Auto Loan Trust
-----------------------------------------------------------------------------
40,000,000 3.29%, 2/15/94 40,000,000
----------------------------------------------------------------------------- -----------------
Total 72,000,000
----------------------------------------------------------------------------- -----------------
Insurance--2.1%
-----------------------------------------------------------------------------
People's Security Life Insurance Co.
-----------------------------------------------------------------------------
25,000,000 3.52%, 2/1/94 25,000,000
----------------------------------------------------------------------------- -----------------
Total Variable Rate Instruments 344,687,412
----------------------------------------------------------------------------- -----------------
Short-Term Notes--3.5%
- ---------------------------------------------------------------------------------------------
Banking--1.2%
-----------------------------------------------------------------------------
AP Investment Co. (Bankers Trust Co. Put)
-----------------------------------------------------------------------------
8,000,000 3.85%, 9/7/94 8,000,000
-----------------------------------------------------------------------------
Bayerische Landesbank
-----------------------------------------------------------------------------
6,000,000 3.57%, 12/9/94 6,001,843
----------------------------------------------------------------------------- -----------------
Total 14,001,843
----------------------------------------------------------------------------- -----------------
Finance-Automotive--1.1%
-----------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, 1993-2 Class A-1
-----------------------------------------------------------------------------
1,375,519 3.37%, 6/15/94 1,375,402
-----------------------------------------------------------------------------
Premier Auto Trust 1993-3 Class A-1
-----------------------------------------------------------------------------
1,018,427 3.44%, 6/15/94 1,018,188
-----------------------------------------------------------------------------
Premier Auto Trust 1993-4 Class A-1
-----------------------------------------------------------------------------
10,350,361 3.43%, 8/2/94 10,349,993
----------------------------------------------------------------------------- -----------------
Total 12,743,583
----------------------------------------------------------------------------- -----------------
Finance-Retail--0.8%
-----------------------------------------------------------------------------
American General Finance Corp.
-----------------------------------------------------------------------------
5,000,000 1.84%, 9/15/94 5,179,068
-----------------------------------------------------------------------------
Associates Corp. North America
-----------------------------------------------------------------------------
$ 2,800,000 3.62%--3.64%, 11/15/94--12/1/94 $ 2,881,688
-----------------------------------------------------------------------------
Associates Corp. of North America
-----------------------------------------------------------------------------
2,250,000 3.45%, 3/1/94 2,261,034
----------------------------------------------------------------------------- -----------------
Total 10,321,790
----------------------------------------------------------------------------- -----------------
Government Agency--0.4%
-----------------------------------------------------------------------------
Tennessee Valley Authority, Series E
-----------------------------------------------------------------------------
4,000,000 1.25%, 10/1/94 4,300,217
----------------------------------------------------------------------------- -----------------
Total Short-Term Notes 41,367,433
----------------------------------------------------------------------------- -----------------
***Repurchase Agreements--26.9%
- ---------------------------------------------------------------------------------------------
45,000,000 BT Securities Corp., 3.18%, dated 1/31/94, due 2/1/94 45,000,000
-----------------------------------------------------------------------------
10,150,000 Daiwa Securities America, Inc., 3.17%, dated 1/31/94, due 2/1/94 10,150,000
-----------------------------------------------------------------------------
7,950,000 Donaldson, Lufkin & Jenrette Securities Corp., 3.18%, dated
1/31/94, due 2/1/94 7,950,000
-----------------------------------------------------------------------------
45,000,000 Fuji Securities, Inc., 3.17%, dated 1/31/94, due 2/1/94 45,000,000
-----------------------------------------------------------------------------
14,000,000 Greenwich Capital Markets, Inc., 3.15%, dated 1/31/94,
due 2/1/94 14,000,000
-----------------------------------------------------------------------------
54,000,000 Kidder, Peabody & Co., Inc., 3.18%, dated 1/31/94, due 2/1/94 54,000,000
-----------------------------------------------------------------------------
40,000,000 UBS Securities, Inc., 3.18%, dated 1/31/94, due 2/1/94 40,000,000
-----------------------------------------------------------------------------
50,000,000(a) J.P. Morgan Securities, Inc., 3.12%, dated 1/11/94, due 2/10/94 50,000,000
-----------------------------------------------------------------------------
50,000,000(a) Lehman Government Securities, 3.10%, dated 1/13/94,
due 2/14/94 50,000,000
----------------------------------------------------------------------------- -----------------
Total Repurchase Agreements (Note 2B) 316,100,000
----------------------------------------------------------------------------- -----------------
Total Investments, at amortized cost $ 1,176,043,157\
----------------------------------------------------------------------------- -----------------
</TABLE>
Prime Obligations Fund
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
FSA--Financial Security Assurance
LOC--Letter(s) of Credit
PLC--Public Limited Company
* Each issue shows the rate of discount at the time of purchase.
** 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.
(a) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of repurchase
agreement.
\ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,175,434,837) at
January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
Prime Obligations Fund
Statement of Assets and Liabilities
January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
- ----------------------------------------------------------------------------------------------
Investments in other securities $ 859,943,157
- -----------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) 316,100,000
- ----------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value
(Notes 2A and 2B) $ 1,176,043,157
- ----------------------------------------------------------------------------------------------
Interest receivable 2,324,023
- ----------------------------------------------------------------------------------------------
Receivable for Fund shares sold 62,481
- ----------------------------------------------------------------------------------------------
Prepaid/deferred expenses (Note 2F) 31,224
- ---------------------------------------------------------------------------------------------- -----------------
Total assets 1,178,460,885
- ----------------------------------------------------------------------------------------------
Liabilities:
- ----------------------------------------------------------------------------------------------
Dividends payable 2,976,565
- -----------------------------------------------------------------------------
Payable for Fund shares repurchased 35,193
- -----------------------------------------------------------------------------
Payable to Bank 14,290
- ----------------------------------------------------------------------------- ---------------
Total liabilities 3,026,048
- ---------------------------------------------------------------------------------------------- -----------------
Net Assets for 1,175,434,837 shares of beneficial interest outstanding $ 1,175,434,837
- ---------------------------------------------------------------------------------------------- -----------------
Net Asset Value, Offering Price, and Redemption Price Per Share
($1,175,434,837 / 1,175,434,837 shares of beneficial interest outstanding) $ 1.00
- ---------------------------------------------------------------------------------------------- -----------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
Prime Obligations Fund
Statement of Operations
Six Months Ended January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
- ------------------------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 18,097,081
- --------------------------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------------------------
Investment advisory fee (Note 5) $ 1,091,195
- -----------------------------------------------------------------------------------
Trustees' fees 5,756
- -----------------------------------------------------------------------------------
Administrative personnel and services fee (Note 5) 276,429
- -----------------------------------------------------------------------------------
Custodian fees 73,264
- -----------------------------------------------------------------------------------
Recordkeeping fee (Note 5) 49,265
- -----------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 5) 11,685
- -----------------------------------------------------------------------------------
Auditing fees 6,572
- -----------------------------------------------------------------------------------
Legal fees 4,035
- -----------------------------------------------------------------------------------
Printing and postage 5,500
- -----------------------------------------------------------------------------------
Fund share registration costs 33,224
- -----------------------------------------------------------------------------------
Insurance premiums 11,214
- -----------------------------------------------------------------------------------
Taxes 9,322
- -----------------------------------------------------------------------------------
Miscellaneous 4,771
- ----------------------------------------------------------------------------------- -------------
Total expenses 1,582,232
- -----------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 491,038
- ----------------------------------------------------------------------------------- -------------
Net expenses 1,091,194
- -------------------------------------------------------------------------------------------------- --------------
Net investment income $ 17,005,887
- -------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
Prime Obligations Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended July 31,
<S> <C> <C>
1994* 1993
Increase (Decrease) in Net Assets:
- -------------------------------------------------------------------------
Operations--
- -------------------------------------------------------------------------
Net investment income $ 17,005,887 $ 32,550,206
- ------------------------------------------------------------------------- ------------------ ------------------
Distributions to Shareholders (Note 3)--
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income (17,005,887) (32,550,206)
- ------------------------------------------------------------------------- ------------------ ------------------
Fund Share (Principal) Transactions (Note 4)--
- -------------------------------------------------------------------------
Proceeds from sale of shares 3,628,381,950 5,287,583,256
- -------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of dividends in Fund shares 1,284,667 1,429,731
- -------------------------------------------------------------------------
Cost of shares redeemed (3,552,390,966) (5,108,271,778)
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets from Fund share transactions 77,275,651 180,741,209
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets 77,275,651 180,741,209
- -------------------------------------------------------------------------
Net Assets:
- -------------------------------------------------------------------------
Beginning of period 1,098,159,186 917,417,977
- ------------------------------------------------------------------------- ------------------ ------------------
End of period $ 1,175,434,837 $ 1,098,159,186
- ------------------------------------------------------------------------- ------------------ ------------------
*Six months ended January 31, 1994 (unaudited).
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Prime Obligations Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31,
<S> <C> <C> <C> <C> <C>
1994* 1993 1992 1991 1990**
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------
Income from investment operations
- -----------------------------------------------------
Net investment income 0.02 0.03 0.05 0.07 0.03
- -----------------------------------------------------
Less distributions
- -----------------------------------------------------
Dividends to shareholders from
net investment income (0.02) (0.03) (0.05) (0.07) (0.03)
- ----------------------------------------------------- --------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------- --------- --------- --------- --------- ---------
Total return*** 1.58% 3.25% 4.74% 7.30% 2.89%
- -----------------------------------------------------
Ratio to average net assets
- -----------------------------------------------------
Expenses 0.20%(a) 0.20% 0.20% 0.20% 0.20%(a)
- -----------------------------------------------------
Net investment income 3.12%(a) 3.20% 4.53% 6.54% 8.21%(a)
- -----------------------------------------------------
Expense waiver/reimbursement (b) 0.09%(a) 0.09% 0.10% 0.24% 0.68%(a)
- -----------------------------------------------------
Supplemental data
- -----------------------------------------------------
Net assets, end of period (000 omitted) $1,175,435 $1,098,159 $917,418 $473,593 $34,777
- -----------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
Prime Obligations Fund
Notes to Financial Statements
January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
(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, as amended, 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, as amended, applicable to regulated investment
companies and to distribute to shareholders each year all of its taxable
income. Accordingly, no provisions for federal tax are 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.
(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
January 31, 1994, capital paid-in aggregated $1,175,434,837. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
<S> <C> <C>
1994* 1993
Shares outstanding, beginning of period 1,098,159,186 917,417,977
- ---------------------------------------------------------------------------
Shares sold 3,628,381,950 5,287,583,256
- ---------------------------------------------------------------------------
Shares issued to shareholders electing to receive
payment of dividends in Fund shares 1,284,667 1,429,731
- ---------------------------------------------------------------------------
Shares redeemed (3,552,390,966) (5,108,271,778)
- --------------------------------------------------------------------------- ------------------ -----------------
Shares outstanding, end of period 1,175,434,837 1,098,159,186
- --------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
* Six months ended January 31, 1994.
(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. The Adviser has voluntarily agreed to waive a portion
of its fee. The Adviser can modify or terminate this voluntary waiver at any
time at its sole discretion. For the six months ended January 31, 1994, the
Adviser earned an investment advisory fee of $1,091,195 of which $491,038 was
voluntarily waived in accordance with such agreement.
Federated Services Company, the Fund's recordkeeper, transfer and dividend
disbursing agent received for its services a fee of $60,950 for the six months
ended January 31, 1994.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Effective March 1, 1994, Federated
Administrative Services ("FAS") will provide administrative personnel and
services at an annual rate of 0.15 of 1% on the first $250 million of average
aggregate net assets of the total Federated Funds; 0.125 of 1% on the next $250
million; 0.10 of 1% on the next $250 million; and 0.075 of 1% on average
aggregate net assets in excess of $750 million. 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. Certain Officers and Trustees of the Trust are
Officers and Directors of the above corporations.
Trustees Officers
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland J. Christopher Donahue
J. Christopher Donahue President
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Jeannette Fisher-Garber
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
- ----------------------------------------------------------------------------
TAX-FREE
- ----------------------------------------------------------------------------
OBLIGATIONS
- ----------------------------------------------------------------------------
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JANUARY 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
0022807 (3/94)
President's Message
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Tax-Free
Obligations Fund. The report covers the six-month period ended January 31, 1994.
It begins with the Fund's Investment Review, followed by Financial Statements
which include the Portfolio of Investments.
Taxes continue to take more of your income than ever. The Fund responds by
helping you keep more of what you earn. It pursues current income and stability
of principal* through a highly diversified portfolio consisting exclusively of
short-term municipal securities. In addition, you have daily access to your
money.
During the six-month reporting period, tax-free dividends paid to shareholders
totaled $7.2 million. Net assets in the Fund soared during the period, reaching
$816.4 million at the period's end compared to $454 million in assets at the
beginning of the period.
Thank you for your confidence in Tax-Free Obligations Fund. We welcome your
questions and comments.
Sincerely,
[LOGO]
J. Christopher Donahue
President
March 15, 1994
* Although no money market mutual fund can guarantee a stable $1.00 share value,
the Fund has done so since its inception.
Investment Review
- --------------------------------------------------------------------------------
U.S. economic growth accelerated over the six-month period ending January 31,
1994. Real gross domestic product rose at an annual rate of 2.8% in the second
quarter of 1993 and surged in the fourth quarter to a 5.9% annual rate, the
fastest pace since the end of 1987. Although a broad range of sectors
contributed to the quarter's growth, the interest sensitive sectors--housing,
durable goods, and business investment spending--showed the sharpest gains.
Recent economic data indicate that economic activity in the first half of 1994
should continue to be strong, although the pace may be reduced. During this time
inflation measures remained subdued. Increases in the producer price index have
descended sharply from an annual rate of 1.3% as of July 1, 1993, to 0.2% as of
January 31, 1994.
Despite the evidence of stronger growth in the economy, yields on U.S. Treasury
and prime money market instruments remained relatively stable and at
historically low levels over the reporting period. Three-month commercial paper,
a proxy for short-term rates, traded in a narrow range near 3.20% from early
August to late October before moving slightly higher in November to 3.45%. The
increase in rates in November reflected higher year-end financing costs by
corporations. Commercial paper rates then gently declined in December and early
January and remained almost flat to end the period at 3.20%. The Federal Reserve
Board maintained a steady monetary policy as the discount rate and Federal funds
rate targets were unchanged at 3.00% from September, 1992. However, subsequent
to the report period, on February 4, 1994, the Federal Reserve Board changed
monetary policy by increasing the Federal funds rate from 3.00% to 3.25%. This
is the first tightening move since 1989. In response to the tightening of
monetary policy by the Federal Reserve Board and to the expectation of greater
tightening to come, short-term interest rates generally rose in February.
Much like taxable short-term rates, tax-exempt money market rates remained at
historically low levels over the report period. However, unlike the taxable
markets, yields on short-term tax-exempt securities exhibited substantial
volatility, due to imbalances in the supply of paper relative to demand.
Interest rates on seven-day variable rate demand notes (VRDNs) averaged 2.40%
over the period but were as low as 1.70% in January and as high as 3.12% in
December. On a week-to-week basis, tax-exempt money market fund yields are
driven by the VRDN market since they typically comprise 60% or more of a fund's
assets. For the most part, the volatility worked in favor of the tax-exempt
investor, as VRDNs averaged 80% of comparable taxable rates over the report
period. Normally, VRDNs will vary in a range somewhere between 70%-75% of
comparable taxable rates. In the fixed rate note term market, one year municipal
note yields averaged over 76% of the one-year Treasury rates. There were many
opportunities over the report period, particularly late August and September, to
purchase and lock in attractive yields on high quality muni notes.
Reflecting activity in the the short-term market, the 7-day net yield of the
Fund as of January 31, 1994, was 2.20%.* Meanwhile, net assets at the end of the
report period were $816.4 million and the average maturity was 55 days.
Management will continue to monitor the short-term tax-exempt market for
investments consistent with the objective of the Fund.
* Data quoted represent past performance and are not indicative of future
results. Yield will vary.
Tax-Free Obligations Fund
Portfolio of Investments
January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Credit
Rating:
Principal Moody's,
Amount or S&P* Value
Short-Term Municipal Securities--99.4%
<C> <S> <C> <C>
- ----------------------------------------------------------------------------
Alabama--2.7%
------------------------------------------------------------
$ 3,000,000 Alabama State Public School and College Authority, 3.70%
TRANs (Escrowed in Treasuries), Mandatory Tender 11/1/94 NR(1) $ 3,019,740
------------------------------------------------------------
2,600,000 Birmingham, AL, GO Weekly VRDNs (Series 1992A)/(First
Alabama Bank LOC) A-1+ 2,600,000
------------------------------------------------------------
8,600,000 Birmingham, AL, GO Medical Clinic Board Daily VRDNs
(University of Alabama Health Services Foundation)/(Morgan
Guaranty Trust Co. LOC) A-1+ 8,600,000
------------------------------------------------------------
4,200,000 Huntsville, AL, Health Care Authority/Health Care Facilities
Weekly VRDNs (Series 1992A)/(MBIA
Insured) VMIG1 4,200,000
------------------------------------------------------------
900,000 Mobile, AL, IDB, PCR Weekly VRDNs (Series 1993A)/(Alabama
Power Co. Guaranty) A-1 900,000
------------------------------------------------------------
1,000,000 Montgomery, AL, IDB, Pollution Control & Solid Waste
Disposal, 2.15% CP (General Electric
Company Guaranty), Mandatory Tender 2/16/94 A-1+ 1,000,000
------------------------------------------------------------
1,300,000 Montgomery, AL, IDB Weekly VRDNs (Series 1988A)/(Smith
Industries)/(Trust Company Bank LOC) A-1 1,300,000
------------------------------------------------------------ ---------------
Total 21,619,740
------------------------------------------------------------ ---------------
Arizona--0.6%
------------------------------------------------------------
5,000,000 Arizona Agricultural Improvement & Power District, 2.30% CP
(Salt River Project Guaranty), Mandatory Tender 4/11/94 A-1+ 5,000,000
------------------------------------------------------------ ---------------
Arkansas--0.2%
------------------------------------------------------------
$ 1,000,000 Sheridan, AR, IDA Weekly VRDNs (H.H. Robertson Co.)/(PNC
Bank N.A. LOC) VMIG1 $ 1,000,000
------------------------------------------------------------
1,000,000 Sheidan, AR, IDR Weekly VRDNs (Series B)/(H.H. Robertson
Co.)/(PNC Bank N.A. LOC) P-1 1,000,000
------------------------------------------------------------ ---------------
Total 2,000,000
------------------------------------------------------------ ---------------
California--7.0%
------------------------------------------------------------
5,000,000 Alameda, CA, 3.00% TRANs, 6/30/94 MIGI 5,004,953
------------------------------------------------------------
4,000,000 California Pollution Control Finance Authority Weekly VRDNs
(Series 1991)/(North County Recycling & Energy Recovery
Centre)/(Union Bank of Switzerland LOC) A-1+ 4,000,000
------------------------------------------------------------
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+ 5,010,232
------------------------------------------------------------
15,000,000 California State, 3.50% RANs (Series 1993-1994),
6/28/94 SP-1 15,040,968
------------------------------------------------------------
16,350,000 Los Angeles County, CA, 3.00% TRANs, 6/30/94 SP-1+ 16,358,797
------------------------------------------------------------
6,750,000 San Bernardino County, CA, 3.25% TRANs,
7/27/94 MIGI 6,762,583
------------------------------------------------------------
5,000,000 Student Education Loan Marketing Corp., CA, 2.65% Annual
TOBs (Series 1993A)/(Dresdner Bank AG LOC), Mandatory Tender
11/1/94 A-1+ 5,000,000
------------------------------------------------------------ ---------------
Total 57,177,533
------------------------------------------------------------ ---------------
Colorado--1.6%
------------------------------------------------------------
10,000,000 Arapahoe County, CO, Capital Improvement Authority, 2.85%
Semi-Annual TOBs (E-470)/(Society Generale LOC), Optional
Tender 2/28/94 SP-1+ 10,000,000
------------------------------------------------------------
$ 2,750,000 Denver (City and County), CO, 3.50% Annual TOBs (MBIA
Insured), Mandatory Tender 12/15/94 A-1+ $ 2,750,000
------------------------------------------------------------ ---------------
Total 12,750,000
------------------------------------------------------------ ---------------
Connecticut--4.3%
------------------------------------------------------------
18,000,000 Connecticut Development Authority Weekly VRDNs (Independence
Living, Inc.)/(Credit Commercial de France LOC) VMIG1 18,000,000
------------------------------------------------------------
11,000,000 Connecticut State Transportation Infrastructure
Authority Weekly VRDNs (Industrial Bank of Japan Ltd. LOC) A-1+ 11,000,000
------------------------------------------------------------
6,000,000 Connecticut State, HFA, 2.80% Annual TOBs (Series
1993E-1)/(Housing Mortgage Finance Program), Mandatory
Tender 11/15/94 A-1+ 6,000,000
------------------------------------------------------------ ---------------
Total 35,000,000
------------------------------------------------------------ ---------------
Delaware--0.6%
------------------------------------------------------------
5,100,000 Delaware Health Facilities Authority Weekly VRDNs (Series
1985 BTP-19A)/(The Medical Center of Delaware)/(MBIA
Insured) NR(1) 5,100,000
------------------------------------------------------------ ---------------
Florida--6.9%
------------------------------------------------------------
2,500,000 Florida Municipal Loan Council, 2.85% CP (Series
1985-1)/(Florida League of Cities)/(Sumitomo Bank Ltd. LOC),
Mandatory Tender 2/11/94 VMIG1 2,500,000
------------------------------------------------------------
4,300,000 Florida Municipal Loan Council, 2.85% CP(Series
1985-2)/(Florida League of Cities)/(Sumitomo Bank Ltd. LOC),
Mandatory Tender 2/11/94 VMIG1 4,300,000
------------------------------------------------------------
6,170,000 Florida State Board of Education, 2.70%
Semi-Annual TOBs (Series 1989A), Optional
Tender 6/1/94 NR(2) 6,170,000
------------------------------------------------------------
$ 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
------------------------------------------------------------
4,100,000 Sarasota County, FL, Public Hospital District, 2.55% CP
(Sarasota Memorial Hospital Guaranty), Mandatory Tender
2/18/94 VMIG1 4,100,000
------------------------------------------------------------
8,000,000 Sarasota County, FL, Public Hospital District, 2.60% CP
(Sarasota Memorial Hospital Guaranty), Mandatory Tender
2/25/94 VMIG1 8,000,000
------------------------------------------------------------
11,000,000 Sunshine State Governmental Finance Commission, 2.05% CP
(Morgan Guaranty Trust Co., National Westminster Bank PLC
and Union Bank of Switzerland LOCs), Mandatory Tender
2/18/94 VMIG1 11,000,000
------------------------------------------------------------
5,000,000 Sunshine State Governmental Finance Commission, 2.10% CP
(Morgan Guaranty Trust Co., National Westminster Bank PLC
and Union Bank of Switzerland LOCs), Mandatory Tender
2/24/94 VMIG1 5,000,000
------------------------------------------------------------
2,000,000 University of Florida Athletic Association Weekly VRDNs
(University of Florida Stadium)/(Sun Bank N.A. LOC) VMIG1 2,000,000
------------------------------------------------------------
6,175,000 Volusia County, FL, HFA, Weekly VRDNs
(Fisherman's Landing)/(Mellon Bank N.A. LOC) P-1 6,175,000
------------------------------------------------------------
1,825,000 Volusia County, FL, IDA Weekly VRDNs (Crane Cams)/(First
Union National Bank LOC) P-1 1,825,000
------------------------------------------------------------ ---------------
Total 56,185,000
------------------------------------------------------------ ---------------
Georgia--1.9%
------------------------------------------------------------
$ 1,960,000 DeKalb County, GA, IDA Weekly VRDNs (Three Score,
Inc.)/(Sovran Bank N.A. LOC) P-1 $ 1,960,000
------------------------------------------------------------
6,730,000 DeKalb County, GA, Multi-Family Housing
Authority Weekly VRDNs (Series 1985Q)/(Crow
Wood Arbor Assoc. Ltd.)/(Chemical Bank LOC) A-1 6,730,000
------------------------------------------------------------
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
------------------------------------------------------------
5,000,000 Georgia State, Single Family Residential Finance
Authority, 2.65% Semi-Annual TOBs, 3/1/94 NR(2) 5,000,000
------------------------------------------------------------ ---------------
Total 15,290,000
------------------------------------------------------------ ---------------
Illinois--4.5%
------------------------------------------------------------
7,000,000 Chicago, IL, Weekly VRDNs (Series SB92)/(Canadian Imperial
Bank of Commerce LOC) A-1+ 7,000,000
------------------------------------------------------------
3,000,000 Illinois Development Finance Authority Weekly VRDNs
(Newlywed Food)/(Mellon Bank N.A. LOC) A-1 3,000,000
------------------------------------------------------------
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
------------------------------------------------------------
13,000,000 Illinois State Toll Highway Authority Weekly VRDNs (Series
1993B)/(MBIA Insured) VMIG1 13,000,000
------------------------------------------------------------
8,000,000 Illinois State, Sales Tax Revenue Weekly VRDNs
(P-Floats) VMIG1 8,000,000
------------------------------------------------------------ ---------------
Total 37,000,000
------------------------------------------------------------ ---------------
Indiana--3.5%
------------------------------------------------------------
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.)/(First
National Bank, Louisville LOC) P-1 $ 1,370,000
------------------------------------------------------------
20,000,000 Indiana Bond Bank, 3.03% RANs (Series A2),
1/17/95 SP-1+ 20,052,115
------------------------------------------------------------
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 28,172,115
------------------------------------------------------------ ---------------
Kansas--0.9%
------------------------------------------------------------
7,400,000 Praire Village, KS, Weekly VRDNs (Series 1993B)/ (Claridge
Court)/(Banque Paribas LOC) A-1 7,400,000
------------------------------------------------------------ ---------------
Louisiana--1.1%
------------------------------------------------------------
2,000,000 Hammond, LA, IDA Daily VRDNs (Jack Eckerd, Inc.)/(Westpac
Banking Corp. LOC) P-1 2,000,000
------------------------------------------------------------
7,000,000 Louisiana Public Facilities Authority, 3.25% Annual TOBs
(Series C)/(Orleans Parish School Board
Guaranty), 8/12/94 SP-1+ 7,014,390
------------------------------------------------------------ ---------------
Total 9,014,390
------------------------------------------------------------ ---------------
Maryland--1.4%
------------------------------------------------------------
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 (Occidental
Petroleum)/(National Westminster Bank LOC) A-1+ 2,100,000
------------------------------------------------------------
6,500,000 Maryland State and Local Facilities Weekly VRDNs (P-Floats) VMIG1 6,500,000
------------------------------------------------------------ ---------------
Total 11,500,000
------------------------------------------------------------ ---------------
Massachusetts--3.5%
------------------------------------------------------------
$ 3,000,000 Commonwealth of Massachusetts Daily VRDNs
(Series 1990D)/(ABN AMRO Bank N.V. LOC) VMIG1 $ 3,000,000
------------------------------------------------------------
4,000,000 Commonwealth of Massachusetts Daily VRDNs
(Series E)/(ABN AMRO Bank N.V. LOC) A-1+ 4,000,000
------------------------------------------------------------
16,000,000 Commonwealth of Massachusetts Dedicated Income Tax Daily
VRDNs (Series B)/(National Westminster Bank PLC LOC) A-1+ 16,000,000
------------------------------------------------------------
5,500,000 Massachusetts Bay Transit Authority, 2.85% Semi-Annual TOBs
(Long Term Credit Bank of Japan Ltd. LOC), 3/1/94 A-1 5,500,000
------------------------------------------------------------ ---------------
Total 28,500,000
------------------------------------------------------------ ---------------
Minnesota--8.4%
------------------------------------------------------------
3,500,000 Eagan, MN, Multi-Family Housing Weekly VRDNs (Series
1992A)/(Cinnamon Ridge)/(Mellon Bank N.A. LOC) VMIG1 3,500,000
------------------------------------------------------------
10,000,000 Minneapolis, MN, Weekly VRDNs (Series 1993)/ (Commercial
Development)/(Market Square Real
Estate, Inc.)/(Norwest Bank of Minnesota LOC) A-1+ 10,000,000
------------------------------------------------------------
4,000,000 Minnesota State Commissioner of Iron Range
Resources & Rehabilitation Weekly VRDNs (Series
1991)/(Louisiana Pacific Corp.)/(Wachovia Bank & Trust Co.
LOC) P-1 4,000,000
------------------------------------------------------------
9,300,000 Minnesota State Higher Education Facility Authority Weekly
VRDNs (Carlton College Guaranty) VMIG1 9,300,000
------------------------------------------------------------
2,000,000 Minnesota State Higher Education Facility Authority Weekly
VRDNs (Series 3D)/(College of
St. Benedict)/(Sumitomo Bank Ltd. LOC) VMIG1 2,000,000
------------------------------------------------------------
7,970,000 Minnesota State Higher Education Facility Authority Weekly
VRDNs (Supplemental Student Loan
Program)/(Mitsubishi Bank Ltd. LOC) VMIG1 7,970,000
------------------------------------------------------------
$ 6,100,000 Rochester, MN, Health Care Facility Weekly VRDNs (Mayo
Clinic Foundation Guaranty) VMIG1 $ 6,100,000
------------------------------------------------------------
19,000,000 Rochester, MN, Hospital Authority Weekly VRDNs (Mayo Clinic
Foundation Guaranty) VMIG1 19,000,000
------------------------------------------------------------
7,000,000 Saint Paul Port Authority, MN, Tax Increment Weekly VRDNs
(Series 1991)/(First Bank N.A. LOC) A-1 7,000,000
------------------------------------------------------------ ---------------
Total 68,870,000
------------------------------------------------------------ ---------------
Mississippi--0.2%
------------------------------------------------------------
1,875,000 Hinds County, MS, Urban Renewal Refunding Weekly VRDNs
(Series 1991)/(North State Street)/ (AmSouth Bank N.A. LOC) VMIG1 1,875,000
------------------------------------------------------------ ---------------
Missouri--0.5%
------------------------------------------------------------
4,200,000 Poplar Bluff, MO, IDA Weekly VRDNs (Series 1987)/(Gates
Rubber Co.)/(National Bank of Detroit LOC) A-1+ 4,200,000
------------------------------------------------------------ ---------------
Montana--0.8%
------------------------------------------------------------
6,500,000 Forsyth, Rosebud County, MT, PCR, 2.20% CP (Pacificorp,
Inc.)/(Industrial Bank of Japan Ltd. LOC), Mandatory Tender
2/24/94 A-1+ 6,500,000
------------------------------------------------------------ ---------------
Nevada--0.4%
------------------------------------------------------------
3,000,000 Director of the State of Nevada, 2.90% Annual TOBs (FMC
Corp.)/(Barclays Bank PLC LOC),
Optional Tender 9/15/94 VMIG1 3,000,000
------------------------------------------------------------ ---------------
New Jersey--2.5%
------------------------------------------------------------
20,000,000 New Jersey State, 3.00% TRANs (Series 1992B),
6/15/94 SP-1+ 20,066,663
------------------------------------------------------------ ---------------
New York--4.2%
------------------------------------------------------------
$ 15,000,000 New York City, NY, 3.125% GO TANs (Series 1994A), 4/8/94 SP-1+ $ 15,014,882
------------------------------------------------------------
3,000,000 New York City, NY, 3.50% RANs, 4/15/94 SP-1 3,004,124
------------------------------------------------------------
4,000,000 New York City, NY, Weekly VRDNs (Industrial Bank of Japan
Ltd. LOC) A-1+ 4,000,000
------------------------------------------------------------
10,000,000 New York State Energy Research and Development Authority
Daily VRDNs (Niagara Mohawk Power)/ (Long Term Credit Bank
of Japan Ltd. LOC) A-1+ 10,000,000
------------------------------------------------------------
2,000,000 Niagara County, NY, IDA Weekly VRDNs (Allegheny Ludlum Steel
Corp.)/(PNC Bank N.A. LOC) A-1 2,000,000
------------------------------------------------------------ ---------------
Total 34,019,006
------------------------------------------------------------ ---------------
North Carolina--6.3%
------------------------------------------------------------
7,377,877 Charlotte, NC, Weekly VRDNs (Series 1992) NR(1) 7,377,877
------------------------------------------------------------
2,300,000 Durham, NC, 2.50% CP (Series 1993A)/(Wachovia Bank & Trust
Co. N.A. LOC), Mandatory Tender
2/8/94 A-1+ 2,300,000
------------------------------------------------------------
15,000,000 Martin County, NC, IFA Weekly VRDNs (Series
1993)/(Weyerhauser, Inc. Guaranty) A-1 15,000,000
------------------------------------------------------------
1,575,000 NCNB Pooled Tax-Exempt Trust Weekly VRDNs (Series
1990A)/(NationsBank of North Carolina N.A. LOC) P-1 1,575,000
------------------------------------------------------------
16,000,000 North Carolina Municipal Power Agency Pound1, 2.40% CP
(Catawba Electric), Mandatory Tender 5/20/94 A-1+ 16,000,000
------------------------------------------------------------
9,500,000 North Carolina Municipal Power Agency Pound1, 2.55% CP
(Catawba Electric), Mandatory Tender 2/18/94 A-1 9,500,000
------------------------------------------------------------ ---------------
Total 51,752,877
------------------------------------------------------------ ---------------
Ohio--12.4%
------------------------------------------------------------
$ 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, Building Acquisition, 2.93% GO UT BANs,
6/1/94 NR(2) 3,001,244
------------------------------------------------------------
1,100,000 Cuyahoga County, OH, Hospital Authority Weekly VRDNs (St.
Luke's Hospital)/(First National Bank of Chicago LOC) VMIG1 1,100,000
------------------------------------------------------------
2,750,000 Cuyahoga County, OH, IDA Weekly VRDNs (H.P. Parking
Co.)/(Society National Bank LOC) P-1 2,750,000
------------------------------------------------------------
3,900,000 Franklin County, OH, Hospital Facility Authority Weekly
VRDNs (St. Anthony's Hospital)/(National City Bank,
Cleveland LOC) VMIG1 3,900,000
------------------------------------------------------------
10,700,000 Franklin County, OH, Weekly VRDNs (Series
1992)/(Rickenbacker Holdings, Inc.)/(Bank One,
Columbus N.A. LOC) P-1 10,700,000
------------------------------------------------------------
4,900,000 Hamilton County, OH, Health Care System Weekly VRDNs (West
Park Retirement Community, Inc.)/ (Fifth Third Bank LOC) VMIG1 4,900,000
------------------------------------------------------------
21,000,000 Hamilton County, OH, Hospital Authority Revenue Bonds Weekly
VRDNs (Series 1986A)/(Good
Samaritan Hospital Guaranty) A-1 21,000,000
------------------------------------------------------------
2,650,000 Kettering, OH, IDA Weekly VRDNs (Center-Plex Venture,
Inc.)/(Society National Bank LOC) P-1 2,650,000
------------------------------------------------------------
2,885,000 Lorain County, OH, Hospital Facilities Revenue Bonds 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
------------------------------------------------------------
$ 4,500,000 Lucas County, OH, HFA Weekly VRDNs (Riverside
Hospital)/(Huntington National Bank LOC) P-1 $ 4,500,000
------------------------------------------------------------
2,000,000 Lucas County, OH, Weekly VRDNs (Series 1991)/ (Ohio Citizens
Bank)/(National City Bank, Cleveland LOC) P-1 2,000,000
------------------------------------------------------------
2,725,000 Marion County, OH, Hospital Authority, 2.65%
Semi-Annual TOBs (Series 1991)/(Pooled Lease
Program)/(Bank One, Columbus N.A. LOC),
Optional Tender 5/2/94 A-1+ 2,725,000
------------------------------------------------------------
5,000,000 Mayfield Village, OH, IDA Weekly VRDNs (Beta Campus
Co.)/(Society National Bank LOC) P-1 5,000,000
------------------------------------------------------------
1,730,000 Montgomery County, OH, IDA Weekly VRDNs (Bethesda Two Ltd.
Partnership)/(Huntington
National Bank LOC) P-1 1,730,000
------------------------------------------------------------
850,000 Montgomery County, OH, IDA Weekly VRDNs (Center-Plex
Venture, Inc.)/(Society National Bank LOC) P-1 850,000
------------------------------------------------------------
4,800,000 Muskingham County, OH, Hospital Facilities
Authority Weekly VRDNs (Bethesda Care Systems)/ (BancOhio
National Bank LOC) VMIG1 4,800,000
------------------------------------------------------------
4,000,000 Ohio State Air Quality Development Authority, 2.70% CP
(Cincinnati Gas & Electric Co.)/(Westpac Banking Corp. LOC),
Mandatory Tender 2/14/94 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
------------------------------------------------------------
5,000,000 Ohio State Water Development Authority, 2.55% CP (Series
A)/(Cleveland Electric Illuminating Co. Guaranty)/(FGIC
Insured), Mandatory Tender
3/10/94 A-1+ 5,000,000
------------------------------------------------------------
$ 5,000,000 Richland County, OH, 2.96% GO BANs, 9/15/94 NR(3) $ 5,006,350
------------------------------------------------------------
2,500,000 Scioto County, OH, Hospital Authority Weekly VRDNs (AMBAC
Insured) A-1 2,500,000
------------------------------------------------------------
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)/ (Society
National Bank LOC) P-1 900,000
------------------------------------------------------------
545,000 Summit County, OH, IDR, 2.75% Annual TOBs (SGS Tool
Co.)/(National City Bank, Cleveland LOC), Mandatory Tender
5/2/94 P-1 545,000
------------------------------------------------------------
1,150,000 Twinsburg, OH, IDA Weekly VRDNs (Carl
Massara)/(Society National Bank LOC) P-1 1,150,000
------------------------------------------------------------ ---------------
Total 101,117,594
------------------------------------------------------------ ---------------
Oklahoma--0.5%
------------------------------------------------------------
3,690,000 Oklahoma County, OK, Industrial Authority Retirement Center,
2.80% Semi-Annual TOBs (Series 1989)/(Baptist General
Convention)/(Sumitomo Bank Ltd. LOC), Mandatory Tender
3/1/94 VMIG1 3,690,063
------------------------------------------------------------ ---------------
Pennsylvania--8.0%
------------------------------------------------------------
5,000,000 Allegheny County, PA, IDA, PCR, 2.70% Annual TOBs (Series
1992A)/(Duquesne Light Company)/ (Canadian Imperial Bank of
Commerce LOC), Mandatory Tender 7/12/94 P-1 5,000,000
------------------------------------------------------------
7,000,000 Authority for Improvements in Municipalities, PA, Weekly
VRDNs (Pooled Hospital & Equipment
Leasing Program)/(MBIA Insured) VMIG1 7,000,000
------------------------------------------------------------
1,125,000 Delaware County, PA, IDA, PCR Weekly VRDNs (Series
1993A)/(Philadelphia Electric Co.)/(Toronto-Dominion Bank
LOC) A-1+ 1,125,000
------------------------------------------------------------
$ 4,000,000 Delaware County, PA, PCA, 2.80% CP
(Philadelphia Electric Co.)/(FGIC Insured),
Mandatory Tender 3/23/94 A-1+ $ 4,000,000
------------------------------------------------------------
4,700,000 Delaware County, PA, Weekly VRDNs (The
American College)/(Provident National Bank LOC) P-1 4,700,000
------------------------------------------------------------
3,900,000 East Hempfield Township, PA, IDA Weekly VRDNs (Series
1985)/(Yellow Freight System, Inc.)/
(Wachovia Bank & Trust Co. N.A. LOC) A-1 3,900,000
------------------------------------------------------------
6,500,000 Millcreek Township School District, PA, 2.73% TRANs, 6/30/94 NR(3) 6,501,014
------------------------------------------------------------
1,000,000 Pennsylvania Higher Education Facilities Authority Daily
VRDNs (Temple University)/(Morgan
Guaranty Trust Co. LOC) A-1+ 1,000,000
------------------------------------------------------------
1,800,000 Pennsylvania Higher Education Facilities Authority Weekly
VRDNs (Carnegie-Mellon University
Guaranty) A-1+ 1,800,000
------------------------------------------------------------
4,100,000 Pennsylvania State Higher Education Assistance Agency Weekly
VRDNs (Student Loan Marketing Association LOC) A-1+ 4,100,000
------------------------------------------------------------
7,700,000 Philadelphia, PA, 2.55% GO CP (Series 1990)/(Fuji Bank Ltd.
LOC), Mandatory Tender 5/26/94 A-1 7,700,000
------------------------------------------------------------
5,000,000 Philadelphia, PA, 3.25% TANs (Series B)/
(Corestates Bank N.A. LOC), 6/15/94 A-1 5,008,933
------------------------------------------------------------
1,300,000 Quakertown, PA, Weekly VRDNs (Hapsco Group)/ (First National
Bank, Chicago LOC) VMIG1 1,300,000
------------------------------------------------------------
2,600,000 Sayre, PA, Health Care Facilities Authority Hospital Weekly
VRDNs (Series C)/(VHA of PA Capital
Asset Finance Program)/(AMBAC Insured) A-1 2,600,000
------------------------------------------------------------
$ 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 65,734,947
------------------------------------------------------------ ---------------
Puerto Rico--1.5%
------------------------------------------------------------
12,200,000 Government Development Bank of Puerto Rico Weekly VRDNs
(Credit Suisse and Sumitomo Bank Ltd. LOCs) A-1+ 12,200,000
------------------------------------------------------------ ---------------
Rhode Island--1.1%
------------------------------------------------------------
9,000,000 Pawtucket, RI, 2.50% GO BANs, 4/25/94 NR(3) 9,000,995
------------------------------------------------------------ ---------------
South Carolina--2.3%
------------------------------------------------------------
4,000,000 Charleston, SC, 2.62% TANs (Series 1993), 3/15/94 NR(2) 4,000,086
------------------------------------------------------------
14,500,000 Greenville, SC, Hospital System Board of Trustees Weekly
VRDNs (Series 1993B) A-1+ 14,500,000
------------------------------------------------------------ ---------------
Total 18,500,086
------------------------------------------------------------ ---------------
Tennessee--3.9%
------------------------------------------------------------
8,600,000 Chattanooga, TN, HEFA Weekly VRDNs (Siskin Hospital for
Physical Rehabilitation, Inc.)/ (Sumitomo Bank Ltd. LOC) A-1+ 8,600,000
------------------------------------------------------------
10,700,000 Chattanooga-Hamilton County, TN, Hospital
Authority Daily VRDNs (Erlanger Medical Center Guaranty) A-1 10,700,000
------------------------------------------------------------
1,000,000 Jackson County, TN, IDB Daily VRDNs (Essette Co.)/(Morgan
Guaranty Trust Co. LOC) A-1+ 1,000,000
------------------------------------------------------------
$ 11,900,000 Metro Nashville Tennessee Airport Authority
Weekly VRDNs (Series 1993)/(FGIC Insured) A-1+ $ 11,900,000
------------------------------------------------------------ ---------------
Total 32,200,000
------------------------------------------------------------ ---------------
Texas--2.5%
------------------------------------------------------------
2,000,000 Houston, TX, HFDC Daily VRDNs (Methodist
Hospital Guaranty) A-1+ 2,000,000
------------------------------------------------------------
2,020,000 North Richland Hills, TX, IDC Weekly VRDNs (Technol,
Inc.)/(NationsBank of North Carolina
N.A. LOC) P-1 2,020,000
------------------------------------------------------------
16,000,000 Texas State, 3.25% TRANs (Series 1993), 8/31/94 SP-1+ 16,042,700
------------------------------------------------------------ ---------------
Total 20,062,700
------------------------------------------------------------ ---------------
Virginia--1.1%
------------------------------------------------------------
6,200,000 Roanoke, VA, IDA Daily VRDNs (Series 1992A)/ (Carilion
Health System)/(Morgan Guaranty Trust Co. LOC) A-1+ 6,200,000
------------------------------------------------------------
3,140,000 Virginia Beach, VA, Development Authority Weekly VRDNs (GSC
Diamond Associates)/(Sovran Bank N.A. LOC) P-1 3,140,000
------------------------------------------------------------ ---------------
Total 9,340,000
------------------------------------------------------------ ---------------
Wisconsin--0.1%
------------------------------------------------------------
1,100,000 Seymour, WI, IDA Weekly VRDNs (Beatrice Cheese, Inc.)/(Bank
of New York LOC) P-1 1,100,000
------------------------------------------------------------ ---------------
Wyoming--0.1%
------------------------------------------------------------
1,125,000 Natrona County, WY, Hospital Revenue, 3.90% CP (W.W.
Grainger, Inc. Guaranty), Mandatory Tender 6/1/94 P-1 1,125,000
------------------------------------------------------------ ---------------
Other--1.9%
------------------------------------------------------------
$ 10,000,000 Clipper Tax Exempt Trust, Weekly VRDNs (Series 1993-1) A-1+ $ 10,000,000
------------------------------------------------------------
5,220,722 LaSalle National Bank Bustops Trust Weekly VRDNs (Series
1993A)/(LaSalle National Bank BPA) A-1+ 5,220,722
------------------------------------------------------------ ---------------
Total 15,220,722
------------------------------------------------------------ ---------------
Total Investments, at amortized cost $ 811,284,431\
------------------------------------------------------------ ---------------
* See Notes to Portfolio of Investments in Statement of Additional Information
dated September 30, 1993.
\ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($816,425,351) at January 31, 1994.
The following abbreviations are used in this portfolio:
</TABLE>
<TABLE>
<S> <C>
AMBAC American Municipal Bond Assurance
Corporation
BANs Bond Anticipation Notes
BPA Bond Purchase Agreement
CP Commercial Paper
FGIC Financial Guaranty Insurance Co.
FSA Financial Security Assurance
GNMA Government National Mortgage
Association
GO General Obligation
HEFA Health and Education Facilities
Authority
HFA Housing Finance Authority
HFDC Health Facility Development Authority
I DA Industrial Development Authority
I DB Industrial Development Bond
I DR Industrial Development Revenue
I FA Industrial Finance Authority
L OC Letter of Credit
LT Limited Tax
MBIA Municipal Bond Investors Assurance
PCA Pollution Control Authority
PCR Pollution Control Revenue
PLC Public Limited Company
RANs Revenue Anticipation Notes
TANs Tax Anticipation Notes
TOBs Tender Option Bonds
TRANs Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDNs Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Tax-Free Obligations Fund
Statement of Assets and Liabilities
January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
- ------------------------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $ 811,284,431
- ------------------------------------------------------------------------------------------------
Cash 2,495,845
- ------------------------------------------------------------------------------------------------
Interest receivable 4,071,798
- ------------------------------------------------------------------------------------------------
Prepaid/deferred expenses (Note 2E) 6,674
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 817,858,748
- ------------------------------------------------------------------------------------------------
Liabilities:
- ------------------------------------------------------------------------------------------------
Dividends payable $ 1,354,188
- ---------------------------------------------------------------------------------
Accrued expenses and other liabilities 79,209
- --------------------------------------------------------------------------------- -------------
Total liabilities 1,433,397
- ------------------------------------------------------------------------------------------------ ---------------
Net Assets for 816,446,777 shares of beneficial interest outstanding $ 816,425,351
- ------------------------------------------------------------------------------------------------ ---------------
Net Assets Consist of:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 816,446,777
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (21,426)
- ------------------------------------------------------------------------------------------------ ---------------
Total $ 816,425,351
- ------------------------------------------------------------------------------------------------ ---------------
Net Asset Value, Offering Price, and Redemption Price Per Share
($816,425,351 / 816,446,777 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------ ---------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
Tax-Free Obligations Fund
Statement of Operations
Six Months Ended January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2B) $ 7,823,783
- ---------------------------------------------------------------------------------------------------
Expenses:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 5) $ 607,242
- ------------------------------------------------------------------------------------
Trustees' fees 3,200
- ------------------------------------------------------------------------------------
Administrative personnel services fee (Note 5) 219,754
- ------------------------------------------------------------------------------------
Custodian fees 72,526
- ------------------------------------------------------------------------------------
Recordkeeping fees (Note 5) 6,745
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 5) 41,852
- ------------------------------------------------------------------------------------
Auditing fees 6,572
- ------------------------------------------------------------------------------------
Legal fees 4,645
- ------------------------------------------------------------------------------------
Printing and postage 7,796
- ------------------------------------------------------------------------------------
Fund share registration costs 53,040
- ------------------------------------------------------------------------------------
Insurance premiums 5,900
- ------------------------------------------------------------------------------------
Miscellaneous 3,040
- ------------------------------------------------------------------------------------ -------------
Total expenses 1,032,312
- ------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 425,070
- ------------------------------------------------------------------------------------ -------------
Net expenses 607,242
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 7,216,541
- --------------------------------------------------------------------------------------------------- -------------
Net realized gain on investments 2,400
- ---------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 7,218,941
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Tax-Free Obligations Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended July 31,
<S> <C> <C>
1994* 1993
Increase (Decrease) in Net Assets:
- -------------------------------------------------------------------------
Operations--
- -------------------------------------------------------------------------
Net investment income $ 7,216,541 $ 10,222,200
- -------------------------------------------------------------------------
Net realized gain (loss) on investments ($2,400 net gain, and $23,826 net
loss, as computed for federal tax purposes, respectively) 2,400 (23,826)
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets resulting from operations 7,218,941 10,198,374
- ------------------------------------------------------------------------- ------------------ ------------------
Distributions to Shareholders (Note 3)--
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income (7,216,541) (10,222,200)
- ------------------------------------------------------------------------- ------------------ ------------------
Fund Share (Principal) Transactions (Note 4)--
- -------------------------------------------------------------------------
Proceeds from sale of shares 1,696,233,983 1,565,436,002
- -------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to
receive payment of dividends in Fund shares 235,516 8,569
- -------------------------------------------------------------------------
Cost of shares redeemed (1,334,165,345) (1,420,156,576)
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets from Fund share transactions 362,304,154 145,287,995
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets 362,306,554 145,264,169
- -------------------------------------------------------------------------
Net Assets:
- -------------------------------------------------------------------------
Beginning of period 454,118,797 308,854,628
- ------------------------------------------------------------------------- ------------------ ------------------
End of period $ 816,425,351 $ 454,118,797
- ------------------------------------------------------------------------- ------------------ ------------------
*Six months ended January 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
</TABLE>
Tax-Free Obligations Fund
Financial Highlights
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended July 31,
<S> <C> <C> <C> <C> <C>
1994* 1993 1992 1991 1990**
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------- ----------- --------- --------- --------- -----------
Income from investment operations
- --------------------------------------------------------------------
Net investment income 0.01 0.03 0.04 0.05 0.04
- --------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.03) (0.04) (0.05) (0.04)
- -------------------------------------------------------------------- ----------- --------- --------- --------- -----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------- ----------- --------- --------- --------- -----------
Total return*** 1.21% 2.54% 3.37% 5.13% 3.70%
- --------------------------------------------------------------------
Ratios to Average Net Assets
- --------------------------------------------------------------------
Expenses 0.20%(a) 0.20% 0.20% 0.20% 0.20%(a)
- --------------------------------------------------------------------
Net investment income 2.38%(a) 2.49% 3.58% 4.93% 5.75%(a)
- --------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.14%(a) 0.14% 0.17% 0.26% 0.21%(a)
- --------------------------------------------------------------------
Supplemental data
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $816,425 $454,119 $308,855 $165,669 $145,552
- --------------------------------------------------------------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
** Reflects operations for the period from December 12, 1989 (date of initial
public investment) to July 31, 1990.
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
Tax-Free Obligations Fund
Notes to Financial Statements
January 31, 1994
(unaudited)
- --------------------------------------------------------------------------------
(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 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.
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.
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 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.
E. 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.
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.
(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
January 31, 1994, capital paid-in aggregated $816,446,777. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
<S> <C> <C>
1994* 1993
Shares outstanding, beginning of period 454,142,623 308,854,628
- ----------------------------------------------------------------------------
Shares sold 1,696,233,983 1,565,436,002
- ----------------------------------------------------------------------------
Shares issued to shareholders electing to receive payment
of dividends in Fund shares 235,516 8,569
- ----------------------------------------------------------------------------
Shares redeemed (1,334,165,345) (1,420,156,576)
- ---------------------------------------------------------------------------- ----------------- -----------------
Shares outstanding, end of period 816,446,777 454,142,623
- ---------------------------------------------------------------------------- ----------------- -----------------
*Six months ended January 31, 1994.
</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. The Adviser has voluntarily agreed to waive a portion
of its fee. The Adviser can modify or terminate this voluntary waiver at any
time at its sole discretion. For the six months ended January 31, 1994, the
Adviser earned an investment advisory fee of $607,242, of which $425,070 was
voluntarily waived in accordance with such agreement.
Federated Services Company, the Fund's recordkeeper, transfer and dividend
disbursing agent received for its services a fee of $48,597 for the six months
ended January 31, 1994.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Effective March 1, 1994, Federated
Administratvie Services ("FAS") will provide administrative personnel and
services at an annual rate of 0.15 of 1% on the first $250 million of average
aggregate net assets of the total Federated Funds; 0.125 of 1% on the next $250
million; 0.10 of 1% on the next $250 million; and 0.075 of 1% on average
aggregate net assets in excess of $750 million. 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. Certain Officers and Trustees of the Trust
are Officers and Directors of the above corporations.
Trustees Officers
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland J. Christopher Donahue
J. Christopher Donahue President
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Jeannette Fisher-Garber
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Fund's prospectus which contains facts concerning its
objective and policies, management fees, expenses and other information.
----------------------------------------------------------------------------
TREASURY
- ----------------------------------------------------------------------------
OBLIGATIONS
- ----------------------------------------------------------------------------
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JANUARY 31, 1994
[LOGO] FEDERATED SECURITIES CORP.
--------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
1022004 (3/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Treasury
Obligations Fund. The report covers the six-month period ended January 31,
1994. It begins with the Fund's Investment Review, followed by Financial
Statements which include the Portfolio of Investments.
The Fund pursues current income and stability of principal* through a
diversified portfolio consisting exclusively of short-term U.S. Treasury
obligations and in repurchase agreements collateralized by these obligations.
In addition, you have daily access to your money.
During the six-month reporting period, dividends paid to shareholders totaled
$38.4 million. At the end of the period, net assets stood at $2.2 billion.
Thank you for your confidence in Treasury Obligations Fund. As always, your
questions and comments are always welcome.
Sincerely,
[LOGO]
J. Christopher Donahue President
March 15, 1994
* Although no money market mutual fund can guarantee a stable $1.00 share
value, the Fund has done so since its inception.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Treasury Obligations Fund, which is rated AAAm by Standard & Poor's and Aaa by
Moody's*, is invested in direct obligations of the U.S. Treasury, either in the
form of notes and bills or as collateral for repurchase agreements. The Fund's
Treasury bill position has increased due to a narrowing of the yield spread
that notes typically offer relative to bills. Recently, the Fund has been
managed with an average maturity of 45-55 days.
During the semi-annual reporting period, the Federal Reserve continued to
target a Federal funds rate of 3%. With the Federal Reserve on hold, movements
in short rates over the period were driven by market sentiment. Short rates
declined through late September as inflationary worries subsided in the face of
weaker economic growth and favorable reports on consumer and producer prices.
Confronted with strong fourth quarter economic growth, short rates climbed
higher through November on speculation that the Federal Reserve might be moved
to tighten monetary policy in the first half of 1994 if the growth proved to be
sustainable. Rates then drifted lower through the end of the reporting period.
A comparison of six-month Treasury bill rates during the same time frame showed
a decline from 3.33% to 3.11% in late September, followed by a rise to 3.40% at
the end of November and then a decline to 3.24% by the end of January, 1994. As
a yield advantage continued to exist for investments in repurchase agreements
versus direct investments in short-term Treasury securities, a substantial
percentage of the Fund's investments remained in repurchase agreements. The
Fund maintained a barbelled portfolio structure of a significant position in
overnight repurchase agreements combined with securities with longer maturities
of six to twelve months.
Shortly after the end of the reporting period, on February 4, 1994, the Federal
Reserve surprised the market by tightened monetary policy by moving the target
rate for Federal funds from 3% to 3.25%, in the first change in stance by the
Federal Reserve since September, 1992. In an unusual move, Chairman Greenspan
announced the action, rather than let the market discern it in the traditional
method through interpretation of the Federal Reserve's open market operations.
Recent comments by Federal Reserve officials have indicated an uneasiness with
what they perceive to be the still accomodative nature of its monetary policy,
and market expectations are for another tightening by the Federal Reserve. The
Fund's average maturity has been drifting shorter to reflect the uncertainty in
Federal Reserve policy and based on specific relative yield opportunities
available in the current market environment. However, changing economic and
market developments are continuously monitored to best serve our clients
attracted to the short-term U.S. government market.
*Ratings are subject to change
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------------------------------------------ --------------
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--39.4%
-------------------------------------------------------------
U.S. TREASURY BILLS--14.2%*
------------------------------------------------
$321,000,000 3.115%-3.475%, 2/10/94-8/4/94 $ 317,462,161
------------------------------------------------ --------------
U.S. TREASURY NOTES--25.2%
------------------------------------------------
555,000,000 4.875%-9.50%, 1/31/94-11/15/94 561,947,079
------------------------------------------------ --------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 879,409,240
------------------------------------------------ --------------
REPURCHASE AGREEMENTS--61.2%**
-------------------------------------------------------------
B.T. Securities Corp., 3.18%, dated 1/31/94, due
120,000,000 2/1/94 120,000,000
------------------------------------------------
B.T. Securities Corp., 3.23%, dated 1/31/94, due
140,000,000 2/1/94 140,000,000
------------------------------------------------
BZW Securities, Inc., 3.17%, dated 1/31/94, due
9,100,000 2/1/94 9,100,000
------------------------------------------------
75,000,000 Bear, Stearns & Co., Inc., 3.17%, dated 1/31/94,
due 2/1/94 75,000,000
------------------------------------------------
Daiwa Securities America, Inc., 3.17%, dated
90,000,000 1/31/94, due 2/1/94 90,000,000
------------------------------------------------
100,000,000 Donaldson, Lufkin & Jenrette Securities Corp.,
3.18%, dated 1/31/94, due 2/1/94 100,000,000
------------------------------------------------
Fuji Securities, Inc., 3.17%, dated 1/31/94, due
100,000,000 2/1/94 100,000,000
------------------------------------------------
Greenwich Capital Markets, Inc., 3.20%, dated
110,000,000 1/31/94, due 2/1/94 110,000,000
------------------------------------------------
J.P. Morgan Securities, Inc., 3.19%, dated
25,000,000 1/31/94, due 2/1/94 25,000,000
------------------------------------------------
Kidder Peabody & Co., Inc., 3.20%, dated
100,000,000 1/31/94, due 2/1/94 100,000,000
------------------------------------------------
100,000,000 NCNB of North Carolina-Charlotte, 3.17%, dated
1/31/94, due 2/1/94 100,000,000
------------------------------------------------
100,000,000 Nikko Securities Co. International, Inc., 3.18%,
dated 1/31/94, due 2/1/94 100,000,000
------------------------------------------------
65,000,000 Smith Barney, Harris Upham & Co., Inc., 3.25%,
dated 1/31/94, due 2/1/94 65,000,000
------------------------------------------------
UBS Securities, Inc., 3.08%, dated 1/31/94, due
70,000,000 2/1/94 70,000,000
------------------------------------------------
UBS Securities, Inc., 3.23%, dated 1/31/94, due
30,000,000 2/1/94 30,000,000
------------------------------------------------
44,000,000 (a)Morgan Stanley & Co., 3.11%, 1/4/94, due
2/3/94 44,000,000
------------------------------------------------
45,000,000 (a)Goldman, Sachs & Co., 3.12%, dated 1/10/94,
due 3/14/94 45,000,000
------------------------------------------------
(a)Morgan Stanley & Co., Inc., 3.06%, 1/24/94,
$43,000,000 due 2/23/94 $ 43,000,000
---------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (NOTE 1B) 1,366,100,000
---------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $2,245,509,240+
---------------------------------------------- --------------
</TABLE>
* Current rate and next reset date shown.
** Repurchase agreements are fully collateralized by U.S. Treasury obligations.
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
($2,233,481,348) at January 31, 1994.
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------
Investments in repurchase agreements (Note 2B) $1,366,100,000
- -----------------------------------------------
Investments in U.S. Treasury obligations 879,409,240
- ----------------------------------------------- ---------------
Total investments, at amortized cost and value
(Notes 2A and 2B) $2,245,509,240
- ---------------------------------------------------------------
Cash 171,224
- ---------------------------------------------------------------
Interest receivable 13,020,955
- ---------------------------------------------------------------
Receivable for Fund shares sold 10,906
- ---------------------------------------------------------------
Deferred expenses (Note 2F) 33,810
- --------------------------------------------------------------- --------------
Total assets 2,258,746,135
- ---------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------
Payable for investments purchased 19,680,489
- -----------------------------------------------
Dividends payable 5,512,098
- -----------------------------------------------
Accrued expenses 72,200
- ----------------------------------------------- ---------------
Total liabilities 25,264,787
- --------------------------------------------------------------- --------------
NET ASSETS for 2,233,481,348 shares of beneficial interest
outstanding $2,233,481,348
- --------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($2,233,481,348 / 2,233,481,348 shares of beneficial interest
outstanding) $1.00
- --------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------
Interest income (Note 2C) $40,947,643
- ---------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------
Investment advisory fee (Note 5) $2,556,452
- ---------------------------------------------------
Trustees' fees 13,032
- ---------------------------------------------------
Administrative personnel and services fee (Note 5) 527,475
- ---------------------------------------------------
Custodian fees 87,650
- ---------------------------------------------------
Recordkeeping fee (Note 5) 101,524
- ---------------------------------------------------
Transfer and dividend disbursing agent fees and ex-
penses (Note 5) 8,545
- ---------------------------------------------------
Auditing fees 6,573
- ---------------------------------------------------
Legal fees 8,400
- ---------------------------------------------------
Printing and postage 8,500
- ---------------------------------------------------
Fund share registration costs 67,276
- ---------------------------------------------------
Insurance premiums 20,847
- ---------------------------------------------------
Taxes 18,000
- ---------------------------------------------------
Miscellaneous 7,311
- --------------------------------------------------- ----------
Total expenses 3,431,585
- ---------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 5) 875,133
- --------------------------------------------------- ----------
Net expenses 2,556,452
- --------------------------------------------------------------- -----------
Net investment income $38,391,191
- --------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
1994* 1993
--------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------
OPERATIONS--
- -------------------------------------------
Net investment income $ 38,391,191 $ 70,974,313
- ------------------------------------------- --------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 3)--
- -------------------------------------------
Dividends to shareholders from net invest-
ment income (38,391,191) (70,974,313)
- ------------------------------------------- --------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE
4)--
- -------------------------------------------
Proceeds from sale of shares 4,831,587,719 10,440,738,782
- -------------------------------------------
Net asset value of shares issued to
shareholders electing to receive payment of
dividends in Fund shares 1,592,781 1,335,315
- -------------------------------------------
Cost of shares redeemed (5,132,180,694) (10,341,629,978)
- ------------------------------------------- --------------- ----------------
Change in net assets from Fund share
transactions (299,000,194) 100,444,119
- ------------------------------------------- --------------- ----------------
Change in net assets (299,000,194) 100,444,119
- -------------------------------------------
NET ASSETS:
- -------------------------------------------
Beginning of period 2,532,481,542 2,432,037,423
- ------------------------------------------- --------------- ----------------
End of period $ 2,233,481,348 $ 2,532,481,542
- ------------------------------------------- --------------- ----------------
</TABLE>
* Six months ended January 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------
1994* 1993 1992 1991 1990**
- ------------------------ ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------
Net investment income 0.02 0.03 0.04 0.07 0.03
- ------------------------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------------
Dividends to sharehold-
ers from net investment (0.02) (0.03) (0.04) (0.07) (0.03)
income ------ ------- ------ ------ ------
- ------------------------
NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
PERIOD ------ ------ ------ ------ ------
- ------------------------
TOTAL RETURN*** 1.52% 3.15% 4.61% 7.11% 5.09%
- ------------------------
RATIOS TO AVERAGE NET
ASSETS
- ------------------------
Expenses 0.20%(a) 0.20% 0.20% 0.20% 0.20%(a)
- ------------------------
Net investment income 3.00%(a) 3.11% 4.49% 6.65% 8.16%(a)
- ------------------------
Expenses
waiver/reimbursement (b) 0.07%(a) 0.07% 0.08% 0.09% 0.15%(a)
- ------------------------
SUPPLEMENTAL DATA
- ------------------------
<CAPTION>
Net assets end of
period
(000 omitted)
- ------------------------ $2,233,481 $2,532,482 $2,432,037 $1,678,880 $576,048
</TABLE>
*Six months ended January 31, 1994 (unaudited).
** 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.
*** Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 5).
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
(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 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, as amended, applicable to regulated investment
companies and to distribute to shareholders each year all of its taxable
income. Accordingly, no provisions for federal tax are 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.
(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
January 31, 1994, capital paid-in aggregated $2,233,481,348. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
1994* 1993
- --------------------------------------------- -------------- ---------------
<S> <C> <C>
Shares outstanding, beginning of period 2,532,481,542 2,432,037,423
- ---------------------------------------------
Shares sold 4,831,587,719 10,440,738,782
- ---------------------------------------------
Shares issued to shareholders electing to re-
ceive
payment of dividends in Fund shares 1,592,781 1,335,315
- ---------------------------------------------
Shares redeemed (5,132,180,694) (10,341,629,978)
- --------------------------------------------- -------------- ---------------
Shares outstanding, end of period 2,233,481,348 2,532,481,542
- --------------------------------------------- -------------- ---------------
</TABLE>
* Six months ended January 31, 1994.
(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. The Adviser has voluntarily agreed to waive a
portion of its fee. The Adviser can modify or terminate this voluntary waiver
at any time at its sole discretion. For the six months ended January 31, 1994,
the Adviser earned a fee of $2,556,452 of which $875,133 was voluntarily waived
in accordance with such agreement .
Federated Services Company, the Fund's recordkeeper, transfer and dividend
disbursing agent received for its services a fee of $110,069 for the six months
ended January 31, 1994.
Administrative personnel and services were provided at approximate cost by
Federated Administrative Services, Inc. Effective March 1, 1994, Federated
Administrative Services ("FAS") will provide administrative personnel and
services at an annual rate of 0.15 of 1% on the first $250 million of average
aggregate net assets of the total Federated Funds; 0.125 of 1% on the next $250
million; 0.10 of 1% on the next $250 million; and 0.075 of 1% on average
aggregate net assets in excess of $750 million. 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. Certain Officers and Trustees of the Trust are
Officers and Directors of the above corporations.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland J. Christopher Donahue
J. Christopher Donahue President
James E. Dowd Richard B. Fisher
Lawrence D. Ellis, M.D. Vice President
Edward L. Flaherty, Jr. Edward C. Gonzales
Peter E. Madden Vice President and Treasurer
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts John A. Staley, IV
Vice President
David M. Taylor
Assistant Treasurer
Jeannette Fisher-Garber
Assistant Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
