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1 , : 1
Government Obligations Tax-Managed Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
Prospectus
The Institutional Shares of Government Obligations Tax-Managed Fund (the
"Fund") offered by this prospectus represent interests in a diversified
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in short-
term U.S. government securities to achieve current income consistent with
stability of principal and liquidity. The Fund's investment strategy is
intended to enable the Fund to provide shareholders with dividends that
are exempt from state and local income taxation to the extent permissible
by federal and state law. Unless otherwise exempt, shareholders are
required to pay federal income tax on any dividends.
The shares offered by this prospectus are not deposits or obligations of
any bank, are not endorsed or guaranteed by any bank, and are not insured
or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.
Investment in these shares involves investment risks, including possible
loss of principal. The Fund attempts to maintain a stable net asset value
of $1.00 per share; there can be no assurance that the Fund will be able
to do so.
This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated May 7,
1995, with the Securities and Exchange Commission. The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information free of charge by calling 1-800-235-4669. To obtain
other information, or make inquiries about the Fund, contact the Fund at
the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated May 7, 1995
Table of Contents
Summary of Fund Expenses 1
General Information 2
Investment Information 2
Investment Objective 2
Investment Policies 2
Investment Limitations 4
Regulatory Compliance 4
Trust Information 4
Management of the Trust 4
Distribution of Shares 5
Administration of the Fund 5
Expenses of the Fund and
Institutional Shares 6
Net Asset Value 6
Investing in the Fund 6
Share Purchases 6
Minimum Investment Required 7
Subaccounting Services 7
Certificates and
Confirmations 7
Dividends 7
Capital Gains 8
Redeeming Shares 8
By Mail 8
Telephone Redemption 9
Accounts with Low Balances 9
Shareholder Information 9
Voting Rights 9
Massachusetts Partnership
Law 10
Tax Information 10
Federal Income Tax 10
Pennsylvania Corporate and
Personal Property Taxes 10
Other Classes of Shares 10
Performance Information 11
Addresses 12
Summary of Fund Expenses
Institutional Shares
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Institutional Shares Operating Expenses
(As a percentage of projected average net assets)*
Management Fee (after waiver) (1) 0.00%
12b-1 Fee. None
Total Other Expenses (after expense reimbursement) 0.20%
Shareholder Services Fee None
Total Institutional Shares Operating Expenses(2) 0.20%
(1)The estimated management fee has been reduced to reflect the
anticipated voluntary waiver of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion.
The maximum management fee is 0.20%.
(2)The total Institutional Shares operating expenses are estimated to be
1.46% absent the anticipated voluntary waiver of the management fee
and the anticipated voluntary reimbursement of certain other operating
expenses.
*Total Institutional Shares operating expenses are estimated based on
average expenses expected to be incurred during the period ending July 31,
1995. During the course of this period, expenses may be more or less than
the average amount shown.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of Institutional Shares
of the Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Investing in
Institutional Shares" and "Money Market Obligations Trust Information."
Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.
EXAMPLE 1 year 3 years
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and
(2) redemption at the end of each time period. $ 2 $6
The above example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
This example is based on estimated data for the Institutional Shares Class
fiscal year ending July 31, 1995.
The information set forth in the foregoing table and example relates
only to Institutional Shares of the Fund. The Fund also offers another
class of shares called Institutional Service Shares. Institutional Shares
and Institutional Service Shares are subject to certain of the same
expenses; however, Institutional Service Shares are subject to a
shareholder services fee of 0.25%. See "Other Classes of Shares."
General Information
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this Fund,
as of the date of this prospectus, the Trustees have established two
classes of shares known as Institutional Shares and Institutional Service
Shares. This prospectus relates only to Institutional Shares of the Fund,
which are designed primarily for financial institutions as a convenient
means of accumulating an interest in a professionally managed, diversified
portfolio investing only in short-term U.S. government securities. A
minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of
$200,000,000 in Federated funds within a twelve-month period. For this
purpose, an investor is defined as a financial institution or its
collective customers, including affiliate financial institutions and their
collective customers, or other institutions that are determined to qualify
by Federated Securities Corp., and (2) Federated funds are those mutual
funds which are distributed by Federated Securities Corp. or are advised
by or administered by investment advisers or administrators affiliated
with Federated Securities Corp. ("Federated Funds"). An investor's minimum
investment will be calculated by combining all accounts the investor
maintains with the Federated Funds, which includes the Trust.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
Investment Information
Investment Objective
The investment objective of the Fund is current income consistent with
stability of principal and liquidity. This investment objective cannot be
changed without shareholder approval. The Fund's investment strategy is
intended to enable the Fund to provide shareholders with dividends that
are exempt from state and local income taxation to the extent permissible
by federal and state law. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
Investment Policies
The Fund pursues its investment objective by investing only in U.S.
government securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
The Fund will limit its investments to investments which, if owned
directly, pay interest exempt from state personal income tax. Therefore,
dividends paid by the Fund may be exempt from state personal income tax.
Acceptable Investments. The Fund invests only in U.S. government
securities. These instruments are either issued or guaranteed by the U.S.
government, its agencies, or instrumentalities. These securities include,
but are not limited to:
o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
o notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student
Loan Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government, such as Government National Mortgage Association
participation certificates, are backed by the full faith and credit of the
U.S. Treasury. No assurances can be given that the U.S. government will
provide financial support to other agencies or instrumentalities, since it
is not obligated to do so. These instrumentalities are supported by:
o the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
o discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
o the credit of the agency or instrumentality.
Agency Master Demand Notes. The Fund may enter into master demand notes
with various federal agencies and instrumentalities. Under a master demand
note, the Fund has the right to increase or decrease the amount of the
note on a daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon
seven or more days notice by either the Fund or the borrower and bear
interest at a variable rate. The Fund relies on master demand notes, in
part, to provide daily liquidity. To the extent that the Fund cannot
obtain liquidity through master demand notes, it may be required to
maintain a larger cash position, invest more assets in securities with
current maturities or dispose of assets at a gain or loss to maintain
sufficient liquidity.
When-Issued and Delayed Delivery Transactions. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions
are arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The seller's failure to complete
these transactions may cause the Fund to miss a price or yield considered
to be advantageous. Settlement dates may be a month or more after entering
into these transactions, and the market values of the securities purchased
may vary from the purchase prices. Accordingly, the Fund may pay more or
less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits
or losses upon the sale of such commitments.
Investment Limitations
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument
for a percentage of its cash value with an agreement to buy it back on a
set date) or pledge securities except, under certain circumstances, the
Fund may borrow up to one-third of the value of its total assets and
pledge assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval. The following limitation, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid
securities.
Regulatory Compliance
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
this prospectus and its Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of
and regulations under the Investment Company Act of 1940, as amended. In
particular, the Fund will comply with the various requirements of Rule 2a-
7, which regulates money market mutual funds. The Fund will determine the
effective maturity of its investments according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and
regulations without the approval of its shareholders.
Trust Information
Management of the Trust
Board of Trustees. The Trust is managed by a Board of Trustees. The
Trustees are responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles the
Board's responsibilities between meetings of the Board.
Investment Adviser. Investment decisions for the Fund are made by
Federated Administrative Services, the Fund's investment adviser, subject
to direction by the Trustees. The adviser continually conducts investment
research and supervision for the Fund and is responsible for the purchase
and sale of portfolio instruments.
Advisory Fees. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The
adviser has undertaken to reimburse the Fund up to the amount of the
advisory fee for operating expenses in excess of limitations
established by certain states. The adviser also may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
Adviser's Background. Federated Administrative Services, a Delaware
business trust, organized on June 14, 1990, is a registered
investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of Federated Investors. All of the Class A (voting) shares
of Federated Investors are owned by a trust, the trustees of which
are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also
provide administrative services to a number of investment companies.
Total assets under management or administration by these and other
subsidiaries of Federated Investors are approximately $70 billion.
Federated Investors, which was founded in 1956 as Federated
Investors, Inc., develops and manages mutual funds primarily for the
financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy
serve approximately 3,500 client institutions nationwide. Through
these same client institutions, individual shareholders also have
access to this same level of investment expertise.
Distribution of Shares
Federated Securities Corp. is the principal distributor for Institutional
Shares of the Fund. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
Administration of the Fund
Administrative Services. Federated Administrative Services, a subsidiary
of Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund. Federated Administrative Services provides these at an
annual rate as specified below:
Maximum Fee Average Aggregate Daily Net Assets
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Average aggregate daily net assets include those of all mutual funds
advised by affiliates of Federated Investors. Federated Administrative
Services may choose voluntarily to waive a portion of its fee.
Custodian. State Street Bank and Trust Company, Boston, MA, is custodian
for the securities and cash of the Fund.
Transfer Agent and Dividend Disbursing Agent. Federated Services Company,
Pittsburgh, PA is transfer agent for the shares of, and dividend
disbursing agent for, the Fund.
Independent Public Accountants. The independent public accountants for
the Fund are Arthur Andersen LLP, Pittsburgh, PA.
Expenses of the Fund and Institutional Shares
Holders of shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and
continuing its existence; registering the Trust with federal and state
securities authorities; Trustees' fees; auditors' fees; the cost of
meetings of Trustees; legal fees of the Trust; association membership
dues; and such non-recurring and extraordinary items as may arise.
The Fund expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the
Fund; investment advisory services; taxes and commissions; custodian fees;
insurance premiums; auditors' fees; and such non-recurring and
extraordinary items as may arise.
At present, no expenses are allocated to the shares as a class. However
the Board of Trustees reserves the right to allocate certain expenses to
holders of shares as it deems appropriate ("class expenses"). In any case,
class expenses would be limited to: transfer agent fees as identified by
the transfer agent as attributable to holders of shares; printing and
postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related
to administrative personnel and services as required to support holders of
shares; legal fees relating solely to shares; and Trustees' fees incurred
as a result of issues relating solely to shares.
Net Asset Value
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities
attributable to shares from the value of Fund assets attributable to
shares, and dividing the remainder by the number of shares outstanding.
The Fund cannot guarantee that its net asset value will always remain at
$1.00 per share.
The net asset value is determined at 1:00 p.m., 4:00 p.m. (Eastern time),
and as of the close of trading (normally 4:00 p.m., Eastern time) on the
New York Stock Exchange each day the New York Stock Exchange is open.
Investing in the Fund
Share Purchases
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve wire are open for business. Shares may be
purchased either by wire or mail. The Fund reserves the right to reject
any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
By Wire. To purchase by Federal Reserve wire, call the Fund before 1:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows:
Federated Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Government Obligations
Tax-Managed Fund-Institutional Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028.
By Mail. To purchase by mail, send a check made payable to Government
Obligations Tax-Managed Fund-Institutional Shares to: Federated Services
Company, Government Obligations Tax-Managed Fund, c/o State Street Bank
and Trust Company, P.O. Box 8602, Boston, MA 02266-8602. Orders by mail
are considered received when payment by check is converted into federal
funds. This is normally the next business day after the check is received.
Minimum Investment Required
The minimum initial investment is $25,000. Eligibility for investment in
the Fund is contingent upon an investor accumulating and maintaining a
minimum aggregate investment of $200,000,000 in Federated Funds within a
twelve-month period.
Subaccounting Services
Financial institutions are encouraged to open single master accounts.
However, certain financial institutions may wish to use the transfer
agent's subaccounting system to minimize their internal recordkeeping
requirements. The transfer agent charges a fee based on the level of
subaccounting services rendered. Financial institutions may charge or pass
through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided
which may be related to the ownership of Fund shares. This prospectus
should, therefore, be read together with any agreement between the
customer and the financial institution with regard to the services
provided, the fees charged for those services, and any restrictions and
limitations imposed.
Certificates and Confirmations
As transfer agent for the Fund, Federated Services Company maintains a
share account for each shareholder. Share certificates are not issued
unless requested by contacting the Fund or Federated Services Company in
writing.
Monthly confirmations are sent to report transactions such as all
purchases and redemptions as well as dividends paid during the month.
Dividends
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 3:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
Capital Gains
The Fund does not expect to realize any capital gains or losses. If
capital gains or losses were to occur, they could result in an increase or
decrease in dividends. The Fund will distribute in cash or additional
shares any realized net long-term capital gains at least once every 12
months.
Redeeming Shares
Shares are redeemed at their net asset value next determined after
Federated Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
By Mail
Shares may be redeemed by sending a written request to: Government
Obligations Tax-Managed Fund, Federated Services Company, c/o State Street
Bank and Trust Company, P.O. Box 8602, Boston, MA 02266-8602. The written
request should state: Government Obligations Tax-Managed
Fund-Institutional Shares; shareholder's name; the account number; and the
share or dollar amount requested. Sign the request exactly as the shares
are registered. Shareholders should call the Fund for assistance in
redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption of
any amount to be sent to an address other than that on record with the
Fund, or a redemption payable other than to the shareholder of record must
have their signatures guaranteed by:
o a trust company or commercial bank whose deposits are insured by the
Bank Insurance Fund which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
o a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
o a savings bank or savings and loan association whose deposits are
insured by the Savings Association Insurance Fund, which is
administered by the FDIC; or
o any other "eligible guarantor institution," as defined in the
Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in
the future to limit eligible signature guarantors to institutions that are
members of the signature guarantee program. The Fund and its transfer
agent reserve the right to amend these standards at any time without
notice.
Normally, a check for the proceeds is mailed within one business day, but
in no event more than seven days, after receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Telephone Redemption
Shares may be redeemed by telephoning the Fund. Telephone instructions may
be recorded and if reasonable procedures are not followed by the Fund, it
may be liable for losses due to unauthorized or fraudulent telephone
instructions. An authorization form permitting the Fund to accept
telephone requests must first be completed. Authorization forms and
information on this service are available from Federated Securities Corp.
If the redemption request is received before 1:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a
domestic commercial bank which is a member of the Federal Reserve System,
and those shares redeemed will not be entitled to that day's dividend. A
daily dividend will be paid on shares redeemed if the redemption request
is received after 1:00 p.m. (Eastern time). However, the proceeds are not
wired until the following business day.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur, another method of redemption, such as "By Mail," should be
considered. If at any time the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be
promptly notified.
Accounts with Low Balances
Due to the high cost of maintaining accounts with low balances, the Fund
may redeem shares in any account and pay the proceeds to the shareholder
if the account balance falls below a required minimum value of $25,000 or
the aggregate investment in Federated Funds falls below the required
minimum of $200,000,000 to be maintained from and after twelve months from
account opening, due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is
notified in writing and allowed 30 days to purchase additional shares to
meet the minimum requirement.
Shareholder Information
Voting Rights
Each share of the Trust gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares
of all classes of each portfolio in the Trust have equal voting rights,
except that in matters affecting only a particular portfolio or class,
only shares of that portfolio or class are entitled to vote. As a
Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders for this purpose shall be
called by the Trustees upon the written request of shareholders owning at
least 10% of the outstanding shares of the Trust.
Massachusetts Partnership Law
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this
disclaimer to be given in each agreement, obligation, or instrument the
Trust or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a
shareholder for any act or obligation of the Trust. Therefore, financial
loss resulting from liability as a shareholder will occur only if the
Trust itself cannot meet its obligations to indemnify shareholders and pay
judgments against them.
Tax Information
Federal Income Tax
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded to
such companies. The Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital gains) and
losses realized by the Trust's other portfolios will not be combined for
tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income
tax on any dividends and other distributions received. This applies
whether dividends and distributions are received in cash or as additional
shares.
Pennsylvania Corporate and Personal Property Taxes
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust:
o the Fund is not subject to Pennsylvania corporate or personal
property taxes; and
o Fund shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Fund would be subject to
such taxes if owned directly by residents of those jurisdictions.
Other State and Local Taxes. To the extent permissible by federal and
state law, the Fund is structured to provide shareholders with income that
is exempt or excluded from taxation at the state and local level.
Substantially all dividends paid to shareholders residing in certain
states will be exempt or excluded from state income tax. Many states, by
stature, judicial decision or administrative action, have taken the
position that dividends of a regulated investment company such as the Fund
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. government agencies and instrumentalities are the functional
equivalent of interest from such obligations and are, therefore, exempt
from state and local income taxes. Shareholders should be aware of the
application of their state and local tax laws to investments in the Fund.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
Other Classes of Shares
The Fund also offers the following class.
Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary
capacity. Investments in Institutional Service Shares are subject to a
minimum initial investment of $25,000. Institutional Service Shares are
subject to a shareholder services fee of 0.25%.
Financial institutions providing distribution or administrative services
may receive additional compensation depending upon which class of shares
of the Fund is sold. The distributor pays this compensation and is
reimbursed from sources other than the assets of the Fund.
The amount of dividends payable to shareholders of any particular class
may be more or less than that payable to the shareholders of any other
class depending upon the existence of and differences in class expenses
and Services Plan expenses. The stated advisory fee is the same for all
classes of shares.
Performance Information
From time to time, the Fund advertises its yield, effective yield, and tax-
equivalent yield for shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during the
period on an investment shown as a percentage of the investment. The
effective yield is calculated similarly to the yield, but when annualized,
the income earned by an investment is assumed to be reinvested daily. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. The tax-equivalent yield
is calculated similarly to the yield, but is adjusted to reflect the
taxable yield that would have to be earned to equal the shares' tax-exempt
yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the
value of an investment in the shares after reinvesting all income
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The performance figures will be calculated separately for each class of
shares. Because each class of shares is subject to different expenses, the
yield, effective yield, and tax-equivalent yield of Institutional Shares
will exceed the yield, effective yield, and tax-equivalent yield of
Institutional Service Shares for the same period.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare its performance to certain indices.
Addresses
Government Obligations Tax-Managed
Fund
Institutional Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Administrative Federated Investors Tower
Services Pittsburgh, PA 15222-3779
Custodian
State Street Bank and Trust
Company P.O. Box 8602
Boston, MA 02266-8602
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
Government Obligations
Tax-Managed Fund
Institutional Shares
Prospectus
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated May 7, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
60934N856
G01140-01(5/95)
Government Obligations Tax-Managed Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
Prospectus
The Institutional Service Shares of Government Obligations Tax-Managed
Fund (the "Fund") offered by this prospectus represent interests in a
diversified portfolio of Money Market Obligations Trust (the "Trust"), an
open-end management investment company (a mutual fund). The Fund invests
in short-term U.S. government securities to achieve current income
consistent with stability of principal and liquidity. The Fund's
investment strategy is intended to enable the Fund to provide shareholders
with dividends that are exempt from state and local income taxation to the
extent permissible by federal and state law. Unless otherwise exempt,
shareholders are required to pay federal income tax on any dividends.
The shares offered by this prospectus are not deposits or obligations of
any bank, are not endorsed or guaranteed by any bank, and are not insured
or guaranteed by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other government agency.
Investment in these shares involves investment risks, including possible
loss of principal. The Fund attempts to maintain a stable net asset value
of $1.00 per share; there can be no assurance that the Fund will be able
to do so.
This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated May 7,
1995, with the Securities and Exchange Commission. The information
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information free of charge by calling 1-800-235-4669. To obtain
other information, or make inquiries about the Fund, contact the Fund at
the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated May 7, 1995
Table of Contents
Summary of Fund Expenses 1
General Information 2
Investment Information 2
Investment Objective 2
Investment Policies 2
Investment Limitations 4
Regulatory Compliance 4
Trust Information 4
Management of the Trust 4
Distribution of Shares 5
Administration of the Fund 5
Expenses of the Fund and
Institutional Service
Shares 6
Net Asset Value 7
Investing in the Fund 7
Share Purchases 7
Minimum Investment Required 7
Subaccounting Services 7
Certificates and
Confirmations 8
Dividends 8
Capital Gains 8
Redeeming Shares 8
By Mail 8
Telephone Redemption 9
Accounts with Low Balances 9
Shareholder Information 10
Voting Rights 10
Massachusetts Partnership
Law 10
Tax Information 10
Federal Income Tax 10
Pennsylvania Corporate and
Personal Property Taxes 11
Other Classes of Shares 11
Performance Information 11
Addresses 13
Summary of Fund Expenses
Institutional Service Shares
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Institutional Service Shares Operating Expenses
(As a percentage of projected average net assets)*
Management Fee (after waiver) (1) 0.00%
12b-1 Fee. None
Total Other Expenses (after expense reimbursement) 0.45%
Shareholder Services Fee 0.25%
Total Institutional Service Shares Operating Expenses(2) 0.45%
(1)The estimated management fee has been reduced to reflect the
anticipated voluntary waiver of the management fee. The adviser can
terminate this voluntary waiver at any time at its sole discretion.
The maximum management fee is 0.20%.
(2)The total Institutional Service Shares operating expenses are
estimated to be 1.71% absent the anticipated voluntary waiver of the
management fee and the anticipated voluntary reimbursement of certain
other operating expenses.
*Total Institutional Service Shares operating expenses are estimated based
on average expenses expected to be incurred during the period ending July
31, 1995. During the course of this period, expenses may be more or less
than the average amount shown.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of Institutional Service
Shares of the fund will bear, either directly or indirectly. For more
complete descriptions of the various costs and expenses, see "Investing in
Institutional Service Shares" and "Money Market Obligations Trust
Information." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
EXAMPLE 1 year 3 years
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and
(2) redemption at the end of each time period. $ 5 $14
The above example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.
This example is based on estimated data for the Institutional Service
Shares Class fiscal year ending July 31, 1995.
The information set forth in the foregoing table and example relates
only to Institutional Service Shares of the Fund. The Fund also offers
another class of shares called Institutional Shares. Institutional Service
Shares and Institutional Shares are subject to certain of the same
expenses; however, Institutional Shares are not subject to a shareholder
service fee. See "Other Classes of Shares."
General Information
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this Fund,
as of the date of this prospectus, the Trustees have established two
classes of shares known as Institutional Service Shares and Institutional
Shares. This prospectus relates only to Institutional Service Shares of
the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing only in short-term U.S. government
securities. A minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of
$200,000,000 in Federated funds within a twelve-month period. For this
purpose, an investor is defined as a financial institution or its
collective customers, including affiliate financial institutions and their
collective customers, or other institutions that are determined to qualify
by Federated Securities Corp., and (2) Federated funds are those mutual
funds which are distributed by Federated Securities Corp. or are advised
by or administered by investment advisers or administrators affiliated
with Federated Securities Corp. ("Federated Funds"). An investor's minimum
investment will be calculated by combining all accounts the investor
maintains with the Federated Funds, which includes the Trust.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
Investment Information
Investment Objective
The investment objective of the Fund is current income consistent with
stability of principal and liquidity. This investment objective cannot be
changed without shareholder approval. The Fund's investment strategy is
intended to enable the Fund to provide shareholders with dividends that
are exempt from state and local income taxation to the extent permissible
by federal and state law. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
investment policies described in this prospectus.
Investment Policies
The Fund pursues its investment objective by investing only in U.S.
government securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
The Fund will limit its investments to investments which, if owned
directly, pay interest exempt from state personal income tax. Therefore,
dividends paid by the Fund may be exempt from state personal income tax.
Acceptable Investments. The Fund invests only in U.S. government
securities. These instruments are either issued or guaranteed by the U.S.
government, its agencies, or instrumentalities. These securities include,
but are not limited to:
o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
o notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student
Loan Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government, such as Government National Mortgage Association
participation certificates, are backed by the full faith and credit of the
U.S. Treasury. No assurances can be given that the U.S. government will
provide financial support to other agencies or instrumentalities, since it
is not obligated to do so. These instrumentalities are supported by:
o the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
o discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
o the credit of the agency or instrumentality.
Agency Master Demand Notes. The Fund may enter into master demand notes
with various federal agencies and instrumentalities. Under a master demand
note, the Fund has the right to increase or decrease the amount of the
note on a daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon
seven or more days notice by either the Fund or the borrower and bear
interest at a variable rate. The Fund relies on master demand notes, in
part, to provide daily liquidity. To the extent that the Fund cannot
obtain liquidity through master demand notes, it may be required to
maintain a larger cash position, invest more assets in securities with
current maturities or dispose of assets at a gain or loss to maintain
sufficient liquidity.
When-Issued and Delayed Delivery Transactions. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions
are arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The seller's failure to complete
these transactions may cause the Fund to miss a price or yield considered
to be advantageous. Settlement dates may be a month or more after entering
into these transactions, and the market values of the securities purchased
may vary from the purchase prices. Accordingly, the Fund may pay more or
less than the market value of the securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits
or losses upon the sale of such commitments.
Investment Limitations
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument
for a percentage of its cash value with an agreement to buy it back on a
set date) or pledge securities except, under certain circumstances, the
Fund may borrow up to one-third of the value of its total assets and
pledge assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval. The following limitation, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid
securities.
Regulatory Compliance
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
this prospectus and its Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of
and regulations under the Investment Company Act of 1940, as amended. In
particular, the Fund will comply with the various requirements of Rule 2a-
7, which regulates money market mutual funds. The Fund will determine the
effective maturity of its investments according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and
regulations without the approval of its shareholders.
Trust Information
Management of the Trust
Board of Trustees. The Trust is managed by a Board of Trustees. The
Trustees are responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles the
Board's responsibilities between meetings of the Board.
Investment Adviser. Investment decisions for the Fund are made by
Federated Administrative Services, the Fund's investment adviser, subject
to direction by the Trustees. The adviser continually conducts investment
research and supervision for the Fund and is responsible for the purchase
and sale of portfolio instruments.
Advisory Fees. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The
adviser has undertaken to reimburse the Fund up to the amount of the
advisory fee for operating expenses in excess of limitations
established by certain states. The adviser also may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
Adviser's Background. Federated Administrative Services, a Delaware
business trust, organized on June 14, 1990, is a registered
investment adviser under the Investment Advisers Act of 1940. It is a
subsidiary of Federated Investors. All of the Class A (voting) shares
of Federated Investors are owned by a trust, the trustees of which
are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also
provide administrative services to a number of investment companies.
Total assets under management or administration by these and other
subsidiaries of Federated Investors are approximately $70 billion.
Federated Investors, which was founded in 1956 as Federated
Investors, Inc., develops and manages mutual funds primarily for the
financial industry. Federated Investors' track record of competitive
performance and its disciplined, risk averse investment philosophy
serve approximately 3,500 client institutions nationwide. Through
these same client institutions, individual shareholders also have
access to this same level of investment expertise.
Distribution of Shares
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
Shareholder Services Plan. The Fund has adopted a Shareholder Services
Plan for Institutional Service Shares (the "Services Plan") under which it
will pay Federated Shareholder Services, an affiliate of Federated
Investors, an amount not exceeding .25 of 1% of the average daily net
asset value of the Institutional Service Shares to provide personal
services and/or maintenance of shareholder accounts to the Fund and its
shareholders. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily.
Federated Shareholder Services may elect to pay financial institutions
fees based upon shares owned by their clients or customers for services
provided to those clients or customers. The schedules of such fees and the
basis upon which such fees will be paid will be determined from time to
time by Federated Shareholder Services.
Glass-Steagall Act. The Glass-Steagall Act prohibits a depository
institution (such as a commercial bank or a savings and loan association)
from being an underwriter or distributor of most securities. In the event
the Glass-Steagall Act is deemed to prohibit depository institutions from
acting in the administrative capacities described above or should Congress
relax current restrictions on depository institutions, the Board of
Trustees will consider appropriate changes in the administrative services.
State securities laws governing the ability of depository institutions to
act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions may be required to register as dealers pursuant to
state law.
Administration of the Fund
Administrative Services. Federated Administrative Services, a subsidiary
of Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund. Federated Administrative Services provides these at an
annual rate as specified below:
Maximum Fee Average Aggregate Daily Net Assets
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Average aggregate daily net assets include those of all mutual funds
advised by affiliates of Federated Investors. Federated Administrative
Services may choose voluntarily to waive a portion of its fee.
Custodian. State Street Bank and Trust Company, Boston, MA, is custodian
for the securities and cash of the Fund.
Transfer Agent and Dividend Disbursing Agent. Federated Services Company,
Pittsburgh, PA is transfer agent for the shares of, and dividend
disbursing agent for, the Fund.
Independent Public Accountants. The independent public accountants for
the Fund are Arthur Andersen LLP, Pittsburgh, PA.
Expenses of the Fund and Institutional Service Shares
Holders of shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and
continuing its existence; registering the Trust with federal and state
securities authorities; Trustees' fees; auditors' fees; the cost of
meetings of Trustees; legal fees of the Trust; association membership
dues; and such non-recurring and extraordinary items as may arise.
The Fund expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the
Fund; investment advisory services; taxes and commissions; custodian fees;
insurance premiums; auditors' fees; and such non-recurring and
extraordinary items as may arise.
At present, no expenses are allocated to the shares as a class. However
the Board of Trustees reserves the right to allocate certain expenses to
holders of shares as it deems appropriate ("class expenses"). In any case,
class expenses would be limited to: transfer agent fees as identified by
the transfer agent as attributable to holders of shares; printing and
postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxies to current shareholders;
registration fees paid to the Securities and Exchange Commission and
registration fees paid to state securities commissions; expenses related
to administrative personnel and services as required to support holders of
shares; legal fees relating solely to shares; and Trustees' fees incurred
as a result of issues relating solely to shares.
Net Asset Value
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities
attributable to shares from the value of Fund assets attributable to
shares, and dividing the remainder by the number of shares outstanding.
The Fund cannot guarantee that its net asset value will always remain at
$1.00 per share.
The net asset value is determined at 1:00 p.m., 4:00 p.m. (Eastern time),
and as of the close of trading (normally 4:00 p.m., Eastern time) on the
New York Stock Exchange each day the New York Stock Exchange is open.
Investing in the Fund
Share Purchases
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve wire are open for business. Shares may be
purchased either by wire or mail. The Fund reserves the right to reject
any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
By Wire. To purchase by Federal Reserve wire, call the Fund before 1:00
p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows:
Federated Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Government Obligations
Tax-Managed Fund-Institutional Service Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number
011000028.
By Mail. To purchase by mail, send a check made payable to Government
Obligations Tax-Managed Fund-Institutional Service Shares to: Federated
Services Company, Government Obligations Tax-Managed Fund, c/o State
Street Bank and Trust Company, P.O. Box 8602, Boston, MA 02266-8602.
Orders by mail are considered received when payment by check is converted
into federal funds. This is normally the next business day after the check
is received.
Minimum Investment Required
The minimum initial investment is $25,000. Eligibility for investment in
the Fund is contingent upon an investor accumulating and maintaining a
minimum aggregate investment of $200,000,000 in Federated Funds within a
twelve-month period.
Subaccounting Services
Financial institutions are encouraged to open single master accounts.
However, certain financial institutions may wish to use the transfer
agent's subaccounting system to minimize their internal recordkeeping
requirements. The transfer agent charges a fee based on the level of
subaccounting services rendered. Financial institutions may charge or pass
through subaccounting fees as part of or in addition to normal trust or
agency account fees. They may also charge fees for other services provided
which may be related to the ownership of Fund shares. This prospectus
should, therefore, be read together with any agreement between the
customer and the financial institution with regard to the services
provided, the fees charged for those services, and any restrictions and
limitations imposed.
Certificates and Confirmations
As transfer agent for the Fund, Federated Services Company maintains a
share account for each shareholder. Share certificates are not issued
unless requested by contacting the Fund or Federated Services Company in
writing.
Monthly confirmations are sent to report transactions such as all
purchases and redemptions as well as dividends paid during the month.
Dividends
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 3:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
Capital Gains
The Fund does not expect to realize any capital gains or losses. If
capital gains or losses were to occur, they could result in an increase or
decrease in dividends. The Fund will distribute in cash or additional
shares any realized net long-term capital gains at least once every 12
months.
Redeeming Shares
Shares are redeemed at their net asset value next determined after
Federated Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
By Mail
Shares may be redeemed by sending a written request to: Government
Obligations Tax-Managed Fund, Federated Services Company, c/o State Street
Bank and Trust Company, P.O. Box 8602, Boston, MA 02266-8602. The written
request should state: Government Obligations Tax-Managed
Fund-Institutional Service Shares; shareholder's name; the account number;
and the share or dollar amount requested. Sign the request exactly as the
shares are registered. Shareholders should call the Fund for assistance in
redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.
Shareholders requesting a redemption of $50,000 or more, a redemption of
any amount to be sent to an address other than that on record with the
Fund, or a redemption payable other than to the shareholder of record must
have their signatures guaranteed by:
o a trust company or commercial bank whose deposits are insured by the
Bank Insurance Fund which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
o a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
o a savings bank or savings and loan association whose deposits are
insured by the Savings Association Insurance Fund, which is
administered by the FDIC; or
o any other "eligible guarantor institution," as defined in the
Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in
the future to limit eligible signature guarantors to institutions that are
members of the signature guarantee program. The Fund and its transfer
agent reserve the right to amend these standards at any time without
notice.
Normally, a check for the proceeds is mailed within one business day, but
in no event more than seven days, after receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Telephone Redemption
Shares may be redeemed by telephoning the Fund. Telephone instructions may
be recorded and if reasonable procedures are not followed by the Fund, it
may be liable for losses due to unauthorized or fraudulent telephone
instructions. An authorization form permitting the Fund to accept
telephone requests must first be completed. Authorization forms and
information on this service are available from Federated Securities Corp.
If the redemption request is received before 1:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a
domestic commercial bank which is a member of the Federal Reserve System,
and those shares redeemed will not be entitled to that day's dividend. A
daily dividend will be paid on shares redeemed if the redemption request
is received after 1:00 p.m. (Eastern time). However, the proceeds are not
wired until the following business day.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur, another method of redemption, such as "By Mail," should be
considered. If at any time the Fund shall determine it necessary to
terminate or modify this method of redemption, shareholders would be
promptly notified.
Accounts with Low Balances
Due to the high cost of maintaining accounts with low balances, the Fund
may redeem shares in any account and pay the proceeds to the shareholder
if the account balance falls below a required minimum value of $25,000 or
the aggregate investment in Federated Funds falls below the required
minimum of $200,000,000 to be maintained from and after twelve months from
account opening,, due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is
notified in writing and allowed 30 days to purchase additional shares to
meet the minimum requirement.
Shareholder Information
Voting Rights
Each share of the Trust gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All shares
of all classes of each portfolio in the Trust have equal voting rights,
except that in matters affecting only a particular portfolio or class,
only shares of that portfolio or class are entitled to vote. As a
Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders for this purpose shall be
called by the Trustees upon the written request of shareholders owning at
least 10% of the outstanding shares of the Trust.
Massachusetts Partnership Law
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this
disclaimer to be given in each agreement, obligation, or instrument the
Trust or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a
shareholder for any act or obligation of the Trust. Therefore, financial
loss resulting from liability as a shareholder will occur only if the
Trust itself cannot meet its obligations to indemnify shareholders and pay
judgments against them.
Tax Information
Federal Income Tax
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded to
such companies. The Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital gains) and
losses realized by the Trust's other portfolios will not be combined for
tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income
tax on any dividends and other distributions received. This applies
whether dividends and distributions are received in cash or as additional
shares.
Pennsylvania Corporate and Personal Property Taxes
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust:
o the Fund is not subject to Pennsylvania corporate or personal
property taxes; and
o Fund shares may be subject to personal property taxes imposed by
counties, municipalities, and school districts in Pennsylvania to the
extent that the portfolio securities in the Fund would be subject to
such taxes if owned directly by residents of those jurisdictions.
Other State and Local Taxes. To the extent permissible by federal and
state law, the Fund is structured to provide shareholders with income that
is exempt or excluded from taxation at the state and local level.
Substantially all dividends paid to shareholders residing in certain
states will be exempt or excluded from state income tax. Many states, by
stature, judicial decision or administrative action, have taken the
position that dividends of a regulated investment company such as the Fund
that are attributable to interest on obligations of the U.S. Treasury and
certain U.S. government agencies and instrumentalities are the functional
equivalent of interest from such obligations and are, therefore, exempt
from state and local income taxes. Shareholders should be aware of the
application of their state and local tax laws to investments in the Fund.
.Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
Other Classes of Shares
The Fund also offers the following class.
Institutional Shares are sold at net asset value primarily to accounts
for which financial institutions act in an agency or fiduciary capacity.
Institutional Shares are sold with no shareholder services fees.
Financial institutions providing distribution or administrative services
may receive additional compensation depending upon which class of shares
of the Fund is sold. The distributor pays this compensation and is
reimbursed from sources other than the assets of the Fund.
The amount of dividends payable to shareholders of any particular class
may be more or less than that payable to the shareholders of any other
class depending upon the existence of and differences in class expenses
and Services Plan expenses. The stated advisory fee is the same for all
classes of shares.
Performance Information
From time to time, the Fund advertises its yield, effective yield, and tax-
equivalent yield for shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during the
period on an investment shown as a percentage of the investment. The
effective yield is calculated similarly to the yield, but when annualized,
the income earned by an investment is assumed to be reinvested daily. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. The tax-equivalent yield
is calculated similarly to the yield, but is adjusted to reflect the
taxable yield that would have to be earned to equal the shares' tax-exempt
yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the
value of an investment in the shares after reinvesting all income
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.
The performance figures will be calculated separately for each class of
shares. Because each class of shares is subject to different expenses, the
yield, effective yield, and tax-equivalent yield of Institutional Shares
will exceed the yield, effective yield, and tax-equivalent yield of
Institutional Service Shares for the same period.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare its performance to certain indices.
Addresses
Government Obligations Tax-Managed
Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Administrative
Services Federated Investors Tower
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and Trust
Company P.O. Box 8602
Boston, MA 02266-8602
Transfer Agent and Dividend Disbursing Agent
Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
Government Obligations
Tax-Managed Fund
Institutional Service Shares
Prospectus
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated May 7, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
60934N849
G01140-02(5/95)
Government Obligations Tax-Managed Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
Institutional Service Shares
Statement of Additional Information
This Statement of Additional Information should be read with the
prospectus(es) of Government Obligations Tax-Managed Fund (the "Fund"), a
portfolio of Money Market Obligations Trust (the "Trust") dated May 7,
1995 This Statement is not a prospectus. To receive a copy of a
prospectus, write or call the Trust.
Federated Investors Tower
Pittsburgh, PA 15222-3779
[S]
Statement dated May 7, 1995
Federated Securities Corp.
Distributor
A subsidiary of Federated Investors
Table of Contents
Investment Policies 1
Acceptable Investments 1
Reverse Repurchase
Agreements 1
When-Issued And Delayed
Delivery Transactions 1
Investment Limitations 1
Selling Short and Buying on
Margin 1
Issuing Senior Securities
and Borrowing Money 1
Pledging Assets 1
Lending Cash or Securities 1
Investing in Commodities 1
Investing in Real Estate 1
Underwriting 2
Concentration of Investments 2
Diversification of
Investments 2
Investing in Illiquid
Securities 2
Investing in Securities of
Other Investment Companies 2
Investing in New Issuers 2
Investing for Control 2
Investing in Issuers Whose
Securities Are
Owned by Officers of the Fund
2
Investing in Options 2
Investing in Minerals 2
Brokerage Transactions 3
Money Market Obligations
Trust Management 3
Trustees Compensation 8
Fund Ownership 9
Trustee Liability 9
Investment Advisory Services 9
Investment Adviser(s) 9
Advisory Fees 9
State Expense Limitations 9
Fund Administration 9
Shareholder Services Plan 10
Determining Net Asset Value 10
Redemption in Kind 10
The Fund's Tax Status 10
Performance Information 11
Yield 11
Effective Yield 11
Total Return 11
Performance Comparisons 11
Investment Policies
Unless indicated otherwise, the policies described below may be changed by
the Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
Acceptable Investments
Some of the short-term U.S. government securities the Fund may purchase
carry variable interest rates. These securities have a rate of interest
subject to adjustment at least annually. This adjusted interest rate is
ordinarily tied to some objective standard, such as the 91-day U.S.
Treasury bill rate. Variable interest rates will reduce the changes in the
market value of such securities from their original purchase prices.
Accordingly, the potential for capital appreciation or capital
depreciation should not be greater than that of fixed interest rate U.S.
government securities having maturities equal to the interest rate
adjustment dates of the variable rate U.S. government securities. The
Fund may purchase variable rate U.S. government securities upon the
determination by the Board of Trustees that the interest rate as adjusted
will cause the instrument to have a current market value that
approximates its par value on the adjustment date.
Reverse Repurchase Agreements
The Fund may enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument in return for a percentage
of the instrument;s market value in cash and agrees that on a stipulated
date in the future the Fund will repurchase the portfolio instrument by
remitting the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but does not ensure this result. When effecting reverse
repurchase agreements, liquid assets of the Fund, in a dollar amount
sufficient to make payment for the obligations to be purchased, are:
segregated on the Fund's records at the trade date; marked to market
daily; and maintained until the transaction is settled.
When-Issued And Delayed Delivery Transactions
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund sufficient to make payment for the securities to be purchased are
segregated on the Fund's records at the trade date. These assets are
marked to market daily and are maintained until the transaction has been
settled. The Fund does not intend to engage in when-issued and delayed
delivery transactions to an extent that would cause the segregation of
more than 20% of the total value of its assets.
Investment Limitations
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts
borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of the value
of its total assets are outstanding. During the period any reverse
repurchase agreements are outstanding, the Fund will restrict the purchase
of portfolio securities to money market instruments maturing on or before
the expiration date of the reverse repurchase agreements, but only to the
extent necessary to assure completion of the reverse repurchase
agreements.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings.
Lending Cash or Securities
The Fund will not lend any of its assets, except that it may purchase or
hold portfolio securities permitted by its investment objective, policies,
and limitations, or Declaration of Trust.
Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
Investing in Real Estate
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in securities of issuers
whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
Underwriting
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
Concentration of Investments
The Fund will not invest 25% or more of the value of its total assets in
any one industry. The U.S. government is not considered to be an industry.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such U.S. government securities)
if as a result more than 5% of the value of its total assets would be
invested in the securities of that issuer, or if it would own more than
10% of the outstanding voting securities of that issuer.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective. Investing in
Restricted Securities
The Fund will not invest in securities subject to restrictions on resale
under federal securities law.
Investing in Illiquid Securities
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
Investing in Issuers Whose Securities Are Owned by Officers of the Fund
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Fund or its investment adviser owning
individually more than .50 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Minerals
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers instruments
issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items". Except with respect to borrowing
money, if a percentage limitation is adhered to at the time of investment,
a later increase or decrease in percentage resulting from any change in
value or net assets will not result in a violation of such limitation.
The Fund does not intend to borrow money or pledge securities in excess of
5% of the value of its net assets during the coming fiscal year.
Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to guidelines established by the Board
of Trustees. The adviser may select brokers and dealers who offer
brokerage and research services. These services may be furnished directly
to the Fund or to the adviser and may include: advice as to the
advisability of investing in securities; security analysis and reports;
economic studies; industry studies; receipt of quotations for portfolio
evaluations; and similar services. Research services provided by brokers
and dealers may be used by the adviser or its affiliates in advising the
Trust and other accounts. To the extent that receipt of these services may
supplant services for which the adviser or its affiliates might otherwise
have paid, it would tend to reduce their expenses. The adviser and its
affiliates exercise reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions.
They determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When the
Fund and one or more other accounts managed by the adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
Money Market Obligations Trust Management
Officers and Trustees are listed with their addresses, present positions
with Money Market Obligations Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life
and Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the father of J.
Christopher Donahue, President and Trustee of the Trust.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner of
the Funds; formerly, Senior Partner, Ernst & Young LLP.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; President, Northgate Village
Development Corporation; Partner or Trustee in private real estate
ventures in Southwest Florida; Director, Trustee, or Managing General
Partner of the Funds; formerly, President, Naples Property Management,
Inc.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.
J. Christopher Donahue *
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp.; President, Passport Research, Ltd.; Trustee, Federated
Administrative Services, Federated Services Company, and Federated
Shareholder Services; President or Vice President of the Funds; Director,
Trustee, or Managing General Partner of some of the Funds. Mr. Donahue is
the son of John F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Director,
Blue Cross of Massachusetts, Inc.
Lawrence D. Ellis, M.D.
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.
Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Counsel, Horizon Financial, F.A., Western Region.
Peter E. Madden
225 Franklin Street
Boston, MA
Birthdate: April 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director,
Trustee, or Managing General Partner of the Funds; formerly, President,
State Street Bank and Trust Company and State Street Boston Corporation
and Trustee, Lahey Clinic Foundation, Inc.
Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
Management Center; Director, Trustee, or Managing General Partner of the
Funds; President Emeritus, University of Pittsburgh; formerly, Chairman,
National Advisory Council for Environmental Policy and Technology.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: July 21, 1935
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research, Ltd.;
Executive Vice President, Treasurer, and Director, Federated Securities
Corp.; Trustee, Federated Services Company and Federated Shareholder
Services; Chairman, Treasurer, and Trustee, Federated Administrative
Services; Trustee or Director of some of the Funds; Vice President and
Treasurer of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and
Secretary, Federated Research Corp. and Passport Research, Ltd.; Trustee,
Federated Services Company; Executive Vice President, Secretary, and
Trustee, Federated Administrative Services; Secretary and Trustee,
Federated Shareholder Services; Executive Vice President and Director,
Federated Securities Corp.; Vice President and Secretary of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.
Trustees Compensation
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 68 other investment
companies in the Fund Complex
Thomas G. Bigley $0 $20,688 for the Trust and
Trustee 49 other investment companies
in the Fund Complex
John T. Conroy, Jr. $6,147 $117,202 for the Trust and
Trustee 64 other investment companies in
the Fund Complex
William J. Copeland $6,147 $117,202 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 14 other investment companies
in the Fund Complex
James E. Dowd $6,147 $117,202 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Lawrence D. Ellis, M.D. $5,449 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Edward L. Flaherty, Jr. $6,147 $117,202 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Peter E. Madden $5,449 $90,563 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Gregor F. Meyer $5,449 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
John E. Murray, Jr., $0 $0 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Wesley W. Posvar $5,449 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
Marjorie P. Smuts $5,449 $106,460 for the Trust and
Trustee 64 other investment companies
in the Fund Complex
*Information is furnished for the fiscal year ended July 31, 1994.
#The aggregate compensation is provided for the Trust which is comprised
of six portfolios.
+The information is provided for the last calendar year.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust; Automated Government
Money Trust; California Municipal Cash Trust; Cash Trust Series II; Cash
Trust Series, Inc.; DG Investor Series; Edward D. Jones & Co. Daily
Passport Cash Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated Growth Trust;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Intermediate Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government Trust; Federated
Short-Term U.S. Government Trust; Federated Stock Trust; Federated Tax-
Free Trust; Federated U.S. Government Bond Fund; First Priority Funds;
Fixed Income Securities, Inc.; Fortress Adjustable Rate U.S. Government
Fund, Inc.; Fortress Municipal Income Fund, Inc.; Fortress Utility Fund,
Inc.; Fund for U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Insight Institutional Series,
Inc.; Insurance Management Series; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Equity Income Fund, Inc.; Liberty High Income Bond
Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Term Trust, Inc. - 1999; Liberty
Utility Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters Funds; RIMCO
Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Star Funds;
The Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.;
Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; Trust for
U.S. Treasury Obligations; The Virtus Funds; World Investment Series, Inc.
Fund Ownership
Officers and Trustees as a group own less than 1% of the Fund's
outstanding shares.
Trustee Liability
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
Investment Advisory Services
Investment Adviser(s)
The Fund's investment adviser is Federated Administrative Services. It is
a subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John
F. Donahue, his wife and his son, J. Christopher Donahue.
The adviser shall not be liable to Trust, the Fund, or any shareholder of
the Fund for any losses that may be sustained in the purchase, holding, or
sale of any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
Advisory Fees
For its advisory services, Federated Administrative Services receives an
annual investment advisory fee as described in the prospectus.
State Expense Limitations
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses) exceed
2-1/2% per year of the first $30 million of average net assets, 2% per
year of the next $70 million of average net assets, and 1-1/2% per year of
the remaining average net assets, the adviser will reimburse the Fund for
its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this limitation,
the investment advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the adviser will be limited, in
any single fiscal year, by the amount of the investment advisory fees.
This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.
Fund Administration
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus.
Shareholder Services Plan
This arrangement permits the payment of fees to Federated Shareholder
Services and financial institutions to cause services to be provided which
are necessary for the maintenance of shareholder accounts and to encourage
personal services to shareholders by a representative who has knowledge of
the shareholder's particular circumstances and goals. These activities and
services may include, but are not limited to: providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balance; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses. By
adopting the Shareholder Services Plan, the Board of Trustees expects that
the Fund will benefit by: (1) providing personal services to shareholders;
(2) investing shareholder assets with a minimum of delay and
administrative detail; (3) enhancing shareholder recordkeeping systems;
and (4) responding promptly to shareholders' requests and inquiries
concerning their accounts.
Custodian and Portfolio Recordkeeper. State Street Bank and Trust
Company, Boston, MA, is custodian for the securities and cash of the Fund.
Federated Services Company, Pittsburgh, PA, provides certain accounting
and recordkeeping services with respect to the Fund's portfolio
investments.
Transfer Agent. As transfer agent, Federated Services Company maintains
all necessary shareholder records. For its services, the transfer agent
receives a fee based upon the size, type and number of accounts and
transactions made by shareholders.
Determining Net Asset Value
The Trustees have decided that the best method for determining the value
of portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at current
market value. Accordingly, neither the amount of daily income nor the net
asset value is affected by any unrealized appreciation or depreciation of
the portfolio. In periods of declining interest rates, the indicated daily
yield on shares of the Fund computed by dividing the annualized daily
income on the Fund's portfolio by the net asset value computed as above
may tend to be higher than a similar computation made by using a method of
valuation based upon market prices and estimates. In periods of rising
interest rates, the opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the "Rule") promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Trustees will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Trustees
will take any steps they consider appropriate (such as redemption in kind
or shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
Redemption in Kind
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in
kind. In such cases, the Fund will pay all or a portion of the remainder
of the redemption in portfolio instruments valued in the same way as the
Fund determines net asset value. The portfolio instruments will be
selected in a manner that the Trustees deem fair and equitable. Redemption
in kind is not as liquid as a cash redemption. If redemption is made in
kind, shareholders who sell these securities could receive less than the
redemption value and could incur certain transaction costs.
The Fund's Tax Status
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund must, among other requirements: derive at least 90%
of its gross income from dividends, interest, and gains from the sale of
securities; derive less than 30% of its gross income from the sale of
securities held less than three months; invest in securities within
certain statutory limits; and distribute to its shareholders at least 90%
of its net income earned during the year.
The foregoing general discussion of U.S. federal income tax consequences
is based on the Internal Revenue Code, as amended, and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. Future legislative or administrative changes or court
decisions may significantly change the conclusions expressed herein, and
any such changes or decisions may have retroactive effect with respect to
the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the
rules for U.S. federal income taxation described above. It is anticipated
that the ordinary income dividends paid by the Fund from net investment
income will be exempt from state and local personal and, in some cases,
corporate income taxes in many states. Shareholders are urged to consult
their tax advisers as to the consequences of these and other state and
local tax rules affecting their investment in the Fund.
Performance Information
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the relative
amount of cash flow. To the extent that financial institutions and
broker/dealers charge fees in connection with services provided in
conjunction with an investment in shares of the Fund, the performance will
be reduced for those shareholders paying those fees.
Yield
The yield is calculated based upon the seven days ending on the day of the
calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
shares purchased with dividends earned from the original one share and all
dividends declared on the original and any purchased shares; dividing the
net change in the account's value by the value of the account at the
beginning of the base period to determine the base period return; and
multiplying the base period return by 365/7.
Effective Yield
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to
the 365/7th power; and subtracting 1 from the result.
Total Return
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the
period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000, adjusted over
the period by any additional shares, assuming the monthly reinvestment of
all dividends and distributions.
Performance Comparisons
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
o Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment of
all income dividends and capital gains distributions, if any.
o Donoghue's Money Fund Report publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the same
money funds.
o Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
o Salomon 30-Day CD Index compares rate levels of 30-day certificates
of deposit from the top ten prime representative banks.
o Salomon 30-Day Treasury Bill Index is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
o Discount Corporation of New York 30-Day Federal Agencies is a weekly
quote of the average daily offering price for selected federal agency
issues maturing in 30 days.
60934N856
60934N849
G01140-03(5/95)
