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AUTOMATED CASH MANAGEMENT TRUST
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
PROSPECTUS
The shares of Automated Cash Management Trust (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 money market securities to provide
stability of principal and current income consistent with stability of
principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE 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 September
30, 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, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, 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 September 30, 1995
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Other Investment Techniques 5
Investment Risks 6
Investment Limitations 6
Regulatory Compliance 6
TRUST INFORMATION 7
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Management of the Trust 7
Distribution of Shares 8
Administration of the Fund 8
NET ASSET VALUE 9
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INVESTING IN THE FUND 9
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Share Purchases 9
Minimum Investment Required 10
Subaccounting Services 10
Certificates and Confirmations 10
Dividends 10
Capital Gains 10
Retirement Plans 11
REDEEMING SHARES 11
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By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
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Voting Rights 12
Massachusetts Partnership Law 13
TAX INFORMATION 13
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Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 13
PERFORMANCE INFORMATION 14
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FINANCIAL STATEMENTS 15
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REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 27
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ADDRESSES 28
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SUMMARY OF FUND EXPENSES
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<TABLE>
<S> <C> <C>
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 FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)................................................ 0.11%
12b-1 Fee.................................................................... None
Total Other Expenses......................................................... 0.46%
Shareholder Services Fee (after waiver)(2)......................... 0.24%
Total Fund Operating Expenses(3)........................................ 0.57%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary waiver
at any time at its sole discretion. The maximum management fee is 0.50%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total Fund operating expenses would have been 0.97% absent the voluntary
waivers of a portion of the management fee and a portion of the shareholder
services fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "TRUST INFORMATION". WIRE TRANSFERRED REDEMPTIONS OF LESS THAN
$5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
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<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period......... $6 $18 $32 $71
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
AUTOMATED CASH MANAGEMENT TRUST
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 27.
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED APRIL 30,
ENDED ----------------------------------------------------------------------------------------------
JULY 31, 1995(A) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
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INCOME FROM
INVESTMENT
OPERATIONS
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Net investment
income 0.01 0.05 0.03 0.03 0.05 0.07 0.08 0.08 0.07 0.06 0.07
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LESS
DISTRIBUTIONS
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Distributions from
net investment
income (0.01) (0.05) (0.03) (0.03) (0.05) (0.07) (0.08) (0.08) (0.07) (0.06) (0.07)
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE,
END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN (b) 1.42% 4.82% 2.84% 3.11% 5.02% 7.52% 8.69% 8.20% 6.72% 6.00% 7.69%
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RATIOS TO AVERAGE
NET ASSETS
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Expenses 0.57%(c) 0.57% 0.57% 0.56% 0.56% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55%
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Net investment
income 5.60%(c) 4.71% 2.80% 3.07% 4.88% 7.23% 8.32% 7.93% 6.53% 5.82% 7.43%
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Expense waiver/
reimbursement (d) 0.40%(c) 0.33% 0.07% 0.04% 0.03% 0.12% 0.09% 0.10% 0.04% 0.04% 0.06%
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SUPPLEMENTAL DATA
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Net assets, end
of period (000
omitted) $1,141,043 $983,099 $975,453 $1,172,170 $1,220,212 $1,464,710 $1,164,013 $943,136 $924,558 $867,725 $764,841
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</TABLE>
(a) The Fund was reorganized into Money Market Obligations Trust effective July
30, 1994. The Fund has changed its fiscal year-end from April 30, to July
31, effective October 27, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The Fund is designed as a convenient means of accumulating an
interest in a professionally managed, diversified portfolio investing in
short-term money market securities. A minimum initial investment of $25,000
within a 90-day period is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is stability of principal and current
income consistent with stability of principal. This investment objective cannot
be changed without shareholder approval. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of money
market instruments maturing in 13 months or less. The average maturity of money
market instruments in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Unless indicated otherwise, the investment policies set
forth below may not be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:
- instruments of foreign banks and savings and loans (such as certificates
of deposit, demand and time deposits, savings shares, and bankers'
acceptances) if they have capital, surplus, and undivided profits of over
$100,000,000, or if the principal amount of the instrument is insured by
the Bank Insurance Fund ("BIF") which is administered by the Federal
Deposit Insurance Corporation ("FDIC") or the Savings Association
Insurance Fund ("SAIF") which is administered by the FDIC. These
instruments may include Eurodollar Certificates of Deposit ("ECDs"),
Yankee Certificates of Deposit ("Yankee CDs"), and Eurodollar Time
Deposits ("ETDs");
- commercial paper rated A-1 by Standard and Poor's Ratings Group, Prime-1
by Moody's Investors Service, Inc., or F-1 by Fitch Investors Service,
and unrated but of comparable quality, including Canadian Commercial
Paper ("CCPs") and Europaper;
- marketable obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities; and
- repurchase agreements.
The Fund invests only in instruments denominated and payable in U.S. dollars.
RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch") are
all considered rated in the highest short-term rating category. The Fund will
follow applicable regulations in determining whether a security rated by more
than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell U.S. government securities or certificates of deposit to the
Fund and agree at the time of sale to repurchase them at a mutually agreed upon
time and price within one year from the date of acquisition. The Fund or its
custodian will take possession of the securities subject to repurchase
agreements and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are found by the Fund's investment
adviser to be creditworthy pursuant to guidelines established by the Trustees.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase short-term
U.S. government 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 Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. 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.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including restricted
securities and repurchase agreements providing for settlement in more than seven
days after notice, to 10% of its net assets. Certain instruments in which the
Fund may invest, such as ETDs and repurchase agreements with maturities of more
than seven days, could be considered illiquid.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law, and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees of the Fund are quite liquid. As a matter
of operating policy, the Fund intends, therefore, to treat the restricted
securities which meet the criteria for liquidity established by the Trustees,
including Section 4(2) commercial paper, as determined by the Fund's investment
adviser, as liquid and not subject to the investment limitation applicable to
illiquid securities. In addition, because Section 4(2) commercial paper is
liquid, the Fund intends to not subject such paper to the limitation applicable
to restricted securities.
OTHER INVESTMENT TECHNIQUES
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund typically
evaluates the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, the Fund
will not treat credit-enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under certain circumstances
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that
are exercisable even after a payment default on the underlying security may be
treated as a form of credit enhancement.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject to
different risks than domestic obligations of domestic banks or corporations.
Examples of these risks include international economic and political
developments, foreign governmental restrictions that may adversely affect the
payment of principal or interest, foreign withholding or other taxes on interest
income, difficulties in obtaining or enforcing a judgment against the issuing
entity, and the possible impact of interruptions in the flow of international
currency transactions. Risks may also exist for ECDs, ETDs, and Yankee CDs
because the banks issuing these instruments, or their domestic or foreign
branches, are not necessarily subject to the same regulatory requirements that
apply to domestic banks, such as reserve requirements, loan limitations,
examinations, accounting, auditing, recordkeeping, and the public availability
of information. These factors will be carefully considered by the Fund's adviser
in selecting investments for the Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 10% of the value of
its total assets to secure such borrowings. This investment limitation cannot be
changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7 which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for exercising all the
Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .50 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989 is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $72 billion invested across
more than 260 funds under management and/or administration by its
subsidiaries, as of December 31, 1994, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more
than 1,750 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000
investment professionals have selected Federated funds for their clients.
Both the Trust and the adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for 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. The Fund has entered into a Shareholder Services Agreement
with Federated Shareholder Services, a subsidiary of Federated Investors, under
which the Fund may make payments up to .25 of 1% of the average daily net asset
value of Fund shares, computed at an annual rate, to obtain certain personal
services for shareholders and provide maintenance of shareholder accounts
("shareholder services"). From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services. Financial institutions will
receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. The distributor may pay
financial institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide certain services to
shareholders. These services may include, but are not limited to, distributing
prospectuses and other information, providing accounting assistance, and
communicating or facilitating purchases and redemptions of shares. Any fees paid
for these services by the distributor will be reimbursed by the adviser or its
affiliates and not the Fund.
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:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
- --------------------- ----------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
on assets in excess of $750
0.075 of 1% million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
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The Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Fund cannot
guarantee that its net asset value will always remain at $1.00 per share.
The net asset value is determined at 12 noon, 3:00 p.m. (Eastern time), and as
of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange, Monday through Friday, except on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
INVESTING IN THE FUND
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SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.
(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: Automated Cash Management Trust; 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 Automated Cash
Management Trust to: Federated Services Company, Automated Cash Management
Trust, P.O. Box 8600, Boston, MA 02266-8600. 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.
AUTOMATIC INVESTMENTS. Investors may establish accounts with their financial
institutions to have cash accumulations automatically invested in the Fund. The
investments may be made on predeter-
mined dates or when the investor's account reaches a certain level.
Participating financial institutions are responsible for prompt transmission of
orders relating to the program, and they may charge for their services.
Investors should read this prospectus along with the financial institution's
agreement or literature describing these services and fees.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within 90 days. Minimum
investments will be calculated by combining all accounts maintained with the
Fund. Financial institutions may impose different minimum investment
requirements on their customers.
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. State securities laws may require certain financial
institutions such as depository institutions to register as dealers.
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.
RETIREMENT PLANS
Shares of the Fund can be purchased as an investment for retirement plans or for
IRA accounts. For further details contact Federated Securities Corp. and consult
a tax adviser.
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: Automated Cash
Management Trust, Federated Services Company, P.O. Box 8600, Boston, MA
02266-8600. The written request should state: Automated Cash Management Trust;
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 insured mail with the written request to Federated Services
Company, 500 Victory Road-2nd Floor, North Quincy, MA 02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and 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.
BY WRITING A CHECK. At the shareholder's request, State Street Bank and Trust
Company or Federated Services Company will establish a checking account for
redeeming shares. For further information, contact Federated Services Company.
With this checking account, shares may be redeemed by writing a check for $100
or more. The redemption will be made at the net asset value on the date that the
check is presented to the Fund. A check may not be written to close an account.
A shareholder may obtain cash by negotiating the check through the shareholder's
local bank. Checks should never be made payable or sent to State Street Bank and
Trust Company or Federated Services Company to redeem shares. Cancelled checks
are sent to the shareholder each month.
TELEPHONE REDEMPTION
Shares may be redeemed in minimum amounts of $1,000 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 3:00 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 3:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day. Under limited circumstances, arrangements may be made with the
distributor for same-day payment of proceeds, without that day's dividend, for
redemption requests received before 3:00 p.m. (Eastern time).
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, except accounts maintained by retirement plans,
and pay the proceeds to the shareholder if the account balance falls below a
required minimum value of $25,000 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 each portfolio
in the Trust have equal voting rights, except that in matters affecting only a
particular portfolio, only shares of that portfolio 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, as amended, 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, 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. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Fund after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
AUTOMATED CASH MANAGEMENT TRUST
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------- --------------
<C> <C> <S> <C>
BANK NOTES--1.8%
- ---------------------------------------------------------------------------------
BANKING--1.8%
--------------------------------------------------------------
$10,000,000 Bank One, Milwaukee, WI N.A., 5.960%, 9/11/1995 $ 10,000,659
--------------------------------------------------------------
10,000,000 State Street Bank and Trust Co., 5.980%, 9/6/1995 10,000,000
-------------------------------------------------------------- --------------
TOTAL BANK NOTES 20,000,659
-------------------------------------------------------------- --------------
CERTIFICATE OF DEPOSIT--1.8%
- ---------------------------------------------------------------------------------
BANKING--1.8%
--------------------------------------------------------------
21,000,000 Banque Nationale de Paris, 5.620%-5.630%, 1/8/1996-1/12/1996 21,000,562
-------------------------------------------------------------- --------------
(a) COMMERCIAL PAPER--64.3%
- ---------------------------------------------------------------------------------
BANKING--20.1%
--------------------------------------------------------------
13,000,000 Bank of Nova Scotia, Toronto, 5.830%, 9/11/1995 12,915,016
--------------------------------------------------------------
53,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian
Imperial Bank of Commerce, Toronto), 5.816%-6.453%,
8/14/1995-9/7/1995 52,815,971
--------------------------------------------------------------
24,300,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank AG,
Frankfurt), 5.723%-6.347%, 10/5/1995-1/22/1996 23,691,683
--------------------------------------------------------------
12,000,000 Credit Agricole U.S.A., Inc., (Guaranteed by Caisse Nationale
De Credit Agricole Paris), 6.369%, 9/29/1995 11,878,657
--------------------------------------------------------------
47,000,000 Dresdner US Finance, 5.733%-6.254%, 9/5/1995-12/12/1995 46,298,529
--------------------------------------------------------------
17,000,000 National Australia Funding, Inc., (Guaranteed by National
Australia Bank Ltd., Melbourne), 5.741%-5.771%,
12/1/1995-12/12/1995 16,664,883
--------------------------------------------------------------
8,000,000 PEMEX Capital, Inc., (Credit Suisse, Zurich LOC), 5.866%,
9/5/1995 7,955,044
--------------------------------------------------------------
15,000,000 Royal Bank of Canada, Montreal, 5.636%, 1/11/1996 14,627,817
--------------------------------------------------------------
4,500,000 Southeast Paper Manufacturing, Inc., (Banque Paribas, Paris
LOC), 5.870%, 10/10/1995 4,449,425
--------------------------------------------------------------
18,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska
Handelsbanken, Stockholm), 5.784%-6.270%,
10/16/1995-10/27/1995 17,759,566
--------------------------------------------------------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------- --------------
<C> <C> <S> <C>
(a) COMMERCIAL PAPER--CONTINUED
- ---------------------------------------------------------------------------------
BANKING--CONTINUED
--------------------------------------------------------------
$20,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by Toronto-
Dominion Bank), 5.777%-6.027%, 8/17/1995-1/8/1996 $ 19,724,311
-------------------------------------------------------------- --------------
Total 228,780,902
-------------------------------------------------------------- --------------
CHEMICALS--1.1%
--------------------------------------------------------------
13,000,000 Du Pont (E.I.) de Nemours & Co., 5.850%, 11/29/1995 12,753,000
-------------------------------------------------------------- --------------
DIVERSIFIED--0.9%
--------------------------------------------------------------
10,000,000 Rockwell International Corp., 6.455%, 9/6/1995 9,937,500
-------------------------------------------------------------- --------------
FINANCE-COMMERCIAL--23.8%
--------------------------------------------------------------
41,000,000 Asset Securitization Cooperative Corp., 5.739%-6.107%,
8/16/1995-10/26/1995 40,660,089
--------------------------------------------------------------
37,500,000 Beta Finance, Inc., 5.718%-6.245%, 8/29/1995-1/31/1996 36,999,360
--------------------------------------------------------------
32,000,000 CIESCO, Inc., 5.842%-6.027%, 8/11/1995-9/20/1995 31,833,924
--------------------------------------------------------------
30,000,000 CIT Group Holdings, Inc., 5.760%-6.099%, 8/1/1995-12/22/1995 29,559,000
--------------------------------------------------------------
23,300,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.766%-6.338%,
9/15/1995-11/7/1995 23,045,266
--------------------------------------------------------------
12,000,000 Falcon Asset Securitization Corp., 5.752%, 10/24/1995 11,841,240
--------------------------------------------------------------
47,000,000 General Electric Capital Corp., 5.747%-6.453%,
8/8/1995-12/21/1995 46,355,986
--------------------------------------------------------------
37,525,000 Preferred Receivables Funding Co. (PREFCO), 5.604%-6.113%,
9/14/1995-1/10/1996 36,954,135
--------------------------------------------------------------
15,000,000 Sheffield Receivables Corp., 6.101%-6.108%,
8/10/1995-8/16/1995 14,967,500
-------------------------------------------------------------- --------------
Total 272,216,500
-------------------------------------------------------------- --------------
FINANCE-RETAIL--10.8%
--------------------------------------------------------------
10,000,000 Associates Corp. of North America, 6.018%, 8/8/1995 9,988,470
--------------------------------------------------------------
19,000,000 Budget Funding Corp., 5.905%-6.036%, 8/3/1995-9/20/1995 18,898,761
--------------------------------------------------------------
34,800,000 Ford Credit Receivables Funding, Inc., 5.720%-6.037%,
8/18/1995-10/11/1995 34,574,517
--------------------------------------------------------------
37,000,000 McKenna Triangle National Corp., 5.709%-6.048%
8/4/1995-10/10/1995 36,843,017
--------------------------------------------------------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------- --------------
<C> <C> <S> <C>
(a) COMMERCIAL PAPER--CONTINUED
- ---------------------------------------------------------------------------------
FINANCE-RETAIL--CONTINUED
--------------------------------------------------------------
$ 3,000,000 New Center Asset Trust, A1/P1 Series, 6.384%, 9/22/1995 $ 2,973,177
--------------------------------------------------------------
20,000,000 New Center Asset Trust, A1+/P1 Series, 6.342%-6.609%,
8/11/1995-9/15/1995 19,878,104
-------------------------------------------------------------- --------------
Total 123,156,046
-------------------------------------------------------------- --------------
INSURANCE--3.7%
--------------------------------------------------------------
5,300,000 CXC, Inc. (Guaranteed by Cap MAC), 6.667%, 8/3/1995 5,298,101
--------------------------------------------------------------
3,000,000 Marsh & McLennan Cos., Inc., 5.944%, 12/1/1995 2,941,338
--------------------------------------------------------------
34,087,000 Prospect Street Senior Portfolio, L.P., (Guaranteed by
Financial Security Assurance, Inc.), 5.694%-6.449%,
8/8/1995-1/17/1996 33,794,635
-------------------------------------------------------------- --------------
Total 42,034,074
-------------------------------------------------------------- --------------
OIL & OIL FINANCE--1.2%
--------------------------------------------------------------
14,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.),
6.038%-6.115%, 8/7/1995-8/11/1995 13,982,721
-------------------------------------------------------------- --------------
PHARMACEUTICALS AND HEALTH CARE--0.4%
--------------------------------------------------------------
5,000,000 Schering Corp., (Guaranteed by Schering Plough Corp.), 6.455%,
8/11/1995 4,991,319
-------------------------------------------------------------- --------------
SOVEREIGN GOVERNMENT--0.9%
--------------------------------------------------------------
10,000,000 Ontario Hydro, (Guaranteed by Province of Ontario), 5.854%,
10/4/1995 9,897,422
-------------------------------------------------------------- --------------
TELECOMMUNICATIONS--1.4%
--------------------------------------------------------------
16,000,000 Ameritech Capital Funding Corp., (Guaranteed by Ameritech
Corp.), 5.781%-5.801%, 12/1/1995-1/22/1996 15,645,887
-------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 733,395,371
-------------------------------------------------------------- --------------
SHORT-TERM BONDS--0.8%
- ---------------------------------------------------------------------------------
BANKING--0.6%
--------------------------------------------------------------
6,804,454 Banc One Auto Trust 1995-A, 6.363%, 4/15/1996 6,804,454
-------------------------------------------------------------- --------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------- --------------
<C> <C> <S> <C>
SHORT-TERM BONDS--CONTINUED
- ---------------------------------------------------------------------------------
LEASING--0.2%
--------------------------------------------------------------
$ 1,905,177 Copelco Capital Funding Corp. II Series 1994-A, 6.030%,
10/20/1995 $ 1,905,177
-------------------------------------------------------------- --------------
TOTAL SHORT-TERM BONDS 8,709,631
-------------------------------------------------------------- --------------
(b) VARIABLE RATE INSTRUMENTS--25.1%
- ---------------------------------------------------------------------------------
BANKING--10.5%
--------------------------------------------------------------
9,000,000 American Seaway Foods, Inc., (Society National Bank,
Cleveland, OH LOC), 6.010%, 8/4/1995 9,000,000
--------------------------------------------------------------
9,300,000 Associated Materials, Inc., (Society National Bank, Cleveland,
OH LOC), 6.010%, 8/4/1995 9,300,000
--------------------------------------------------------------
6,000,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.869%,
8/7/1995 6,000,000
--------------------------------------------------------------
1,525,000 Denver Urban Renewal Authority Series 1992-B, (Banque Paribas,
Paris LOC), 6.100%, 8/3/1995 1,525,000
--------------------------------------------------------------
6,700,000 Development Authority of Richmond Cty, GA, (PNC Bank, N.A.
LOC), 5.869%, 8/7/1995 6,700,000
--------------------------------------------------------------
5,000,000 Kentucky Rural Economic Development Authority (PCI),
(PNC Bank, N.A. LOC), 5.969%, 8/7/1995 5,000,000
--------------------------------------------------------------
9,500,000 Massachusetts Industrial Finance Agency, (PNC Bank, N.A. LOC),
5.890%, 8/3/1995 9,500,000
--------------------------------------------------------------
13,550,000 Merit Care, Inc., (PNC Bank, N.A. LOC), 5.869%, 8/7/1995 13,550,000
--------------------------------------------------------------
12,000,000 National Funding Corp., 1994-A, (American National Bank,
Chicago LOC), 5.840%, 8/3/1995 12,000,000
--------------------------------------------------------------
20,000,000 (c) SMM Trust, Series 1994-B, (Guaranteed by Morgan Guaranty Trust
Co., New York), 6.205%, 8/11/1995 19,999,686
--------------------------------------------------------------
27,000,000 (c) SMM Trust, Series 1995-I, (Guaranteed by Morgan Guaranty Trust
Co., New York), 5.895%, 8/1/1995 26,993,515
-------------------------------------------------------------- --------------
Total 119,568,201
-------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--3.1%
--------------------------------------------------------------
10,000,000 Compagnie Euralair S.A., (Guaranteed by General Electric Co.),
5.869%, 8/7/1995 10,000,000
--------------------------------------------------------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------- --------------
<C> <C> <S> <C>
(b) VARIABLE RATE INSTRUMENTS--CONTINUED
- ---------------------------------------------------------------------------------
$ 4,901,137 Marta Leasing Ltd., (Guaranteed by General Electric Co.),
5.869%, 8/7/1995 $ 4,901,137
--------------------------------------------------------------
20,889,046 Northwest Airlines, Inc., (Guaranteed by General Electric
Co.), 5.897%, 8/7/1995 20,889,046
-------------------------------------------------------------- --------------
Total 35,790,183
-------------------------------------------------------------- --------------
FINANCE-COMMERCIAL--3.6%
--------------------------------------------------------------
40,500,000 Money Market Auto Loan Trust, (Guaranteed by Cap MAC), 6.015%,
8/15/1995 40,500,000
-------------------------------------------------------------- --------------
FINANCE-RETAIL--2.6%
--------------------------------------------------------------
30,000,000 Carco Auto Loan Master Trust, Series 1993-2, Class A1, 5.785%,
8/15/1995 30,000,000
-------------------------------------------------------------- --------------
INSURANCE--5.3%
--------------------------------------------------------------
25,000,000 (c) Peoples Security Life Insurance, 6.300%, 8/1/1995 25,000,000
--------------------------------------------------------------
12,500,000 (c) Sun Life Insurance Co. of America, 6.108%, 8/2/1995 12,500,000
--------------------------------------------------------------
12,500,000 Sun Life Insurance Co. of America, 6.213%, 8/2/1995 12,500,000
--------------------------------------------------------------
10,000,000 Sun Life Insurance Co. of America, 6.275%, 8/1/1995 10,000,000
-------------------------------------------------------------- --------------
Total 60,000,000
-------------------------------------------------------------- --------------
TOTAL VARIABLE RATE INSTRUMENTS 285,858,384
-------------------------------------------------------------- --------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------- --------------
<C> <C> <S> <C>
(d) REPURCHASE AGREEMENTS--6.4%
- ---------------------------------------------------------------------------------
$50,300,000 Bear, Stearns and Co., Inc., 5.810%, dated 7/31/1995, due
8/1/1995 $ 50,300,000
--------------------------------------------------------------
11,000,000 First Chicago Capital Markets, Inc., 5.820%, dated 7/31/1995,
due 8/1/1995 11,000,000
--------------------------------------------------------------
1,540,000 Nikko Securities Co. International, Inc., 5.950%, dated
7/31/1995, due 8/1/1995 1,540,000
--------------------------------------------------------------
10,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 10,000,000
-------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 72,840,000
-------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $1,141,804,607
-------------------------------------------------------------- --------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Current rate and next reset date shown.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. These securities have been determined to be
liquid under criteria established by the Board of Trustees. At the end of
the period, these securities amounted to $84,493,201 which represents 7.4%
of net assets.
(d) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,141,043,183) at July 31, 1995.
The following acronym is used throughout this portfolio:
LOC--Letter of Credit
(See Notes which are an integral part of the Financial Statements.)
AUTOMATED CASH MANAGEMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $1,141,804,607
- ------------------------------------------------------------------------------
Cash 276,326
- ------------------------------------------------------------------------------
Income receivable 1,765,600
- ------------------------------------------------------------------------------
Receivable for shares sold 32,377
- ------------------------------------------------------------------------------ --------------
Total assets 1,143,878,910
- ------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------
Payable for shares redeemed $ 279,708
- ------------------------------------------------------------------
Income distribution payable 2,005,072
- ------------------------------------------------------------------
Accrued expenses 550,947
- ------------------------------------------------------------------ ----------
Total liabilities 2,835,727
- ------------------------------------------------------------------------------ --------------
NET ASSETS for 1,141,043,183 shares outstanding $1,141,043,183
- ------------------------------------------------------------------------------ --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($1,141,043,183 / 1,141,043,183 shares outstanding) $1.00
- ------------------------------------------------------------------------------ --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED CASH MANAGEMENT TRUST
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS
ENDED JULY 31, YEAR ENDED
1995 APRIL 30, 1995
-------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------
Interest $16,648,358 $54,630,019
- -----------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------
Investment advisory fee $ 1,348,977 $ 5,173,695
- -----------------------------------------------------------
Administrative personnel and services fee 204,235 783,297
- -----------------------------------------------------------
Custodian fees 35,126 298,074
- -----------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses 78,898 142,581
- -----------------------------------------------------------
Directors'/Trustees' fees 433 15,046
- -----------------------------------------------------------
Auditing fees 10,000 12,700
- -----------------------------------------------------------
Legal fees 4,641 17,953
- -----------------------------------------------------------
Portfolio accounting fees 31,073 97,575
- -----------------------------------------------------------
Shareholder services fee 674,489 2,483,374
- -----------------------------------------------------------
Share registration costs 213,892 107,762
- -----------------------------------------------------------
Printing and postage 10,080 51,980
- -----------------------------------------------------------
Insurance premiums 7,626 62,482
- -----------------------------------------------------------
Taxes -- 15,497
- -----------------------------------------------------------
Miscellaneous 2,612 10,168
- ----------------------------------------------------------- ----------- -----------
Total expenses 2,622,082 9,272,184
- ----------------------------------------------------------- ----------- -----------
Deduct--
- -----------------------------------------------------------
Waiver of investment advisory fee $ 1,049,124 3,374,156
- -----------------------------------------------------------
Waiver of shareholder services fee 26,980 --
- ----------------------------------------------------------- ----------- -----------
Total waivers 1,076,104 3,374,156
- ----------------------------------------------------------- ----------- -----------
Net expenses 1,545,978 5,898,028
- ----------------------------------------------------------- ----------- -----------
Net investment income $15,102,380 $48,731,991
- ----------------------------------------------------------- ----------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED CASH MANAGEMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED APRIL 30,
ENDED ------------------------------------
JULY 31, 1995 1995 1994
--------------- ---------------- ----------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 15,102,380 $ 48,731,991 $ 29,154,607
- ---------------------------------------- --------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (15,102,380) (48,731,991) (29,154,607)
- ---------------------------------------- --------------- ---------------- ----------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of Shares 2,064,434,014 10,099,261,708 10,204,328,063
- ----------------------------------------
Net asset value of Shares issued to
shareholders in payment of distributions
declared 9,139,140 27,788,873 14,864,321
- ----------------------------------------
Cost of Shares redeemed (1,915,628,903) (10,119,404,536) (10,415,909,478)
- ---------------------------------------- --------------- ---------------- ----------------
Change in net assets resulting from
share transactions 157,944,251 7,646,045 (196,717,094)
- ---------------------------------------- --------------- ---------------- ----------------
Change in net assets 157,944,251 7,646,045 (196,717,094)
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 983,098,932 975,452,887 1,172,169,981
- ---------------------------------------- --------------- ---------------- ----------------
End of period $ 1,141,043,183 $ 983,098,932 $ 975,452,887
- ---------------------------------------- --------------- ---------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED CASH MANAGEMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Effective July 30, 1994, Automated Cash Management Trust (the "Fund") was
reorganized into an investment portfolio of Money Market Obligations Trust (the
"Trust"). The Trust is registered under the Investment Company Act of 1940, as
amended (the "Act") as an open-end, management investment company. The Trust
consists of six diversified portfolios. The financial statements included herein
present only those of the Fund. The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated and a
shareholder's interest to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value its
portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to guidelines and/or standards
reviewed or established by the Board of Trustees (the "Trustees"). Risks may
arise from the potential inability of counterparties to honor the terms of the
repurchase agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and distribute to shareholders each
year substantially all of its income. Accordingly, no provisions for federal tax
are necessary.
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At July
31, 1995 capital paid in aggregated $1,141,043,183.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED APRIL 30,
------------------ -----------------------------------
JULY 31, 1995 1995 1994
<S> <C> <C> <C>
- ----------------------------------- ---------------- --------------- ---------------
Shares sold 2,064,434,014 10,099,261,708 10,204,328,063
- -----------------------------------
Shares issued to shareholders in
payment of distributions declared 9,139,140 27,788,873 14,864,321
- -----------------------------------
Shares redeemed (1,915,628,903) (10,119,404,536) (10,415,909,478)
- ----------------------------------- -------------- --------------- ---------------
Net change resulting from share
transactions 157,944,251 7,646,045 (196,717,094)
- ----------------------------------- -------------- --------------- ---------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .50 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATION FEE--Federated Administrative Services ("FAS") under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a portion of this fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
RESTRICTED SECURITIES--Restricted securities are securities that may only be
resold upon registration under federal securities laws or in transactions exempt
from such registration. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. In some cases, the
restricted securities may be resold without registration upon exercise of a
demand feature. Such restricted securities may be determined to be liquid under
criteria established by the Trustees. The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Investment Company Act of 1940. Additional
information on each restricted security held at July 31, 1995 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ------------------------------------------------------------------ ----------- ------------
<S> <C> <C>
SMM Trust 1994-B (Guaranteed by Morgan
Guaranty Trust Co., New York), 6.205%, 8/1/1995 8/31/1994 $19,989,400
SMM Trust 1995-I (Guaranteed by Morgan
Guaranty Trust Co., New York), 5.895%, 8/1/1995 5/26/1995 $26,992,184
Peoples Security Life Insurance, 6.300%, 8/1/1995 12/29/1994 $25,000,000
Sun Life Insurance Co. of America, 6.108%, 8/2/1995 9/20/1993 $12,500,000
</TABLE>
CHANGE IN FISCAL YEAR--The Fund has changed its fiscal year-end from April 30,
to July 31, effective October 27, 1994.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Automated Cash Management Trust):
We have audited the accompanying statement of assets and liabilities of
Automated Cash Management Trust (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of July 31, 1995, the related statement of operations
statement of changes in net assets, and the financial highlights, for the year
ended April 30, 1995, and for the period from May 1, 1995, to July 31, 1995.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
statements referred to above for Automated Cash Management Trust as of April 30,
1994, as well as the financial highlights for the periods ended April 30, 1986,
through April 30, 1994, were audited by other auditors whose report dated June
9, 1994, expressed an unqualified opinion on those statements and financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Automated Cash Management Trust (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1995, and the results of its operations, the
changes in its net assets and its financial highlights for the year ended April
30, 1995, and for the period from May 1, 1995, to July 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Automated Cash Management Trust
Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, MA 02266-8600
- -------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, MA 02266-8600
- -------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- -------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AUTOMATED CASH
MANAGEMENT TRUST
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 052903101
G00554-01 (9/95)
AUTOMATED CASH MANAGEMENT TRUST
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the prospectus
of Automated Cash Management Trust (the "Fund"), a portfolio of Money
Market Obligations Trust (the "Trust") dated September 30, 1995. This
Statement is not a prospectus. To receive a copy of a prospectus, write or
call the Fund.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1995
FEDERATED SECURITIES
CORP.
Distributor
A subsidiary of
Federated Investors
FUND HISTORY 1 FUND ADMINISTRATION 10
INVESTMENT POLICIES 1 SHAREHOLDER SERVICES AGREEMENT 10
Acceptable Investments 1 DETERMINING NET ASSET VALUE 11
Bank Instruments 1
REDEMPTION IN KIND 11
U.S. Government Obligations 1
When-Issued and Delayed Delivery THE FUND'S TAX STATUS 11
Transactions 1
PERFORMANCE INFORMATION 11
Repurchase Agreements 1
Reverse Repurchase Agreements 2 Yield 11
INVESTMENT LIMITATIONS 2 Effective Yield 12
Total Return 12
BROKERAGE TRANSACTIONS 4
- ----------------------------------
Performance Comparisons 12
MONEY MARKET OBLIGATIONS TRUST ABOUT FEDERATED INVESTORS 12
- ------------------------------
MANGEMENT 4 Mutual Fund Market 13
---------------------------------
Institutional 13
Share Ownership 8
Trust Organizations 13
Trustees Compensation 9
Broker/Dealers and
Trustee Liability 9
Bank Broker/Dealer Subsidiaries13
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 10
FUND HISTORY
Effective July 30, 1994, Automated Cash Management Trust was reorganized into an
investment portfolio of Money Market Obligations Trust. The Trust is registered
under the Investment Company Act of 1940, as amended as an open-end, management
investment company. The Trust consists of six diversified portfolios.
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may not be changed by
the Board of Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of the
security, the issuer of any demand feature applicable to the security, or any
guarantor of either the security or any demand feature.
BANK INSTRUMENTS
The instruments of banks and savings and loans whose deposits are insured by the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF"),
such as certificates of deposit, demand and time deposits, savings shares, and
bankers' acceptances, are not necessarily guaranteed by those organizations. In
addition to domestic bank instruments, the Fund may invest in: Eurodollar
Certificates of Deposit issued by foreign branches of U.S. or foreign banks;
Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in foreign
branches of U.S. or foreign banks; Canadian Time Deposits, which are U.S.
dollar-denominated deposits issued by branches of major Canadian banks located
in the United States; and Yankee Certificates of Deposit, which are U.S. dollar-
denominated certificates of deposit issued by U.S. branches of foreign banks and
held in the United States.
U.S. GOVERNMENT OBLIGATIONS
The Fund invests 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.
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.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial institutions,
such as broker/dealers, which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument in return for a percentage of the
instrument's market value in cash and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous, but does
not ensure this result. When effecting reverse repurchase agreements, liquid
assets of the Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are: segregated on the Fund's records at the trade
date; marked to market daily; and maintained until the transaction is settled.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any money market instruments short or purchase any
money market instruments on margin but may obtain such short-term credits
as may be necessary for clearance of purchases and sales of money market
instruments.
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.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge or
hypothecate assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 10% of the value of total assets at the time of
the borrowing.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may purchase or
hold money market instruments, including repurchase agreements, permitted
by its investment objective and policies.
-
INVESTING IN COMMODITIES, MINERALS, OR REAL ESTATE
The Fund will not invest in commodities, commodity contracts, oil, gas, or
other mineral programs or real estate, except that it may purchase money
market instruments issued by companies that invest in or sponsor interests.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of restricted securities which the Fund may purchase pursuant
to its investment objective, policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase money market instruments if, as a result of such
purchase, more than 25% of the value of its total assets would be invested
in one industry. However, investing in bank instruments (such as time and
demand deposits and certificates of deposit), U.S. government obligations
or instruments secured by these money market instruments, such as
repurchase agreements, shall not be considered investments in any one
industry.
ACQUIRING SECURITIES
The Fund will not acquire the voting securities of any issuer. It will not
invest in securities issued by any other investment company, except as part
of a merger, consolidation, or other acquisition. It will not invest in
securities of a company for the purpose of exercising control or
management.
DIVERSIFICATION OF INVESTMENTS
The Fund will not purchase securities issued by any one issuer
having a value of more than 5% of the value of its total assets
except cash or cash items, repurchase agreements, and U.S.
government obligations.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest in securities which are subject to restrictions on
resale under federal securities laws except that the Fund may invest up to
10% of its net assets in high quality securities subject to such
restrictions. This limitation is not applicable to commercial paper issued
under Section 4(2) of the Securities Act of 1933.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets in
money market instruments of unseasoned issuers, including their
predecessors, that have been in operation for less than three years.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser, owning
individually more than .50 of 1% of the issuer's securities, together own
more than 5% of the issuer's securities.
The above limitations cannot be changed without shareholder approval. The
following investment limitation, 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 ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items". Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
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
restriction.
The Fund did not borrow money or pledge securities in excess of 5% of the value
of its net assets during the last fiscal year and has no present intent to do so
during the coming fiscal year.
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 Fund and
other accounts. To the extent that receipt of these services may supplant
services for which the adviser or its affiliates might otherwise have paid, it
would tend to reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage and
research services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided. During the fiscal
years ended April 30, 1995, 1994 and 1993, and for the period from April 30,
1995 to July 31, 1995, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, 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. and Federated Global Research Corp.; Chairman, Passport Research, Ltd.;
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. and Federated Global 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.
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; Shareholder, 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
70 Westcliff Road
Westin, MA
Birthdate: March 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.
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.
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, International Politics and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., and U.S. Space Foundation; Chairman, Czecho Management Center;
Director, Trustee, or Managing General Partner of the Funds; President Emeritus,
University of Pittsburgh; founding Chairman, National Advisory Council for
Environmental Policy and Technology and Federal Emergency Management Advisory
Board.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/marketing consultant; Conference Coordinator, Non-profit
entities; 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; 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
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp., and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Services Company; Chairman, Treasurer, and Trustee, Federated Administrative
Services; Trustee or Director of some of the Funds; Executive Vice President and
Treasurer of the Funds.
David M. Taylor
Federated Investors Tower
Pittsburgh, PA
Birthdate: January 13, 1947
Treasurer
Senior Vice President, Controller, and Trustee, Federated Investors; Controller,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., and Passport Research, Ltd.; Vice President, Federated Shareholder
Services; Senior Vice President, Federated Administrative Services; Treasurer of
the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.; Trustee,
Federated Services Company; Executive Vice President, Secretary, and Trustee,
Federated Administrative Services; President and Trustee, Federated Shareholder
Services; Director, Federated Securities Corp.; Executive 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.
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 Government Money Trust; Blanchard Funds; Blanchard
Precious Metals, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust; Federated ARMs
Fund; Federated Equity Funds; Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Master Trust; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S. Government
Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated Total Return
Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S, Government Securities Fund: 3-5
Years; 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;; 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; 111 Corcoran Funds; Peachtree Funds;
The Planters Funds; RIMCO Monument Funds; The Shawmut Funds; Star Funds; The
Starburst Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust; 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.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund`s outstanding
shares.
As of September 6, 1995, the following shareholders of record owned 5% or more
of the outstanding shares of the Fund: Stephens Inc., Little Rock, AR, owned
approximately 113.462,732 shares (9.50%); State Street Bank and Trust, North
Quincy, MA, owned approximately 67,578,920 shares (5.66%); and BHC Securities
Inc., Philadelphia, PA, owned approximately 60,303,018 shares (5.05%).
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 $3,078 $20,688 for the Trust and
Trustee 49 other investment companies in the Fund
Complex
John T. Conroy, Jr. $5,840 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
William J. Copeland $5,840 $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 $5,840 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $4,306 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr. $5,840 $117,202 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Peter E. Madden $2,978 $90,563 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Gregor F. Meyer $4,306 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
John E. Murray, Jr., $863 $0 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Wesley W. Posvar $4,306 $106,460 for the Trust and
Trustee 64 other investment companies in the Fund
Complex
Marjorie P. Smuts $4,306 $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, 1995.
#The aggregate compensation is provided for the Trust which is comprised of six
portfolios.
+The information is provided for the last calendar year.
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
The Fund's investment adviser is Federated Management. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are owned
by a trust, the trustees of which are John F. Donahue, his wife and his son, J.
Christopher Donahue.
The adviser shall not be liable to the 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 Management receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended April
30, 1995, 1994 and 1993, and for the period from April 30, 1995 to July 31,
1995, the adviser earned $5,173,695, $5,207,744, $6,173,392 and $1,348,977, of
which $3,374,156, $724,909, $488,070 and $1,049,124 were waived.
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. Prior to March 1, 1994, Federated Administrative Services, Inc.,
also a subsidiary of Federated Investors, served as the Fund's Administrator.
(For purposes of this Statement of Additional Information, Federated
Administrative Services and Federated Administrative Services, Inc., may
hereinafter collectively be referred to as, the "Administrators".) For the
fiscal year ended April 30, 1995, and for the period from April 30, 1995 to July
31, 1995, Federated Administrative Services earned $783,297 and $204,235,
respectively. For the fiscal year ended April 30, 1994, the Administrators
collectively earned $721,387. For the fiscal year ended April 30, 1993,
Federated Administrative Services, Inc., earned $649,911. Dr. Henry J. Gailliot,
an officer of Federated Management, the adviser to the Fund, holds approximately
20% of the outstanding common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.
SHAREHOLDER SERVICES AGREEMENT
This arrangement permits the payment of fees to Federated Shareholder Services
and financial institutions to cause services to be provided which are necessary
for the maintenance of shareholder accounts and to encourage personal services
to shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may include,
but are not limited to: providing office space, equipment, telephone facilities,
and various clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses. By
adopting the Shareholder Services Agreement, the 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.
For the fiscal year ended April 30, 1995, and for the period from April 30, 1995
to July 31, 1995, the Fund paid shareholder services fees in the amount of
$2,483,374 and $674,489, respectively, all of which were paid to financial
institutions.
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 on 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, as amended. Under the Rule, the Trustees must establish
procedures reasonably designed to stabilize the net asset value per share, as
computed for purposes of distribution and redemption, at $1.00 per share, taking
into account current market conditions and the Fund's investment objective. The
procedures include monitoring the relationship between the amortized cost value
per share and the net asset value per share based upon available indications of
market value. The Trustees will decide what, if any, steps should be taken if
there is a difference of more than 0.5 of 1% between the two values. The
Trustees will take any steps they consider appropriate (such as redemption in
kind or shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund's net asset value, whichever is less, for any one shareholder within a
90-day period. Any redemption beyond this amount will also be in cash unless the
Trustees determine that further payments should be in kind. In such cases, the
Fund will pay all or a portion of the remainder of the redemption in portfolio
instruments valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees deem fair
and equitable. Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders who sell these securities could receive
less than the redemption value and could incur certain transaction costs.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund must, among other requirements: derive at least 90% of its
gross income from dividends, interest, and gains from the sale of securities;
derive less than 30% of its gross income from the sale of securities held less
than three months; invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned during the
year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average portfolio
maturity; type of instruments in which the portfolio is invested; changes in
interest rates; changes in expenses; and the relative amount of cash flow. To
the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares of
the Fund, the performance will be reduced for those shareholders paying those
fees.
YIELD
The yield is calculated based upon the seven days ending on the day of the
calculation, called the "base period." This yield is computed by: determining
the net change in the value of a hypothetical account with a balance of one
share at the beginning of the base period, with the net change excluding capital
changes but including the value of any additional shares purchased with
dividends earned from the original one share and all dividends declared on the
original and any purchased shares; dividing the net change in the account's
value by the value of the account at the beginning of the base period to
determine the base period return; and multiplying the base period return by
365/7.
The Fund's yield for the seven-day period ended July 31, 1995, was 5.42%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base period
return by: adding 1 to the base period return; raising the sum to the 365/7th
power; and subtracting 1 from the result.
The Fund's effective yield for the seven-day period ended July 31, 1995, was
5.57%.
TOTAL RETURN
Average annual total return is the average compounded rate of return for a given
period that would equate a $1,000 initial investment to the ending redeemable
value of that investment. The ending redeemable value is computed by multiplying
the number of shares owned at the end of the period by the net asset value per
share at the end of the period. The number of shares owned at the end of the
period is based on the number of shares purchased at the beginning of the period
with $1,000, adjusted over the period by any additional shares, assuming the
monthly reinvestment of all dividends and distributions.
The Fund's average annual total returns for the one-, five- and ten-year periods
ended April 30, 1995, were 5.31%, 4.53%, and 5.99%, respectively.
Cumulative total return reflects the Fund's total performance over a specific
period of time. The cumulative total return for the Fund for the period from
April 30, 1995 through July 31, 1995 was 1.42%. This total return is
representative of only three months of activity since the Fund changed its
fiscal year end.
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:
OLIPPER 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.
oDONOGHUE'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.
oMONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
oSALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
ABOUT FEDERATED INVESTORS
Federated is dedicated to meeting investor needs which is reflected in its
investment decision making-structured, straightforward, and consistent. This has
resulted in a history of competitive performance with a range of competitive
investment products that have gained the confidence of thousands of clients and
their customers.
The company's disciplined security selection process is firmly rooted in sound
methodologies backed by fundamental and technical research. Investment decisions
are made and executed by teams of portfolio managers, analysts, and traders
dedicated to specific market sectors.
In the money market sector, Federated gained prominence in the mutual fund
industry in 1974 with the creation of the first institutional money market fund.
Simultaneously, the company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a principal means used by
money managers today to value money market fund shares. Other innovations
include the first institutional tax-free money market fund. As of December 31,
1994, Federated managed more than $31 billion in assets across approximately 43
money market funds, including 17 government, 8 prime and 18 municipal with
assets approximating $17 billion, $7.4 billion and $6.6 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated's equity and high
yield corporate bond management while William D. Dawson, Executive Vice
President, oversees Federated's domestic fixed income management. Henry A.
Frantzen, Executive Vice President, oversees the management of Federated's
international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes mutual funds for a
variety of investment applications. Specific markets include:
INSTITUTIONAL
Federated meets the needs of more than 4,000 institutional clients nationwide by
managing and servicing separate accounts and mutual funds for a variety of
applications, including defined benefit and defined contribution programs, cash
management, and asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities, foundations/endowments,
insurance companies, and investment and financial advisors. The marketing effort
to these institutional clients is headed by John B. Fisher, President,
Institutional Sales Division.
TRUST ORGANIZATIONS
Other institutional clients include close relationships with more than 1,500
banks and trust organizations. Virtually all of the trust divisions of the top
100 bank holding companies use Federated funds in their clients' portfolios. The
marketing effort to trust clients is headed by Mark R. Gensheimer, Executive
Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated mutual funds are available to consumers through major brokerage firms
nationwide- including 200 New York Stock Exchange firms- supported by more
wholesalers than any other mutual fund distributor. The marketing effort to
these firms is headed by James F. Getz, President, Broker/Dealer Division.
*Source: Investment Company Institute
60934N864
