1
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GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Government Obligations Fund (the
"Fund") offered by this prospectus represent interests in a
diversified portfolio of Money Market Obligations Trust (the "Trust"),
an open-end management investment company (a mutual fund). The Fund
invests in U.S. government securities to provide 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 Combined Statement of Additional Information
dated September 30, 1995, with the Securities and Exchange Commission.
The information contained in the Combined Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Combined 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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<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SERVICE SHARES 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
Investment Limitations 5
Regulatory Compliance 5
TRUST INFORMATION 5
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Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 7
NET ASSET VALUE 7
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INVESTING IN THE FUND 8
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Share Purchases 8
Minimum Investment Required 8
Subaccounting Services 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING SHARES 9
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By Mail 9
Telephone Redemption 10
Accounts with Low Balances 11
SHAREHOLDER INFORMATION 11
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Voting Rights 11
Massachusetts Partnership Law 11
TAX INFORMATION 12
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Federal Income Tax 12
Pennsylvania Corporate and Personal
Property Taxes 12
OTHER CLASSES OF SHARES 12
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PERFORMANCE INFORMATION 12
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FINANCIAL STATEMENTS 14
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INDEPENDENT AUDITORS' REPORT 23
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ADDRESSES 24
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</TABLE>
I
SUMMARY OF FUND EXPENSES
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<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering
price)................................................................................ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................... None
Exchange Fee............................................................................ None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)....................................................... 0.05%
12b-1 Fee............................................................................... None
Total Other Expenses.................................................................... 0.40%
Shareholder Services Fee................................................... 0.25%
Total Operating Expenses (2).................................................... 0.45%
<FN>
(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
0.20%.
(2) The total operating expenses would have been 0.60% absent the voluntary
waiver of a portion of the management fee.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION". WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------- --------- --------- --------- ---------
<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............... $5 $14 $25 $57
</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.
1
GOVERNMENT OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
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(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Independent Public Accountants on page 23.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31,
1995(A)
- -------------------------------------------------------------- ------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00
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INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.05
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LESS DISTRIBUTIONS
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Distributions from net investment income (0.05)
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NET ASSET VALUE, END OF PERIOD $1.00
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------------
TOTAL RETURN (B) 5.31%
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RATIOS TO AVERAGE NET ASSETS
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Expenses 0.45%(c)
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Net investment income 5.63%(c)
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Expense waiver/reimbursement (d) 0.15%(c)
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $339,105
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<FN>
(a) Reflects operations for the period from August 1, 1994, (date of initial
public investment) to July 31, 1995. For the period from the effective
date, July 5, 1994 to July 31, 1994, all net investment income was
distributed to the Fund's adviser.
(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.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
2
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 shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Service Shares of the Fund, which are designed primarily for financial
institutions as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio investing in short-term U.S.
government securities. A minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
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 to provide current income consistent
with stability of principal. This investment objective cannot be changed without
shareholder approval. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio of
U.S. government securities maturing in thirteen months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise, the
investment policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
3
ACCEPTABLE INVESTMENTS. 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:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as 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:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. 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.
4
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
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 15% of the value of
its total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
5
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. 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 Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
SHAREHOLDER SERVICES. The Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of Federated
Investors, under which the Fund may
6
make payments up to .25 of 1% of the average daily net asset value of the
Institutional Service Shares, computed at an annual rate, to obtain 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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
----------- ----------------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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 shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder
7
by the number of shares outstanding. The Fund cannot guarantee that its net
asset value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (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: Government Obligations Fund--Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Fund-- Institutional Service Shares to: Federated Services Company,
Government Obligations Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services
8
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.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Government Obligations Fund--Institutional Service
Shares; shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road--2nd Floor, North Quincy, MA
02171.
9
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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 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.
10
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000, or the
aggregate investment in Federated Funds falls below the required minimum of
$200,000,000 to be maintained from and after twelve months from account opening,
due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Putnam Trust Company, Greenwich, CT, owned approximately 118,529,400 shares
(34.82%) of the voting securities of the Fund's Institutional Service Shares
and, therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
11
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, 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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity and are subject to
a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income
12
earned by an investment is assumed to be reinvested daily. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
13
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
SHORT-TERM OBLIGATIONS--31.1%
-------------------------------------------------------------------------------
$ 11,000,000 (a) FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--0.5%
------------------------------------------------------------
6.578%, 2/23/1996 $ 10,611,633
------------------------------------------------------------ --------------
78,280,000 (a) FEDERAL HOME LOAN BANK, DISCOUNT NOTES--3.4%
------------------------------------------------------------
6.229%-7.00%, 11/2/1995-1/16/1996 76,473,379
------------------------------------------------------------ --------------
78,500,000 (b) FEDERAL HOME LOAN BANK, FLOATING RATE NOTES--3.5%
------------------------------------------------------------
5.715%-5.790%, 8/1/95 78,449,946
------------------------------------------------------------ --------------
63,500,000 (a) FEDERAL HOME LOAN BANK, DISCOUNT NOTES--2.8%
------------------------------------------------------------
6.015%-6.850%, 2/28/1996-6/13/1996 63,554,612
------------------------------------------------------------ --------------
13,165,000 (a) FEDERAL HOME LOAN MORTGAGE CORP., DISCOUNT NOTES--0.6%
------------------------------------------------------------
6.798%-7.013%, 11/1/1995-2/8/1996 12,837,593
------------------------------------------------------------ --------------
16,500,000 (b) FEDERAL HOME LOAN MORTGAGE CORP., FLOATING RATE NOTES--0.7%
------------------------------------------------------------
5.720%, 8/1/95 16,499,593
------------------------------------------------------------ --------------
246,920,000 (a) FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--10.6%
------------------------------------------------------------
5.755%-6.399%, 8/17/1995-4/15/1996 241,643,739
------------------------------------------------------------ --------------
50,000,000 (b) FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE
NOTES--2.2%
------------------------------------------------------------
5.740%-5.880%, 8/1/95 49,995,969
------------------------------------------------------------ --------------
11,000,000 (a) FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--0.5%
------------------------------------------------------------
5.500%, 6/12/1996 10,961,811
------------------------------------------------------------ --------------
8,000,000 (a) STUDENT LOAN MARKETING ASSOCIATION, DISCOUNT NOTES--0.4%
------------------------------------------------------------
6.752%, 2/21/1996 8,007,761
------------------------------------------------------------ --------------
55,230,000 (b) STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE
NOTES--2.4%
------------------------------------------------------------
5.790%-6.040%, 8/7/95 55,243,249
------------------------------------------------------------ --------------
34,500,000 (a) U.S. TREASURY BILLS--1.5%
------------------------------------------------------------
5.270%-6.505%, 8/24/1995-6/27/1996 33,583,557
------------------------------------------------------------ --------------
45,000,000 U.S. TREASURY NOTES--2.0%
------------------------------------------------------------
7.750%-9.250%, 1/15/1996-3/31/1996 45,653,539
------------------------------------------------------------ --------------
TOTAL SHORT-TERM OBLIGATIONS 703,516,381
------------------------------------------------------------ --------------
</TABLE>
14
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
(C) REPURCHASE AGREEMENTS--70.9%
-------------------------------------------------------------------------------
$335,000,000 BT Securities Corp., 5.840%, dated 7/31/1995, due 8/1/1995 $ 335,000,000
------------------------------------------------------------
27,200,000 BZW Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 27,200,000
------------------------------------------------------------
50,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 50,000,000
------------------------------------------------------------
40,000,000 Deutsche Bank Government Securities, Inc., 5.870%, dated
7/31/1995, due 8/1/1995 40,000,000
------------------------------------------------------------
240,000,000 Goldman, Sachs and Co., 5.870%, dated 7/31/1995, due
8/1/1995 240,000,000
------------------------------------------------------------
110,000,000 HSBC Securities, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
110,000,000 Harris, Nesbitt, Thomson Securities, Inc., 5.820%, dated
7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
25,000,000 J.P. Morgan Securities, Inc., 5.870%, dated 7/31/1995, due
8/1/1995 25,000,000
------------------------------------------------------------
110,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 110,000,000
------------------------------------------------------------
100,000,000 Nomura Securities Intenational, Inc., 5.860%, dated
7/31/1995, due 8/1/1995 100,000,000
------------------------------------------------------------
110,000,000 Smith Barney, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
80,000,000 Swiss Bank Capital Markets, 5.840%, dated 7/31/1995, due
8/1/1995 80,000,000
------------------------------------------------------------
110,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
43,000,000 (d) CS First Boston Corp., 5.770%, dated 7/14/1995, due
8/14/1995 43,000,000
------------------------------------------------------------
28,000,000 (d) CS First Boston Corp., 5.800%, dated 7/7/1995, due 8/7/1995 28,000,000
------------------------------------------------------------
45,000,000 (d) Goldman, Sachs & Co., 5.750%, dated 7/7/1995, due 9/5/1995 45,000,000
------------------------------------------------------------
44,000,000 (d) Goldman, Sachs & Co., 5.750%, dated 7/25/1995, due
10/23/1995 44,000,000
------------------------------------------------------------ --------------
TOTAL REPURCHASE AGREEMENTS 1,607,200,000
------------------------------------------------------------ --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $2,310,716,381
------------------------------------------------------------ --------------
--------------
<FN>
(a) Each issue shows the rate of discount at time of purchase.
(b) Current rate and next demand date shown.
</TABLE>
15
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
(c) 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.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,265,621,228) at July 31, 1995.
</TABLE>
(See Notes which are an integral part of the Financial Statements.)
16
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------
Investments in repurchase agreements $1,607,200,000
- ------------------------------------------------
Investments in securities 703,516,381
- ------------------------------------------------ --------------
Total investments in securities, at
amortized cost and value $2,310,716,381
- ----------------------------------------------------------------
Cash 1,277,143
- ----------------------------------------------------------------
Income receivable 4,063,752
- ----------------------------------------------------------------
Receivable for shares sold 50,790
- ---------------------------------------------------------------- --------------
Total assets 2,316,108,066
- ----------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------
Payable for investments purchased 33,980,946
- ------------------------------------------------
Payable for shares redeemed 8,642,732
- ------------------------------------------------
Income distribution payable 7,242,088
- ------------------------------------------------
Accrued expenses 621,072
- ------------------------------------------------ --------------
Total liabilities 50,486,838
- ---------------------------------------------------------------- --------------
NET ASSETS for 2,265,621,228 shares outstanding $2,265,621,228
- ---------------------------------------------------------------- --------------
--------------
NET ASSET VALUE, Offering Price and Redemption
Proceeds Per Share:
- ----------------------------------------------------------------
Institutional Shares:
- ----------------------------------------------------------------
($1,926,515,833 DIVIDED BY 1,926,515,833 shares outstanding) $ 1.00
- ---------------------------------------------------------------- --------------
Institutional Service Shares:
- ----------------------------------------------------------------
($339,105,395 DIVIDED BY 339,105,395 shares outstanding) $ 1.00
- ---------------------------------------------------------------- --------------
--------------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
17
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest $82,570,212
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $2,842,786
- -----------------------------------------------------------------------
Administrative personnel and services fee 1,075,995
- -----------------------------------------------------------------------
Custodian fees 164,968
- -----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 51,116
- -----------------------------------------------------------------------
Directors'/Trustees' fees 8,207
- -----------------------------------------------------------------------
Auditing fees 11,809
- -----------------------------------------------------------------------
Legal fees 4,496
- -----------------------------------------------------------------------
Portfolio accounting fees 149,536
- -----------------------------------------------------------------------
Shareholder services fee--Institutional Shares 3,183,649
- -----------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 369,663
- -----------------------------------------------------------------------
Share registration costs 561,996
- -----------------------------------------------------------------------
Printing and postage 23,120
- -----------------------------------------------------------------------
Insurance premiums 16,366
- -----------------------------------------------------------------------
Taxes 6,980
- -----------------------------------------------------------------------
Miscellaneous 4,704
- ----------------------------------------------------------------------- ----------
Total expenses 8,475,391
- -----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------
Waiver of investment advisory fee $2,063,842
- ----------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 3,183,649 5,247,491
- ---------------------------------------------------------- ---------- ----------
Net expenses 3,227,900
- ------------------------------------------------------------------------------------- -----------
Net investment income $79,342,312
- ------------------------------------------------------------------------------------- -----------
-----------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
18
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 79,342,312 $ 22,768,833
- ----------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------------------------
Institutional Shares (71,018,165) (22,768,833)
- -----------------------------------------------------------------------
Institutional Service Shares (8,324,147) 0
- ----------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions to shareholders (79,342,312) (22,768,833)
- ----------------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of Shares 8,123,000,879 3,045,297,053
- -----------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 19,779,451 1,181,007
- -----------------------------------------------------------------------
Cost of Shares redeemed (6,641,037,966) (2,989,745,626)
- ----------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 1,501,742,364 56,732,434
- ----------------------------------------------------------------------- --------------- ---------------
Change in net assets 1,501,742,364 56,732,434
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 763,878,864 707,146,430
- ----------------------------------------------------------------------- --------------- ---------------
End of period $ 2,265,621,228 $ 763,878,864
- ----------------------------------------------------------------------- --------------- ---------------
--------------- ---------------
<FN>
(See Notes which are an integral part of the Financial Statements)
</TABLE>
19
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Money Market Obligations 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 are only those of Government Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares.
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 the 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.
20
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,265,621,228.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
INSTITUTIONAL SHARES 1995 1994
- --------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Shares sold 7,200,004,553 3,045,297,053
- ---------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 16,152,849 1,181,007
- ---------------------------------------------------------------
Shares redeemed (6,053,520,182) (2,989,745,626)
- --------------------------------------------------------------- --------------- ---------------
Net change resulting from Institutional share transactions 1,162,637,220 56,732,434
- --------------------------------------------------------------- --------------- ---------------
--------------- ---------------
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
INSTITUTIONAL SERVICE SHARES 1995(A) 1994
- --------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Shares sold 922,996,326 --
- ---------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 3,626,602 --
- ---------------------------------------------------------------
Shares redeemed (587,517,784) --
- --------------------------------------------------------------- --------------- ---------------
Net change resulting from Institutional Service share
transactions 339,105,144 --
- --------------------------------------------------------------- --------------- ---------------
--------------- ---------------
Net change resulting from Fund share transactions 1,501,742,364 56,732,434
- --------------------------------------------------------------- --------------- ---------------
--------------- ---------------
<FN>
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995.
</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 .20 of 1% of the
21
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), 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 chose to waive a portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its
sole discretion.
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.
22
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of July 31, 1995, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our 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 and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
23
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Government Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
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>
24
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 60934N807
G01066-02 (9/95) [RECYCLED PAPER LOGO]
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Government Obligations Fund (the "Fund")
offered by this prospectus represent interests in a diversified
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in
U.S. government securities to provide 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 Combined Statement of Additional Information
dated September 30, 1995, with the Securities and Exchange Commission.
The information contained in the Combined Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Combined 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
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- --------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SHARES 2
- --------------------------------------------------
GENERAL INFORMATION 3
- --------------------------------------------------
INVESTMENT INFORMATION 3
- --------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 5
Regulatory Compliance 5
TRUST INFORMATION 5
- --------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Trust 7
NET ASSET VALUE 7
- --------------------------------------------------
INVESTING IN THE FUND 8
- --------------------------------------------------
Share Purchases 8
Minimum Investment Required 8
Subaccounting Services 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING SHARES 9
- --------------------------------------------------
By Mail 9
Telephone Redemption 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 11
- --------------------------------------------------
Voting Rights 11
Massachusetts Partnership Law 11
TAX INFORMATION 11
- --------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 12
OTHER CLASSES OF SHARES 12
- --------------------------------------------------
PERFORMANCE INFORMATION 12
- --------------------------------------------------
FINANCIAL STATEMENTS 13
- --------------------------------------------------
INDEPENDENT AUDITORS' REPORT 22
- --------------------------------------------------
ADDRESSES 23
- --------------------------------------------------
</TABLE>
I
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering
price)................................................................................ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................... None
Exchange Fee............................................................................ None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)....................................................... 0.05%
12b-1 Fee............................................................................... None
Total Other Expenses.................................................................... 0.15%
Shareholder Services Fee (after waiver) (2)................................ 0.00%
Total Operating Expenses (3).................................................... 0.20%
<FN>
(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
0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.60% absent the voluntary
waiver of a portion of the management fee and the shareholder services fee.
</TABLE>
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 "INVESTING IN THE FUND" AND "TRUST INFORMATION". WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------- --------- --------- --------- ---------
<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............... $2 $6 $11 $26
</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.
1
GOVERNMENT OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 22.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------------------------------------
1995 1994 1993 1992 1991 1990(A)
- -------------------------------------------------- ---------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------
Net investment income 0.05 0.03 0.03 0.05 0.07 0.03
- --------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------
Distributions from net investment income (0.05) (0.03) (0.03) (0.05) (0.07) (0.03)
- -------------------------------------------------- ---------- -------- -------- -------- -------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------- ---------- -------- -------- -------- -------- -----------
TOTAL RETURN (B) 5.57% 3.41% 3.22% 4.70% 7.20% 2.80%
- --------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- --------------------------------------------------
Net investment income 5.58% 3.38% 3.16% 4.55% 6.77% 8.24%(c)
- --------------------------------------------------
Expense waiver/reimbursement (d) 0.40% 0.15% 0.11% 0.12% 0.22% 0.34%(c)
- --------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------
Net assets, end of period (000 omitted) $1,926,516 $763,879 $707,146 $679,533 $331,454 $148,598
- --------------------------------------------------
<FN>
(a) Reflects operations for the period from March 31, 1990, (date of initial
public investment) to July 31, 1990.
(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.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing in short-term U.S. government securities. A
minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal. This investment objective cannot be changed without
shareholder approval. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio of
U.S. government securities maturing in thirteen months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise, the
investment policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
3
ACCEPTABLE INVESTMENTS. 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:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as 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:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. 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.
4
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
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 15% of the value of
its total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
5
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. 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 Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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
6
make payments up to .25 of 1% of the average daily net asset value of the
Institutional Shares, computed at an annual rate, to obtain 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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
------------ ----------------------------------------
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
7
The net asset value is determined at 12:00 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
- --------------------------------------------------------------------------------
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: Government Obligations Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Fund-- Institutional Shares to: Federated Services Company,
Government Obligations Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations
8
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.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Government Obligations Fund--Institutional Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight 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");
9
- 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 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 and pay the proceeds to the shareholder if the
account balance falls below a required mini-
mum value of $25,000, or the aggregate investment in Federated Funds falls below
the required minimum of $200,000,000 to be maintained from and after twelve
months from account opening, due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
10
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Putnam Trust Company, Greenwich, CT, owned approximately 118,529,400 shares
(34.82%) of the voting securities of the Fund's Institutional Service Shares
and, therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
11
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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary capacity
and are subject to a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
12
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
SHORT-TERM OBLIGATIONS--31.1%
- -------------------------------------------------------------------------------
$ 11,000,000 (a) FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--0.5%
------------------------------------------------------------
6.578%, 2/23/1996 $ 10,611,633
------------------------------------------------------------ --------------
78,280,000 (a) FEDERAL HOME LOAN BANK, DISCOUNT NOTES--3.4%
------------------------------------------------------------
6.229%-7.00%, 11/2/1995-1/16/1996 76,473,379
------------------------------------------------------------ --------------
78,500,000 (b) FEDERAL HOME LOAN BANK, FLOATING RATE NOTES--3.5%
------------------------------------------------------------
5.715%-5.790%, 8/1/95 78,449,946
------------------------------------------------------------ --------------
63,500,000 (a) FEDERAL HOME LOAN BANK, DISCOUNT NOTES--2.8%
------------------------------------------------------------
6.015%-6.850%, 2/28/1996-6/13/1996 63,554,612
------------------------------------------------------------ --------------
13,165,000 (a) FEDERAL HOME LOAN MORTGAGE CORP., DISCOUNT NOTES--0.6%
------------------------------------------------------------
6.798%-7.013%, 11/1/1995-2/8/1996 12,837,593
------------------------------------------------------------ --------------
16,500,000 (b) FEDERAL HOME LOAN MORTGAGE CORP., FLOATING RATE NOTES--0.7%
------------------------------------------------------------
5.720%, 8/1/95 16,499,593
------------------------------------------------------------ --------------
246,920,000 (a) FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--10.6%
------------------------------------------------------------
5.755%-6.399%, 8/17/1995-4/15/1996 241,643,739
------------------------------------------------------------ --------------
50,000,000 (b) FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTES--
2.2%
------------------------------------------------------------
5.740%-5.880%, 8/1/95 49,995,969
------------------------------------------------------------ --------------
11,000,000 (a) FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--0.5%
------------------------------------------------------------
5.500%, 6/12/1996 10,961,811
------------------------------------------------------------ --------------
8,000,000 (a) STUDENT LOAN MARKETING ASSOCIATION, DISCOUNT NOTES--0.4%
------------------------------------------------------------
6.752%, 2/21/1996 8,007,761
------------------------------------------------------------ --------------
55,230,000 (b) STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE
NOTES--2.4%
------------------------------------------------------------
5.790%-6.040%, 8/7/95 55,243,249
------------------------------------------------------------ --------------
34,500,000 (a) U.S. TREASURY BILLS--1.5%
------------------------------------------------------------
5.270%-6.505%, 8/24/1995-6/27/1996 33,583,557
------------------------------------------------------------ --------------
</TABLE>
13
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
SHORT-TERM OBLIGATIONS--CONTINUED
- -------------------------------------------------------------------------------
$ 45,000,000 U.S. TREASURY NOTES--2.0%
------------------------------------------------------------
7.750%-9.250%, 1/15/1996-3/31/1996 $ 45,653,539
------------------------------------------------------------ --------------
TOTAL SHORT-TERM OBLIGATIONS 703,516,381
------------------------------------------------------------ --------------
(C) REPURCHASE AGREEMENTS--70.9%
- -------------------------------------------------------------------------------
335,000,000 BT Securities Corp., 5.840%, dated 7/31/1995, due 8/1/1995 335,000,000
------------------------------------------------------------
27,200,000 BZW Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 27,200,000
------------------------------------------------------------
50,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 50,000,000
------------------------------------------------------------
40,000,000 Deutsche Bank Government Securities, Inc., 5.870%, dated
7/31/1995, due 8/1/1995 40,000,000
------------------------------------------------------------
240,000,000 Goldman, Sachs and Co., 5.870%, dated 7/31/1995, due
8/1/1995 240,000,000
------------------------------------------------------------
110,000,000 HSBC Securities, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
110,000,000 Harris, Nesbitt, Thomson Securities, Inc., 5.820%, dated
7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
25,000,000 J.P. Morgan Securities, Inc., 5.870%, dated 7/31/1995, due
8/1/1995 25,000,000
------------------------------------------------------------
110,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 110,000,000
------------------------------------------------------------
100,000,000 Nomura Securities Intenational, Inc., 5.860%, dated
7/31/1995, due 8/1/1995 100,000,000
------------------------------------------------------------
110,000,000 Smith Barney, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
80,000,000 Swiss Bank Capital Markets, 5.840%, dated 7/31/1995, due
8/1/1995 80,000,000
------------------------------------------------------------
110,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 110,000,000
------------------------------------------------------------
43,000,000 (d) CS First Boston Corp., 5.770%, dated 7/14/1995, due
8/14/1995 43,000,000
------------------------------------------------------------
28,000,000 (d) CS First Boston Corp., 5.800%, dated 7/7/1995, due 8/7/1995 28,000,000
------------------------------------------------------------
45,000,000 (d) Goldman, Sachs & Co., 5.750%, dated 7/7/1995, due 9/5/1995 45,000,000
------------------------------------------------------------
44,000,000 (d) Goldman, Sachs & Co., 5.750%, dated 7/25/1995, due
10/23/1995 44,000,000
------------------------------------------------------------ --------------
TOTAL REPURCHASE AGREEMENTS 1,607,200,000
------------------------------------------------------------ --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $2,310,716,381
------------------------------------------------------------ --------------
--------------
</TABLE>
14
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
<FN>
(a) Each issue shows the rate of discount at time of purchase.
(b) Current rate and next demand date shown.
(c) 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.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,265,621,228) at July 31, 1995.
</TABLE>
(See Notes which are an integral part of the Financial Statements.)
15
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------------------------
Investments in repurchase agreements $1,607,200,000
- ----------------------------------------------------------------------------------------------------
Investments in securities 703,516,381
- ---------------------------------------------------------------------------------------------------- --------------
</TABLE>
<TABLE>
<S> <C>
Total investments in securities, at amortized cost and value $2,310,716,381
- --------------------------------------------------------------------------------------------------------------------
Cash 1,277,143
- --------------------------------------------------------------------------------------------------------------------
Income receivable 4,063,752
- --------------------------------------------------------------------------------------------------------------------
Receivable for shares sold 50,790
- -------------------------------------------------------------------------------------------------------------------- --------------
Total assets 2,316,108,066
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
LIABILITIES:
- --------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 33,980,946
- ----------------------------------------------------------------------------------------------------
Payable for shares redeemed 8,642,732
- ----------------------------------------------------------------------------------------------------
Income distribution payable 7,242,088
- ----------------------------------------------------------------------------------------------------
Accrued expenses 621,072
- ---------------------------------------------------------------------------------------------------- --------------
</TABLE>
<TABLE>
<S> <C>
Total liabilities 50,486,838
- -------------------------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 2,265,621,228 shares outstanding $2,265,621,228
- -------------------------------------------------------------------------------------------------------------------- --------------
--------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- --------------------------------------------------------------------------------------------------------------------
Institutional Shares:
- --------------------------------------------------------------------------------------------------------------------
($1,926,515,833 DIVIDED BY 1,926,515,833 shares outstanding) $ 1.00
- -------------------------------------------------------------------------------------------------------------------- --------------
Institutional Service Shares:
- --------------------------------------------------------------------------------------------------------------------
($339,105,395 DIVIDED BY 339,105,395 shares outstanding) $ 1.00
- -------------------------------------------------------------------------------------------------------------------- --------------
--------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
16
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest $82,570,212
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $2,842,786
- -----------------------------------------------------------------------
Administrative personnel and services fee 1,075,995
- -----------------------------------------------------------------------
Custodian fees 164,968
- -----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 51,116
- -----------------------------------------------------------------------
Directors'/Trustees' fees 8,207
- -----------------------------------------------------------------------
Auditing fees 11,809
- -----------------------------------------------------------------------
Legal fees 4,496
- -----------------------------------------------------------------------
Portfolio accounting fees 149,536
- -----------------------------------------------------------------------
Shareholder services fee--Institutional Shares 3,183,649
- -----------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 369,663
- -----------------------------------------------------------------------
Share registration costs 561,996
- -----------------------------------------------------------------------
Printing and postage 23,120
- -----------------------------------------------------------------------
Insurance premiums 16,366
- -----------------------------------------------------------------------
Taxes 6,980
- -----------------------------------------------------------------------
Miscellaneous 4,704
- ----------------------------------------------------------------------- ----------
Total expenses 8,475,391
- -----------------------------------------------------------------------
Deduct--
- -----------------------------------------------------------------------
Waiver of investment advisory fee $2,063,842
- ----------------------------------------------------------
Waiver of shareholder services fee-Institutional Shares 3,183,649 5,247,491
- ---------------------------------------------------------- ---------- ----------
Net expenses 3,227,900
- ------------------------------------------------------------------------------------- -----------
Net investment income $79,342,312
- ------------------------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
17
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 79,342,312 $ 22,768,833
- ----------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------------------------
Institutional Shares (71,018,165) (22,768,833)
- -----------------------------------------------------------------------
Institutional Service Shares (8,324,147) 0
- ----------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions to shareholders (79,342,312) (22,768,833)
- ----------------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of Shares 8,123,000,879 3,045,297,053
- -----------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 19,779,451 1,181,007
- -----------------------------------------------------------------------
Cost of Shares redeemed (6,641,037,966) (2,989,745,626)
- ----------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 1,501,742,364 56,732,434
- ----------------------------------------------------------------------- --------------- ---------------
Change in net assets 1,501,742,364 56,732,434
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 763,878,864 707,146,430
- ----------------------------------------------------------------------- --------------- ---------------
End of period $ 2,265,621,228 $ 763,878,864
- ----------------------------------------------------------------------- --------------- ---------------
--------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
18
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Money Market Obligations 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 are only those of Government Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares.
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 the 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.
19
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,265,621,228.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
1995 1994
--------------- ---------------
INSTITUTIONAL SHARES
- ---------------------------------------------------------------
<S> <C> <C>
Shares sold 7,200,004,553 3,045,297,053
- ---------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 16,152,849 1,181,007
- ---------------------------------------------------------------
Shares redeemed (6,053,520,182) (2,989,745,626)
- --------------------------------------------------------------- --------------- ---------------
Net change resulting from Institutional share transactions 1,162,637,220 56,732,434
- --------------------------------------------------------------- --------------- ---------------
--------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
1995(a) 1994
--------------- ---------------
INSTITUTIONAL SERVICE SHARES
- ---------------------------------------------------------------
<S> <C> <C>
Shares sold 922,996,326 --
- ---------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 3,626,602 --
- ---------------------------------------------------------------
Shares redeemed (587,517,784) --
- --------------------------------------------------------------- --------------- ---------------
Net change resulting from Institutional Service share
transactions 339,105,144 --
- --------------------------------------------------------------- --------------- ---------------
Net change resulting from Fund share transactions 1,501,742,364 56,732,434
- --------------------------------------------------------------- --------------- ---------------
--------------- ---------------
<FN>
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995.
</TABLE>
20
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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 .20 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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), 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 chose to waive a portion of its
fee. FSS can modify or terminate this voluntary waiver at any time at its
sole discretion.
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.
21
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust, a Massachusetts business trust), including the schedule of portfolio
investments, as of July 31, 1995, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our 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 and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
22
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Government Obligations Fund
Institutional Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Investment Advisor
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
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>
23
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 60934N104
G01066-01 (9/95) [RECYCLED PAPER LOGO]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Prime Obligations Fund (the "Fund") offered by this
prospectus represent interests in a diversified portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in money market securities to provide 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 Combined Statement of Additional Information dated
September 30, 1995, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Combined 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
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Risks 7
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 8
- ------------------------------------------------------
Management of the Trust 8
Distribution of Shares 9
Administration of the Fund 9
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
Subaccounting Services 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
- ------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 15
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
INDEPENDENT AUDITORS' REPORT 30
- ------------------------------------------------------
ADDRESSES 31
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)......... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)............................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable).................. None
Exchange Fee........................................................................ None
</TABLE>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<S> <C> <C>
Management Fee (after waiver)(1)..................................................... 0.07%
12b-1 Fee............................................................................ None
Total Other Expenses................................................................. 0.13%
Shareholder Services Fee(2)............................................. 0.00%
Total Operating Expenses(3).......................................................... 0.20%
</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
0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.58% absent the voluntary
waiver of a portion of the management fee and 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 "INVESTING IN INSTITUTIONAL SHARES" AND "MONEY MARKET OBLIGATIONS
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
- ----------------------------------------------------- ------ ------- ------- --------
<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.......... $2 $ 6 $11 $ 26
</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.
PRIME OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of the Independent Public Accountants on page
30.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991 1990(A)
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------
Net investment income 0.06 0.03 0.03 0.05 0.07 0.03
- -----------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------
Distributions from net investment
income (0.06) (0.03) (0.03) (0.05) (0.07) (0.03)
- ----------------------------------------- ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------- ------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 5.65% 3.47% 3.25% 4.74% 7.30% 2.89%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- -----------------------------------------
Net investment income 5.60% 3.47% 3.20% 4.53% 6.54% 8.21%(c)
- -----------------------------------------
Expense waiver/reimbursement (d) 0.38% 0.14% 0.09% 0.10% 0.24% 0.68%(c)
- -----------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------
Net assets, end of period (000 omitted) $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593 $34,777
- -----------------------------------------
</TABLE>
(a) Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
(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
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing primarily in short-term money market securities.
A minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide 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 primarily in a portfolio
of money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Unless indicated otherwise, investment policies may be
changed by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:
- domestic issues of corporate debt obligations, including variable rate
demand notes;
- commercial paper (including Canadian Commercial Paper and Europaper);
- certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
- short-term credit facilities;
- asset-backed securities;
- obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
- other money market instruments.
The Fund invests only in instruments denominated and payable in U.S. dollars.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security
at the time of each interest rate adjustment or at other fixed intervals.
See "Demand Features." The Fund treats variable rate demand notes as
maturing on the later of the date of the next interest rate adjustment or
the date on which the Fund may next tender the security for repurchase.
BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million, or insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"). Bank Instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Fund will treat
securities credit enhanced with a bank's letter of credit as Bank
Instruments.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial
interests in special purpose trusts, limited partnership interests, or
commercial paper or other debt securities issued by a special purpose
corporation. Although the securities often have some form of credit or
liquidity enhancement, payments on the securities depend predominantly upon
collections of the loans and receivables held by the issuer.
SHORT-TERM CREDIT FACILITIES. The Fund may enter into, or acquire
participations in, short-term borrowing arrangements with corporations,
consisting of either a short-term revolving credit facility or a master
note agreement payable upon demand. Under these arrangements, the
borrower may reborrow funds during the term of the facility. The Fund
treats any commitments to provide such advances as a standby commitment to
purchase the borrower's notes.
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 securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
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.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values
of the securities purchased may vary from the purchase prices. Accordingly, the
Fund may pay more or less than the market value of the securities on the
settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law, and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees of the Fund are quite liquid. The Fund
intends, therefore, to treat the restricted securities which meet the criteria
for liquidity established by the Trustees, including Section 4(2) commercial
paper, as determined by the Fund's investment adviser, as liquid and not subject
to the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not subject
such paper to the limitation applicable to restricted securities.
CONCENTRATION OF INVESTMENTS. The Fund may invest 25% or more of its total
assets in commercial paper issued by finance companies. The finance companies in
which the Fund intends to invest can be divided into two categories, commercial
finance companies and consumer finance companies. Commercial finance companies
are principally engaged in lending to corporations or other businesses. Consumer
finance companies are primarily engaged in lending to individuals. Captive
finance
companies or finance subsidiaries which exist to facilitate the marketing and
financial activities of their parent will, for purposes of industry
concentration, be classified in the industry of their parent's corporation.
Concentrating investments in any one industry may subject the Fund to more risk
than if it did not concentrate investments.
In addition, the Fund may invest 25% or more of the value of its total assets in
instruments issued by a U.S. branch of a domestic bank or savings and loan
having capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment.
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 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 Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7 which regulates
money market mutual funds. For example, with limited exceptions, Rule 2a-7
prohibits the investment of more than 5% of the Fund's total assets in the
securities of any one issuer, although the Fund's investment limitation only
requires such 5% diversification with respect to 75% of its assets. The Fund
will invest more than 5% of its assets in any one issuer only under the
circumstances permitted by Rule 2a-7. The Fund will also determine the effective
maturity of its investments, as well as its ability to consider a security as
having received the requisite short-term ratings by NRSROs, according to Rule
2a-7. The Fund may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. 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 Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 the Institutional Shares, computed at an annual rate,
to obtain 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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (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
- --------------------------------------------------------------------------------
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 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 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: Prime Obligations Fund-Institutional Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028. The Fund reserves
the right to refuse any request made by wire or telephone and may limit the
amount involved or the number of telephone redemptions. This procedure may be
modified or terminated by the transfer agent or the Fund.
BY MAIL. To purchase by mail, send a check made payable to Prime Obligations
Fund-Institutional Shares to: Federated Services Company, Prime Obligations
Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed. 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
5:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Prime Obligations Fund,
Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The written
request should state: Prime Obligations Fund-Institutional Shares; shareholder's
name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 5:00 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 5:00
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 5:00 p.m. (Eastern time). The Fund reserves
the right to refuse any request made by wire or telephone and may limit the
amount involved or the number of telephone redemptions. This procedure may be
modified or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000, or the
aggregate investment in Federated Funds falls below the required minimum of
$200,000,000 to be maintained from and after twelve months from account opening,
due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Peoples Bank, Bridgeport, CT, owned approximately 149,257,858 shares (36.34%) of
the voting securities of the Fund's Institutional Service Shares and, therefore,
may, for certain purposes, be deemed to control the Fund and be able to affect
the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency of fiduciary capacity
and are subject to a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
PRIME OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
BANK NOTES--2.9%
- ---------------------------------------------------------------------------------
BANKING--2.9%
-------------------------------------------------------------
$ 15,000,000 Bank One, Milwaukee, WI N.A., 5.960%, 9/11/1995 $ 15,000,989
-------------------------------------------------------------
72,000,000 Mellon Bank NA, Pittsburgh, 6.000%-6.240%,
10/20/1995-11/28/1995 72,000,000
------------------------------------------------------------- --------------
TOTAL BANK NOTES 87,000,989
------------------------------------------------------------- --------------
(A)COMMERCIAL PAPER--62.2%
- ---------------------------------------------------------------------------------
BANKING--19.0%
-------------------------------------------------------------
15,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank
N.V., Amsterdam), 5.809%, 12/27/1995 14,651,583
-------------------------------------------------------------
140,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank
PLC, London), 5.709%-6.348%, 8/9/1995-1/22/1996 138,243,523
-------------------------------------------------------------
108,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian
Imperial Bank of Commerce, Toronto), 5.754%-6.452%,
8/16/1995-10/23/1995 107,135,856
-------------------------------------------------------------
24,700,000 City of Cleveland, (Union Bank of Switzerland, Zurich LOC),
5.950%, 10/4/1995 24,700,000
-------------------------------------------------------------
79,100,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank
AG, Frankfurt), 5.749%-5.841%, 10/25/1995-1/22/1996 77,608,628
-------------------------------------------------------------
45,000,000 Dresdner US Finance, 5.936%-5.984%, 9/5/1995-12/21/1995 44,486,209
-------------------------------------------------------------
24,000,000 J.P. Morgan & Co., Inc., 5.756%, 1/22/1996 23,351,560
-------------------------------------------------------------
70,547,000 Queensland Alumina Ltd., (Credit Suisse, Zurich LOC),
5.940%-6.101%, 8/1/1995-9/14/1995 70,285,776
-------------------------------------------------------------
19,800,000 Royal Bank of Canada, Montreal, 5.636%, 1/11/1996 19,308,718
-------------------------------------------------------------
1,000,000 Societe Generale North America, Inc., (Guaranteed by Societe
Generale, Paris), 5.724%, 1/23/1996 972,972
-------------------------------------------------------------
40,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by
Toronto-Dominion Bank), 5.870%-6.390%, 9/7/1995-12/8/1995 39,464,261
------------------------------------------------------------- --------------
Total 560,209,086
------------------------------------------------------------- --------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
- ---------------------------------------------------------------------------------
DIVERSIFIED--0.7%
-------------------------------------------------------------
$ 20,000,000 Rockwell International Corp., 6.336%, 9/13/1995 $ 19,853,322
------------------------------------------------------------- --------------
ELECTRONICS--0.3%
-------------------------------------------------------------
10,000,000 Hewlett-Packard Co., 5.918%, 9/28/1995 9,906,072
------------------------------------------------------------- --------------
FINANCE-COMMERCIAL--23.6%
-------------------------------------------------------------
90,400,000 Asset Securitization Cooperative Corp., 5.740%-5.969%,
8/30/1995-10/20/1995 89,658,264
-------------------------------------------------------------
122,700,000 Beta Finance, Inc., 5.630%-6.450%, 8/14/1995-1/29/1996 121,182,697
-------------------------------------------------------------
80,700,000 CIESCO, Inc., 5.687%-6.356%, 8/25/1995-10/27/1995 79,963,340
-------------------------------------------------------------
116,000,000 CIT Group Holdings, Inc., 5.760%-6.217%, 8/29/1995-12/22/1995 114,015,734
-------------------------------------------------------------
31,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.843%-6.271%,
9/15/1995-11/7/1995 30,721,169
-------------------------------------------------------------
24,620,000 Falcon Asset Securitization Corp., 5.752%-5.815%,
10/26/1995-1/22/1996 24,135,125
-------------------------------------------------------------
135,000,000 General Electric Capital Corp., 5.750%-6.317%,
9/5/1995-1/23/1996 133,106,685
-------------------------------------------------------------
81,575,000 PREFCO-Preferred Receivables Funding Co., 5.868%-6.113%,
8/9/1995-11/15/1995 80,720,284
-------------------------------------------------------------
26,300,000 Sheffield Receivables Corp., 6.100%-6.101%,
8/9/1995-8/10/1995 26,263,600
------------------------------------------------------------- --------------
Total 699,766,898
------------------------------------------------------------- --------------
FINANCE-RETAIL--10.7%
-------------------------------------------------------------
109,000,000 Associates Corp. of North America, 5.699%-6.163%,
8/4/1995-10/31/1995 108,314,529
-------------------------------------------------------------
118,700,000 Ford Credit Receivables Funding, Inc., 5.720%-6.207%,
8/24/1995-10/23/1995 117,685,863
-------------------------------------------------------------
67,000,000 New Center Asset Trust, A1+/P1 Series, 6.214%-6.314%,
10/10/1995-10/20/1995 66,164,109
-------------------------------------------------------------
25,000,000 Norwest Financial, Inc., 5.833%, 10/2/1995 24,752,431
------------------------------------------------------------- --------------
Total 316,916,932
------------------------------------------------------------- --------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
- ---------------------------------------------------------------------------------
INSURANCE--1.6%
-------------------------------------------------------------
$ 15,000,000 City of New York G.O. 1995-B, (FGIC-SPI Gtd.),
6.241%, 8/22/1995 $ 15,000,000
-------------------------------------------------------------
10,175,000 Marsh & McLennan Cos., Inc., 5.944%-6.453%,
9/25/1995-12/1/1995 10,027,975
-------------------------------------------------------------
22,783,000 Prospect Street Senior Portfolio, L.P., (Guaranteed by
Financial Security Assurance, Inc.), 5.805%-6.273%,
9/6/1995-11/10/1995 22,506,070
------------------------------------------------------------- --------------
Total 47,534,045
------------------------------------------------------------- --------------
MISCELLANEOUS--0.5%
-------------------------------------------------------------
15,000,000 Procter & Gamble Co., 5.845%, 10/16/1995 14,817,917
------------------------------------------------------------- --------------
OIL & OIL FINANCE--1.1%
-------------------------------------------------------------
33,000,000 Koch Industries, Inc., 5.851%, 8/1/1995 33,000,000
------------------------------------------------------------- --------------
TELECOMMUNICATIONS--4.7%
-------------------------------------------------------------
139,620,000 AT&T Corp., 5.739%-6.373%, 8/11/1995-12/1/1995 138,331,098
------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 1,840,335,370
------------------------------------------------------------- --------------
CORPORATE NOTES--1.2%
- ---------------------------------------------------------------------------------
BANKING--1.2%
-------------------------------------------------------------
33,787,467 Banc One Corp., 6.363%, 4/15/1996 33,787,468
------------------------------------------------------------- --------------
TOTAL CORPORATE NOTES 33,787,468
------------------------------------------------------------- --------------
(B)VARIABLE RATE INSTRUMENTS--18.3%
- ---------------------------------------------------------------------------------
BANKING--13.1%
-------------------------------------------------------------
4,045,000 500 South Front St. L.P., Series A, (Huntington National
Bank, Columbus, OH LOC), 5.890%, 8/3/1995 4,045,000
-------------------------------------------------------------
6,500,000 500 South Front St. L.P., Series B, (Huntington National
Bank, Columbus, OH LOC), 5.890%, 8/3/1995 6,500,000
-------------------------------------------------------------
10,927,000 Adesa Funding Corp., (Bank One, Indianapolis, IN LOC),
5.840%, 8/3/1995 10,927,000
-------------------------------------------------------------
8,455,000 Alexandria Executive Club L.P., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 8,455,000
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ---------------------------------------------------------------------------------
BANKING--CONTINUED
-------------------------------------------------------------
$ 9,000,000 Arrow N.A., Inc., (Huntington National Bank, Columbus, OH
LOC), 5.885%, 8/3/1995 $ 9,000,000
-------------------------------------------------------------
16,900,000 Beverly California Corp., (PNC Bank, N.A. LOC),
5.869%, 8/7/1995 16,900,000
-------------------------------------------------------------
1,642,790 Bowling Green Manor L.P., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,642,790
-------------------------------------------------------------
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH LOC),
6.060%, 1/3/1996 17,400,000
-------------------------------------------------------------
21,558,000 Capital One Funding Corp. 1994-C, Series 1994-C, (Bank One,
Cleveland, N.A. LOC), 6.069%, 8/3/1995 21,558,000
-------------------------------------------------------------
26,300,000 Capital One Funding Corp. 1995-A, (Bank One, Indianapolis, IN
LOC), 5.885%, 8/3/1995 26,300,000
-------------------------------------------------------------
17,446,000 Capital One Funding Corp. 1995-B, (Liberty National Bank &
Trust Co. LOC), 5.840%, 8/3/1995 17,446,000
-------------------------------------------------------------
1,062,337 Clyde Manor L.P., (Huntington National Bank, Columbus, OH
LOC), 5.885%, 8/3/1995 1,062,337
-------------------------------------------------------------
2,500,000 Crystal Enterprises, Inc., Series 1995, (NBD Bank, N.A.,
Detroit, MI LOC), 5.900%, 8/3/1995 2,500,000
-------------------------------------------------------------
4,020,000 Eastwinds Investment, Ltd., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 4,020,000
-------------------------------------------------------------
5,000,000 G.M.H. Enterprises, Inc., Series 1995, (National City Bank,
Cleveland, OH LOC), 5.950%, 8/3/1995 5,000,000
-------------------------------------------------------------
2,420,000 Grote Family L.P., (Huntington National Bank, Columbus, OH
LOC), 5.885%, 8/3/1995 2,420,000
-------------------------------------------------------------
12,300,000 Hunt Club Apartments, Inc., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/2/1995 12,300,000
-------------------------------------------------------------
1,700,000 Jade Sterling Steel Co., Inc., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,700,000
-------------------------------------------------------------
4,200,000 Kokosing Construction Co., Inc., (National City Bank,
Cleveland, OH LOC), 5.950%, 8/2/1995 4,200,000
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ---------------------------------------------------------------------------------
BANKING--CONTINUED
-------------------------------------------------------------
$ 8,600,000 Mississippi Business Finance Corp., (Comerica Bank, Detroit,
MI LOC), 5.885%, 8/3/1995 $ 8,600,000
-------------------------------------------------------------
2,000,000 Mississippi Business Finance Corp., Series 1995 Plantation
Pointe, LP Project, (Amsouth Bank N.A., Birmingham LOC),
5.885%, 8/3/1995 2,000,000
-------------------------------------------------------------
4,885,000 Olen Corp., (National City Bank, Cleveland, OH LOC), 5.950%,
8/2/1995 4,885,000
-------------------------------------------------------------
1,800,000 Roby Company Ltd. Partnership, (Huntington National Bank,
Columbus, OH LOC), 5.850%, 8/3/1995 1,800,000
-------------------------------------------------------------
7,730,000 Roby Company Ltd. Partnership, (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 7,730,000
-------------------------------------------------------------
13,450,000 Rooker, J.W., (Wachovia Bank of Georgia NA, Atlanta LOC),
5.896%, 8/2/1995 13,450,000
-------------------------------------------------------------
6,100,000 S.I.D.A. (Alabama) Miltope Project, Series 1994, (First
Alabama Bank, Birmingham LOC), 6.135%, 8/3/1995 6,100,000
-------------------------------------------------------------
11,100,000 S.I.D.A. (Alabama),TRB (Wellborn Cabinet, Inc.), (Amsouth
Bank N.A., Birmingham LOC), 5.930%, 8/2/1995 11,100,000
-------------------------------------------------------------
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
-------------------------------------------------------------
101,000,000 (c) SMM Trust, Series 1995-I, (Guaranteed by Morgan Guaranty
Trust Co., New York), 5.895%, 8/1/1995 100,975,741
-------------------------------------------------------------
7,040,000 Shenandoah Partners L.P., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 7,040,000
-------------------------------------------------------------
3,418,000 Vista Funding Corp., (Bank One, Akron, N.A. LOC), 5.840%,
8/3/1995 3,418,000
-------------------------------------------------------------
6,569,000 Vista Funding Corp., (Fifth Third Bank of Northwestern OH
LOC), 5.885%, 8/3/1995 6,569,000
-------------------------------------------------------------
11,500,000 Vista Funding Corp., 1995-B, (Fifth Third Bank of
Northwestern OH LOC), 5.885%, 8/3/1995 11,500,000
-------------------------------------------------------------
1,011,431 Wauseon Manor II L.P., (Huntington National Bank, Columbus,
OH LOC), 5.885%, 8/3/1995 1,011,431
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ---------------------------------------------------------------------------------
BANKING--CONTINUED
-------------------------------------------------------------
$ 3,775,000 Wexner Heritage House, (Huntington National Bank, Columbus,
OH LOC), 5.885%, 8/3/1995 $ 3,775,000
-------------------------------------------------------------
2,445,000 YMCA of Central, OH, (Huntington National Bank, Columbus, OH
LOC), 5.890%, 8/3/1995 2,445,000
------------------------------------------------------------- --------------
Total 385,774,985
------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--1.2%
-------------------------------------------------------------
8,840,838 GS Funding Corp., (Guaranteed by General Electric Co.),
5.869%, 7/31/1995 8,840,838
-------------------------------------------------------------
6,000,000 Lauda Air, Luftfahrt, (Guaranteed by General Electric Co.),
5.881%, 8/1/1995 6,000,000
-------------------------------------------------------------
19,918,165 Northwest Airlines, Inc., (Guaranteed by General Electric
Co.), 5.897%, 7/31/1995 19,918,165
------------------------------------------------------------- --------------
Total 34,759,003
------------------------------------------------------------- --------------
FINANCE-COMMERCIAL--1.2%
-------------------------------------------------------------
36,000,000 Money Market Auto Loan Trust, (Guaranteed by Cap MAC),
6.015%, 8/15/1995 36,000,000
------------------------------------------------------------- --------------
FINANCE-RETAIL--1.1%
-------------------------------------------------------------
31,825,493 Carco Auto Loan Master Trust, Series 1993-2, Class A1,
5.785%, 8/15/1995 31,825,493
------------------------------------------------------------- --------------
INSURANCE--0.8%
-------------------------------------------------------------
25,000,000 (c) Peoples Security Life Insurance, 6.300%, 8/1/1995 25,000,000
------------------------------------------------------------- --------------
MUNICIPAL--0.9%
-------------------------------------------------------------
26,700,000 (c) Columbus, OH, 6.135%, 8/3/1995 26,700,000
------------------------------------------------------------- --------------
TOTAL VARIABLE RATE INSTRUMENTS 540,059,481
------------------------------------------------------------- --------------
(D)REPURCHASE AGREEMENTS--15.6%
- ---------------------------------------------------------------------------------
700,000 Bear, Stearns & Co., Inc., 5.81%, dated 7/31/1995, due
8/1/1995 700,000
-------------------------------------------------------------
135,748,000 First Chicago Capital Markets, Inc., 5.82%, dated 7/31/1995,
due 8/1/1995 135,748,000
-------------------------------------------------------------
147,451,000 Fuji Securities, Inc., 5.82%, dated 7/31/1995, due 8/1/1995 147,451,000
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(D)REPURCHASE AGREEMENTS--CONTINUED
- ---------------------------------------------------------------------------------
$ 10,516,000 PaineWebber, Inc., 5.85%, dated 7/31/1995, due 8/1/1995 $ 10,516,000
-------------------------------------------------------------
211,000 State Street Bank and Trust Co., 5.82%, dated 7/31/1995, due
8/1/1995 211,000
-------------------------------------------------------------
167,090,000 UBS Securities, Inc., 5.80%, dated 7/31/1995, due 8/1/1995 167,090,000
------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 461,716,000
------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $2,962,899,308
------------------------------------------------------------- --------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) Restricted Securities--Investment in securities not registered under the
Securities Act of 1933. At the end of the period, these amounted to 6.0% 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
($2,958,751,318) at July 31, 1995.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
LOC -- Letter of Credit
LP -- Limited Partnership
PLC -- Public Limited Company
TRB -- Taxable Revenue Bond
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments in repurchase agreements $ 461,716,000
- --------------------------------------------------------------
Investments in securities 2,501,183,308
- -------------------------------------------------------------- --------------
Total investments, at amortized cost and value $2,962,899,308
- -------------------------------------------------------------------------------
Income receivable 5,325,668
- -------------------------------------------------------------------------------
Receivable for shares sold 8,182,417
- ------------------------------------------------------------------------------- --------------
Total assets 2,976,407,393
- -------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------
Payable for shares redeemed 3,166,500
- --------------------------------------------------------------
Income distribution payable 10,170,581
- --------------------------------------------------------------
Accrued expenses 707,730
- --------------------------------------------------------------
Payable to Bank 3,611,264
- -------------------------------------------------------------- --------------
Total liabilities 17,656,075
- ------------------------------------------------------------------------------- --------------
NET ASSETS for 2,958,751,318 shares outstanding $2,958,751,318
- ------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------
Institutional Shares:
($2,457,797,173/2,457,797,173 shares outstanding) $1.00
- ------------------------------------------------------------------------------- --------------
Institutional Service Shares:
($500,954,145/500,954,145 shares outstanding) $1.00
- ------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest $127,412,842
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $ 4,370,903
- -------------------------------------------------------------------
Administrative personnel and services fee 1,654,387
- -------------------------------------------------------------------
Custodian fees 244,453
- -------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 67,443
- -------------------------------------------------------------------
Directors'/Trustees' fees 8,283
- -------------------------------------------------------------------
Auditing fees 12,951
- -------------------------------------------------------------------
Legal fees 28,075
- -------------------------------------------------------------------
Portfolio accounting fees 190,089
- -------------------------------------------------------------------
Shareholder services fee--Institutional Shares 4,908,345
- -------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 554,723
- -------------------------------------------------------------------
Share registration costs 503,411
- -------------------------------------------------------------------
Printing and postage 25,638
- -------------------------------------------------------------------
Insurance premiums 49,287
- -------------------------------------------------------------------
Taxes 38,556
- -------------------------------------------------------------------
Miscellaneous 27,683
- ------------------------------------------------------------------- -----------
Total expenses 12,684,227
- -------------------------------------------------------------------
Deduct--
- ------------------------------------------------------
Waiver of investment advisory fee $2,828,160
- ------------------------------------------------------
Waiver of shareholder services fee--Institutional
Shares 4,908,345 7,736,505
- ------------------------------------------------------ ---------- -----------
Net expenses 4,947,722
- ---------------------------------------------------------------------------------- ------------
Net investment income $122,465,120
- ---------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------
1995 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 122,465,120 $ 41,204,591
- ----------------------------------------------------------- ---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------------
Institutional Shares (109,911,005) (41,183,125)
- -----------------------------------------------------------
Institutional Service Shares (12,554,115) (21,466)
- ----------------------------------------------------------- ---------------- ---------------
Change in net assets resulting from distributions to
shareholders (122,465,120) (41,204,591)
- ----------------------------------------------------------- ---------------- ---------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------
Proceeds from sale of Shares 28,128,464,929 8,598,402,134
- -----------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of distributions declared 34,127,138 6,605,494
- -----------------------------------------------------------
Cost of Shares redeemed (26,464,207,220) (8,442,800,343)
- ----------------------------------------------------------- ---------------- ---------------
Change in net assets resulting from share transactions 1,698,384,847 162,207,285
- ----------------------------------------------------------- ---------------- ---------------
Change in net assets 1,698,384,847 162,207,285
- ----------------------------------------------------------- ---------------- ---------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 1,260,366,471 1,098,159,186
- ----------------------------------------------------------- ---------------- ---------------
End of period $ 2,958,751,318 $ 1,260,366,471
- ----------------------------------------------------------- ---------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Money Market Obligations 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 presented herein present only those of Prime Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
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 the 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.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,958,751,318.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
INSTITUTIONAL SHARES
- -----------------------------------------------------------
Shares Sold 23,850,176,668 8,582,784,664
- -----------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 27,352,248 6,585,754
- -----------------------------------------------------------
Shares redeemed (22,670,711,004) (8,436,550,343)
- ----------------------------------------------------------- --------------- --------------
Net change resulting from Institutional share
transactions 1,206,817,912 152,820,075
- ----------------------------------------------------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1995 1994*
--------------- --------------
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
- -----------------------------------------------------------
Shares Sold 4,278,288,261 15,617,470
- -----------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 6,774,890 19,740
- -----------------------------------------------------------
Shares redeemed (3,793,496,216) (6,250,000)
- ----------------------------------------------------------- --------------- --------------
Net change resulting from Institutional Service share
transactions 491,566,935 9,387,210
- ----------------------------------------------------------- --------------- --------------
Net change resulting from share transactions 1,698,384,847 162,207,285
- ----------------------------------------------------------- --------------- --------------
</TABLE>
* Reflects operations for the period from July 5, 1994, (date of initial public
offering) to July 31, 1994.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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 .20 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.
ADMINISTRATIVE 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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ")serves as transfer and dividend disbursing agent for
the Fund. This 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
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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 Series 1995-I 01/06/95 $100,970,760
SMM Trust Series 1994-B 05/31/95 20,144,056
Peoples Security Life Insurance, 6.300%, 8/1/1995 07/06/95 25,000,000
Columbus, OH, 6.135%, 8/3/1995 01/30/95 26,700,000
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Prime Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 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 Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust) as
of July 31, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Prime Obligations Fund
Institutional Shares 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 Trust Company P.O. Box 8600
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>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
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 60934N203
9110205A-SS (9/95)
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Prime Obligations Fund (the "Fund") offered
by this prospectus represent interests in a diversified portfolio of Money
Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in money market securities to provide
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 Combined Statement of Additional Information dated
September 30, 1995, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Combined 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
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Risks 7
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 8
- ------------------------------------------------------
Management of the Trust 8
Distribution of Shares 9
Administration of the Trust 9
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
Subaccounting Services 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
- ------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 15
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
INDEPENDENT AUDITORS' REPORT 30
- ------------------------------------------------------
ADDRESSES 31
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)......... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)............................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)............................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable).................. None
Exchange Fee........................................................................ None
</TABLE>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<S> <C> <C>
Management Fee (after waiver)(1)..................................................... 0.07%
12b-1 Fee............................................................................ None
Total Other Expenses................................................................. 0.38%
Shareholder Services Fee................................................ 0.25%
Total Operating Expenses(2).......................................................... 0.45%
</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
0.20%.
(2) The total operating expenses would have been 0.58% absent the voluntary
waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION". WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ----------------------------------------------------- ------ ------- ------- --------
<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.......... $5 $14 $25 $ 57
</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.
PRIME OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of the Independent Public Accountants on page
30.
<TABLE>
<CAPTION>
YEAR ENDED JULY
31,
-----------------
1995 1994(A)
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- -------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------
Net investment income 0.05 0.003
- -------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------
Distributions from net investment income (0.05) (0.003)
- ------------------------------------------------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ------------------------------------------------------------- ------ ------
TOTAL RETURN (B) 5.38% 0.30%
- -------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------
Expenses 0.45% 0.34%(c)
- -------------------------------------------------------------
Net investment income 5.66% 4.68%(c)
- -------------------------------------------------------------
Expense waiver/reimbursement (d) 0.13% 0.14%(c)
- -------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------
Net assets, end of period (000 omitted) $500,954 $9,387
- -------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 5, 1994 (date of initial public
offering) to July 31, 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
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Service Shares of the Fund, which are designed primarily for financial
institutions as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio primarily investing in short-term
money market securities. A minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide 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 primarily in a portfolio
of money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Unless indicated otherwise, investment policies may be
changed by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:
- domestic issues of corporate debt obligations, including variable rate
demand notes;
- commercial paper (including Canadian Commercial Paper and Europaper);
- certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
- short-term credit facilities;
- asset-backed securities;
- obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
- other money market instruments.
The Fund invests only in instruments denominated and payable in U.S. dollars.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security
at the time of each interest rate adjustment or at other fixed intervals.
See "Demand Features." The Fund treats variable rate demand notes as
maturing on the later of the date of the next interest rate adjustment or
the date on which the Fund may next tender the security for repurchase.
BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million, or insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"). Bank Instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Fund will treat
securities credit enhanced with a bank's letter of credit as Bank
Instruments.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial
interests in special purpose trusts, limited partnership interests, or
commercial paper or other debt securities issued by a special purpose
corporation. Although the securities often have some form of credit or
liquidity enhancement, payments on the securities depend predominantly upon
collections of the loans and receivables held by the issuer.
SHORT-TERM CREDIT FACILITIES. The Fund may enter into, or acquire
participations in, short-term borrowing arrangements with corporations,
consisting of either a short-term revolving credit facility or a master
note agreement payable upon demand. Under these arrangements, the
borrower may reborrow funds during the term of the facility. The Fund
treats any commitments to provide such advances as a standby commitment to
purchase the borrower's notes.
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 securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
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.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the
securities purchased may vary from the purchase prices. Accordingly, the Fund
may pay more or less than the market value of the securities on the settlement
date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law, and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees of the Fund are quite liquid. The Fund
intends, therefore, to treat the restricted securities which meet the criteria
for liquidity established by the Trustees, including Section 4(2) commercial
paper, as determined by the Fund's investment adviser, as liquid and not subject
to the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not subject
such paper to the limitation applicable to restricted securities.
CONCENTRATION OF INVESTMENTS. The Fund may invest 25% or more of its total
assets in commercial paper issued by finance companies. The finance companies in
which the Fund intends to invest can be divided into two categories, commercial
finance companies and consumer finance companies. Commercial finance companies
are principally engaged in lending to corporations or other businesses. Consumer
finance companies are primarily engaged in lending to individuals. Captive
finance
companies or finance subsidiaries which exist to facilitate the marketing and
financial activities of their parent will, for purposes of industry
concentration, be classified in the industry of their parent's corporation.
Concentrating investments in any one industry may subject the Fund to more risk
than if it did not concentrate investments.
In addition, the Fund may invest 25% or more of the value of its total assets in
instruments issued by a U.S. branch of a domestic bank or savings and loan
having capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment.
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 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 Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7 which regulates
money market mutual funds. For example, with limited exceptions, Rule 2a-7
prohibits the investment of more than 5% of the Fund's total assets in the
securities of any one issuer, although the Fund's investment limitation only
requires such 5% diversification with respect to 75% of its assets. The Fund
will invest more than 5% of its assets in any one issuer only under the
circumstances permitted by Rule 2a-7. The Fund will also determine the effective
maturity of its investments, as well as its ability to consider a security as
having received the requisite short-term ratings by NRSROs, according to Rule
2a-7. The Fund may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. 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 Board of Trustees,
and could result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
SHAREHOLDER SERVICES. 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 the Institutional Service Shares, computed at an annual rate, to obtain
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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
on assets in excess of $750
.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
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (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
- --------------------------------------------------------------------------------
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 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 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: Prime Obligations Fund-Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.
The Fund reserves the right to refuse any request made by wire or telephone and
may limit the amount involved or the number of telephone redemptions. This
procedure may be modified or terminated by the transfer agent or the Fund.
BY MAIL. To purchase by mail, send a check made payable to Prime Obligations
Fund-Institutional Service Shares to: Federated Services Company, Prime
Obligations Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed. 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
5:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Prime Obligations Fund,
Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The written
request should state: Prime Obligations Fund-Institutional Service Shares;
shareholder's name; the account number; and the share or dollar
amount requested. Sign the request exactly as the shares are registered.
Shareholders should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 5:00 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 5:00
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 5:00 p.m. (Eastern time). The Fund reserves
the right to refuse any request made by wire or telephone and may limit the
amount involved or the number of telephone redemptions. This procedure may be
modified or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000, or the
aggregate investment in Federated Funds falls below the required minimum of
$200,000,000 to be maintained from and after twelve months from account opening,
due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Peoples Bank, Bridgeport, CT, owned approximately 149,257,858 shares (36.34%) of
the voting securities of the Fund's Institutional Service Shares and, therefore,
may, for certain purposes, be deemed to control the Fund and be able to affect
the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur
only if the Trust itself cannot meet its obligations to indemnify shareholders
and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity and are subject to
a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
PRIME OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
BANK NOTES--2.9%
- ---------------------------------------------------------------------------------
BANKING--2.9%
-------------------------------------------------------------
$ 15,000,000 Bank One, Milwaukee, WI N.A., 5.960%, 9/11/1995 $ 15,000,989
-------------------------------------------------------------
72,000,000 Mellon Bank NA, Pittsburgh, 6.000%-6.240%,
10/20/1995-11/28/1995 72,000,000
------------------------------------------------------------- --------------
TOTAL BANK NOTES 87,000,989
------------------------------------------------------------- --------------
(A)COMMERCIAL PAPER--62.2%
- ---------------------------------------------------------------------------------
BANKING--19.0%
-------------------------------------------------------------
15,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank
N.V., Amsterdam), 5.809%, 12/27/1995 14,651,583
-------------------------------------------------------------
140,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank
PLC, London), 5.709%-6.348%, 8/9/1995-1/22/1996 138,243,523
-------------------------------------------------------------
108,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian
Imperial Bank of Commerce, Toronto), 5.754%-6.452%,
8/16/1995-10/23/1995 107,135,856
-------------------------------------------------------------
24,700,000 City of Cleveland, (Union Bank of Switzerland, Zurich LOC),
5.950%, 10/4/1995 24,700,000
-------------------------------------------------------------
79,100,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank
AG, Frankfurt), 5.749%-5.841%, 10/25/1995-1/22/1996 77,608,628
-------------------------------------------------------------
45,000,000 Dresdner US Finance, 5.936%-5.984%, 9/5/1995-12/21/1995 44,486,209
-------------------------------------------------------------
24,000,000 J.P. Morgan & Co., Inc., 5.756%, 1/22/1996 23,351,560
-------------------------------------------------------------
70,547,000 Queensland Alumina Ltd., (Credit Suisse, Zurich LOC),
5.940%-6.101%, 8/1/1995-9/14/1995 70,285,776
-------------------------------------------------------------
19,800,000 Royal Bank of Canada, Montreal, 5.636%, 1/11/1996 19,308,718
-------------------------------------------------------------
1,000,000 Societe Generale North America, Inc., (Guaranteed by Societe
Generale, Paris), 5.724%, 1/23/1996 972,972
-------------------------------------------------------------
40,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by
Toronto-Dominion Bank), 5.870%-6.390%, 9/7/1995-12/8/1995 39,464,261
------------------------------------------------------------- --------------
Total 560,209,086
------------------------------------------------------------- --------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
- ---------------------------------------------------------------------------------
DIVERSIFIED--0.7%
-------------------------------------------------------------
$ 20,000,000 Rockwell International Corp., 6.336%, 9/13/1995 $ 19,853,322
------------------------------------------------------------- --------------
ELECTRONICS--0.3%
-------------------------------------------------------------
10,000,000 Hewlett-Packard Co., 5.918%, 9/28/1995 9,906,072
------------------------------------------------------------- --------------
FINANCE-COMMERCIAL--23.6%
-------------------------------------------------------------
90,400,000 Asset Securitization Cooperative Corp., 5.740%-5.969%,
8/30/1995-10/20/1995 89,658,264
-------------------------------------------------------------
122,700,000 Beta Finance, Inc., 5.630%-6.450%, 8/14/1995-1/29/1996 121,182,697
-------------------------------------------------------------
80,700,000 CIESCO, Inc., 5.687%-6.356%, 8/25/1995-10/27/1995 79,963,340
-------------------------------------------------------------
116,000,000 CIT Group Holdings, Inc., 5.760%-6.217%, 8/29/1995-12/22/1995 114,015,734
-------------------------------------------------------------
31,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.843%-6.271%,
9/15/1995-11/7/1995 30,721,169
-------------------------------------------------------------
24,620,000 Falcon Asset Securitization Corp., 5.752%-5.815%,
10/26/1995-1/22/1996 24,135,125
-------------------------------------------------------------
135,000,000 General Electric Capital Corp., 5.750%-6.317%,
9/5/1995-1/23/1996 133,106,685
-------------------------------------------------------------
81,575,000 PREFCO-Preferred Receivables Funding Co., 5.868%-6.113%,
8/9/1995-11/15/1995 80,720,284
-------------------------------------------------------------
26,300,000 Sheffield Receivables Corp., 6.100%-6.101%,
8/9/1995-8/10/1995 26,263,600
------------------------------------------------------------- --------------
Total 699,766,898
------------------------------------------------------------- --------------
FINANCE-RETAIL--10.7%
-------------------------------------------------------------
109,000,000 Associates Corp. of North America, 5.699%-6.163%,
8/4/1995-10/31/1995 108,314,529
-------------------------------------------------------------
118,700,000 Ford Credit Receivables Funding, Inc., 5.720%-6.207%,
8/24/1995-10/23/1995 117,685,863
-------------------------------------------------------------
67,000,000 New Center Asset Trust, A1+/P1 Series, 6.214%-6.314%,
10/10/1995-10/20/1995 66,164,109
-------------------------------------------------------------
25,000,000 Norwest Financial, Inc., 5.833%, 10/2/1995 24,752,431
------------------------------------------------------------- --------------
Total 316,916,932
------------------------------------------------------------- --------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
- ---------------------------------------------------------------------------------
INSURANCE--1.6%
-------------------------------------------------------------
$ 15,000,000 City of New York G.O. 1995-B, (FGIC-SPI Gtd.),
6.241%, 8/22/1995 $ 15,000,000
-------------------------------------------------------------
10,175,000 Marsh & McLennan Cos., Inc., 5.944%-6.453%,
9/25/1995-12/1/1995 10,027,975
-------------------------------------------------------------
22,783,000 Prospect Street Senior Portfolio, L.P., (Guaranteed by
Financial Security Assurance, Inc.), 5.805%-6.273%,
9/6/1995-11/10/1995 22,506,070
------------------------------------------------------------- --------------
Total 47,534,045
------------------------------------------------------------- --------------
MISCELLANEOUS--0.5%
-------------------------------------------------------------
15,000,000 Procter & Gamble Co., 5.845%, 10/16/1995 14,817,917
------------------------------------------------------------- --------------
OIL & OIL FINANCE--1.1%
-------------------------------------------------------------
33,000,000 Koch Industries, Inc., 5.851%, 8/1/1995 33,000,000
------------------------------------------------------------- --------------
TELECOMMUNICATIONS--4.7%
-------------------------------------------------------------
139,620,000 AT&T Corp., 5.739%-6.373%, 8/11/1995-12/1/1995 138,331,098
------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 1,840,335,370
------------------------------------------------------------- --------------
CORPORATE NOTES--1.2%
- ---------------------------------------------------------------------------------
BANKING--1.2%
-------------------------------------------------------------
33,787,467 Banc One Corp., 6.363%, 4/15/1996 33,787,468
------------------------------------------------------------- --------------
TOTAL CORPORATE NOTES 33,787,468
------------------------------------------------------------- --------------
(B)VARIABLE RATE INSTRUMENTS--18.3%
- ---------------------------------------------------------------------------------
BANKING--13.1%
-------------------------------------------------------------
4,045,000 500 South Front St. L.P., Series A, (Huntington National
Bank, Columbus, OH LOC), 5.890%, 8/3/1995 4,045,000
-------------------------------------------------------------
6,500,000 500 South Front St. L.P., Series B, (Huntington National
Bank, Columbus, OH LOC), 5.890%, 8/3/1995 6,500,000
-------------------------------------------------------------
10,927,000 Adesa Funding Corp., (Bank One, Indianapolis, IN LOC),
5.840%, 8/3/1995 10,927,000
-------------------------------------------------------------
8,455,000 Alexandria Executive Club L.P., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 8,455,000
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ---------------------------------------------------------------------------------
BANKING--CONTINUED
-------------------------------------------------------------
$ 9,000,000 Arrow N.A., Inc., (Huntington National Bank, Columbus, OH
LOC), 5.885%, 8/3/1995 $ 9,000,000
-------------------------------------------------------------
16,900,000 Beverly California Corp., (PNC Bank, N.A. LOC),
5.869%, 8/7/1995 16,900,000
-------------------------------------------------------------
1,642,790 Bowling Green Manor L.P., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,642,790
-------------------------------------------------------------
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH LOC),
6.060%, 1/3/1996 17,400,000
-------------------------------------------------------------
21,558,000 Capital One Funding Corp. 1994-C, Series 1994-C, (Bank One,
Cleveland, N.A. LOC), 6.069%, 8/3/1995 21,558,000
-------------------------------------------------------------
26,300,000 Capital One Funding Corp. 1995-A, (Bank One, Indianapolis, IN
LOC), 5.885%, 8/3/1995 26,300,000
-------------------------------------------------------------
17,446,000 Capital One Funding Corp. 1995-B, (Liberty National Bank &
Trust Co. LOC), 5.840%, 8/3/1995 17,446,000
-------------------------------------------------------------
1,062,337 Clyde Manor L.P., (Huntington National Bank, Columbus, OH
LOC), 5.885%, 8/3/1995 1,062,337
-------------------------------------------------------------
2,500,000 Crystal Enterprises, Inc., Series 1995, (NBD Bank, N.A.,
Detroit, MI LOC), 5.900%, 8/3/1995 2,500,000
-------------------------------------------------------------
4,020,000 Eastwinds Investment, Ltd., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 4,020,000
-------------------------------------------------------------
5,000,000 G.M.H. Enterprises, Inc., Series 1995, (National City Bank,
Cleveland, OH LOC), 5.950%, 8/3/1995 5,000,000
-------------------------------------------------------------
2,420,000 Grote Family L.P., (Huntington National Bank, Columbus, OH
LOC), 5.885%, 8/3/1995 2,420,000
-------------------------------------------------------------
12,300,000 Hunt Club Apartments, Inc., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/2/1995 12,300,000
-------------------------------------------------------------
1,700,000 Jade Sterling Steel Co., Inc., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,700,000
-------------------------------------------------------------
4,200,000 Kokosing Construction Co., Inc., (National City Bank,
Cleveland, OH LOC), 5.950%, 8/2/1995 4,200,000
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ---------------------------------------------------------------------------------
BANKING--CONTINUED
-------------------------------------------------------------
$ 8,600,000 Mississippi Business Finance Corp., (Comerica Bank, Detroit,
MI LOC), 5.885%, 8/3/1995 $ 8,600,000
-------------------------------------------------------------
2,000,000 Mississippi Business Finance Corp., Series 1995 Plantation
Pointe, LP Project, (Amsouth Bank N.A., Birmingham LOC),
5.885%, 8/3/1995 2,000,000
-------------------------------------------------------------
4,885,000 Olen Corp., (National City Bank, Cleveland, OH LOC), 5.950%,
8/2/1995 4,885,000
-------------------------------------------------------------
1,800,000 Roby Company Ltd. Partnership, (Huntington National Bank,
Columbus, OH LOC), 5.850%, 8/3/1995 1,800,000
-------------------------------------------------------------
7,730,000 Roby Company Ltd. Partnership, (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 7,730,000
-------------------------------------------------------------
13,450,000 Rooker, J.W., (Wachovia Bank of Georgia NA, Atlanta LOC),
5.896%, 8/2/1995 13,450,000
-------------------------------------------------------------
6,100,000 S.I.D.A. (Alabama) Miltope Project, Series 1994, (First
Alabama Bank, Birmingham LOC), 6.135%, 8/3/1995 6,100,000
-------------------------------------------------------------
11,100,000 S.I.D.A. (Alabama),TRB (Wellborn Cabinet, Inc.), (Amsouth
Bank N.A., Birmingham LOC), 5.930%, 8/2/1995 11,100,000
-------------------------------------------------------------
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
-------------------------------------------------------------
101,000,000 (c) SMM Trust, Series 1995-I, (Guaranteed by Morgan Guaranty
Trust Co., New York), 5.895%, 8/1/1995 100,975,741
-------------------------------------------------------------
7,040,000 Shenandoah Partners L.P., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 7,040,000
-------------------------------------------------------------
3,418,000 Vista Funding Corp., (Bank One, Akron, N.A. LOC), 5.840%,
8/3/1995 3,418,000
-------------------------------------------------------------
6,569,000 Vista Funding Corp., (Fifth Third Bank of Northwestern OH
LOC), 5.885%, 8/3/1995 6,569,000
-------------------------------------------------------------
11,500,000 Vista Funding Corp., 1995-B, (Fifth Third Bank of
Northwestern OH LOC), 5.885%, 8/3/1995 11,500,000
-------------------------------------------------------------
1,011,431 Wauseon Manor II L.P., (Huntington National Bank, Columbus,
OH LOC), 5.885%, 8/3/1995 1,011,431
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ---------------------------------------------------------------------------------
BANKING--CONTINUED
-------------------------------------------------------------
$ 3,775,000 Wexner Heritage House, (Huntington National Bank, Columbus,
OH LOC), 5.885%, 8/3/1995 $ 3,775,000
-------------------------------------------------------------
2,445,000 YMCA of Central, OH, (Huntington National Bank, Columbus, OH
LOC), 5.890%, 8/3/1995 2,445,000
------------------------------------------------------------- --------------
Total 385,774,985
------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--1.2%
-------------------------------------------------------------
8,840,838 GS Funding Corp., (Guaranteed by General Electric Co.),
5.869%, 7/31/1995 8,840,838
-------------------------------------------------------------
6,000,000 Lauda Air, Luftfahrt, (Guaranteed by General Electric Co.),
5.881%, 8/1/1995 6,000,000
-------------------------------------------------------------
19,918,165 Northwest Airlines, Inc., (Guaranteed by General Electric
Co.), 5.897%, 7/31/1995 19,918,165
------------------------------------------------------------- --------------
Total 34,759,003
------------------------------------------------------------- --------------
FINANCE-COMMERCIAL--1.2%
-------------------------------------------------------------
36,000,000 Money Market Auto Loan Trust, (Guaranteed by Cap MAC),
6.015%, 8/15/1995 36,000,000
------------------------------------------------------------- --------------
FINANCE-RETAIL--1.1%
-------------------------------------------------------------
31,825,493 Carco Auto Loan Master Trust, Series 1993-2, Class A1,
5.785%, 8/15/1995 31,825,493
------------------------------------------------------------- --------------
INSURANCE--0.8%
-------------------------------------------------------------
25,000,000 (c) Peoples Security Life Insurance, 6.300%, 8/1/1995 25,000,000
------------------------------------------------------------- --------------
MUNICIPAL--0.9%
-------------------------------------------------------------
26,700,000 (c) Columbus, OH, 6.135%, 8/3/1995 26,700,000
------------------------------------------------------------- --------------
TOTAL VARIABLE RATE INSTRUMENTS 540,059,481
------------------------------------------------------------- --------------
(D)REPURCHASE AGREEMENTS--15.6%
- ---------------------------------------------------------------------------------
700,000 Bear, Stearns & Co., Inc., 5.81%, dated 7/31/1995, due
8/1/1995 700,000
-------------------------------------------------------------
135,748,000 First Chicago Capital Markets, Inc., 5.82%, dated 7/31/1995,
due 8/1/1995 135,748,000
-------------------------------------------------------------
147,451,000 Fuji Securities, Inc., 5.82%, dated 7/31/1995, due 8/1/1995 147,451,000
-------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ------------------------------------------------------------- --------------
<C> <C> <S> <C>
(D)REPURCHASE AGREEMENTS--CONTINUED
- ---------------------------------------------------------------------------------
$ 10,516,000 PaineWebber, Inc., 5.85%, dated 7/31/1995, due 8/1/1995 $ 10,516,000
-------------------------------------------------------------
211,000 State Street Bank and Trust Co., 5.82%, dated 7/31/1995, due
8/1/1995 211,000
-------------------------------------------------------------
167,090,000 UBS Securities, Inc., 5.80%, dated 7/31/1995, due 8/1/1995 167,090,000
------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 461,716,000
------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $2,962,899,308
------------------------------------------------------------- --------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) Restricted Securities--Investment in securities not registered under the
Securities Act of 1933. At the end of the period, these amounted to 6.0% 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
($2,958,751,318) at July 31, 1995.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
LOC -- Letter of Credit
LP -- Limited Partnership
PLC -- Public Limited Company
TRB -- Taxable Revenue Bond
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments in repurchase agreements $ 461,716,000
- --------------------------------------------------------------
Investments in securities 2,501,183,308
- -------------------------------------------------------------- --------------
Total investments, at amortized cost and value $2,962,899,308
- -------------------------------------------------------------------------------
Income receivable 5,325,668
- -------------------------------------------------------------------------------
Receivable for shares sold 8,182,417
- ------------------------------------------------------------------------------- --------------
Total assets 2,976,407,393
- -------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------
Payable for shares redeemed 3,166,500
- --------------------------------------------------------------
Income distribution payable 10,170,581
- --------------------------------------------------------------
Accrued expenses 707,730
- --------------------------------------------------------------
Payable to Bank 3,611,264
- -------------------------------------------------------------- --------------
Total liabilities 17,656,075
- ------------------------------------------------------------------------------- --------------
NET ASSETS for 2,958,751,318 shares outstanding $2,958,751,318
- ------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------
Institutional Shares:
($2,457,797,173/2,457,797,173 shares outstanding) $1.00
- ------------------------------------------------------------------------------- --------------
Institutional Service Shares:
($500,954,145/500,954,145 shares outstanding) $1.00
- ------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest $127,412,842
- ----------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------
Investment advisory fee $ 4,370,903
- -------------------------------------------------------------------
Administrative personnel and services fee 1,654,387
- -------------------------------------------------------------------
Custodian fees 244,453
- -------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 67,443
- -------------------------------------------------------------------
Directors'/Trustees' fees 8,283
- -------------------------------------------------------------------
Auditing fees 12,951
- -------------------------------------------------------------------
Legal fees 28,075
- -------------------------------------------------------------------
Portfolio accounting fees 190,089
- -------------------------------------------------------------------
Shareholder services fee--Institutional Shares 4,908,345
- -------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 554,723
- -------------------------------------------------------------------
Share registration costs 503,411
- -------------------------------------------------------------------
Printing and postage 25,638
- -------------------------------------------------------------------
Insurance premiums 49,287
- -------------------------------------------------------------------
Taxes 38,556
- -------------------------------------------------------------------
Miscellaneous 27,683
- ------------------------------------------------------------------- -----------
Total expenses 12,684,227
- -------------------------------------------------------------------
Deduct--
- ------------------------------------------------------
Waiver of investment advisory fee $2,828,160
- ------------------------------------------------------
Waiver of shareholder services fee--Institutional
Shares 4,908,345 7,736,505
- ------------------------------------------------------ ---------- -----------
Net expenses 4,947,722
- ---------------------------------------------------------------------------------- ------------
Net investment income $122,465,120
- ---------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------
1995 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------
Net investment income $ 122,465,120 $ 41,204,591
- ----------------------------------------------------------- ---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------------
Institutional Shares (109,911,005) (41,183,125)
- -----------------------------------------------------------
Institutional Service Shares (12,554,115) (21,466)
- ----------------------------------------------------------- ---------------- ---------------
Change in net assets resulting from distributions to
shareholders (122,465,120) (41,204,591)
- ----------------------------------------------------------- ---------------- ---------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------
Proceeds from sale of Shares 28,128,464,929 8,598,402,134
- -----------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of distributions declared 34,127,138 6,605,494
- -----------------------------------------------------------
Cost of Shares redeemed (26,464,207,220) (8,442,800,343)
- ----------------------------------------------------------- ---------------- ---------------
Change in net assets resulting from share transactions 1,698,384,847 162,207,285
- ----------------------------------------------------------- ---------------- ---------------
Change in net assets 1,698,384,847 162,207,285
- ----------------------------------------------------------- ---------------- ---------------
NET ASSETS:
- -----------------------------------------------------------
Beginning of period 1,260,366,471 1,098,159,186
- ----------------------------------------------------------- ---------------- ---------------
End of period $ 2,958,751,318 $ 1,260,366,471
- ----------------------------------------------------------- ---------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Money Market Obligations 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 presented herein present only those of Prime Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
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 the 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.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,958,751,318.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
INSTITUTIONAL SHARES
- -----------------------------------------------------------
Shares Sold 23,850,176,668 8,582,784,664
- -----------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 27,352,248 6,585,754
- -----------------------------------------------------------
Shares redeemed (22,670,711,004) (8,436,550,343)
- ----------------------------------------------------------- --------------- --------------
Net change resulting from Institutional share
transactions 1,206,817,912 152,820,075
- ----------------------------------------------------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1995 1994*
--------------- --------------
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
- -----------------------------------------------------------
Shares Sold 4,278,288,261 15,617,470
- -----------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 6,774,890 19,740
- -----------------------------------------------------------
Shares redeemed (3,793,496,216) (6,250,000)
- ----------------------------------------------------------- --------------- --------------
Net change resulting from Institutional Service share
transactions 491,566,935 9,387,210
- ----------------------------------------------------------- --------------- --------------
Net change resulting from share transactions 1,698,384,847 162,207,285
- ----------------------------------------------------------- --------------- --------------
</TABLE>
* Reflects operations for the period from July 5, 1994, (date of initial public
offering) to July 31, 1994.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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 .20 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.
ADMINISTRATIVE 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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ")serves as transfer and dividend disbursing agent for
the Fund. This 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
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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 Series 1995-I 01/06/95 $100,970,760
SMM Trust Series 1994-B 05/31/95 20,144,056
Peoples Security Life Insurance, 6.300%, 8/1/1995 07/06/95 25,000,000
Columbus, OH, 6.135%, 8/3/1995 01/30/95 26,700,000
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Prime Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 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 Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust) as
of July 31, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Prime Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
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>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
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 60934N708
9110204A-SS (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
INVESTMENT POLICIES 1
Acceptable Investments 1
Bank Instruments 1
U.S. Government Obligations 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 2
INVESTMENT LIMITATIONS 2
Brokerage Transactions 4
Money Market Obligations Trust Mangement4
Share Ownership 8
Trustees Compensation 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 10
FUND ADMINISTRATION 10
SHAREHOLDER SERVICES AGREEMENT 10
DETERMINING NET ASSET VALUE 11
REDEMPTION IN KIND 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 12
Total Return 12
Performance Comparisons 12
ABOUT FEDERATED INVESTORS 12
Mutual Fund Market 13
Institutional 13
Trust Organizations 13
Broker/Dealers and
Bank Broker/Dealer Subsidiaries 13
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 makingstructured, 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
60934N849
G01140-03 (9/95)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Other Investment Techniques 5
Investment Risks 6
Investment Limitations 6
Regulatory Compliance 6
TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Distribution of Shares 8
Administration of the Fund 8
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN THE FUND 9
- ------------------------------------------------------
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
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
- ------------------------------------------------------
Voting Rights 12
Massachusetts Partnership Law 13
TAX INFORMATION 13
- ------------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and Personal
Property Taxes 13
PERFORMANCE INFORMATION 14
- ------------------------------------------------------
FINANCIAL STATEMENTS 15
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 27
- ------------------------------------------------------
ADDRESSES 28
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<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
- -------------------------------------------------------------------------------------------
<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
- --------------------------------------------------------------------------------
(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
- ----------------
INCOME FROM
INVESTMENT
OPERATIONS
- ----------------
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
- ----------------
LESS
DISTRIBUTIONS
- ----------------
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%
- ---------------
RATIOS TO AVERAGE
NET ASSETS
- ---------------
Expenses 0.57%(c) 0.57% 0.57% 0.56% 0.56% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55%
- ---------------
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%
- ---------------
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%
- ---------------
SUPPLEMENTAL DATA
- ---------------
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
- ---------------
</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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
Combined Statement of Additional Information
This Combined Statement of Additional Information should be read with the
prospectuses of Government Obligations Tax-Managed Fund (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
INVESTMENT POLICIES 1
Acceptable Investments 1
When-Issued and Delayed Delivery Transactions 1
Reverse Repurchase Agreements 1
INVESTMENT LIMITATIONS 1
BROKERAGE TRANSACTIONS 3
Money Market Obligations Trust Mangement3
Share Ownership 7
Trustees Compensation 8
Trustee Liability 8
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 9
Fund Administration 9
SHAREHOLDER SERVICES AGREEMENT 9
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 10
THE FUND'S TAX STATUS 10
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 11
Total Return 11
Performance Comparisons 11
ABOUT FEDERATED INVESTORS 12
Mutual Fund Market 12
Institutional 12
Trust Organizations 12
Broker/Dealers and
Bank Broker/Dealer Subsidiaries 12
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may 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
Some of the short-term U.S. government securities the Fund may purchase carry
variable interest rates. These securities have a rate of interest subject to
adjustment at least annually. This adjusted interest rate is ordinarily tied
to some objective standard, such as the 91-day U.S. Treasury bill rate. Variable
interest rates will reduce the changes in the market value of such securities
from their original purchase prices. Accordingly, the potential for capital
appreciation or capital depreciation should not be greater than that of fixed
interest rate U.S. government securities having maturities equal to the
interest rate adjustment dates of the variable rate U.S. government securities.
The Fund may purchase variable rate U.S. government securities upon the
determination by the Trustees that the interest rate as adjusted will cause the
instrument to have a current market value that approximates its par value on
the adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
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 securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts
borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of the value
of its total assets are outstanding. During the period any reverse
repurchase agreements are outstanding, the Fund will restrict the purchase
of portfolio securities to money market instruments maturing on or before
the expiration date of the reverse repurchase agreements, but only to the
extent necessary to assure completion of the reverse repurchase
agreements.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings.
Lending Cash or Securities
The Fund will not lend any of its assets, except that it may purchase or
hold portfolio securities permitted by its investment objective, policies,
and limitations, or Declaration of Trust.
Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
Investing in Real Estate
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in securities of issuers
whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
Underwriting
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
Concentration of Investments
The Fund will not invest 25% or more of the value of its total assets in
any one industry. The U.S. government is not considered to be an industry.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such U.S. government securities)
if as a result more than 5% of the value of its total assets would be
invested in the securities of that issuer, or if it would own more than
10% of the outstanding voting securities of that issuer.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
Investing in Restricted Securities
The Fund will not invest in securities subject to restrictions on resale
under federal securities law.
Investing in Illiquid Securities
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
Investing in Issuers Whose Securities are Owned by Officers of the Fund
The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser, owning
individually more than .50 of 1% of the issuer's securities, together own
more than 5% of the issuer's securities.
Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Minerals
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items". Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not borrow money 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 period
from May 30, 1995 (date of initial public investment) 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 Institutional Shares of Fund: Citizens Trust Co., Providence,
RI, owned approximately 38,117,429 shares (84.29%); and Santa Monica Bank, Santa
Monica, CA, owned approximately 4,426,000 shares (9.79%).
As of September 6, 1995 the following shareholder of record owned 5% or more of
the outstanding Institutional Service Shares of the Fund: Anderson & Co.,
Philadelphia, PA, owned approximately 76,759,107 shares (100%).
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 Administrative Services. It is a
subsidiary of Federated Investors. All the voting securities of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue, his
wife and his son, J. Christopher Donahue.
The adviser shall not be liable to 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 Administrative Services receives an annual
investment advisory fee as described in the prospectus. For the period from May
30, 1995 (date of initial public investment) to July 31, 1995, the adviser
earned $24,484, all of which was 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. For the period from May 30, 1995 (date of initial public investment)
to July 31, 1995, Federated Administrative Services earned $26,329.
SHAREHOLDER SERVICES AGREEMENT
With respect to both the Institutional Shares and Institutional Service Shares
of the Fund, the Trust has adopted a 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 period from May 30, 1995 (date of initial public investment) to July 31,
1995, the Fund's Institutional Service Shares paid shareholder services fees in
the amount of $29,653, all of which were paid to financial institutions.
For the period from June 2, 1995 (date of initial public investment) to July 31,
1995, the Fund's Institutional Shares paid shareholder services fees in the
amount of $952, all of which were waived.
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.
The foregoing general discussion of U.S. federal income tax consequences is
based on the Internal Revenue Code, as amended, and the regulations issued
thereunder as in effect on the date of this Combined Statement of Additional
Information. Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such changes or
decisions may have retroactive effect with respect to the transactions
contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital gain
dividends from regulated investment companies often differ from the rules for
U.S. federal income taxation described above. It is anticipated that the
ordinary income dividends paid by the Fund from net investment income will be
exempt from state and local personal and, in some cases, corporate income taxes
in many states. Shareholders are urged to consult their tax advisers as to the
consequences of these and other state and local tax rules affecting their
investment in the Fund.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average portfolio
maturity; type of instruments in which the portfolio is invested; changes in
interest rates; changes in expenses; and the relative amount of cash flow. To
the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares of
the Fund, the performance will be reduced for those shareholders paying those
fees.
YIELD
The yield is calculated based upon the seven days ending on the day of the
calculation, called the "base period." This yield is computed by: determining
the net change in the value of a hypothetical account with a balance of one
share at the beginning of the base period, with the net change excluding capital
changes but including the value of any additional shares purchased with
dividends earned from the original one share and all dividends declared on the
original and any purchased shares; dividing the net change in the account's
value by the value of the account at the beginning of the base period to
determine the base period return; and multiplying the base period return by
365/7.
For the seven-day period ended July 31, 1995, the yields for Institutional
Shares and Institutional Service Shares were 5.59% and 5.34%, respectively.
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.
For the seven-day period ended July 31, 1995, the effective yields for
Institutional Shares and Institutional Service Shares were 5.74% and 5.48%,
respectively.
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.
Cumulative total return reflects the Fund's total performance over a specific
period of time. The cumulative total return for the Fund's Institutional Service
Shares and Institutional Shares for the period from May 30, 1995 (date of
initial public investment) through July 31, 1995, was .95% and .94%,
respectively. This total return is representative of only two months of activity
since the date of initial public investment.
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.
oSALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most representative
yields for selected securities, issued by the U.S. Treasury, maturing in 30
days.
oDISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES is a weekly quote of
the average daily offering price for selected federal agency issues maturing in
30 days.
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
60934N856
60934N849
G01140-03 (9/95)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Government Obligations Tax-Managed Fund (the
"Fund") offered by this prospectus represent interests in a diversified
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in short-term
U.S. government securities to achieve current income consistent with stability
of principal and liquidity. The Fund's investment strategy is intended to enable
the Fund to provide shareholders with dividends that are exempt from state and
local income taxation to the extent permissible by federal and state law. Unless
otherwise exempt, shareholders are required to pay federal income tax on any
dividends.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information dated
September 30, 1995, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Combined 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
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 5
Regulatory Compliance 5
TRUST INFORMATION 5
- ------------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 7
Expenses of the Fund and
Institutional Service Shares 7
NET ASSET VALUE 8
- ------------------------------------------------------
INVESTING IN THE FUND 8
- ------------------------------------------------------
Share Purchases 8
Minimum Investment Required 9
Subaccounting Services 9
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING SHARES 9
- ------------------------------------------------------
By Mail 10
Telephone Redemption 10
Accounts with Low Balances 11
SHAREHOLDER INFORMATION 11
- ------------------------------------------------------
Voting Rights 11
Massachusetts Partnership Law 11
TAX INFORMATION 12
- ------------------------------------------------------
Federal Income Tax 12
Pennsylvania Corporate and
Personal Property Taxes 12
OTHER CLASSES OF SHARES 12
- ------------------------------------------------------
PERFORMANCE INFORMATION 13
- ------------------------------------------------------
FINANCIAL STATEMENTS 14
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 21
- ------------------------------------------------------
ADDRESSES 22
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................ None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)...................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)........... None
Exchange Fee................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)............................................. 0.00%
12b-1 Fee.................................................................... None
Total Other Expenses (after expense reimbursement)........................... 0.45%
Shareholder Services Fee................................................... 0.25%
Total Operating Expenses(2)............................................. 0.45%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time at
its sole discretion. The maximum management fee is 0.20%.
(2) The total operating expenses would have been 0.85% absent the voluntary
waiver of the management fee and the voluntary reimbursement of certain other
operating expenses.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------------------
<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........ $5 $14 $25 $57
</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.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
FINANCIAL HIGHLIGHTS-INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Independent Public Accountants on page 22.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995(A)
----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ---------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------
Net investment income 0.01
- ---------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------
Distributions from net investment income (0.01)
- --------------------------------------------------------------------------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00
- --------------------------------------------------------------------------- -----------
TOTAL RETURN (B) 0.95%
- ---------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------
Expenses 0.45%(c)
- ---------------------------------------------------------------------------
Net investment income 5.55%(c)
- ---------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.40%(c)
- ---------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------
Net assets, end of period (000 omitted) $76,165
- ---------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from May 30, 1995 (date of initial public
investment) to July 31, 1995.
(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
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Service Shares and
Institutional Shares. This prospectus relates only to Institutional Service
Shares of the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing in short-term U.S. government securities. A
minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, an investor is
defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
Federated funds are those mutual funds which are distributed by Federated
Securities Corp. or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with stability
of principal and liquidity. This investment objective cannot be changed without
shareholder approval. The Fund's investment strategy is intended to enable the
Fund to provide shareholders with dividends that are exempt from state and local
income taxation to the extent permissible by federal and state law. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. government
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, the investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned directly, pay
interest exempt from state personal income tax. Therefore, dividends paid by the
Fund may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities. These
instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as 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:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
AGENCY MASTER DEMAND NOTES. The Fund may enter into master demand notes
with various federal agencies and instrumentalities. Under a master demand
note, the Fund has the right to increase or decrease the amount of the note
on a daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon seven
or more days notice by either the Fund or the borrower and bear interest at
a variable rate. The Fund relies on master demand notes, in part, to
provide daily liquidity. To the extent that the Fund cannot obtain
liquidity through master demand notes, it may be required to maintain a
larger cash position, invest more assets in securities with current
maturities or dispose of assets at a gain or loss to maintain sufficient
liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7.
The Fund may change these operational policies to reflect changes in the laws
and regulations without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for exercising all the
Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Administrative Services, the Fund's investment adviser, subject to direction by
the Trustees. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Administrative Services, a Delaware
business trust, organized on June 14, 1990, is a registered investment
adviser under the Investment Advisers Act of 1940. It is a subsidiary of
Federated Investors. All of the Class A (voting) shares of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue,
Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and Mr.
Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment companies
and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. 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 Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
SHAREHOLDER SERVICES. 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.
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>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, the only expenses which are allocated specifically to Institutional
Service Shares as a class are shareholder services fees. However, the Trustees
reserve the right to allocate certain other expenses to holders of shares as it
deems appropriate ("class expenses"). In any case, class expenses would be
limited to: transfer agent fees as identified by the transfer agent as
attributable to holders of shares; printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders; registration fees paid to the Securities
and
Exchange Commission and registration fees paid to state securities commissions;
expenses related to administrative personnel and services as required to support
holders of shares; legal fees relating solely to shares; and Trustees' fees
incurred as a result of issues relating solely to shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 1:00 p.m., 4:00 p.m. (Eastern time), and as
of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange, 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
- --------------------------------------------------------------------------------
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 1:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Government Obligations Tax-Managed Fund -- Institutional Service Shares;
Fund Number (this number can be found on the account statement or by contacting
the Fund); Group Number or Order Number; Nominee or Institution Name; and ABA
Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Tax-Managed Fund--Institutional Service Shares to: Federated
Services Company, Government Obligations Tax-Managed Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed. 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.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Tax-Managed Fund, Federated Services Company, P.O. Box 8600, Boston, MA
02266-8600. The written request should state: Government Obligations Tax-Managed
Fund -- Institutional Service Shares; shareholder's name; the account number;
and the share or dollar amount requested. Sign the request exactly as the shares
are registered. Shareholders should call the Fund for assistance in redeeming by
mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 1:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 1:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 or the aggregate
investment in Federated Funds falls below the required minimum of $200,000,000
to be maintained from and after twelve months from account opening, due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Citizens Trust Co., Providence, RI, owned approximately 38,117,429 shares
(84.29%) of the voting securities of the Fund's Institutional Shares; and
Anderson & Co., Philadelphia, PA, owned approximately 76,759,107 shares (100%)
of the voting securities of the Fund's Institutional Service Shares and,
therefore, may for certain purposes, be deemed to control the Fund and be able
to affect the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act
or obligation of the Trust. Therefore, financial loss resulting from liability
as a shareholder will occur only if the Trust itself cannot meet its obligations
to indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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. To the extent permissible by federal and state law,
the Fund is structured to provide shareholders with income that is exempt or
excluded from taxation at the state and local level. Substantially all dividends
paid to shareholders residing in certain states will be exempt or excluded from
state income tax. Many states, by statute, judicial decision or administrative
action, have taken the position that dividends of a regulated investment company
such as the Fund that are attributable to interest on obligations of the U.S.
Treasury and certain U.S. government agencies and instrumentalities are the
functional equivalent of interest from such obligations and are, therefore,
exempt from state and local income taxes. Shareholders should be aware of the
application of their state and local tax laws to investments in the Fund.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity and are subject to
a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are not accruing shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and total
return for shares. The performance figures will be calculated separately for
each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- -------------------------------------------------------------- --------------
<C> <C> <S> <C>
GOVERNMENT AGENCIES--100.2%
- ---------------------------------------------------------------------------------
$20,000,000 (a) Federal Farm Credit Bank Discount Note, 5.750%, 8/1/1995 $ 20,000,000
--------------------------------------------------------------
59,400,000 (b) Student Loan Marketing Association, 5.790%, 8/1/1995 59,400,000
-------------------------------------------------------------- --------------
TOTAL GOVERNMENT AGENCIES 79,400,000
-------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 79,400,000
-------------------------------------------------------------- --------------
</TABLE>
(a) This issue shows the rate of discount at the time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($79,235,107) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $79,400,000
- --------------------------------------------------------------------------------
Cash 20,148
- --------------------------------------------------------------------------------
Income receivable 211,661
- --------------------------------------------------------------------------------
Deferred expenses 28,667
- -------------------------------------------------------------------------------- -----------
Total assets 79,660,476
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Income distribution payable $367,554
- ----------------------------------------------------------------------
Accrued expenses 57,815
- ---------------------------------------------------------------------- --------
Total liabilities 425,369
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 79,235,107 shares outstanding $79,235,107
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
($3,070,142 / 3,070,142 shares outstanding) $1.00
- -------------------------------------------------------------------------------- -----------
Institutional Service Shares:
($76,164,965 / 76,164,965 shares outstanding) $1.00
- -------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF OPERATIONS
PERIOD ENDED JULY 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest $734,661
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 24,484
- -------------------------------------------------------------------------
Administrative personnel and services fee 26,329
- -------------------------------------------------------------------------
Custodian fees 4,500
- -------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 1,988
- -------------------------------------------------------------------------
Legal fees 248
- -------------------------------------------------------------------------
Portfolio accounting fees 12,750
- -------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 952
- -------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 29,653
- -------------------------------------------------------------------------
Share registration costs 1,833
- -------------------------------------------------------------------------
Printing and postage 496
- -------------------------------------------------------------------------
Miscellaneous 390
- ------------------------------------------------------------------------- --------
Total expenses 103,623
- -------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------
Waiver of investment advisory fee $24,484
- ---------------------------------------------------------------
Waiver of shareholder services fee -- Institutional Shares 952
- ---------------------------------------------------------------
Reimbursement of other operating expenses 23,511 48,947
- --------------------------------------------------------------- ------- --------
Net expenses 54,676
- ------------------------------------------------------------------------------------- --------
Net investment income $679,985
- ------------------------------------------------------------------------------------- --------
</TABLE>
*For the period from May 30, 1995 (date of initial public investment) to July
31, 1995
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
--------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 679,985
- ---------------------------------------------------------------------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (22,005)
- ----------------------------------------------------------------------------
Institutional Service Shares (657,980)
- ---------------------------------------------------------------------------- --------------
Change in net assets resulting from distributions to shareholders (679,985)
- ---------------------------------------------------------------------------- --------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of Shares 95,754,802
- ----------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 304,922
- ----------------------------------------------------------------------------
Cost of Shares redeemed (16,824,617)
- ---------------------------------------------------------------------------- --------------
Change in net assets resulting from share transactions 79,235,107
- ---------------------------------------------------------------------------- --------------
Change in net assets 79,235,107
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 0
- ---------------------------------------------------------------------------- --------------
End of period $ 79,235,107
- ---------------------------------------------------------------------------- --------------
</TABLE>
*For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations 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 Government Obligations
Tax-Managed Fund (the "Fund"). The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
(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.
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 to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
- --------------------------------------------------------------------------------
(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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $79,235,107.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
--------------
<S> <C>
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------
Shares Sold 4,997,518
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 2
- -----------------------------------------------------------------------------
Shares redeemed (1,927,378)
- ----------------------------------------------------------------------------- -------------
Net change resulting from Institutional Shares transactions 3,070,142
- ----------------------------------------------------------------------------- -------------
</TABLE>
*For the period from June 2, 1995 (date of initial public investment) to July
31, 1995.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995**
---------------
<S> <C>
INSTITUTIONAL SERVICE SHARES
- ----------------------------------------------------------------------------
Shares Sold 90,757,284
- ----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 304,920
- ----------------------------------------------------------------------------
Shares redeemed (14,897,239)
- ---------------------------------------------------------------------------- --------------
Net change resulting from Institutional Service Shares transactions 76,164,965
- ---------------------------------------------------------------------------- --------------
Net change resulting from share transactions 79,235,107
- ---------------------------------------------------------------------------- --------------
</TABLE>
**For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Administrative Services ("FAS"), the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to .20 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--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.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
- --------------------------------------------------------------------------------
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.
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.
ORGANIZATIONAL EXPENSES--Organizational expenses of $26,061 were initially borne
by the Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses during the five year period following May 7, 1995 (the
date the Fund first became effective). For the period ended July 31, 1995, the
Fund paid $290 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Tax-Managed Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Tax-Managed Fund (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,
the statement of changes in net assets, and the financial highlights for the
period from May 30, 1995 (date of initial public investment) 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 audit.
We conducted our audit 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Tax-Managed Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the period from May
30, 1995 (date of initial public investment) to July 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Government Obligations Tax-Managed Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
Federated Administrative Services Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 60934N849
G01140-02 (9/95)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Government Obligations Tax-Managed Fund (the "Fund")
offered by this prospectus represent interests in a diversified portfolio of
Money Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in short-term U.S. government
securities to achieve current income consistent with stability of principal and
liquidity. The Fund's investment strategy is intended to enable the Fund to
provide shareholders with dividends that are exempt from state and local income
taxation to the extent permissible by federal and state law. Unless otherwise
exempt, shareholders are required to pay federal income tax on any dividends.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information dated
September 30, 1995, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Combined 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
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 5
Regulatory Compliance 5
TRUST INFORMATION 5
- ------------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 7
Expenses of the Fund and
Institutional Shares 7
NET ASSET VALUE 8
- ------------------------------------------------------
INVESTING IN THE FUND 8
- ------------------------------------------------------
Share Purchases 8
Minimum Investment Required 9
Subaccounting Services 9
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING SHARES 9
- ------------------------------------------------------
By Mail 10
Telephone Redemption 10
Accounts with Low Balances 11
SHAREHOLDER INFORMATION 11
- ------------------------------------------------------
Voting Rights 11
Massachusetts Partnership Law 11
TAX INFORMATION 12
- ------------------------------------------------------
Federal Income Tax 12
Pennsylvania Corporate and
Personal Property Taxes 12
OTHER CLASSES OF SHARES 13
- ------------------------------------------------------
PERFORMANCE INFORMATION 13
- ------------------------------------------------------
FINANCIAL STATEMENTS 14
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 21
- ------------------------------------------------------
ADDRESSES 22
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................ None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)...................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)........... None
Exchange Fee................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)............................................. 0.00%
12b-1 Fee.................................................................... None
Total Other Expenses (after expense reimbursement)........................... 0.20%
Shareholder Services Fee (after waiver)(2)................................. 0.00%
Total Operating Expenses(3)............................................. 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time at
its sole discretion. The maximum management fee is 0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.85% absent the voluntary
waivers of the management fee, a portion of the shareholder services fee and the
voluntary reimbursement of certain other operating expenses.
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 "INVESTING IN THE FUND" AND "TRUST INFORMATION." WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------------------------------------------------- ------ ------- ------- --------
<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......................................... $2 $6 $11 $26
</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.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Independent Public Accountants on page 21.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995(A)
-----------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------
Net investment income 0.01
- ------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------
Distributions from net investment income (0.01)
- ------------------------------------------------------------------------ -----------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ------------------------------------------------------------------------ -----------
TOTAL RETURN (B) 0.94%
- ------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------
Expenses 0.20%(c)
- ------------------------------------------------------------------------
Net investment income 5.78%(c)
- ------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.65%(c)
- ------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------
Net assets, end of period (000 omitted) $3,070
- ------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 2, 1995 (date of initial public
investment) to July 31, 1995.
(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
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing in short-term U.S. government securities. A
minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, an investor is
defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
Federated funds are those mutual funds which are distributed by Federated
Securities Corp. or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with stability
of principal and liquidity. This investment objective cannot be changed without
shareholder approval. The Fund's investment strategy is intended to enable the
Fund to provide shareholders with dividends that are exempt from state and local
income taxation to the extent permissible by federal and state law. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. government
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, the investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned directly, pay
interest exempt from state personal income tax. Therefore, dividends paid by the
Fund may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities. These
instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
- direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
- notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as 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:
- the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
- discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
- the credit of the agency or instrumentality.
AGENCY MASTER DEMAND NOTES. The Fund may enter into master demand notes
with various federal agencies and instrumentalities. Under a master demand
note, the Fund has the right to increase or decrease the amount of the note
on a daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon seven
or more days notice by either the Fund or the borrower and bear interest at
a variable rate. The Fund relies on master demand notes, in part, to
provide daily liquidity. To the extent that the Fund cannot obtain
liquidity through master demand notes, it may be required to maintain a
larger cash position, invest more assets in securities with current
maturities or dispose of assets at a gain or loss to maintain sufficient
liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7.
The Fund may change these operational policies to reflect changes in the laws
and regulations without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Administrative Services, the Fund's investment adviser, subject to direction by
the Trustees. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Administrative Services, a Delaware
business trust, organized on June 14, 1990, is a registered investment
adviser under the Investment Advisers Act of 1940. It is a subsidiary of
Federated Investors. All of the Class A (voting) shares of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue,
Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and Mr.
Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment companies
and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. 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 Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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.
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>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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.
EXPENSES OF THE FUND AND INSTITUTIONAL SHARES
Holders of shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, no expenses are allocated to Institutional Shares as a class.
However, the Trustees reserve the right to allocate certain expenses to holders
of shares as it deems appropriate ("class expenses"). In any case, class
expenses would be limited to: transfer agent fees as identified by the transfer
agent as attributable to holders of shares; printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and registration fees paid to state
securities
commissions; expenses related to administrative personnel and services as
required to support holders of shares; legal fees relating solely to shares; and
Trustees' fees incurred as a result of issues relating solely to shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 1:00 p.m., 4:00 p.m. (Eastern time), and as
of the close of trading (normally 4:00 p.m., Eastern time) on the New York Stock
Exchange, 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
- --------------------------------------------------------------------------------
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 1:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Government Obligations Tax-Managed Fund--Institutional Shares; Fund Number
(this number can be found on the account statement or by contacting the Fund);
Group Number or Order Number; Nominee or Institution Name; and ABA Number
011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Tax-Managed Fund--Institutional Shares to: Federated Services
Company, Government Obligations Tax-Managed Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed. 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.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Tax-Managed Fund, Federated Services Company, P.O. Box 8600, Boston, MA
02266-8600. The written request should state: Government Obligations Tax-Managed
Fund--Institutional Shares; shareholder's name; the account number; and the
share or dollar amount requested. Sign the request exactly as the shares are
registered. Shareholders should call the Fund for assistance in redeeming by
mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 1:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 1:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 or the aggregate
investment in Federated Funds falls below the required minimum of $200,000,000
to be maintained from and after twelve months from account opening, due to
shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Citizens Trust Co., Providence, RI, owned approximately 38,117,429 shares
(84.29%) of the voting securities of the Fund's Institutional Shares; and
Anderson & Co., Philadelphia, PA, owned approximately 76,759,107 shares (100%)
of the voting securities of the Fund's Institutional Service Shares and,
therefore, may, for certain purposes, be deemed to control the Fund and be able
to affect the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act
or obligation of the Trust. Therefore, financial loss resulting from liability
as a shareholder will occur only if the Trust itself cannot meet its obligations
to indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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. To the extent permissible by federal and state law,
the Fund is structured to provide shareholders with income that is exempt or
excluded from taxation at the state and local level. Substantially all dividends
paid to shareholders residing in certain states will be exempt or excluded from
state income tax. Many states, by statute, judicial decision or administrative
action, have taken the position that dividends of a regulated investment company
such as the Fund that are attributable to interest on obligations of the U.S.
Treasury and certain U.S. government agencies and instrumentalities are the
functional equivalent of interest from such obligations and are, therefore,
exempt from state and local income taxes. Shareholders should be aware of the
application of their state and local tax laws to investments in the Fund.
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary capacity
and are subject to a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 fees, but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and total
return for shares. The performance figures will be calculated separately for
each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
GOVERNMENT AGENCIES--100.2%
- ------------------------------------------------------------------------------------
$20,000,000 (a) Federal Farm Credit Bank Discount Note, 5.750%, 8/1/1995 $20,000,000
-----------------------------------------------------------------
59,400,000 (b) Student Loan Marketing Association, 5.790%, 8/1/1995 59,400,000
----------------------------------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES 79,400,000
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $79,400,000
----------------------------------------------------------------- -----------
</TABLE>
(a) This issue shows the rate of discount at the time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($79,235,107) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements.)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $79,400,000
- --------------------------------------------------------------------------------
Cash 20,148
- --------------------------------------------------------------------------------
Income receivable 211,661
- --------------------------------------------------------------------------------
Deferred expenses 28,667
- -------------------------------------------------------------------------------- -----------
Total assets 79,660,476
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Income distribution payable $367,554
- ----------------------------------------------------------------------
Accrued expenses 57,815
- ---------------------------------------------------------------------- --------
Total liabilities 425,369
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 79,235,107 shares outstanding $79,235,107
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
($3,070,142 / 3,070,142 shares outstanding) $1.00
- -------------------------------------------------------------------------------- -----------
Institutional Service Shares:
($76,164,965 / 76,164,965 shares outstanding) $1.00
- -------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF OPERATIONS
PERIOD ENDED JULY 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------
Interest $734,661
- -------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 24,484
- -------------------------------------------------------------------------
Administrative personnel and services fee 26,329
- -------------------------------------------------------------------------
Custodian fees 4,500
- -------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 1,988
- -------------------------------------------------------------------------
Legal fees 248
- -------------------------------------------------------------------------
Portfolio accounting fees 12,750
- -------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 952
- -------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 29,653
- -------------------------------------------------------------------------
Share registration costs 1,833
- -------------------------------------------------------------------------
Printing and postage 496
- -------------------------------------------------------------------------
Miscellaneous 390
- ------------------------------------------------------------------------- --------
Total expenses 103,623
- -------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------
Waiver of investment advisory fee $24,484
- ---------------------------------------------------------------
Waiver of shareholder services fee -- Institutional Shares 952
- ---------------------------------------------------------------
Reimbursement of other operating expenses 23,511 48,947
- --------------------------------------------------------------- ------- --------
Net expenses 54,676
- ------------------------------------------------------------------------------------- --------
Net investment income $679,985
- ------------------------------------------------------------------------------------- --------
</TABLE>
*For the period from May 30, 1995 (date of initial public investment) to July
31, 1995
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
--------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 679,985
- ---------------------------------------------------------------------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (22,005)
- ----------------------------------------------------------------------------
Institutional Service Shares (657,980)
- ---------------------------------------------------------------------------- --------------
Change in net assets resulting from distributions to shareholders (679,985)
- ---------------------------------------------------------------------------- --------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of Shares 95,754,802
- ----------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 304,922
- ----------------------------------------------------------------------------
Cost of Shares redeemed (16,824,617)
- ---------------------------------------------------------------------------- --------------
Change in net assets resulting from share transactions 79,235,107
- ---------------------------------------------------------------------------- --------------
Change in net assets 79,235,107
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 0
- ---------------------------------------------------------------------------- --------------
End of period $ 79,235,107
- ---------------------------------------------------------------------------- --------------
</TABLE>
*For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations 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 Government Obligations
Tax-Managed Fund (the "Fund"). The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
(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.
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 to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
- --------------------------------------------------------------------------------
(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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $79,235,107.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
--------------
<S> <C>
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------
Shares Sold 4,997,518
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 2
- -----------------------------------------------------------------------------
Shares redeemed (1,927,378)
- ----------------------------------------------------------------------------- -------------
Net change resulting from Institutional Shares transactions 3,070,142
- ----------------------------------------------------------------------------- -------------
</TABLE>
*For the period from June 2, 1995 (date of initial public investment) to July
31, 1995.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995**
---------------
<S> <C>
INSTITUTIONAL SERVICE SHARES
- ----------------------------------------------------------------------------
Shares Sold 90,757,284
- ----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 304,920
- ----------------------------------------------------------------------------
Shares redeemed (14,897,239)
- ---------------------------------------------------------------------------- --------------
Net change resulting from Institutional Service Shares transactions 76,164,965
- ---------------------------------------------------------------------------- --------------
Net change resulting from share transactions 79,235,107
- ---------------------------------------------------------------------------- --------------
</TABLE>
**For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Administrative Services ("FAS"), the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to .20 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--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
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
- --------------------------------------------------------------------------------
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.
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.
ORGANIZATIONAL EXPENSES--Organizational expenses of $26,061 were initially borne
by the Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses during the five year period following May 7, 1995 (the
date the Fund first became effective). For the period ended July 31, 1995, the
Fund paid $290 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Tax-Managed Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Tax-Managed Fund (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,
the statement of changes in net assets, and the financial highlights for the
period from May 30, 1995 (date of initial public investment) 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 audit.
We conducted our audit 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Tax-Managed Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the period from May
30, 1995 (date of initial public investment) to July 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Government Obligations Tax-Managed Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
Federated Administrative Services Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Transfer Agent & Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
INSTITUTIONAL SHARES
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 60934N856
G01140-01 (9/95)
- --------------------------------------------------------------------------------
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Treasury Obligations Fund (the "Fund")
offered by this prospectus represent interests in a diversified
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in
U.S. Treasury securities to provide 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 Combined Statement of Additional Information
dated September 30, 1995, with the Securities and Exchange Commission.
The information contained in the Combined Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Combined 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
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
- --------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SHARES 2
- --------------------------------------------------
GENERAL INFORMATION 3
- --------------------------------------------------
INVESTMENT INFORMATION 3
- --------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 4
Regulatory Compliance 5
TRUST INFORMATION 5
- --------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 6
NET ASSET VALUE 7
- --------------------------------------------------
INVESTING IN THE FUND 7
- --------------------------------------------------
Share Purchases 7
Minimum Investment Required 8
Subaccounting Services 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
REDEEMING SHARES 9
- --------------------------------------------------
By Mail 9
Telephone Redemption 9
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
- --------------------------------------------------
Voting Rights 10
Massachusetts Partnership Law 11
TAX INFORMATION 11
- --------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 11
OTHER CLASSES OF SHARES 11
- --------------------------------------------------
PERFORMANCE INFORMATION 12
- --------------------------------------------------
FINANCIAL STATEMENTS 13
- --------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 21
- --------------------------------------------------
ADDRESSES 22
- --------------------------------------------------
</TABLE>
I
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price).. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................... None
Exchange Fee............................................................................ None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)....................................................... 0.08%
12b-1 Fee............................................................................... None
Total Other Expenses.................................................................... 0.12%
Shareholder Services Fee (after waiver) (2)................................ 0.00%
Total Operating Expenses (3).................................................... 0.20%
<FN>
(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
0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.56% absent the voluntary
waivers of a portion of the management fee and the shareholder services
fee.
</TABLE>
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 "INVESTING IN THE FUND" AND "TRUST INFORMATION." WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------- --------- --------- --------- ---------
<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............... $2 $6 $11 $26
</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.
1
TREASURY OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 21.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990(a)
- ---------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------
Net investment income 0.05 0.03 0.03 0.05 0.07 0.04
- ----------------------------------
LESS DISTRIBUTIONS
- ----------------------------------
Distributions from net
investment income (0.05) (0.03) (0.03) (0.05) (0.07) (0.04)
- ---------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN (b) 5.50% 3.35% 3.15% 4.61% 7.11% 5.09%
- ----------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- ----------------------------------
Net investment income 5.42 % 3.29 % 3.11 % 4.49 % 6.65 % 8.16 %(c)
- ----------------------------------
Expense waiver/reimbursement (d) 0.36 % 0.10 % 0.07 % 0.08 % 0.09 % 0.15 %(c)
- ----------------------------------
SUPPLEMENTAL DATA
- ----------------------------------
Net assets, end of period (000
omitted) $3,441,068 $2,582,975 $2,532,482 $2,432,037 $1,678,880 $576,048
- ----------------------------------
<FN>
(a) Reflects operations for the period from February 23, 1990 (date of initial
public investment) to July 31, 1990.
(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.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
2
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Service Shares and
Institutional Shares. This prospectus relates only to Institutional Shares of
the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing in short-term U.S. Treasury securities. A
minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal. This investment objective cannot be changed without
shareholder approval. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. Treasury
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United States.
3
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 securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. 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.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
4
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 Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve
as investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. 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
5
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 Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 the Institutional Shares, computed at an annual rate,
to obtain 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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
- ----------- ----------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
on assets in excess of $750
.075 of 1% million
</TABLE>
6
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
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (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
- --------------------------------------------------------------------------------
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 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 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: Treasury Obligations Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Order Number; Nominee or
7
Institution Name; and ABA Number 011000028. The Fund reserves the right to
refuse any request made by wire or telephone and may limit the amount involved
or the number of telephone redemptions. This procedure may be modified or
terminated by the transfer agent or the Fund.
BY MAIL. To purchase by mail, send a check made payable to Treasury Obligations
Fund--Institutional Shares to: Federated Services Company, Treasury Obligations
Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed. 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
5:00 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.
8
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: Treasury Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Treasury Obligations Fund-Institutional Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone
9
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 5:00 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 5:00
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 5:00 p.m. (Eastern time). The Fund reserves
the right to refuse any request made by wire or telephone and may limit the
amount involved or the number of telephone redemptions. This procedure may be
modified or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000, or the
aggregate investment in Federated funds falls below the required minimum of
$200,000,000 to be maintained from and after twelve months from account opening,
due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
10
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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary capacity
and are subject to a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
11
Institutional Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
12
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
SHORT TERM U.S. TREASURY OBLIGATIONS--25.5%
- ---------------------------------------------------------------------------------
(a) U.S. TREASURY BILLS--16.7%
------------------------------------------------------------
$ 681,000,00 6.830%-5.550%, 8/17/1995 - 5/30/1996 $ 666,042,514
------------------------------------------------------------ --------------
U.S. TREASURY NOTES--8.8%
------------------------------------------------------------
350,500,000 3.875%-9.375%, 8/31/1995 - 5/15/1996 351,865,208
------------------------------------------------------------ --------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,017,907,722
------------------------------------------------------------ --------------
(b) REPURCHASE AGREEMENTS--74.9%
- ---------------------------------------------------------------------------------
50,000,000 Aubrey G. Lanston and Company, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 50,000,000
------------------------------------------------------------
150,000,000 BA Securities, Inc., 5.810%, dated 7/31/1995, due 8/1/1995 150,000,000
------------------------------------------------------------
155,000,000 B.T. Securities Corporation, 5.840%, dated 7/31/1995, due
8/1/1995 155,000,000
------------------------------------------------------------
170,000,000 BOT Securites, Inc., Tokyo, 5.800%, dated 7/31/1995, due
8/1/1995 170,000,000
------------------------------------------------------------
54,800,000 Barclays de Zoete Wedd Securities, Inc., 5.840%, dated
7/31/1995, due 8/1/1995 54,800,000
------------------------------------------------------------
195,000,000 Bear, Stearns and Co., 5.810%, dated 7/31/1995, due 8/1/1995 195,000,000
------------------------------------------------------------
195,000,000 Chemical Banking Corp., 5.820%, dated 7/31/1995, due
8/1/1995 195,000,000
------------------------------------------------------------
195,000,000 Daiwa Securities America, Inc., 5.800%, dated 7/31/1995, due
8/1/1995 195,000,000
------------------------------------------------------------
80,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 80,000,000
------------------------------------------------------------
100,000,000 Dresdner Securities (USA), Inc., 5.820%, dated 7/31/1995,
due 8/1/1995 100,000,000
------------------------------------------------------------
195,000,000 First Chicago Capital Markets, Inc., 5.820%, dated
7/31/1995, due 8/1/1995 195,000,000
------------------------------------------------------------
170,000,000 Fuji Securities, Inc., 5.820%, dated 7/31/1995, due 8/7/1995 170,000,000
------------------------------------------------------------
40,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1995, due 8/1/1995 40,000,000
------------------------------------------------------------
40,000,000 Harris, Nesbitt Thomson, 5.840%, dated 7/31/1995, due
8/1/1995 40,000,000
------------------------------------------------------------
</TABLE>
13
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
(B) REPURCHASE AGREEMENTS--CONTINUED
- ---------------------------------------------------------------------------------
30,000,000 J.P. Morgan Securities, Inc., 5.840%, dated 7/31/1995, due
8/1/1995 $ 30,000,000
------------------------------------------------------------
195,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 195,000,000
------------------------------------------------------------
93,000,000 (c) Merrill Lynch, Pierce, Fenner and Smith, 5.700%, dated
7/7/1995, due 9/5/1995 93,000,000
------------------------------------------------------------
195,000,000 National Westminster Bank USA, NY, 5.820%, dated 7/31/1995,
due 8/1/1995 195,000,000
------------------------------------------------------------
195,000,000 Nations Bank of North Carolina, 5.800%, dated 7/31/1995, due
8/1/1995 195,000,000
------------------------------------------------------------
120,000,000 Nikko Securities, 5.820%, dated 7/31/1995, due 8/1/1995 120,000,000
------------------------------------------------------------
50,000,000 State Street Bank and Trust Co., 5.820%, dated 7/31/1995,
due 8/1/1995 50,000,000
------------------------------------------------------------
195,000,000 SBC Capital Markets, 5.820%, dated 7/31/1995, due 8/1/1995 195,000,000
------------------------------------------------------------
120,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 120,000,000
------------------------------------------------------------ --------------
TOTAL REPURCHASE AGREEMENTS 2,982,800,000
------------------------------------------------------------ --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (d) $4,000,707,722
------------------------------------------------------------ --------------
--------------
<FN>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Repurchase agreements are fully collateralized by U.S. Treasury 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.
(c) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($3,984,922,273) at July 31, 1995.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
14
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------
Investments in repurchase agreements $2,982,800,000
- --------------------------------------------------
Investments in securities 1,017,907,722
- -------------------------------------------------- --------------
Total investments at amortized cost and value $4,000,707,722
- ------------------------------------------------------------------
Cash 211,164
- ------------------------------------------------------------------
Income receivable 6,723,593
- ------------------------------------------------------------------
Receivable for shares sold 256,869
- ------------------------------------------------------------------ --------------
Total assets 4,007,899,348
- ------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------
Payable for shares redeemed 5,235,807
- --------------------------------------------------
Income distribution payable 17,005,739
- --------------------------------------------------
Accrued expenses 735,529
- -------------------------------------------------- --------------
Total liabilities 22,977,075
- ------------------------------------------------------------------ --------------
NET ASSETS for 3,984,922,273 shares outstanding $3,984,922,273
- ------------------------------------------------------------------ --------------
--------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- ------------------------------------------------------------------
Institutional Shares:
($3,441,067,673 DIVIDED BY 3,441,067,673 shares
outstanding) $1.00
- ------------------------------------------------------------------ --------------
Institutional Service Shares:
($543,854,600 DIVIDED BY 543,854,600 shares
outstanding) $1.00
- ------------------------------------------------------------------ --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
15
TREASURY OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------
Interest $183,952,583
- ---------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------
Investment advisory fee $ 6,522,177
- --------------------------------------------------------------
Administrative personnel and services fee 2,468,644
- --------------------------------------------------------------
Custodian fees 233,169
- --------------------------------------------------------------
Transfer agent and dividend disbursing agent fees
and expenses 74,251
- --------------------------------------------------------------
Directors'/Trustees' fees 13,914
- --------------------------------------------------------------
Auditing fees 12,951
- --------------------------------------------------------------
Legal fees 4,583
- --------------------------------------------------------------
Portfolio accounting fees 239,767
- --------------------------------------------------------------
Shareholder services fee--Institutional Shares 7,734,539
- --------------------------------------------------------------
Shareholder services fee--Institutional Service
Shares 418,181
- --------------------------------------------------------------
Share registration costs 626,125
- --------------------------------------------------------------
Printing and postage 19,858
- --------------------------------------------------------------
Insurance premiums 43,861
- --------------------------------------------------------------
Taxes 20,066
- --------------------------------------------------------------
Miscellaneous 15,591
- -------------------------------------------------------------- -----------
Total expenses 18,447,677
- --------------------------------------------------------------
Deduct--
- --------------------------------------------------
Waiver of investment advisory fee $3,742,710
- --------------------------------------------------
Waiver of shareholder services
fee--Institutional Shares 7,734,539 11,477,249
- -------------------------------------------------- ---------- -----------
Net expenses 6,970,428
- --------------------------------------------------------------------------- ------------
Net investment income $176,982,155
- --------------------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
16
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1995 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------
OPERATIONS--
- --------------------------------------------------
Net investment income $ 176,982,155 $ 81,337,110
- -------------------------------------------------- ---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------
Distributions from net investment income
- --------------------------------------------------
Institutional Shares (167,724,558) (81,325,025)
- --------------------------------------------------
Institutional Service Shares (9,257,597) (12,085)
- -------------------------------------------------- ---------------- ---------------
Change in net assets resulting from
distributions to shareholders (176,982,155) (81,337,110)
- -------------------------------------------------- ---------------- ---------------
SHARE TRANSACTIONS--
- --------------------------------------------------
Proceeds from sale of Shares 19,110,121,123 9,791,368,504
- --------------------------------------------------
Net asset value of Shares issued to shareholders
in payment of distributions declared 22,269,297 4,797,827
- --------------------------------------------------
Cost of Shares redeemed (17,739,330,600) (9,736,785,420)
- -------------------------------------------------- ---------------- ---------------
Change in net assets resulting from share
transactions 1,393,059,820 59,380,911
- -------------------------------------------------- ---------------- ---------------
Change in net assets 1,393,059,820 59,380,911
- --------------------------------------------------
NET ASSETS:
- --------------------------------------------------
Beginning of period 2,591,862,453 2,532,481,542
- -------------------------------------------------- ---------------- ---------------
End of period $ 3,984,922,273 $ 2,591,862,453
- -------------------------------------------------- ---------------- ---------------
---------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
17
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations 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 are only those of Treasury Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
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 investment
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 paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as brokers/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the 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.
18
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement 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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $3,984,922,273.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
INSTITUTIONAL SHARES 1995 1994
- ---------------------------------------------------------------------- ---------------- ---------------
<S> <C> <C>
Shares sold 17,554,361,142 9,782,493,254
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 18,926,732 4,785,818
- ----------------------------------------------------------------------
Shares redeemed (16,715,195,395) (9,736,785,420)
- ---------------------------------------------------------------------- ---------------- ---------------
Net change resulting from Institutional Shares transactions 858,092,479 50,493,652
- ---------------------------------------------------------------------- ---------------- ---------------
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
INSTITUTIONAL SERVICE SHARES 1995 1994*
- ---------------------------------------------------------------------- ---------------- ---------------
<S> <C> <C>
Shares sold 1,555,759,981 8,875,250
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,342,565 12,009
- ----------------------------------------------------------------------
Shares redeemed (1,024,135,205) --
- ---------------------------------------------------------------------- ---------------- ---------------
Net change resulting from Institutional Service Shares transactions 534,967,341 8,887,259
- ---------------------------------------------------------------------- ---------------- ---------------
Net change resulting from share transactions 1,393,059,820 59,380,911
- ---------------------------------------------------------------------- ---------------- ---------------
---------------- ---------------
<FN>
* For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
</TABLE>
19
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(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 0.20 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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund 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 0.25 of 1% of average net assets of the Fund for the period. This fee
is to obtain certain personal 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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent
for the Fund. The FServ 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.
20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Treasury
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 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
Treasury Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
21
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Treasury Obligations Fund
Institutional Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Investment Advisor
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
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>
22
- --------------------------------------------------------------------------------
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30,
1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 60934N500
9110208A-IS (9/95) [RECYCLED PAPER LOGO]
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TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Treasury Obligations Fund (the
"Fund") offered by this prospectus represent interests in a
diversified portfolio of Money Market Obligations Trust (the "Trust"),
an open-end management investment company (a mutual fund). The Fund
invests in U.S. Treasury securities to provide 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 Combined Statement of Additional Information
dated September 30, 1995, with the Securities and Exchange Commission.
The information contained in the Combined Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Combined 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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<TABLE>
<S> <C>
SUMMARY OF TRUST EXPENSES 1
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FINANCIAL HIGHLIGHTS--INSTITUTIONAL
SERVICE SHARES 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
Investment Limitations 4
Regulatory Compliance 5
TRUST INFORMATION 5
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Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 6
NET ASSET VALUE 7
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INVESTING IN THE FUND 7
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Share Purchases 7
Minimum Investment Required 8
Subaccounting Services 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
REDEEMING SHARES 9
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By Mail 9
Telephone Redemption 9
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
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Voting Rights 10
Massachusetts Partnership Law 11
TAX INFORMATION 11
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Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 11
OTHER CLASSES OF SHARES 11
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PERFORMANCE INFORMATION 12
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FINANCIAL STATEMENTS 13
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REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 21
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ADDRESSES 22
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</TABLE>
I
SUMMARY OF FUND EXPENSES
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<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering
price)................................................................................ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................... None
Exchange Fee............................................................................ None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver) (1)....................................................... 0.08%
12b-1 Fee............................................................................... None
Total Other Expenses.................................................................... 0.37%
Shareholder Services Fee................................................... 0.25%
Total Operating Expenses (2).................................................... 0.45%
<FN>
(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
0.20%.
(2) The total operating expenses would have been 0.56% absent the voluntary
waiver of a portion of the management fee.
</TABLE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION". WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------- --------- --------- --------- ---------
<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............... $5 $14 $25 $57
</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.
1
TREASURY OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants, on page 21.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------
1995 1994(a)
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<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
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INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.05 0.003
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LESS DISTRIBUTIONS
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Distributions from net investment income (0.05) (0.003)
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NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
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-------- --------
TOTAL RETURN (b) 5.23% 0.29%
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RATIOS TO AVERAGE NET ASSETS
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Expenses 0.45% 0.39%(c)
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Net investment income 5.53% 4.26%(c)
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Expense waiver/reimbursement (d) 0.11% 0.10%(c)
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $543,855 $8,887
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<FN>
(a) Reflects operations for the period from July 5, 1994 (date of initial
public investment) to July 31, 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.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
2
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 shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Service Shares and
Institutional Shares. This prospectus relates only to Institutional Service
Shares of the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing in short-term U.S. Treasury securities. A
minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
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 to provide current income consistent
with stability of principal. This investment objective cannot be changed without
shareholder approval. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. Treasury
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United States.
3
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 securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. 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.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
4
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 Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. 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
5
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 Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
SHAREHOLDER SERVICES. 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 the Institutional Service Shares, computed at an annual
rate, to obtain 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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
-------------------- ------------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
6
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 shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (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 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 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: Treasury Obligations Fund--Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nom-
7
inee or Institution Name; and ABA Number 011000028. The Fund reserves the right
to refuse any request made by wire or telephone and may limit the amount
involved or the number of telephone redemptions. This procedure may be modified
or terminated by the transfer agent or the Fund.
BY MAIL. To purchase by mail, send a check made payable to Treasury Obligations
Fund--Institutional Service Shares to: Federated Services Company, Treasury
Obligations Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed. 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
5:00 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.
8
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: Treasury Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Treasury Obligations Fund--Institutional Service
Shares; shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone
9
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 5:00 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 5:00
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 5:00 p.m. (Eastern time). The Fund reserves
the right to refuse any request made by wire or telephone and may limit the
amount involved or the number of telephone redemptions. This procedure may be
modified or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000, or the
aggregate investment in Federated Funds falls below the required minimum of
$200,000,000 to be maintained from and after twelve months from account opening,
due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
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VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
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.
10
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
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FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity and are subject to
a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
11
Institutional Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
12
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
SHORT TERM U.S. TREASURY OBLIGATIONS--25.5%
- ---------------------------------------------------------------------------------
(a) U.S. TREASURY BILLS--16.7%
------------------------------------------------------------
$681,000,000 6.830% - 5.550%, 8/17/1995 - 5/30/1996 $ 666,042,514
------------------------------------------------------------ --------------
U.S. TREASURY NOTES--8.8%
------------------------------------------------------------
350,500,000 3.875% - 9.375%, 8/31/1995 - 5/15/1996 351,865,208
------------------------------------------------------------ --------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,017,907,722
------------------------------------------------------------ --------------
(b) REPURCHASE AGREEMENTS--74.9%
- ---------------------------------------------------------------------------------
50,000,000 Aubrey G. Lanston and Company, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 50,000,000
------------------------------------------------------------
150,000,000 BA Securities, Inc., 5.810%, dated 7/31/1995, due 8/1/1995 150,000,000
------------------------------------------------------------
155,000,000 B.T. Securities Corporation, 5.840%, dated 7/31/1995, due
8/1/1995 155,000,000
------------------------------------------------------------
170,000,000 BOT Securites, Inc., Tokyo, 5.800%, dated 7/31/1995, due
8/1/1995 170,000,000
------------------------------------------------------------
54,800,000 Barclays de Zoete Wedd Securities, Inc., 5.840%, dated
7/31/1995, due 8/1/1995 54,800,000
------------------------------------------------------------
195,000,000 Bear, Stearns and Co., 5.810%, dated 7/31/1995, due 8/1/1995 195,000,000
------------------------------------------------------------
195,000,000 Chemical Banking Corp., 5.820%, dated 7/31/1995, due
8/1/1995 195,000,000
------------------------------------------------------------
195,000,000 Daiwa Securities America, Inc., 5.800%, dated 7/31/1995, due
8/1/1995 195,000,000
------------------------------------------------------------
80,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 80,000,000
------------------------------------------------------------
100,000,000 Dresdner Securities (USA), Inc., 5.820%, dated 7/31/1995,
due 8/1/1995 100,000,000
------------------------------------------------------------
195,000,000 First Chicago Capital Markets, Inc., 5.820%, dated
7/31/1995, due 8/1/1995 195,000,000
------------------------------------------------------------
170,000,000 Fuji Securities, Inc., 5.820%, dated 7/31/1995, due 8/7/1995 170,000,000
------------------------------------------------------------
40,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1995, due 8/1/1995 40,000,000
------------------------------------------------------------
40,000,000 Harris, Nesbitt Thomson, 5.840%, dated 7/31/1995, due
8/1/1995 40,000,000
------------------------------------------------------------
</TABLE>
13
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
- ---------------- ------------------------------------------------------------ --------------
<C> <S> <C>
REPURCHASE AGREEMENTS--CONTINUED
- ---------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
------------------------------------------------------------
$ 30,000,000 J.P. Morgan Securities, Inc., 5.840%, dated 7/31/1995, due
8/1/1995 $ 30,000,000
------------------------------------------------------------
195,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 195,000,000
------------------------------------------------------------
93,000,000 (c) Merrill Lynch, Pierce, Fenner and Smith, 5.700%, dated
7/7/1995, due 9/5/1995 93,000,000
------------------------------------------------------------
195,000,000 National Westminster Bank USA, NY, 5.820%, dated 7/31/1995,
due 8/1/1995 195,000,000
------------------------------------------------------------
195,000,000 Nations Bank of North Carolina, 5.800%, dated 7/31/1995, due
8/1/1995 195,000,000
------------------------------------------------------------
120,000,000 Nikko Securities, 5.820%, dated 7/31/1995, due 8/1/1995 120,000,000
------------------------------------------------------------
50,000,000 State Street Bank and Trust Co., 5.820%, dated 7/31/1995,
due 8/1/1995 50,000,000
------------------------------------------------------------
195,000,000 SBC Capital Markets, 5.820%, dated 7/31/1995, due 8/1/1995 195,000,000
------------------------------------------------------------
120,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 120,000,000
------------------------------------------------------------ --------------
TOTAL REPURCHASE AGREEMENTS 2,982,800,000
------------------------------------------------------------ --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (d) $4,000,707,722
------------------------------------------------------------ --------------
--------------
<FN>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Repurchase agreements are fully collateralized by U.S. Treasury 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.
(c) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($3,984,922,273) at July 31, 1995.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
14
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------
Investments in repurchase agreements $2,982,800,000
- ------------------------------------------------------
Investments in securities 1,017,907,722
- ------------------------------------------------------ --------------
Total investments at amortized cost and value $4,000,707,722
- ------------------------------------------------------------------------
Cash 211,164
- ------------------------------------------------------------------------
Income receivable 6,723,593
- ------------------------------------------------------------------------
Receivable for shares sold 256,869
- ------------------------------------------------------------------------ --------------
Total assets 4,007,899,348
- ------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------
Payable for shares redeemed 5,235,807
- ------------------------------------------------------
Income distribution payable 17,005,739
- ------------------------------------------------------
Accrued expenses 735,529
- ------------------------------------------------------ --------------
Total liabilities 22,977,075
- ------------------------------------------------------------------------ --------------
NET ASSETS for 3,984,922,273 shares outstanding $3,984,922,273
- ------------------------------------------------------------------------ --------------
--------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- ------------------------------------------------------------------------
Institutional Shares:
($3,441,067,673 DIVIDED BY 3,441,067,673 shares outstanding) $ 1.00
- ------------------------------------------------------------------------ --------------
--------------
Institutional Service Shares:
($543,854,600 DIVIDED BY 543,854,600 shares outstanding) $ 1.00
- ------------------------------------------------------------------------ --------------
--------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
15
TREASURY OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------
Interest $183,952,583
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Investment advisory fee $ 6,522,177
- ----------------------------------------------------------------
Administrative personnel and services fee 2,468,644
- ----------------------------------------------------------------
Custodian fees 233,169
- ----------------------------------------------------------------
Transfer agent and dividend disbursing agent fees
and expenses 74,251
- ----------------------------------------------------------------
Directors'/Trustees' fees 13,914
- ----------------------------------------------------------------
Auditing fees 12,951
- ----------------------------------------------------------------
Legal fees 4,583
- ----------------------------------------------------------------
Portfolio accounting fees 239,767
- ----------------------------------------------------------------
Shareholder services fee--Institutional Shares 7,734,539
- ----------------------------------------------------------------
Shareholder services fee--Institutional Service
Shares 418,181
- ----------------------------------------------------------------
Share registration costs 626,125
- ----------------------------------------------------------------
Printing and postage 19,858
- ----------------------------------------------------------------
Insurance premiums 43,861
- ----------------------------------------------------------------
Taxes 20,066
- ----------------------------------------------------------------
Miscellaneous 15,591
- ---------------------------------------------------------------- -----------
Total expenses 18,447,677
- ----------------------------------------------------------------
Deduct--
- --------------------------------------------------
Waiver of investment advisory fee $3,742,710
- --------------------------------------------------
Waiver of shareholder services
fee--Institutional Shares 7,734,539 11,477,249
- -------------------------------------------------- ---------- -----------
Net expenses 6,970,428
- ------------------------------------------------------------------------------- ------------
Net investment income $176,982,155
- ------------------------------------------------------------------------------- ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
16
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
1995 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------
OPERATIONS--
- ---------------------------------------------
Net investment income $ 176,982,155 $ 81,337,110
- --------------------------------------------- ---------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------
Distributions from net investment income
- ---------------------------------------------
Institutional Shares (167,724,558) (81,325,025)
- ---------------------------------------------
Institutional Service Shares (9,257,597) (12,085)
- --------------------------------------------- ---------------- ---------------
Change in net assets resulting from
distributions to shareholders (176,982,155) (81,337,110)
- --------------------------------------------- ---------------- ---------------
SHARE TRANSACTIONS--
- ---------------------------------------------
Proceeds from sale of Shares 19,110,121,123 9,791,368,504
- ---------------------------------------------
Net asset value of Shares issued to
shareholders in payment of distributions
declared 22,269,297 4,797,827
- ---------------------------------------------
Cost of Shares redeemed (17,739,330,600) (9,736,785,420)
- --------------------------------------------- ---------------- ---------------
Change in net assets resulting from share
transactions 1,393,059,820 59,380,911
- --------------------------------------------- ---------------- ---------------
Change in net assets 1,393,059,820 59,380,911
- ---------------------------------------------
NET ASSETS:
- ---------------------------------------------
Beginning of period 2,591,862,453 2,532,481,542
- --------------------------------------------- ---------------- ---------------
End of period $ 3,984,922,273 $ 2,591,862,453
- --------------------------------------------- ---------------- ---------------
---------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
17
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations 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 are only those of Treasury Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
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 investment
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 paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as brokers/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the 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.
18
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
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.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement 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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $3,984,922,273.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
INSTITUTIONAL SHARES 1995 1994
- -------------------------------------------------- --------------- --------------
<S> <C> <C>
Shares sold 17,554,361,142 9,782,493,254
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 18,926,732 4,785,818
- --------------------------------------------------
Shares redeemed (16,715,195,395) (9,736,785,420)
- -------------------------------------------------- --------------- --------------
Net change resulting from Institutional Shares
transactions 858,092,479 50,493,652
- -------------------------------------------------- --------------- --------------
--------------- --------------
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
INSTITUTIONAL SERVICE SHARES 1995 1994*
- -------------------------------------------------- --------------- --------------
<S> <C> <C>
Shares sold 1,555,759,981 8,875,250
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 3,342,565 12,009
- --------------------------------------------------
Shares redeemed (1,024,135,205) --
- -------------------------------------------------- --------------- --------------
Net change resulting from Institutional Service
Shares transactions 534,967,341 8,887,259
- -------------------------------------------------- --------------- --------------
--------------- --------------
Net change resulting from share transactions 1,393,059,820 59,380,911
- -------------------------------------------------- --------------- --------------
--------------- --------------
<FN>
* For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
</TABLE>
19
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
(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 0.20 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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund 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 0.25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal 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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ 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.
20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Treasury
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 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
Treasury Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
21
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Treasury Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
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>
22
- --------------------------------------------------------------------------------
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30,
1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Cusip 60934N872
9110208A-SS (9/95) [RECYCLED PAPER LOGO]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Tax-Free Obligations Fund (the "Fund") offered by
this prospectus represent interests in a diversified portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in municipal securities to provide dividend
income exempt from federal regular income tax 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 Combined Statement of Additional Information dated
September 30, 1995, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Combined 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
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Municipal Securities 6
Investment Risks 6
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Distribution of Shares 8
Administration of the Fund 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
Subaccounting Services 10
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 13
- ------------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 15
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 45
- ------------------------------------------------------
ADDRESSES 46
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................ None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)...................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)........... None
Exchange Fee................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)............................................. 0.06%
12b-1 Fee.................................................................... None
Total Other Expenses......................................................... 0.14%
Shareholder Services Fee (after waiver)(2)................................. 0.00%
Total Operating Expenses(3)............................................. 0.20%
</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 0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.59% absent the voluntary
waiver of a portion of the management fee and 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 "INVESTING IN THE FUND" AND "TRUST INFORMATION". WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------
<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........ $ 2 $ 6 $ 11 $ 26
</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.
TAX-FREE OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 45.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991 1990(A)
------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------
Net investment income 0.04 0.02 0.03 0.04 0.05 0.04
- --------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------
Distributions from net investment
income (0.04) (0.02) (0.03) (0.04) (0.05) (0.04)
- -------------------------------------- ------ ------ ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------- ------ ------ ------ ------ ------ -------
TOTAL RETURN (B) 3.64% 2.45% 2.54% 3.73% 5.13% 3.70%
- --------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- --------------------------------------
Net investment income 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%(c)
- --------------------------------------
Expense waiver/reimbursement (d) 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%(c)
- --------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------
Net assets, end of period (000
omitted) $1,295,458 $789,755 $454,119 $308,855 $165,669 $145,552
- --------------------------------------
</TABLE>
(a) Reflects operations for the period from December 12, 1989 (date of initial
public investment) to July 31, 1990.
(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
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to the Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing primarily in short-term municipal securities.
The Fund may not be a suitable investment for retirement plans since it invests
in municipal securities. A minimum initial investment of $25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide dividend income exempt from
federal regular income tax consistent with stability of principal. This
investment objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities (as defined below) maturing in 13 months or less. As a
matter of investment policy, which cannot be changed without shareholder
approval, at least 80% of the Fund's annual interest income will be exempt from
federal regular income tax. (Federal regular income tax does not include the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations.) The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the Trustees
without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued by
or on behalf of states, territories, and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of qualified
legal counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:
- tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
- bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
- municipal commercial paper and other short-term notes;
- variable rate demand notes;
- municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases; and
- participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security
at the time of each interest rate adjustment or at other fixed intervals.
See "Demand Features." The Fund treats variable rate demand notes as
maturing on the later of the date of the next interest rate adjustment or
the date on which the Fund may next tender the security for repurchase.
PARTICIPATION INTERESTS. The Fund may purchase interests in Municipal
Securities from financial institutions such as commercial and investment
banks, savings and loan associations, and insurance companies. These
interests may take the form of participations, beneficial interests in a
trust, partnership interests or any other form of indirect ownership that
allows the Fund to treat the income from the investment as exempt from
federal income tax. The Fund invests in these participation interests in
order to obtain credit enhancement or demand features that would not be
available through direct ownership of the underlying Municipal Securities.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation interest in any
of the above.
RATINGS. The securities in which the Fund invests must be rated in the highest
short-term rating category by one or more nationally recognized statistical
rating organizations ("NRSROs") or be of comparable quality to securities having
such ratings. An NRSRO's highest rating category is deter-
mined without regard for sub-categories and gradations. For example, securities
rated SP-1+ or SP-1 by Standard & Poor's Ratings Group ("S&P"), MIG-1 by Moody's
Investors Service, Inc. ("Moody's"), or FIN-1+ or FIN-1 by Fitch Investors
Service, Inc. ("Fitch") are all considered rated in the highest short-term
rating category. The Fund will follow applicable regulations in determining
whether a security rated by more than one NRSRO can be treated as being in the
highest short-term rating category; currently, such securities must be rated by
two NRSROs in their highest rating category. See "Regulatory Compliance."
Further, the Fund has the ability but no present intention of investing in:
securities that are rated MIG-2 or VMIG-2 by Moody's, SP-2 by S&P, FIN-2 by
Fitch; tax-exempt commercial paper that is rated P-2 by Moody's, A-2 by S&P, or
F-2 by Fitch; and securities that are not rated but are deemed to be of
comparable quality. Shareholders will be notified should the Fund decide to
invest in these securities.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund typically
evaluates the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. However,
credit-enhanced securities will not be treated as having been issued by the
credit enhancer for diversification purposes, unless the Fund has invested more
than 10% of its assets in securities issued, guaranteed or otherwise credit
enhanced by the credit enhancer, in which case the securities will be treated as
having been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
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.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities, to 10% of its total assets.
TEMPORARY INVESTMENTS. From time to time, when the investment adviser determines
that market conditions call for a temporary defensive posture, the Fund may
invest in tax-exempt or taxable securities such as: obligations issued by or on
behalf of municipal or corporate issuers having the same quality characteristics
as described above; obligations issued or guaranteed by the U.S. government, its
agencies, or instrumentalities; instruments issued by a U.S. branch of a
domestic bank or other deposit institution having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment; and
repurchase agreements (arrangements in which the organization selling the Fund a
temporary investment agrees at the time of sale to repurchase it at a mutually
agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention to do so. However, the interest from certain Municipal
Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering;
the maturity of the obligations; and the rating of the issue. The ability of the
Fund to achieve its investment objective also depends on the continuing ability
of the issuers of Municipal Securities and participation interests, or the
credit enhancers of either, to meet their obligations for the payment of
interest and principal when due. In addition, from time to time, the supply of
Municipal Securities acceptable for purchase by the Fund could become limited.
The Fund may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or whose
issuers are located in the same state. Sizable investments in these Municipal
Securities could involve an increased risk to the Fund should any of these
related projects or facilities experience financial difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings. This investment limitation
cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for exercising all the
Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. 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 Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 the Institutional Shares, computed at an annual
rate, to obtain 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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
- --------------------- -----------------------------------
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (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
- --------------------------------------------------------------------------------
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: Tax-Free Obligations Fund -- Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Tax-Free Obligations
Fund -- Institutional Shares to: Federated Services Company, Tax-Free
Obligations Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.
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.
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: Tax-Free Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Tax-Free Obligations Fund -- Institutional Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 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.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000, or the
aggregate investment in Federated Funds falls below the required minimum of
$200,000,000 to be maintained from and after twelve months from account opening,
due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act
of 1986, dividends representing net interest earned on certain "private
activity" bonds issued after August 7, 1986, may be included in calculating the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations. The Fund may purchase all types of municipal bonds,
including private activity bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the 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. Because interest received by the Fund may not be
exempt from all state and local income taxes, shareholders may be required to
pay state and local taxes on dividends received from the Fund. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency of fiduciary capacity
and are subject to a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and
tax-equivalent yield for shares. The performance figures will be calculated
separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that would have to be earned to equal
the tax-exempt yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
TAX-FREE OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--100.4%
- ----------------------------------------------------------------------
ALABAMA--2.8%
------------------------------------------------------
$ 9,010,000 Alabama Special Care Facilities Finance Authority
Weekly VRDNs (Providence Hospital)/(Daughters of
Charity GTD) VMIG1 $ 9,010,000
------------------------------------------------------
2,000,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly
VRDNs (S.P. Hotel Company)/(Amsouth Bank N.A.,
Birmingham LOC) VMIG1 2,000,000
------------------------------------------------------
3,140,000 Birmingham, AL Special Care Facilities Financing
Authority, Capital Improvement Revenue Bonds (Series
1995) Weekly VRDNs (Methodist Home for the Aging,
AL)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 3,140,000
------------------------------------------------------
2,850,000 Birmingham, AL, GO (Series 1995-A), 5.625% BANs,
1/5/1996 NR(2) 2,852,538
------------------------------------------------------
4,600,000 Birmingham, AL, GO (Series 1992-A) Weekly VRDNs (First
Alabama Bank, Birmingham LOC) A-1+ 4,600,000
------------------------------------------------------
1,000,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills,
Inc.)/(Trust Company Bank, Atlanta LOC) A-1+ 1,000,000
------------------------------------------------------
3,000,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn
(Homewood AL))/(SouthTrust Bank of Alabama, Birmingham
LOC) P-1 3,000,000
------------------------------------------------------
8,500,000 Huntsville, AL Health Care Authority/Health Care
Facilities (Series 1994-A) Weekly VRDNs (MBIA
INS)/(Amsouth Bank N.A., Birmingham LIQ) A-1 8,500,000
------------------------------------------------------
1,700,000 Huntsville, AL Health Care Authority/Health Care
Facilities, Health Care Facilities Revenue Bonds
(Series 1994-B) Weekly VRDNs (MBIA INS)/(Amsouth Bank
N.A., Birmingham LIQ) A-1 1,700,000
------------------------------------------------------
300,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project
(Huntsville, AL))/(First Alabama Bank, Birmingham LOC) A-1+ 300,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
ALABAMA--CONTINUED
------------------------------------------------------
$ 1,500,000 Marshall County, AL, Special Obligation School
Refunding Warrant (Series 1994) Weekly VRDNs (Marshall
County, AL Board of Education)/
(First Alabama Bank, Birmingham LOC) A-1+ $ 1,500,000
------------------------------------------------------
3,000,000 Mobile, AL IDB, PCR (Series 1993-B) Weekly VRDNs
(Alabama Power Co.) A-1 3,000,000
------------------------------------------------------
995,000 Tuscaloosa County, AL Port Authority (Series 1989-A)
Weekly VRDNs (Capstone Hotel Ltd.)/(SouthTrust Bank of
Alabama, Birmingham LOC) P-1 995,000
------------------------------------------------------
1,630,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series
1994) Weekly VRDNs (Harco, Inc.)/
(Amsouth Bank N.A., Birmingham LOC) P-1 1,630,000
------------------------------------------------------ --------------
Total 43,227,538
------------------------------------------------------ --------------
ARIZONA--1.9%
------------------------------------------------------
15,000,000 Apache County, AZ IDA (Series 1983-A) Weekly
VRDNs (Tucson Electric Power Co.)/(Barclays Bank PLC,
London LOC) A-1+ 15,000,000
------------------------------------------------------
4,000,000 Arizona Health Facilities Authority, Variable Rate
Demand Bond Weekly VRDNs (University Physicians,
Inc.)/
(Bank One, Arizona N.A. LOC) P-1 4,000,000
------------------------------------------------------
4,400,000 Maricopa County, AZ (Series 1994-F) Daily VRDNs
(Arizona Public Service Corp.)/(Bank of America NT and
SA, San Francisco LOC) A-1 4,400,000
------------------------------------------------------
6,000,000 Pima County, AZ IDA, Floating Rate Notes (Series A)
Weekly VRDNs (Tucson Electric Power Co.)/
(Barclays Bank PLC, London LOC) P-1 6,000,000
------------------------------------------------------ --------------
Total 29,400,000
------------------------------------------------------ --------------
ARKANSAS--0.1%
------------------------------------------------------
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson
Co.)/(PNC Bank, N.A. LOC) VMIG1 1,000,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
CALIFORNIA--16.6%
------------------------------------------------------
$27,350,000 California School Cash Reserve Program Authority,
(Series 1995-A), 4.75% TRANs (MBIA Insured), 7/3/1996 SP-1+ $ 27,577,341
------------------------------------------------------
35,000,000 California State, Revenue Anticipation Warrants
(Series C), 5.75% RANs (Bank of America NT and SA, San
Francisco, Bank of Nova Scotia, Toronto, Banque
Nationale de Paris, Canadian Imperial Bank of
Commerce, Toronto, Chemical Bank, New York, Citibank,
N.A., Credit Suisse, Zurich, Morgan Guaranty Trust
Co., New York, National Westminster Bank, PLC, London,
Societe Generale North America, Inc., Sumitomo Bank
Ltd., Osaka, Swiss Bank Corp., Westdeusche Landesbank
Girozentrale & Toronto Dominion Bank LOCs) SP-1 35,274,544
------------------------------------------------------
16,100,000 California State, Revenue Anticipation Warrants
(Series C), 5.75% RANs (FGIC INS), 4/25/1996 SP-1 16,355,231
------------------------------------------------------
40,350,000 California Student Loan, Revenue Bonds (Series A)
Weekly VRDNs (Student Loan Marketing
Association LOC) P-1 40,350,000
------------------------------------------------------
10,000,000 Clipper CAL Tax-Exempt Trust, (94-2) Weekly VRDNs
(California State)/(State Street Bank and Trust Co.
LIQ)/(Bank of America NT and SA, San Francisco, Bank
of Nova Scotia, Toronto, Banque Nationale de Paris,
Canadian Imperial Bank of Commerce, Toronto, Chemical
Bank, Citibank N.A. and Credit Suisse LOCs) VMIG1 10,000,000
------------------------------------------------------
12,995,000 Kern County, CA Board of Education, 4.50% TRANs,
6/28/1996 SP-1+ 13,057,372
------------------------------------------------------
10,000,000 Los Angeles County, CA Unified School District, 4.50%
TRANs, 7/3/1996 SP-1+ 10,071,011
------------------------------------------------------
41,000,000 Los Angeles County, CA, 4.50% TRANs (Bank of America
NT and SA, San Francisco, Credit Suisse, Zurich,
Morgan Guaranty Trust Co., New York, Swiss Bank Corp.,
New York, NY, Union Bank of Switzerland, Zurich and
Westdeutsche Landesbank Girozentrale LOCs), 7/1/1996 SP-1 41,266,907
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
CALIFORNIA--CONTINUED
------------------------------------------------------
$23,500,000 Los Angeles, CA Wastewater System, Tender Option
Certificates (Series 1995-H) Weekly VRDNs (MBIA
INS)/(Swiss Bank Corp., New York, NY LIQ) A-1+ $ 23,500,000
------------------------------------------------------
10,000,000 Orange County, CA IDA, (Series 1991-A) Weekly VRDNs
(The Lakes)/(Citibank, N.A. LOC) A-1 10,000,000
------------------------------------------------------
6,000,000 Orange County, CA Local Transportation Authority,
Sales Tax Revenue Notes, 4.00% CP (Industrial Bank of
Japan Ltd., Tokyo LOC), Mandatory Tender 9/13/1995 A-1 6,000,000
------------------------------------------------------
5,000,000 San Francisco, CA Unified School District (Series
1994), 4.75% TRANs, 8/24/1995 SP-1+ 5,001,722
------------------------------------------------------
7,000,000 Temecula Valley Unified School District, CA, 4.50%
TRANs, 7/5/1996 SP-1+ 7,031,142
------------------------------------------------------
10,800,000 Ventura County, CA Community College District, 4.50%
TRANs, 6/28/1996 SP-1+ 10,851,836
------------------------------------------------------ --------------
Total 256,337,106
------------------------------------------------------ --------------
COLORADO--1.8%
------------------------------------------------------
25,000,000 Arapahoe County, CO Improvement Authority, (Series G),
4.45% TOBs (Swiss Bank Corp., New York, NY LOC),
Optional Tender 8/31/1995 SP-1+ 25,000,000
------------------------------------------------------
2,625,000 Denver (City & County), CO, 5.20% TOBs (Blake Street
Compendium)/(Norwest Bank Minnesota, Minneapolis LOC),
Optional Tender 12/15/1995 A-1+ 2,625,000
------------------------------------------------------ --------------
Total 27,625,000
------------------------------------------------------ --------------
CONNECTICUT--2.6%
------------------------------------------------------
39,780,000 Connecticut State Transportation Infrastructure
Authority Weekly VRDNs (Connecticut State)/(Industrial
Bank of Japan Ltd., Tokyo LOC) A-1 39,780,000
------------------------------------------------------ --------------
DELAWARE--0.3%
------------------------------------------------------
5,100,000 Delaware Health Facilities Authority, (Series
1985-BTP-19A) Weekly VRDNs (Medical Center of
Delaware)/
(MBIA INS)/(Bankers Trust Co., New York LIQ) NR(1) 5,100,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--13.7%
------------------------------------------------------
$ 3,000,000 Alachua County, FL Health Facilities Authority, Health
Facility Revenue Bonds (Series 1991) Weekly VRDNs
(North Florida Retirement Village)/(Kredietbank N.V.,
Brussels LOC) A-1 $ 3,000,000
------------------------------------------------------
3,000,000 Broward County, FL Health Facility Authority, Revenue
Bonds Weekly VRDNs (John Knox Village of Florida)/
(First Union National Bank, Charlotte, N.C. LOC) P-1 3,000,000
------------------------------------------------------
4,470,000 Dade County, FL IDA Weekly VRDNs (Futernick
Associates, Inc.)/(First Union National Bank,
Charlotte, N.C. LOC) P-1 4,470,000
------------------------------------------------------
1,200,000 Dade County, FL IDA, Industrial Development Revenue
Refunding Bonds Weekly VRDNs (Continental Farms,
Inc.)/(Nationsbank of North Carolina N.A. LOC) P-1 1,200,000
------------------------------------------------------
2,000,000 Dade County, FL Water & Sewer System Weekly VRDNs
(FGIC INS)/(Industrial Bank of Japan Ltd., Tokyo LIQ) A-1 2,000,000
------------------------------------------------------
12,490,000 Florida HFA Weekly VRDNs (Cornerstone)/
(PNC Bank, N.A. LOC) A-1 12,490,000
------------------------------------------------------
1,400,000 Florida HFA, Multi-Family Housing Revenue Refunding
Bonds (Series 1985-D) Weekly VRDNs (Park Colony
Project, FL)/(Mellon Bank NA, Pittsburgh LOC) A-1 1,400,000
------------------------------------------------------
3,285,000 Florida State Board of Education Administration,
(CR49)/(Series 1989-A), 4.00% TOBs (Citibank, N.A.
LIQ), Optional Tender 12/1/1995 NR(2) 3,285,000
------------------------------------------------------
4,235,000 Florida State Board of Education Administration,
(CR49D), 4.00% TOBs (Citibank, N.A. LIQ),
Optional Tender 12/1/1995 NR(2) 4,235,000
------------------------------------------------------
1,210,000 Florida State Board of Education Administration,
(CR55), (Series 1989-A), 4.00% TOBs (Citibank, N.A.
LIQ), Optional Tender 12/1/1995 NR(2) 1,210,000
------------------------------------------------------
17,975,000 Hillsborough County, FL IDA, PCR Refunding Bonds
(Series 1994) Weekly VRDNs (Tampa Electric
Company)/(MBIA INS) NR(2) 17,975,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--CONTINUED
------------------------------------------------------
$22,000,000 Jacksonville Electric Authority, FL, Tender Option
Certificates (Series 1995-C) Weekly VRDNs (Bayerische
Hypotheken-Und Wechsel-Bank Ag LOC) A-1+ $ 22,000,000
------------------------------------------------------
9,200,000 Jacksonville, FL PCR, (Series 1994), 4.10% CP (Florida
Power & Light Co.), Mandatory Tender 12/14/1995 VMIG1 9,200,000
------------------------------------------------------
6,100,000 Jacksonville, FL, Hospital Revenue Bonds (Series 1989)
Weekly VRDNs (Baptist Medical Center, AL)/
(First Union National Bank, Charlotte, N.C. LOC) VMIG1 6,100,000
------------------------------------------------------
4,200,000 Key West, FL Community Redevelopment Authority Weekly
VRDNs (Pier House Joint Venture)/
(PNC Bank, N.A. LOC) P-1 4,200,000
------------------------------------------------------
4,000,000 Lake Shore, FL Hospital Authority, Health Facilities
Revenue Bonds (Series 1991) Weekly VRDNs (Lake Shore
Hospital)/(Kredietbank N.V., Brussels LOC) P-1 4,000,000
------------------------------------------------------
2,925,000 Lee County, FL IDA, Health Care Facilities Revenue
Bonds Weekly VRDNs (Hope Hospice Project)/
(Sun Bank N.A., Orlando LOC) VMIG1 2,925,000
------------------------------------------------------
5,000,000 Lee County, FL, (PA-104) Weekly VRDNs (MBIA
INS)/(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 5,000,000
------------------------------------------------------
5,410,000 Manatee County, FL HFA Weekly VRDNs (Carriage
Club)/(Mellon Bank N.A., Pittsburgh LOC) VMIG1 5,410,000
------------------------------------------------------
1,900,000 Manatee County, FL HFA, Multi-Family Mortgage Revenue
Refunding Bonds (Series 1989-A) Weekly VRDNs
(Hampton/McGuire L.P.)/(Nationsbank of
North Carolina N.A. LOC) A-1 1,900,000
------------------------------------------------------
6,230,000 Orange County, FL HFA, Multifamily Housing Revenue
Bonds Weekly VRDNs (Sutton Place. Ltd. Project)/
(Nationsbank of Maryland, N.A. LOC) A-1+ 6,230,000
------------------------------------------------------
1,715,000 Palm Beach County, FL IDA Weekly VRDNs
(Palm Beach Jewish Community Campus)/
(Sun Bank N.A., Orlando LOC) A-1+ 1,715,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--CONTINUED
------------------------------------------------------
$ 5,500,000 Pinellas County, FL Health Facility Authority Daily
VRDNs (Chemical Bank, New York LOC) A-1 $ 5,500,000
------------------------------------------------------
10,870,000 Pinellas County, FL Health Facility Authority, (Series
1987) Weekly VRDNs (St. Mark Village
Project)/(Nationsbank of Florida, N.A. LOC) A-1 10,870,000
------------------------------------------------------
1,000,000 Pinellas County, FL Health Facility Authority, Multi-
Family Mortage Revenue Refunding Bonds (Series 1989-A)
Weekly VRDNs (McGregor Place Project)/(Nationsbank of
North Carolina N.A. LOC) A-1 1,000,000
------------------------------------------------------
4,325,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs
(IMC Fertilizer, Inc. Project)/(Rabobank Nederland,
Utrecht LOC) P-1 4,325,000
------------------------------------------------------
9,300,000 Sarasota County, FL Public Hospital District, 4.15% CP
(Sarasota Memorial Hospital), Mandatory Tender
8/23/1995 A-1 9,300,000
------------------------------------------------------
9,100,000 Sarasota County, FL Public Hospital District, 4.15% CP
(Sarasota Memorial Hospital), Mandatory Tender
8/29/1995 A-1 9,100,000
------------------------------------------------------
1,800,000 Seminole County, FL Health Facility Authority IDA,
(Series 1991) Weekly VRDNs (Florida Living Nursing
Center)/(Barnett Bank of Central Florida, Orlando LOC) VMIG1 1,800,000
------------------------------------------------------
10,900,000 Southeast Volusia Hospital District, Revenue Bonds
(Series 1995) Weekly VRDNs (Bert Fish Medical Center,
FL)/(SouthTrust Bank of Alabama, Birmingham LOC) A-1 10,900,000
------------------------------------------------------
7,000,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly
VRDNs (Savannahs Hospital)/(Nationsbank of Georgia,
N.A. LOC) P-1 7,000,000
------------------------------------------------------
4,800,000 Sunshine State Governmental Finance Commission, FL,
3.90% CP (Morgan Guaranty Trust Co., New York,
National Westminster Bank, PLC, London and Union Bank
of Switzerland, Zurich LOCs), Mandatory Tender
10/27/1995 VMIG1 4,800,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--CONTINUED
------------------------------------------------------
$ 9,750,000 Suwannee County, FL, (Series 1989) Weekly VRDNs
(Advent Christian Village Project)/(Barnett Bank of
Jacksonville LOC) VMIG1 $ 9,750,000
------------------------------------------------------
6,400,000 Titusville, FL, Multi-Purpose Revenue Bonds,
Installment 1995A Weekly VRDNs (Banque Paribas, Paris
LOC) VMIG1 6,400,000
------------------------------------------------------
6,065,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's
Landing)/(Mellon Bank N.A., Pittsburgh LOC) P-1 6,065,000
------------------------------------------------------
1,675,000 Volusia County, FL IDA Weekly VRDNs (Crane Cams)/
(First Interstate Bank of Arizona, N.A. LOC) P-1 1,675,000
------------------------------------------------------ --------------
Total 211,430,000
------------------------------------------------------ --------------
GEORGIA--1.5%
------------------------------------------------------
4,000,000 Atlanta, GA, Urban Residential Finance Authority,
Residential Construction Revenue Bonds, Summerhill
Neighborhood Bond Program (Series 1995) Weekly VRDNs
(First Union National Bank, Charlotte, N.C. LOC) A-1 4,000,000
------------------------------------------------------
1,500,000 Coweta County, GA IDA Daily VRDNs (Eckerds
Warehouse)/(Union Bank of Switzerland, Zurich LOC) A-1 1,500,000
------------------------------------------------------
1,600,000 DeKalb County, GA, (Series 1992) Weekly VRDNs
(American Cancer Society, GA)/(Trust Company Bank,
Atlanta LOC) P-1 1,600,000
------------------------------------------------------
3,395,000 Georgia State, HFA, Single Family Mortgage Revenue,
3.90% TOBs (Citibank, N.A. LIQ), Optional Tender
9/1/1995 NR(2) 3,395,000
------------------------------------------------------
12,000,000 Municipal Electric Authority of Georgia, (Series B),
4.25% TOBs, Optional Tender 6/1/1996 VMIG1 12,014,500
------------------------------------------------------
1,000,000 Rockdale County, GA Hospital Authority, Revenue
Anticipation Certificates (Series 1994) Weekly VRDNs
(Trust Company Bank, Atlanta LOC) VMIG1 1,000,000
------------------------------------------------------ --------------
Total 23,509,500
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
HAWAII--0.4%
------------------------------------------------------
$ 6,400,000 Hawaii State, Puttable Tax Exempt Receipts (Series 31)
Weekly VRDNs (Morgan Guaranty Trust Co.,
New York LIQ) VMIG1 $ 6,400,000
------------------------------------------------------ --------------
ILLINOIS--8.1%
------------------------------------------------------
13,000,000 Chicago O'Hare International Airport, Second Lien
Revenue Bonds, (Series 1984-B), 3.80% TOBs (Westpac
Banking, Corp., Sydney LOC), Optional Tender 1/1/1996 A-1 13,000,000
------------------------------------------------------
3,000,000 Illinois Development Finance Authority Weekly VRDNs
(Newlywed Food)/(Mellon Bank N.A., Pittsburgh LOC) A-1 3,000,000
------------------------------------------------------
5,000,000 Illinois Development Finance Authority, (Series
1993-A) Weekly VRDNs (Loyola Academy)/(Northern Trust
Co., Chicago, IL LOC) A-1+ 5,000,000
------------------------------------------------------
3,000,000 Illinois Educational Facilities Authority (Series
1992) Weekly VRDNs (Depaul University)/(Sanwa Bank
Ltd, Osaka LOC) VMIG1 3,000,000
------------------------------------------------------
7,500,000 Illinois Educational Facilities Authority, 4.25% CP
(Field Museum of Natural History)/(Sanwa Bank Ltd,
Osaka LOC), Mandatory Tender 9/7/1995 VMIG1 7,500,000
------------------------------------------------------
11,500,000 Illinois Educational Facilities Authority, Adjustable
Demand Revenue Bonds (Series 1995) Weekly VRDNs
(Ravinia Festival Association, IL)/(NBD Bank, N.A.,
Detroit, MI LOC) A-1+ 11,500,000
------------------------------------------------------
5,000,000 Illinois Health Facilities Authority Weekly VRDNs
(OSF Health Care Systems) VMIG1 5,000,000
------------------------------------------------------
14,000,000 Illinois Health Facilities Authority (Series 1989A)
Weekly VRDNs (Methodist Health Services Corp.)/
(Fuji Bank, Ltd., Tokyo LOC) A-1 14,000,000
------------------------------------------------------
14,940,000 Illinois Health Facilities Authority, 4.00% CP (Rush-
Presbyterian St. Luke's Medical)/(Northern Trust Co.,
Chicago, IL LIQ), Mandatory Tender 10/19/1995 A-1+ 14,940,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
ILLINOIS--CONTINUED
------------------------------------------------------
$35,000,000 Illinois Health Facilities Authority (Series 1985-B)
Weekly VRDNs (OSF Health Care Systems)/
(Bank of America Illinois LIQ) VMIG1 $ 35,000,000
------------------------------------------------------
13,900,000 Illinois State Toll Highway Authority, (Series 1993-B)
Weekly VRDNs (MBIA INS)/(Societe Generale,
Paris LIQ) VMIG1 13,900,000
------------------------------------------------------ --------------
Total 125,840,000
------------------------------------------------------ --------------
INDIANA--1.3%
------------------------------------------------------
1,115,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/
(National City Bank, Kentucky LOC) P-1 1,115,000
------------------------------------------------------
17,000,000 Indiana Bond Bank, Advance Funding Program Notes
(Series 1995-A3) VRNs, 1/10/1996 SP-1+ 17,000,000
------------------------------------------------------
2,445,000 Indiana Health Facilities Finance Authority
Rehabilitation Center Weekly VRDNs (Crossroads
Rehabilitation Center)/(Bank One, Indianapolis, IN
LOC) A-1 2,445,000
------------------------------------------------------ --------------
Total 20,560,000
------------------------------------------------------ --------------
KENTUCKY--0.1%
------------------------------------------------------
1,530,000 Boone County, KY, Adjustable Rate Revenue Refunding
Bonds Weekly VRDNs (Spring Meadow Associates)/
(Huntington National Bank, Columbus, OH LOC) P-1 1,530,000
------------------------------------------------------ --------------
LOUISIANA--1.9%
------------------------------------------------------
10,000,000 Louisiana PFA, 3.80% CP (Our Lady of Lake)/(FSA INS),
Mandatory Tender 8/21/1995 A-1 10,000,000
------------------------------------------------------
9,865,000 Louisiana PFA, Advance Funding Notes (Series 1994-B),
4.60% TANs (Orleans Parish, LA School Board),
8/31/1995 SP-1+ 9,868,120
------------------------------------------------------
9,130,000 St. James Parish, LA, PCR Refunding Bonds (Series
1988-B), 4.20% CP (Texaco, Inc.), Mandatory Tender
8/8/1995 A-1 9,130,000
------------------------------------------------------ --------------
Total 28,998,120
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
MARYLAND--3.6%
------------------------------------------------------
$24,200,000 Maryland Health & Higher Educational Facilities
Authority (Series 1985-B) Weekly VRDNs
(First National Bank of Chicago LOC) VMIG1 $ 24,200,000
------------------------------------------------------
4,000,000 Maryland Health & Higher Educational Facilities
Authority, Revenue Bonds (Series 1985-A) Weekly VRDNs
(Dai-Ichi Kangyo Bank Ltd., Tokyo LOC) VMIG1 4,000,000
------------------------------------------------------
10,110,000 Maryland State Community Development Administration
(Series 1987-2), 4.35% TOBs (First National Bank of
Chicago LIQ), Optional Tender 10/1/1995 NR(3) 10,110,000
------------------------------------------------------
300,000 Maryland State IDFA Kelly Springfield Tire, Economic
Development Revenue Refunding Bonds (Series 1994)
Weekly VRDNs (Johnson Controls, Inc.) VMIG1 300,000
------------------------------------------------------
2,000,000 Montgomery County, MD EDA Weekly VRDNs
(Howard Hughes Medical Center) A-1+ 2,000,000
------------------------------------------------------
9,300,000 Montgomery County, MD EDA Weekly VRDNs
(U.S. Pharmacopeial Convention Facility)/
(Chemical Bank, New York LOC) VMIG1 9,300,000
------------------------------------------------------
6,000,000 Montgomery County, MD Housing Opportunities
Commission, Single Family Mortgage Revenue Bonds
(Series 1994-C), 4.35% TOBs, Optional Tender
10/25/1995 VMIG1 6,000,000
------------------------------------------------------ --------------
Total 55,910,000
------------------------------------------------------ --------------
MASSACHUSETTS--0.9%
------------------------------------------------------
13,300,000 Massachusetts HEFA (Series I) Weekly VRDNs
(Harvard University) A-1+ 13,300,000
------------------------------------------------------ --------------
MICHIGAN--1.3%
------------------------------------------------------
4,350,000 Dearborn, MI Economic Development Corp. (Series 1991)
Weekly VRDNs (Oakbrook Common Project)/
(Mellon Bank N.A., Pittsburgh LOC) A-1 4,350,000
------------------------------------------------------
2,000,000 Michigan Municipal Bond Authority, 4.50% RANs,
7/3/1996 SP-1+ 2,012,412
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
MICHIGAN--CONTINUED
------------------------------------------------------
$ 1,700,000 Michigan State Hospital Finance Authority, Hospital
Equipment Loan Program Bonds (Series A) Weekly VRDNs
(First of America Bank Corp. LOC) VMIG1 $ 1,700,000
------------------------------------------------------
9,500,000 Michigan State, GO Notes, 5.00% TRANs, 9/29/1995 SP-1+ 9,511,856
------------------------------------------------------
2,695,000 Ottawa County, MI Economic Development Corp., Limited
Obligation Revenue Bonds (Series 1995-B) Weekly VRDNs
(Sunset Manor, Inc. Project)/
(Old Kent Bank & Trust Co., Grand Rapids LOC) A-1 2,695,000
------------------------------------------------------ --------------
Total 20,269,268
------------------------------------------------------ --------------
MINNESOTA--3.4%
------------------------------------------------------
2,065,000 Dakota County, MN Housing & Redevelopment Authority,
Multifamily Rental Housing Revenue Bonds (Series
1994-B) Weekly VRDNs (Westwood Ridge Senior Residence
Project)/(First Bank N.A., Minneapolis LOC) A-1 2,065,000
------------------------------------------------------
5,040,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995)
Weekly VRDNs (Walker Methodist Health Center, Inc.
Project)/(First Bank N.A., Minneapolis LOC) A+ 5,040,000
------------------------------------------------------
10,000,000 Minneapolis, MN (Series 1993) Weekly VRDNs
(Market Square Real Estate, Inc.)/(Norwest Bank
Minnesota, Minneapolis LOC) A-1+ 10,000,000
------------------------------------------------------
4,105,000 Minnesota State HFA, Single Family Mortgage Bonds
(Series 1993-T), 4.85% TOBs (Bayerische Landesbank
Girozentrale LOC), Mandatory Tender 12/14/1995 A-1+ 4,105,000
------------------------------------------------------
7,400,000 Minnesota State Higher Education Coordinating Board,
Supplemental Student Loan Program Variable Rate
Refunding Revenue Bonds (Series 1994-A) Weekly VRDNs
(Norwest Bank Minnesota, Minneapolis LIQ) VMIG1 7,400,000
------------------------------------------------------
19,500,000 Rochester, MN Health Care Facility Authority Weekly
VRDNs (Mayo Foundation) VMIG1 19,500,000
------------------------------------------------------
800,000 St. Paul, MN Port Authority (Series 1991) Weekly VRDNs
(West Gate Office)/(First Bank N.A., Minneapolis LOC) A-1 800,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
MINNESOTA--CONTINUED
------------------------------------------------------
$ 4,200,000 University of Minnesota (Series G), 4.50% TOBs
(Regents of University of Minnesota), Optional Tender
8/1/1995 VMIG1 $ 4,200,000
------------------------------------------------------ --------------
Total 53,110,000
------------------------------------------------------ --------------
MISSISSIPPI--1.2%
------------------------------------------------------
1,770,000 Hinds County, MS (Series 1991) Weekly VRDNs (North
State St. Project)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 1,770,000
------------------------------------------------------
16,600,000 Jackson County, MS Port Facility Daily VRDNs
(Chevron U.S.A., Inc.) P-1 16,600,000
------------------------------------------------------ --------------
Total 18,370,000
------------------------------------------------------ --------------
MISSOURI--0.3%
------------------------------------------------------
4,200,000 Poplar Bluff, MO IDA (Series 1987) Weekly VRDNs (Gates
Rubber Co.)/(NBD Bank, N.A., Detroit, MI LOC) A-1+ 4,200,000
------------------------------------------------------ --------------
NEW JERSEY--1.1%
------------------------------------------------------
11,600,000 Essex County, NJ, (Series 1995-B), 5.00% TANs
(Chemical Bank, New York LOC), 8/22/1995 MIG1 11,605,114
------------------------------------------------------
5,000,000 Mercer County, NJ, 5.50% BANs, 9/20/1995 NR(2) 5,003,952
------------------------------------------------------ --------------
Total 16,609,066
------------------------------------------------------ --------------
NEW YORK--8.9%
------------------------------------------------------
16,600,000 New York City Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds (Series 1995-A) Daily
VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ) A-1+ 16,600,000
------------------------------------------------------
29,800,000 New York Metropolitan Transportation Authority Weekly
VRDNs (Bank of Tokyo Ltd., Tokyo, Industrial Bank of
Japan Ltd., Tokyo, J.P. Morgan Wilmington, Delaware,
Mitsubishi Bank Ltd, Tokyo, Morgan Guaranty Trust Co.,
New York, National Westminster Bank, PLC, London and
Sumitomo Bank Ltd., Osaka LOCs) A-1 29,800,000
------------------------------------------------------
29,900,000 New York State Local Government Assistance Corp.
(Series D), 3.20% TOBs (Societe Generale, Paris LOC),
Mandatory Tender 8/2/1995 A-1+ 29,900,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------------------
$21,600,000 New York State Local Government Assistance Corp.
(Series E), 3.20% TOBs (Canadian Imperial Bank of
Commerce, Toronto LOC), Mandatory Tender 8/2/1995 A-1+ $ 21,600,000
------------------------------------------------------
23,110,000 Niagara County, NY IDA, Solid Waste Disposal Facility
Revenue Bonds (Series 1994-A) Weekly VRDNs (American
Ref-Fuel Company)/(Air Products & Chemicals, Inc. and
Browning-Ferris Industries,
Inc. GTDs) A-1 23,110,000
------------------------------------------------------
14,000,000 Suffolk County, NY, 1995 (RA Series I), 5.25% TANs
(Westdeutsche Landesbank Girozentrale LOC), 8/15/1995 SP-1+ 14,002,354
------------------------------------------------------
3,800,000 Syracuse, NY IDA Syracuse, Multi Modal Civic
Facility Revenue Bonds (Series 1993) Daily VRDNs
(Syracuse University Eggers Halls Project)/
(Morgan Guaranty Trust Co., New York LOC) A-1+ 3,800,000
------------------------------------------------------ --------------
Total 138,812,354
------------------------------------------------------ --------------
NORTH CAROLINA--4.4%
------------------------------------------------------
30,000,000 Charlotte-Mecklenburg Hospital Authority, NC, Loan
Participation Certificates (1995) VRNs (The Charlotte-
Mecklenburg Hospital Authority), 5/22/1996 NR(2) 30,000,000
------------------------------------------------------
4,320,000 Fayetteville, NC Public Works Commission, Revenue
Refunding Bonds Weekly VRDNs (FGIC INS)/
(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 4,320,000
------------------------------------------------------
4,000,000 Greensboro, NC, Certificates of Participation 1994
Equipment Project Weekly VRDNs (Greensboro, NC Center
City Corp.)/(Wachovia Bank of Georgia N.A., Atlanta
LIQ) A-1+ 4,000,000
------------------------------------------------------
15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) A-1 15,000,000
------------------------------------------------------
745,000 NCNB Pooled Tax-Exempt Trust (Series 1990-A)
Weekly VRDNs (NCNB Tax Exempt Trust 1990a)/
(Nationsbank of North Carolina N.A. LOC) P-1 745,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
------------------------------------------------------
$ 4,700,000 North Carolina Medical Care Commission Hospital,
Revenue Bonds (Series 1994) Weekly VRDNs
(Hugh Chatam Memorial/Rutherford Hospitals)/
(First Union National Bank, Charlotte, N.C. LOC) VMIG1 $ 4,700,000
------------------------------------------------------
10,000,000 North Carolina Municipal Power Agency No 1, 3.50% CP
(Bank of America NT and SA, San Francisco, Canadian
Imperial Bank of Commerce, Toronto, First Union
National Bank, Charlotte, N.C., Industrial Bank of
Japan Ltd., Tokyo, Morgan Guaranty Trust Co., New York
and Nationsbank of North Carolina N.A. LIQs),
Mandatory Tender 10/26/1995 P-1 10,000,000
------------------------------------------------------ --------------
Total 68,765,000
------------------------------------------------------ --------------
OHIO--5.7%
------------------------------------------------------
2,700,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs
(Visiting Nurses)/(National City Bank, Cleveland, OH
LOC) A-1 2,700,000
------------------------------------------------------
2,585,000 Ashland County, OH Health Care Weekly VRDNs (Brethren
Care, Inc.)/(National City Bank,
Cleveland, OH LOC) P-1 2,585,000
------------------------------------------------------
8,850,000 Cincinnati City School District, OH, 5.80% TANs,
12/29/1995 NR(3) 8,863,842
------------------------------------------------------
1,100,000 Cuyahoga County, OH Hospital Authority Weekly VRDNs
(St. Lukes Hospital)/(First National Bank of Chicago
LOC) VMIG1 1,100,000
------------------------------------------------------
2,650,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking
Co.)/(Society National Bank, Cleveland, OH LOC) P-1 2,650,000
------------------------------------------------------
2,000,000 Dayton, OH, Revenue Refunding Bonds (Series 1993-E)
Weekly VRDNs (Emery Air Freight Corp.)/(Mellon Bank
N.A., Pittsburgh LOC) VMIG1 2,000,000
------------------------------------------------------
6,100,000 Franklin County, OH Hospital Facility Authority
Weekly VRDNs (Riverside United Methodist Hospital)/
(National City Bank, Cleveland, OH LOC) VMIG1 6,100,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$12,400,000 Hamilton County, OH Hospital Facilities Authority,
Revenue Bonds (Series 1986-A) Weekly VRDNs
(Good Samaritan Hospital) A-1 $ 12,400,000
------------------------------------------------------
2,500,000 Kettering, OH IDA Weekly VRDNs (Center-Plex
Venture)/(Society National Bank, Cleveland, OH LOC) P-1 2,500,000
------------------------------------------------------
2,885,000 Lorain County, OH, Health Facilities Revenue Bonds
(Series 1992-A) Weekly VRDNs (Elyria United Methodist
Home)/(Fifth Third Bancorp LOC) P-1 2,885,000
------------------------------------------------------
2,000,000 Lucas County, OH IDA (Series 1991) Weekly
VRDNs (Ohio Citizens Bank)/(National City Bank,
Cleveland, OH LOC) P-1 2,000,000
------------------------------------------------------
295,000 Lucas County, OH, Hospital Improvement Revenue Weekly
VRDNs (Sunshine Children's Home)/
(National City Bank, Cleveland, OH LOC) P-1 295,000
------------------------------------------------------
4,300,000 Lucas County, OH, Hospital Refunding Revenue
Bonds Weekly VRDNs (Riverside Hospital, OH)/
(Huntington National Bank, Columbus, OH LOC) P-1 4,300,000
------------------------------------------------------
6,900,000 Mahoning County, OH, Housing Revenue Bonds (Series
1995) Weekly VRDNs (Copeland Oaks Project)/(Bank One,
Akron, N.A. LOC) A-1+ 6,900,000
------------------------------------------------------
2,210,000 Marion County, OH Hospital Authority (Series 1991),
4.25% TOBs (Marion County, OH Pooled Hospital
Program)/(Bank One, Columbus, N.A. LOC)
Optional Tender 11/1/1995 A-1+ 2,210,000
------------------------------------------------------
4,250,000 Mayfield Village, OH IDA Weekly VRDNs (Beta Campus
Co.)/(First Union National Bank, Charlotte, N.C. LOC) P-1 4,250,000
------------------------------------------------------
5,400,000 Medina County, OH, Solid Waste Disposal Revenue Bonds
(Series 1995) Weekly VRDNs (Valley City
Steel Company Project)/(Society National Bank,
Cleveland, OH LOC) P-1 5,400,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 800,000 Montgomery County, OH IDA Weekly VRDNs
(Center-Plex Venture)/(Society National Bank,
Cleveland, OH LOC) P-1 $ 800,000
------------------------------------------------------
1,700,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited
Partnership)/(Huntington National Bank, Columbus, OH
LOC) A-1 1,700,000
------------------------------------------------------
4,700,000 Muskingham County, OH Hospital Facilities
Authority Weekly VRDNs (Bethesda Care System)/
(National City Bank, Columbus, OH LOC) VMIG1 4,700,000
------------------------------------------------------
1,800,000 Ohio State Air Quality Development Authority (Series
1998-A) Weekly VRDNs (PPG Industries, Inc.) P-1 1,800,000
------------------------------------------------------
4,080,000 Ohio State Water Development Authority,
Pure Water Refunding & Improvement Bonds
(Series PA-56) Weekly VRDNs (AMBAC INS)/
(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 4,080,000
------------------------------------------------------
1,800,000 Rickenbacker, OH Port Authority (Series 1992)
Weekly VRDNs (Rickenbacker Holdings, Inc.)/
(Bank One, Columbus, N.A. LOC) P-1 1,800,000
------------------------------------------------------
1,900,000 Seneca County, OH Hospital Facility Authority Weekly
VRDNs (St. Francis Home)/(National City Bank,
Cleveland, OH LOC) VMIG1 1,900,000
------------------------------------------------------
800,000 Solon, OH, IDA Weekly VRDNs (Solon Industries)/
(Society National Bank, Cleveland, OH LOC) P-1 800,000
------------------------------------------------------
1,100,000 Twinsburg, OH IDA Weekly VRDNs (Care of Massara)/
(Society National Bank, Cleveland, OH LOC) P-1 1,100,000
------------------------------------------------------ --------------
Total 87,818,842
------------------------------------------------------ --------------
OKLAHOMA--0.6%
------------------------------------------------------
10,000,000 Holdenville, OK Industrial Authority, Correctional
Facility Revenue Bonds (Series 1995) Weekly VRDNs
(Holdenville, OK Correctional Facility)/
(First Union National Bank, Charlotte, N.C. LOC) VMIG1 10,000,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OREGON--0.1%
------------------------------------------------------
$ 2,000,000 Oregon Health, Housing & Cultural Facilities
Authority, Adjustable Rate Revenue Bonds (Series
1995-A) Weekly VRDNs (Guide Dogs for the Blind, Inc.
Project)/
(Banque Nationale de Paris LOC) MIG1 $ 2,000,000
------------------------------------------------------ --------------
PENNSYLVANIA--2.5%
------------------------------------------------------
5,000,000 Allegheny County, PA IDA, PCR (Series 1992-A),
4.80% TOBs (Duquesne Light Power Co.)/
(Canadian Imperial Bank of Commerce, Toronto LOC),
Mandatory Tender 10/17/1995 P-1 5,000,000
------------------------------------------------------
4,000,000 Beaver County, PA IDA, PCR Refunding Bonds (1994
Series), 4.50% CP (Duquesne Light Power Co.)/ (Swiss
Bank Corp., New York, NY LOC), Mandatory Tender
10/10/1995 A-1+ 4,000,000
------------------------------------------------------
6,300,000 Delaware County, PA PCR (Series C), 4.00% CP
(Philadelphia Electric Co.)/(FGIC INS), Mandatory
Tender 10/6/1995 A-1+ 6,300,000
------------------------------------------------------
4,200,000 Delaware County, PA Weekly VRDNs
(American College)/(PNC Bank, N.A. LOC) P-1 4,200,000
------------------------------------------------------
5,600,000 Erie County, PA Hospital Authority Weekly VRDNs (St.
Vincent Health System)/(Fuji Bank, Ltd., Tokyo LOC) A-1 5,600,000
------------------------------------------------------
1,300,000 Pennsylvania State Higher Education Facilities
Authority Weekly VRDNs (Carnegie-Mellon University) A-1 1,300,000
------------------------------------------------------
6,000,000 Philadelphia, PA, GO (Series 1990), 3.90% CP (Fuji
Bank, Ltd., Tokyo LOC), Mandatory Tender 8/23/1995 A-1 6,000,000
------------------------------------------------------
3,690,000 Pittsburgh, PA, GO Unlimited Bonds (Series B), 4.10%
BONDs (AMBAC INS), 9/1/1995 NR(1) 3,690,300
------------------------------------------------------
500,000 Sayre, PA, Health Care Facilities Authority Weekly
VRDNs (VHA of Pennsylvania)/(AMBAC INS)/
(First National Bank of Chicago LIQ) A-1 500,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
------------------------------------------------------
$ 2,000,000 Washington County, PA Hospital Authority Weekly VRDNs
(Keystone Diversified Management Corp.)/
(Mellon Bank N.A., Pittsburgh LOC) A-1 $ 2,000,000
------------------------------------------------------ --------------
Total 38,590,300
------------------------------------------------------ --------------
PUERTO RICO--0.6%
------------------------------------------------------
10,000,000 Puerto Rico Government Development Bank Weekly VRDNs
(Credit Suisse, Zurich LOC) A-1+ 10,000,000
------------------------------------------------------ --------------
SOUTH CAROLINA--0.5%
------------------------------------------------------
3,000,000 Greenville, SC Hospital System Board of Trustees,
(Series 1993-B) Weekly VRDNs (Greenville County, SC
Hospital Authority) A-1+ 3,000,000
------------------------------------------------------
5,000,000 University of South Carolina, Athletic Facilities
(Series 1995), 5.25% BANs, 3/1/1996 NR(3) 5,031,756
------------------------------------------------------ --------------
Total 8,031,756
------------------------------------------------------ --------------
TENNESSEE--3.1%
------------------------------------------------------
10,000,000 Chattanooga, TN HEFA Weekly VRDNs
(Mccallie School)/(Trust Company Bank, Atlanta LOC) A-1+ 10,000,000
------------------------------------------------------
22,400,000 Chattanooga, TN HEFA Weekly VRDNs
(Sisken Hospital)/(Sumitomo Bank Ltd., Osaka LOC) A-1 22,400,000
------------------------------------------------------
2,200,000 Metropolitan Nashville Tennessee AA, (Series 1993)
Weekly VRDNs (FGIC INS)/(Societe Generale, Paris LIQ) A-1+ 2,200,000
------------------------------------------------------
7,330,000 Nashville and Davidson County, NC IDB, Metropolitan
Government Revenue Bonds (Series 1995) Weekly VRDNs
(YMCA Projects)/(Nationsbank of Tennessee LOC) P-1 7,330,000
------------------------------------------------------
6,200,000 Roane, TN IDB, (Series 1982) Monthly VRDNs
(Fortafil Fibers, Inc. Project)/(ABN AMRO Bank N.V.,
Amsterdam LOC) A-1+ 6,200,000
------------------------------------------------------ --------------
Total 48,130,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
TEXAS--2.0%
------------------------------------------------------
$ 4,325,000 Dallas, TX (Series C), 3.90% TOBs, Optional Tender
6/15/1996 NR(1) $ 4,325,000
------------------------------------------------------
11,050,000 Harris County, TX HFDC (Series B), 3.90% TOBs
(San Jacinto Methodist Hospital)/(Morgan Guaranty
Trust Co., New York LOC), Mandatory Tender 9/1/1995 A-1+ 11,050,000
------------------------------------------------------
7,000,000 Harris County, TX, Toll Road Unlimited Tax & Sub Lien
Revenue (Series 1994-G) Weekly VRDNs A-1+ 7,000,000
------------------------------------------------------
2,000,000 Montgomery County, TX IDC, IDRB Weekly VRDNs (Houston
Area Research Center)/(Morgan Guaranty Trust Co., New
York LOC) A-1+ 2,000,000
------------------------------------------------------
1,920,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol,
Inc.)/(Nationsbank of North Carolina N.A. LOC) P-1 1,920,000
------------------------------------------------------
5,000,000 Texas State Department of Housing & Community
Affairs, Multifamily Housing Revenue Refunding Bonds
(Remington Hill Series B) Weekly VRDNs
(Trust Company Bank, Atlanta LOC) A-1+ 5,000,000
------------------------------------------------------ --------------
Total 31,295,000
------------------------------------------------------ --------------
UTAH--1.3%
------------------------------------------------------
19,670,000 Utah State HFA, Single Family Mortgage
Bonds (Series 1995-1) Weekly VRDNs
(Westdeutsche Landesbank Girozentrale LIQ) A-1+ 19,670,000
------------------------------------------------------ --------------
VIRGINIA--0.8%
------------------------------------------------------
1,500,000 Arlington County, VA Weekly VRDNs
(Ballston Public Parking)/(Citibank, NA LOC) A-1+ 1,500,000
------------------------------------------------------
6,200,000 Henrico County, VA IDA, (Series 1994) Daily
VRDNs (Virginia United Methodist Homes, Inc.)/
(Nationsbank of Virginia, N.A. LOC) VMIG1 6,200,000
------------------------------------------------------
5,000,000 Virginia State Housing Development Authority, (Series
1993-A), 3.45% TOBs, Mandatory Tender 9/12/1995 A-1+ 5,000,000
------------------------------------------------------ --------------
Total 12,700,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
WASHINGTON--0.4%
------------------------------------------------------
$ 5,535,000 Pierce County, WA (Series 1995), 4.50% TANs,
12/27/1995 NR(3) $ 5,537,682
------------------------------------------------------ --------------
WEST VIRGINIA--0.5%
------------------------------------------------------
7,960,000 Cabell County Commission, WV, Life Care Facilities
Multi-Option Adjustable Rate Revenue Bonds (Series
1995) Weekly VRDNs (Foster Foundation)/(Huntington
National Bank, Columbus, OH LOC) A-1 7,960,000
------------------------------------------------------ --------------
WISCONSIN--2.3%
------------------------------------------------------
1,100,000 Seymour, WI IDA Weekly VRDNs (Beatrice Cheese,
Inc.)/(Bank of New York, New York LOC) P-1 1,100,000
------------------------------------------------------
34,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical
Center)/(Sumitomo Bank Ltd., Osaka LOC) VMIG1 34,000,000
------------------------------------------------------ --------------
Total 35,100,000
------------------------------------------------------ --------------
WYOMING--0.4%
------------------------------------------------------
1,125,000 Natrona County, WY, Hospital Revenue, 5.85% TOBs
(Grainger W.W., Inc.), Optional Tender 12/1/1995 P-1 1,125,000
------------------------------------------------------
4,400,000 Sweetwater County, WY IDA, PCR Refunding
Bonds (Series 1990-A) Weekly VRDNs (Pacificorp)/
(Credit Suisse, Zurich LOC) VMIG1 4,400,000
------------------------------------------------------ --------------
Total 5,525,000
------------------------------------------------------ --------------
NO STATE--1.4%
------------------------------------------------------
10,000,000 Clipper Tax Exempt Trust (Series 1993-1) Weekly VRDNs
(State Street Bank and Trust Co. LIQ) A-1+ 10,000,000
------------------------------------------------------
6,440,583 LaSalle National Bank Leasetops Trust (Series 1994-B)
Weekly VRDNs (Lasalle National Bank, Chicago LIQ)/
(Lasalle National Bank, Chicago LOC) A-1+ 6,440,583
------------------------------------------------------
1,934,628 LaSalle National Bank Tax-Exempt Trust (Series 1993-A)
Weekly VRDNs (Lasalle National Bank, Chicago LIQ)/
(Lasalle National Bank, Chicago LOC) A-1+ 1,934,628
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
NO STATE--CONTINUED
------------------------------------------------------
$ 3,040,000 Merrill Lynch Puttable FLOATs/RITES Trust
(Series PP2) Weekly VRDNs VMIG1 $ 3,040,000
------------------------------------------------------ --------------
Total 21,415,211
------------------------------------------------------ --------------
TOTAL INVESTMENTS, AT AMORTIZED COST(A) $1,553,856,743
------------------------------------------------------ --------------
</TABLE>
(a) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($1,547,473,496) at July 31, 1995.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
BANs --Bond Anticipation Notes
CDA --Community Development Administration
CP --Commercial Paper
EDA --Economic Development Authority
FGIC --Financial Guaranty Insurance Company
FSA --Financial Security Assurance
GO --General Obligation
GTDs --Guarantees
HEFA --Health and Education Facilities Authority
HFA --Housing Finance Authority
HFDC --Health Facility Development Corporation
IDA --Industrial Development Authority
IDB --Industrial Development Bond
IDC --Industrial Development Corporation
IDR --Industrial Development Revenue
IDRB --Industrial Development Revenue Bonds
IDFA --Industrial Development Finance Authority
IFA --Industrial Finance Authority
INS --Insurance
LIQ --Liquidity Agreement
LOCs --Letter(s) of Credit
LOC --Letter of Credit
MBIA --Municipal Bond Investors Assurance
PCR --Pollution Control Revenue
PFA --Public Facility Authority
PLC --Public Limited Company
RANs --Revenue Anticipation Notes
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
TRANs --Tax and Revenue Anticipation Notes
VHA --Veterans Housing Administration
VRDNs --Variable Rate Demand Notes
VRNs --Variable Rate Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $1,553,856,743
- ------------------------------------------------------------------------------
Cash 933,463
- ------------------------------------------------------------------------------
Income receivable 9,103,589
- ------------------------------------------------------------------------------ --------------
Total assets 1,563,893,795
- ------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------
Payable for investments purchased $11,518,668
- ----------------------------------------------------------------
Income distribution payable 4,394,007
- ----------------------------------------------------------------
Accrued expenses 507,624
- ---------------------------------------------------------------- -----------
Total liabilities 16,420,299
- ------------------------------------------------------------------------------ --------------
NET ASSETS for 1,547,494,731 shares outstanding $1,547,473,496
- ------------------------------------------------------------------------------ --------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Paid in capital 1,547,494,731
- ------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (21,235)
- ------------------------------------------------------------------------------ --------------
Total Net Assets $1,547,473,496
- ------------------------------------------------------------------------------ --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
($1,295,457,878 / 1,295,478,935 shares outstanding) $1.00
- ------------------------------------------------------------------------------ --------------
Institutional Service Shares:
($252,015,618 / 252,015,796 shares outstanding) $1.00
- ------------------------------------------------------------------------------ --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Interest $44,477,152
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $2,318,805
- ----------------------------------------------------------------------
Administrative personnel and services fee 877,668
- ----------------------------------------------------------------------
Custodian fees 110,650
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 43,928
- ----------------------------------------------------------------------
Directors'/Trustees' fees 5,202
- ----------------------------------------------------------------------
Auditing fees 12,951
- ----------------------------------------------------------------------
Legal fees 16,729
- ----------------------------------------------------------------------
Portfolio accounting fees 128,996
- ----------------------------------------------------------------------
Shareholder services fee--Institutional Shares 2,520,292
- ----------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 378,074
- ----------------------------------------------------------------------
Share registration costs 337,930
- ----------------------------------------------------------------------
Printing and postage 28,823
- ----------------------------------------------------------------------
Insurance premiums 15,420
- ----------------------------------------------------------------------
Taxes 22
- ----------------------------------------------------------------------
Miscellaneous 14,033
- ---------------------------------------------------------------------- ----------
Total expenses 6,809,523
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------
Waiver of investment advisory fee $1,581,210
- ----------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 2,520,292 4,101,502
- ---------------------------------------------------------- ---------- ----------
Net expenses 2,708,021
- ----------------------------------------------------------------------------------- -----------
Net investment income 41,769,131
- ----------------------------------------------------------------------------------- -----------
Net realized gain (loss) on investments (1,395)
- ----------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $41,767,736
- ----------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 41,769,131 $ 16,807,122
- -------------------------------------------------------------
Net realized gain/loss on investments ($40 net gain and
$19,220 net loss, respectively, as computed for federal
income tax purposes) (1,395) 3,986
- ------------------------------------------------------------- --------------- ---------------
Change in assets resulting from operations 41,767,736 16,811,108
- ------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------
Distributions from net investment income:
- -------------------------------------------------------------
Institutional Shares (36,508,581) (16,783,291)
- -------------------------------------------------------------
Institutional Service Shares (5,260,550) (23,831)
- ------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions
to shareholders (41,769,131) (16,807,122)
- ------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------
Proceeds from sale of Shares 7,385,500,551 3,346,441,976
- -------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of distributions declared 2,286,899 460,949
- -------------------------------------------------------------
Cost of Shares redeemed (6,655,215,610) (2,986,122,657)
- ------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 732,571,840 360,780,268
- ------------------------------------------------------------- --------------- ---------------
Change in net assets 732,570,445 360,784,254
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 814,903,051 454,118,797
- ------------------------------------------------------------- --------------- ---------------
End of period $ 1,547,473,496 $ 814,903,051
- ------------------------------------------------------------- --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations 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 are only those of Tax-Free Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(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.
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 to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At July 31, 1995, the Fund, for federal tax purposes, had a capital loss
carryforward of $19,800, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
- --------------- -----------------
<S> <C>
2001 $580
2002 $19,220
</TABLE>
Additionally, net capital losses of $1,435 attributable to security
transactions incurred after October 31, 1994 are treated as arising on
August 1, 1995, the first day of the Fund's next taxable year.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $1,547,494,731.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------
INSTITUTIONAL SHARES 1995 1994
- -------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 6,466,015,512 3,312,845,513
- --------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 1,609,289 460,949
- --------------------------------------------------------------
Shares redeemed (5,961,920,320) (2,977,674,630)
- -------------------------------------------------------------- -------------- --------------
Net change resulting from Institutional Share transactions 505,704,481 335,631,832
- -------------------------------------------------------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------
INSTITUTIONAL SERVICE SHARES 1995 1994*
- -------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 919,485,039 33,596,463
- --------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 677,610 --
- --------------------------------------------------------------
Shares redeemed (693,295,290) (8,448,027)
- -------------------------------------------------------------- -------------- --------------
Net change resulting from Institutional Service Share
transactions 226,867,359 25,148,436
- -------------------------------------------------------------- -------------- --------------
Net change resulting from share transactions 732,571,840 360,780,268
- -------------------------------------------------------------- -------------- --------------
</TABLE>
* For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
(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 .20 of 1% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This 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 0.25 of
1% of daily average net assets of the Fund for the period. This fee is to obtain
certain personal 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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
INTERFUND TRANSACTIONS--During the year ended July 31, 1995, the Fund engaged in
purchase and sale transactions with funds that have a common investment adviser
(or affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $2,395,054,229 and $2,346,849,715,
respectively.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust'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 of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST:
(Tax-Free Obligations Fund)
We have audited the accompanying statement of assets and liabilities of Tax-Free
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Tax-Free Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Tax-Free Obligations Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-FREE
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
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 60934N401
9110207A-IS (9/95)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Tax-Free Obligations Fund (the "Fund")
offered by this prospectus represent interests in a diversified portfolio of
Money Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in municipal securities to provide
dividend income exempt from federal regular income tax 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 Combined Statement of Additional Information dated
September 30, 1995, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Combined 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
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Municipal Securities 6
Investment Risks 6
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Distribution of Shares 8
Administration of the Fund 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
Subaccounting Services 10
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 13
- ------------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 15
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 45
- ------------------------------------------------------
ADDRESSES 46
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................ None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)...................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)........... None
Exchange Fee................................................................. None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)............................................. 0.06%
12b-1 Fee.................................................................... None
Total Other Expenses......................................................... 0.39%
Shareholder Services Fee................................................... 0.25%
Total Operating Expenses(2)............................................. 0.45%
</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 0.20%.
(2) The total operating expenses would have been 0.59% absent the voluntary
waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------------------
<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........ $5 $14 $25 $57
</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.
TAX-FREE OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants, on page 45.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------
1995 1994(A)
------ ------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- ---------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------
Net investment income 0.03 0.002
- ---------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------
Distributions from net investment income (0.03) (0.002)
- --------------------------------------------------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- --------------------------------------------------------------- ------ ------
TOTAL RETURN (B) 3.39% 0.18%
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------
Expenses 0.45% 0.39%(c)
- ---------------------------------------------------------------
Net investment income 3.48% 3.04%(c)
- ---------------------------------------------------------------
Expense waiver/reimbursement (d) 0.14% 0.15%(c)
- ---------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------
Net assets, end of period (000 omitted) $252,016 $25,148
- ---------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 5, 1994 (date of initial public
investment) to July 31, 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
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to the Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Service Shares of the Fund, which are designed primarily for financial
institutions as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio investing primarily in short-term
municipal securities. The Fund may not be a suitable investment for retirement
plans since it invests in municipal securities. A minimum initial investment of
$25,000 is required.
Eligibility for investment in the Fund is contingent upon an investor
accumulating and maintaining a minimum aggregate investment of $200,000,000 in
Federated funds within a twelve-month period. For this purpose, 1) an investor
is defined as a financial institution or its collective customers, including
affiliate financial institutions and their collective customers, or other
institutions that are determined to qualify by Federated Securities Corp., and
2) Federated funds are those mutual funds which are distributed by Federated
Securities Corp., or are advised by or administered by investment advisers or
administrators affiliated with Federated Securities Corp. ("Federated Funds").
An investor's minimum investment will be calculated by combining all accounts
the investor maintains with the Federated Funds, which includes the Fund.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide dividend income exempt from
federal regular income tax consistent with stability of principal. This
investment objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities (as defined below) maturing in 13 months or less. As a
matter of investment policy, which cannot be changed without shareholder
approval, at least 80% of the Fund's annual interest income will be exempt from
federal regular income tax. (Federal regular income tax does not include the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations.) The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the Trustees
without
shareholder approval. Shareholders will be notified before any material change
in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued by
or on behalf of states, territories, and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of qualified
legal counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:
- tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
- bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
- municipal commercial paper and other short-term notes;
- variable rate demand notes;
- municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases; and
- participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the Fund
with the right to tender the security for repurchase at its stated principal
amount plus accrued interest. Such securities typically bear interest at a rate
that is intended to cause the securities to trade at par. The interest rate may
float or be adjusted at regular intervals (ranging from daily to annually), and
is normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit the
Fund to tender the security at the time of each interest rate adjustment or at
other fixed intervals. See "Demand Features." The Fund treats variable rate
demand notes as maturing on the later of the date of the next interest rate
adjustment or the date on which the Fund may next tender the security for
repurchase.
PARTICIPATION INTERESTS. The Fund may purchase interests in Municipal Securities
from financial institutions such as commercial and investment banks, savings and
loan associations, and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests or any
other form of indirect ownership that allows the Fund to treat the income from
the investment as exempt from federal income tax. The Fund invests in these
participation interests in order to obtain credit enhancement or demand features
that would not be available through direct ownership of the underlying Municipal
Securities.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities. They may take the form of a lease, an installment purchase contract,
a conditional sales contract, or a participation interest in any of the above.
RATINGS. The securities in which the Fund invests must be rated in the highest
short-term rating category by one or more nationally recognized statistical
rating organizations ("NRSROs") or be of comparable quality to securities having
such ratings. An NRSRO's highest rating category is deter-
mined without regard for sub-categories and gradations. For example, securities
rated SP-1+ or SP-1 by Standard & Poor's Ratings Group ("S&P"), MIG-1 by Moody's
Investors Service, Inc. ("Moody's"), or FIN-1+ or FIN-1 by Fitch Investors
Service, Inc. ("Fitch") are all considered rated in the highest short-term
rating category. The Fund will follow applicable regulations in determining
whether a security rated by more than one NRSRO can be treated as being in the
highest short-term rating category; currently, such securities must be rated by
two NRSROs in their highest rating category. See "Regulatory Compliance."
Further, the Fund has the ability but no present intention of investing in:
securities that are rated MIG-2 or VMIG-2 by Moody's, SP-2 by S&P, FIN-2 by
Fitch; tax-exempt commercial paper that is rated P-2 by Moody's, A-2 by S&P, or
F-2 by Fitch; and securities that are not rated but are deemed to be of
comparable quality. Shareholders will be notified should the Fund decide to
invest in these securities.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund typically
evaluates the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. However,
credit-enhanced securities will not be treated as having been issued by the
credit enhancer for diversification purposes, unless the Fund has invested more
than 10% of its assets in securities issued, guaranteed or otherwise credit
enhanced by the credit enhancer, in which case the securities will be treated as
having been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
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.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities, to 10% of its total assets.
TEMPORARY INVESTMENTS. From time to time, when the investment adviser determines
that market conditions call for a temporary defensive posture, the Fund may
invest in tax-exempt or taxable securities such as: obligations issued by or on
behalf of municipal or corporate issuers having the same quality characteristics
as described above; obligations issued or guaranteed by the U.S. government, its
agencies, or instrumentalities; instruments issued by a U.S. branch of a
domestic bank or other deposit institution having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment; and
repurchase agreements (arrangements in which the organization selling the Fund a
temporary investment agrees at the time of sale to repurchase it at a mutually
agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention to do so. However, the interest from certain Municipal
Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering;
the maturity of the obligations; and the rating of the issue. The ability of the
Fund to achieve its investment objective also depends on the continuing ability
of the issuers of Municipal Securities and participation interests, or the
credit enhancers of either, to meet their obligations for the payment of
interest and principal when due. In addition, from time to time, the supply of
Municipal Securities acceptable for purchase by the Fund could become limited.
The Fund may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or whose
issuers are located in the same state. Sizable investments in these Municipal
Securities could involve an increased risk to the Fund should any of these
related projects or facilities experience financial difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings. This investment limitation
cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for exercising all the
Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee equal
to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. 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 Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
SHAREHOLDER SERVICES. 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 the Institutional Service Shares, computed at an
annual rate, to obtain 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 fees to perform shareholder services based upon shares owned by
their clients or customers. 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.
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>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
- --------------------- -----------------------------------
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. 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
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (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
- --------------------------------------------------------------------------------
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: Tax-Free Obligations Fund-Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Tax-Free Obligations
Fund -- Institutional Service Shares to: Federated Services Company, Tax-Free
Obligations Fund, 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.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment is $25,000. Eligibility for investment in the
Fund is contingent upon an investor accumulating and maintaining a minimum
aggregate investment of $200,000,000 in Federated Funds within a twelve-month
period.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts. However,
certain financial institutions may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent charges a fee based on the level of subaccounting services
rendered. Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They may also
charge fees for other services provided which may be related to the ownership of
Fund shares. This prospectus should, therefore, be read together with any
agreement between the customer and the financial institution with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.
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.
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: Tax-Free Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Tax-Free Obligations Fund -- Institutional Service
Shares; shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight 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.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 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.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000, or the
aggregate investment in Federated Funds falls below the required minimum of
$200,000,000 to be maintained from and after twelve months from account opening,
due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, 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.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act
of 1986, dividends representing net interest earned on certain "private
activity" bonds issued after August 7, 1986, may be included in calculating the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations. The Fund may purchase all types of municipal bonds,
including private activity bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the 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. Because interest received by the Fund may not be
exempt from all state and local income taxes, shareholders may be required to
pay state and local taxes on dividends received from the Fund. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity and are subject to
a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and
tax-equivalent yield for shares. The performance figures will be calculated
separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that would have to be earned to equal
the tax-exempt yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
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.
TAX-FREE OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- ------------------------------------------------------ ------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--100.4%
- ----------------------------------------------------------------------
ALABAMA--2.8%
------------------------------------------------------
$ 9,010,000 Alabama Special Care Facilities Finance Authority
Weekly VRDNs (Providence Hospital)/(Daughters of
Charity GTD) VMIG1 $ 9,010,000
------------------------------------------------------
2,000,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly
VRDNs (S.P. Hotel Company)/(Amsouth Bank N.A.,
Birmingham LOC) VMIG1 2,000,000
------------------------------------------------------
3,140,000 Birmingham, AL Special Care Facilities Financing
Authority, Capital Improvement Revenue Bonds (Series
1995) Weekly VRDNs (Methodist Home for the Aging,
AL)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 3,140,000
------------------------------------------------------
2,850,000 Birmingham, AL, GO (Series 1995-A), 5.625% BANs,
1/5/1996 NR(2) 2,852,538
------------------------------------------------------
4,600,000 Birmingham, AL, GO (Series 1992-A) Weekly VRDNs (First
Alabama Bank, Birmingham LOC) A-1+ 4,600,000
------------------------------------------------------
1,000,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills, Inc.)/
(Trust Company Bank, Atlanta LOC) A-1+ 1,000,000
------------------------------------------------------
3,000,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn
(Homewood AL))/(SouthTrust Bank of Alabama, Birmingham
LOC) P-1 3,000,000
------------------------------------------------------
8,500,000 Huntsville, AL Health Care Authority/Health Care
Facilities (Series 1994-A) Weekly VRDNs (MBIA
INS)/(Amsouth Bank N.A., Birmingham LIQ) A-1 8,500,000
------------------------------------------------------
1,700,000 Huntsville, AL Health Care Authority/Health Care
Facilities, Health Care Facilities Revenue Bonds
(Series 1994-B) Weekly VRDNs (MBIA INS)/(Amsouth Bank
N.A., Birmingham LIQ) A-1 1,700,000
------------------------------------------------------
300,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project
(Huntsville, AL))/(First Alabama Bank, Birmingham LOC) A-1+ 300,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
ALABAMA--CONTINUED
------------------------------------------------------
$ 1,500,000 Marshall County, AL, Special Obligation School
Refunding Warrant (Series 1994) Weekly VRDNs (Marshall
County, AL Board of Education)/
(First Alabama Bank, Birmingham LOC) A-1+ $ 1,500,000
------------------------------------------------------
3,000,000 Mobile, AL IDB, PCR (Series 1993-B) Weekly VRDNs
(Alabama Power Co.) A-1 3,000,000
------------------------------------------------------
995,000 Tuscaloosa County, AL Port Authority (Series 1989-A)
Weekly VRDNs (Capstone Hotel Ltd.)/(SouthTrust Bank of
Alabama, Birmingham LOC) P-1 995,000
------------------------------------------------------
1,630,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series
1994) Weekly VRDNs (Harco, Inc.)/
(Amsouth Bank N.A., Birmingham LOC) P-1 1,630,000
------------------------------------------------------ --------------
Total 43,227,538
------------------------------------------------------ --------------
ARIZONA--1.9%
------------------------------------------------------
15,000,000 Apache County, AZ IDA (Series 1983-A) Weekly VRDNs
(Tucson Electric Power Co.)/(Barclays Bank PLC,
London LOC) A-1+ 15,000,000
------------------------------------------------------
4,000,000 Arizona Health Facilities Authority, Variable Rate
Demand Bond Weekly VRDNs (University Physicians,
Inc.)/
(Bank One, Arizona N.A. LOC) P-1 4,000,000
------------------------------------------------------
4,400,000 Maricopa County, AZ (Series 1994-F) Daily VRDNs
(Arizona Public Service Corp.)/(Bank of America NT
and SA, San Francisco LOC) A-1 4,400,000
------------------------------------------------------
6,000,000 Pima County, AZ IDA, Floating Rate Notes (Series A)
Weekly VRDNs (Tucson Electric Power Co.)/
(Barclays Bank PLC, London LOC) P-1 6,000,000
------------------------------------------------------ --------------
Total 29,400,000
------------------------------------------------------ --------------
ARKANSAS--0.1%
------------------------------------------------------
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson Co.)/
(PNC Bank, N.A. LOC) VMIG1 1,000,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
CALIFORNIA--16.6%
------------------------------------------------------
$27,350,000 California School Cash Reserve Program Authority,
(Series 1995-A), 4.75% TRANs (MBIA Insured), 7/3/1996 SP-1+ $ 27,577,341
------------------------------------------------------
35,000,000 California State, Revenue Anticipation Warrants
(Series C), 5.75% RANs (Bank of America NT and SA, San
Francisco, Bank of Nova Scotia, Toronto, Banque
Nationale de Paris, Canadian Imperial Bank of
Commerce, Toronto, Chemical Bank, New York, Citibank,
N.A., Credit Suisse, Zurich, Morgan Guaranty Trust
Co., New York, National Westminster Bank, PLC, London,
Societe Generale North America, Inc., Sumitomo Bank
Ltd., Osaka, Swiss Bank Corp., Westdeusche Landesbank
Girozentrale & Toronto Dominion Bank LOCs) SP-1 35,274,544
------------------------------------------------------
16,100,000 California State, Revenue Anticipation Warrants
(Series C), 5.75% RANs (FGIC INS), 4/25/1996 SP-1 16,355,231
------------------------------------------------------
40,350,000 California Student Loan, Revenue Bonds (Series A)
Weekly VRDNs (Student Loan Marketing
Association LOC) P-1 40,350,000
------------------------------------------------------
10,000,000 Clipper CAL Tax-Exempt Trust, (94-2) Weekly VRDNs
(California State)/(State Street Bank and Trust Co.
LIQ)/(Bank of America NT and SA, San Francisco, Bank
of Nova Scotia, Toronto, Banque Nationale de Paris,
Canadian Imperial Bank of Commerce, Toronto, Chemical
Bank, Citibank N.A. and Credit Suisse LOCs) VMIG1 10,000,000
------------------------------------------------------
12,995,000 Kern County, CA Board of Education, 4.50% TRANs,
6/28/1996 SP-1+ 13,057,372
------------------------------------------------------
10,000,000 Los Angeles County, CA Unified School District, 4.50%
TRANs, 7/3/1996 SP-1+ 10,071,011
------------------------------------------------------
41,000,000 Los Angeles County, CA, 4.50% TRANs (Bank of America
NT and SA, San Francisco, Credit Suisse, Zurich,
Morgan Guaranty Trust Co., New York, Swiss Bank Corp.,
New York, NY, Union Bank of Switzerland, Zurich and
Westdeutsche Landesbank Girozentrale LOCs), 7/1/1996 SP-1 41,266,907
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
CALIFORNIA--CONTINUED
------------------------------------------------------
$23,500,000 Los Angeles, CA Wastewater System, Tender Option
Certificates (Series 1995-H) Weekly VRDNs (MBIA INS)/
(Swiss Bank Corp., New York, NY LIQ) A-1+ $ 23,500,000
------------------------------------------------------
10,000,000 Orange County, CA IDA, (Series 1991-A) Weekly VRDNs
(The Lakes)/(Citibank, N.A. LOC) A-1 10,000,000
------------------------------------------------------
6,000,000 Orange County, CA Local Transportation Authority,
Sales Tax Revenue Notes, 4.00% CP (Industrial Bank of
Japan Ltd., Tokyo LOC), Mandatory Tender 9/13/1995 A-1 6,000,000
------------------------------------------------------
5,000,000 San Francisco, CA Unified School District (Series
1994), 4.75% TRANs, 8/24/1995 SP-1+ 5,001,722
------------------------------------------------------
7,000,000 Temecula Valley Unified School District, CA, 4.50%
TRANs, 7/5/1996 SP-1+ 7,031,142
------------------------------------------------------
10,800,000 Ventura County, CA Community College District, 4.50%
TRANs, 6/28/1996 SP-1+ 10,851,836
------------------------------------------------------ --------------
Total 256,337,106
------------------------------------------------------ --------------
COLORADO--1.8%
------------------------------------------------------
25,000,000 Arapahoe County, CO Improvement Authority, (Series G),
4.45% TOBs (Swiss Bank Corp., New York, NY LOC),
Optional Tender 8/31/1995 SP-1+ 25,000,000
------------------------------------------------------
2,625,000 Denver (City & County), CO, 5.20% TOBs (Blake Street
Compendium)/(Norwest Bank Minnesota, Minneapolis LOC),
Optional Tender 12/15/1995 A-1+ 2,625,000
------------------------------------------------------ --------------
Total 27,625,000
------------------------------------------------------ --------------
CONNECTICUT--2.6%
------------------------------------------------------
39,780,000 Connecticut State Transportation Infrastructure
Authority Weekly VRDNs (Connecticut State)/(Industrial
Bank of Japan Ltd., Tokyo LOC) A-1 39,780,000
------------------------------------------------------ --------------
DELAWARE--0.3%
------------------------------------------------------
5,100,000 Delaware Health Facilities Authority, (Series
1985-BTP-19A) Weekly VRDNs (Medical Center of
Delaware)/(MBIA INS)/(Bankers Trust Co., New York LIQ) NR(1) 5,100,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--13.7%
------------------------------------------------------
$ 3,000,000 Alachua County, FL Health Facilities Authority, Health
Facility Revenue Bonds (Series 1991) Weekly VRDNs
(North Florida Retirement Village)/(Kredietbank N.V.,
Brussels LOC) A-1 $ 3,000,000
------------------------------------------------------
3,000,000 Broward County, FL Health Facility Authority, Revenue
Bonds Weekly VRDNs (John Knox Village of Florida)/
(First Union National Bank, Charlotte, N.C. LOC) P-1 3,000,000
------------------------------------------------------
4,470,000 Dade County, FL IDA Weekly VRDNs
(Futernick Associates, Inc.)/(First Union National
Bank,
Charlotte, N.C. LOC) P-1 4,470,000
------------------------------------------------------
1,200,000 Dade County, FL IDA, Industrial Development Revenue
Refunding Bonds Weekly VRDNs (Continental Farms,
Inc.)/(Nationsbank of North Carolina N.A. LOC) P-1 1,200,000
------------------------------------------------------
2,000,000 Dade County, FL Water & Sewer System Weekly VRDNs
(FGIC INS)/(Industrial Bank of Japan Ltd., Tokyo LIQ) A-1 2,000,000
------------------------------------------------------
12,490,000 Florida HFA Weekly VRDNs (Cornerstone)/
(PNC Bank, N.A. LOC) A-1 12,490,000
------------------------------------------------------
1,400,000 Florida HFA, Multi-Family Housing Revenue Refunding
Bonds (Series 1985-D) Weekly VRDNs (Park Colony
Project, FL)/(Mellon Bank NA, Pittsburgh LOC) A-1 1,400,000
------------------------------------------------------
3,285,000 Florida State Board of Education Administration,
(CR49)/(Series 1989-A), 4.00% TOBs (Citibank, N.A.
LIQ), Optional Tender 12/1/1995 NR(2) 3,285,000
------------------------------------------------------
4,235,000 Florida State Board of Education Administration,
(CR49D), 4.00% TOBs (Citibank, N.A. LIQ),
Optional Tender 12/1/1995 NR(2) 4,235,000
------------------------------------------------------
1,210,000 Florida State Board of Education Administration,
(CR55), (Series 1989-A), 4.00% TOBs (Citibank, N.A.
LIQ), Optional Tender 12/1/1995 NR(2) 1,210,000
------------------------------------------------------
17,975,000 Hillsborough County, FL IDA, PCR Refunding Bonds
(Series 1994) Weekly VRDNs (Tampa Electric
Company)/(MBIA INS) NR(2) 17,975,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--CONTINUED
------------------------------------------------------
$22,000,000 Jacksonville Electric Authority, FL, Tender Option
Certificates (Series 1995-C) Weekly VRDNs (Bayerische
Hypotheken-Und Wechsel-Bank Ag LOC) A-1+ $ 22,000,000
------------------------------------------------------
9,200,000 Jacksonville, FL PCR, (Series 1994), 4.10% CP (Florida
Power & Light Co.), Mandatory Tender 12/14/1995 VMIG1 9,200,000
------------------------------------------------------
6,100,000 Jacksonville, FL, Hospital Revenue Bonds (Series 1989)
Weekly VRDNs (Baptist Medical Center, AL)/
(First Union National Bank, Charlotte, N.C. LOC) VMIG1 6,100,000
------------------------------------------------------
4,200,000 Key West, FL Community Redevelopment Authority Weekly
VRDNs (Pier House Joint Venture)/
(PNC Bank, N.A. LOC) P-1 4,200,000
------------------------------------------------------
4,000,000 Lake Shore, FL Hospital Authority, Health Facilities
Revenue Bonds (Series 1991) Weekly VRDNs
(Lake Shore Hospital)/(Kredietbank N.V., Brussels LOC) P-1 4,000,000
------------------------------------------------------
2,925,000 Lee County, FL IDA, Health Care Facilities Revenue
Bonds Weekly VRDNs (Hope Hospice Project)/
(Sun Bank N.A., Orlando LOC) VMIG1 2,925,000
------------------------------------------------------
5,000,000 Lee County, FL, (PA-104) Weekly VRDNs (MBIA INS)/
(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 5,000,000
------------------------------------------------------
5,410,000 Manatee County, FL HFA Weekly VRDNs
(Carriage Club)/(Mellon Bank N.A., Pittsburgh LOC) VMIG1 5,410,000
------------------------------------------------------
1,900,000 Manatee County, FL HFA, Multi-Family Mortgage Revenue
Refunding Bonds (Series 1989-A) Weekly VRDNs
(Hampton/McGuire L.P.)/(Nationsbank of
North Carolina N.A. LOC) A-1 1,900,000
------------------------------------------------------
6,230,000 Orange County, FL HFA, Multifamily Housing Revenue
Bonds Weekly VRDNs (Sutton Place. Ltd. Project)/
(Nationsbank of Maryland, N.A. LOC) A-1+ 6,230,000
------------------------------------------------------
1,715,000 Palm Beach County, FL IDA Weekly VRDNs
(Palm Beach Jewish Community Campus)/
(Sun Bank N.A., Orlando LOC) A-1+ 1,715,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--CONTINUED
------------------------------------------------------
$ 5,500,000 Pinellas County, FL Health Facility Authority Daily
VRDNs (Chemical Bank, New York LOC) A-1 $ 5,500,000
------------------------------------------------------
10,870,000 Pinellas County, FL Health Facility Authority, (Series
1987) Weekly VRDNs (St. Mark Village
Project)/(Nationsbank of Florida, N.A. LOC) A-1 10,870,000
------------------------------------------------------
1,000,000 Pinellas County, FL Health Facility Authority, Multi-
Family Mortage Revenue Refunding Bonds (Series 1989-A)
Weekly VRDNs (McGregor Place Project)/(Nationsbank of
North Carolina N.A. LOC) A-1 1,000,000
------------------------------------------------------
4,325,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs
(IMC Fertilizer, Inc. Project)/(Rabobank Nederland,
Utrecht LOC) P-1 4,325,000
------------------------------------------------------
9,300,000 Sarasota County, FL Public Hospital District, 4.15% CP
(Sarasota Memorial Hospital), Mandatory Tender
8/23/1995 A-1 9,300,000
------------------------------------------------------
9,100,000 Sarasota County, FL Public Hospital District, 4.15% CP
(Sarasota Memorial Hospital), Mandatory Tender
8/29/1995 A-1 9,100,000
------------------------------------------------------
1,800,000 Seminole County, FL Health Facility Authority IDA,
(Series 1991) Weekly VRDNs (Florida Living Nursing
Center)/(Barnett Bank of Central Florida, Orlando LOC) VMIG1 1,800,000
------------------------------------------------------
10,900,000 Southeast Volusia Hospital District, Revenue Bonds
(Series 1995) Weekly VRDNs (Bert Fish Medical Center,
FL)/(SouthTrust Bank of Alabama, Birmingham LOC) A-1 10,900,000
------------------------------------------------------
7,000,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly
VRDNs (Savannahs Hospital)/(Nationsbank of Georgia,
N.A. LOC) P-1 7,000,000
------------------------------------------------------
4,800,000 Sunshine State Governmental Finance Commission, FL,
3.90% CP (Morgan Guaranty Trust Co., New York,
National Westminster Bank, PLC, London and Union Bank
of Switzerland, Zurich LOCs), Mandatory Tender
10/27/1995 VMIG1 4,800,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
FLORIDA--CONTINUED
------------------------------------------------------
$ 9,750,000 Suwannee County, FL, (Series 1989) Weekly VRDNs
(Advent Christian Village Project)/(Barnett Bank of
Jacksonville LOC) VMIG1 $ 9,750,000
------------------------------------------------------
6,400,000 Titusville, FL, Multi-Purpose Revenue Bonds,
Installment 1995A Weekly VRDNs (Banque Paribas, Paris
LOC) VMIG1 6,400,000
------------------------------------------------------
6,065,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's
Landing)/(Mellon Bank N.A., Pittsburgh LOC) P-1 6,065,000
------------------------------------------------------
1,675,000 Volusia County, FL IDA Weekly VRDNs (Crane Cams)/
(First Interstate Bank of Arizona, N.A. LOC) P-1 1,675,000
------------------------------------------------------ --------------
Total 211,430,000
------------------------------------------------------ --------------
GEORGIA--1.5%
------------------------------------------------------
4,000,000 Atlanta, GA, Urban Residential Finance Authority,
Residential Construction Revenue Bonds, Summerhill
Neighborhood Bond Program (Series 1995) Weekly VRDNs
(First Union National Bank, Charlotte, N.C. LOC) A-1 4,000,000
------------------------------------------------------
1,500,000 Coweta County, GA IDA Daily VRDNs (Eckerds
Warehouse)/(Union Bank of Switzerland, Zurich LOC) A-1 1,500,000
------------------------------------------------------
1,600,000 DeKalb County, GA, (Series 1992) Weekly VRDNs
(American Cancer Society, GA)/(Trust Company Bank,
Atlanta LOC) P-1 1,600,000
------------------------------------------------------
3,395,000 Georgia State, HFA, Single Family Mortgage Revenue,
3.90% TOBs (Citibank, N.A. LIQ), Optional Tender
9/1/1995 NR(2) 3,395,000
------------------------------------------------------
12,000,000 Municipal Electric Authority of Georgia, (Series B),
4.25% TOBs, Optional Tender 6/1/1996 VMIG1 12,014,500
------------------------------------------------------
1,000,000 Rockdale County, GA Hospital Authority, Revenue
Anticipation Certificates (Series 1994) Weekly VRDNs
(Trust Company Bank, Atlanta LOC) VMIG1 1,000,000
------------------------------------------------------ --------------
Total 23,509,500
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
HAWAII--0.4%
------------------------------------------------------
$ 6,400,000 Hawaii State, Puttable Tax Exempt Receipts (Series 31)
Weekly VRDNs (Morgan Guaranty Trust Co.,
New York LIQ) VMIG1 $ 6,400,000
------------------------------------------------------ --------------
ILLINOIS--8.1%
------------------------------------------------------
13,000,000 Chicago O'Hare International Airport, Second Lien
Revenue Bonds, (Series 1984-B), 3.80% TOBs (Westpac
Banking, Corp., Sydney LOC), Optional Tender 1/1/1996 A-1 13,000,000
------------------------------------------------------
3,000,000 Illinois Development Finance Authority Weekly VRDNs
(Newlywed Food)/(Mellon Bank N.A., Pittsburgh LOC) A-1 3,000,000
------------------------------------------------------
5,000,000 Illinois Development Finance Authority, (Series
1993-A) Weekly VRDNs (Loyola Academy)/(Northern Trust
Co., Chicago, IL LOC) A-1+ 5,000,000
------------------------------------------------------
3,000,000 Illinois Educational Facilities Authority (Series
1992) Weekly VRDNs (Depaul University)/(Sanwa Bank
Ltd, Osaka LOC) VMIG1 3,000,000
------------------------------------------------------
7,500,000 Illinois Educational Facilities Authority, 4.25% CP
(Field Museum of Natural History)/(Sanwa Bank Ltd,
Osaka LOC), Mandatory Tender 9/7/1995 VMIG1 7,500,000
------------------------------------------------------
11,500,000 Illinois Educational Facilities Authority, Adjustable
Demand Revenue Bonds (Series 1995) Weekly VRDNs
(Ravinia Festival Association, IL)/(NBD Bank, N.A.,
Detroit, MI LOC) A-1+ 11,500,000
------------------------------------------------------
5,000,000 Illinois Health Facilities Authority Weekly VRDNs
(OSF Health Care Systems) VMIG1 5,000,000
------------------------------------------------------
14,000,000 Illinois Health Facilities Authority (Series 1989A)
Weekly VRDNs (Methodist Health Services Corp.)/
(Fuji Bank, Ltd., Tokyo LOC) A-1 14,000,000
------------------------------------------------------
14,940,000 Illinois Health Facilities Authority, 4.00% CP (Rush-
Presbyterian St. Luke's Medical)/(Northern Trust Co.,
Chicago, IL LIQ), Mandatory Tender 10/19/1995 A-1+ 14,940,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
ILLINOIS--CONTINUED
------------------------------------------------------
$35,000,000 Illinois Health Facilities Authority (Series 1985-B)
Weekly VRDNs (OSF Health Care Systems)/
(Bank of America Illinois LIQ) VMIG1 $ 35,000,000
------------------------------------------------------
13,900,000 Illinois State Toll Highway Authority,
(Series 1993-B) Weekly VRDNs (MBIA INS)/
(Societe Generale, Paris LIQ) VMIG1 13,900,000
------------------------------------------------------ --------------
Total 125,840,000
------------------------------------------------------ --------------
INDIANA--1.3%
------------------------------------------------------
1,115,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/
(National City Bank, Kentucky LOC) P-1 1,115,000
------------------------------------------------------
17,000,000 Indiana Bond Bank, Advance Funding Program Notes
(Series 1995-A3) VRNs, 1/10/1996 SP-1+ 17,000,000
------------------------------------------------------
2,445,000 Indiana Health Facilities Finance Authority
Rehabilitation Center Weekly VRDNs (Crossroads
Rehabilitation Center)/(Bank One, Indianapolis, IN
LOC) A-1 2,445,000
------------------------------------------------------ --------------
Total 20,560,000
------------------------------------------------------ --------------
KENTUCKY--0.1%
------------------------------------------------------
1,530,000 Boone County, KY, Adjustable Rate Revenue Refunding
Bonds Weekly VRDNs (Spring Meadow Associates)/
(Huntington National Bank, Columbus, OH LOC) P-1 1,530,000
------------------------------------------------------ --------------
LOUISIANA--1.9%
------------------------------------------------------
10,000,000 Louisiana PFA, 3.80% CP (Our Lady of Lake)/(FSA INS),
Mandatory Tender 8/21/1995 A-1 10,000,000
------------------------------------------------------
9,865,000 Louisiana PFA, Advance Funding Notes (Series 1994-B),
4.60% TANs (Orleans Parish, LA School Board),
8/31/1995 SP-1+ 9,868,120
------------------------------------------------------
9,130,000 St. James Parish, LA, PCR Refunding Bonds (Series
1988-B), 4.20% CP (Texaco, Inc.), Mandatory Tender
8/8/1995 A-1 9,130,000
------------------------------------------------------ --------------
Total 28,998,120
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
MARYLAND--3.6%
------------------------------------------------------
$24,200,000 Maryland Health & Higher Educational Facilities
Authority (Series 1985-B) Weekly VRDNs
(First National Bank of Chicago LOC) VMIG1 $ 24,200,000
------------------------------------------------------
4,000,000 Maryland Health & Higher Educational Facilities
Authority, Revenue Bonds (Series 1985-A) Weekly VRDNs
(Dai-Ichi Kangyo Bank Ltd., Tokyo LOC) VMIG1 4,000,000
------------------------------------------------------
10,110,000 Maryland State Community Development Administration
(Series 1987-2), 4.35% TOBs (First National Bank of
Chicago LIQ), Optional Tender 10/1/1995 NR(3) 10,110,000
------------------------------------------------------
300,000 Maryland State IDFA Kelly Springfield Tire, Economic
Development Revenue Refunding Bonds (Series 1994)
Weekly VRDNs (Johnson Controls, Inc.) VMIG1 300,000
------------------------------------------------------
2,000,000 Montgomery County, MD EDA Weekly VRDNs
(Howard Hughes Medical Center) A-1+ 2,000,000
------------------------------------------------------
9,300,000 Montgomery County, MD EDA Weekly VRDNs
(U.S. Pharmacopeial Convention Facility)/
(Chemical Bank, New York LOC) VMIG1 9,300,000
------------------------------------------------------
6,000,000 Montgomery County, MD Housing Opportunities
Commission, Single Family Mortgage Revenue Bonds
(Series 1994-C), 4.35% TOBs, Optional Tender
10/25/1995 VMIG1 6,000,000
------------------------------------------------------ --------------
Total 55,910,000
------------------------------------------------------ --------------
MASSACHUSETTS--0.9%
------------------------------------------------------
13,300,000 Massachusetts HEFA (Series I) Weekly VRDNs
(Harvard University) A-1+ 13,300,000
------------------------------------------------------ --------------
MICHIGAN--1.3%
------------------------------------------------------
4,350,000 Dearborn, MI Economic Development Corp. (Series 1991)
Weekly VRDNs (Oakbrook Common Project)/
(Mellon Bank N.A., Pittsburgh LOC) A-1 4,350,000
------------------------------------------------------
2,000,000 Michigan Municipal Bond Authority, 4.50% RANs,
7/3/1996 SP-1+ 2,012,412
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
MICHIGAN--CONTINUED
------------------------------------------------------
$ 1,700,000 Michigan State Hospital Finance Authority, Hospital
Equipment Loan Program Bonds (Series A) Weekly VRDNs
(First of America Bank Corp. LOC) VMIG1 $ 1,700,000
------------------------------------------------------
9,500,000 Michigan State, GO Notes, 5.00% TRANs, 9/29/1995 SP-1+ 9,511,856
------------------------------------------------------
2,695,000 Ottawa County, MI Economic Development Corp., Limited
Obligation Revenue Bonds (Series 1995-B) Weekly VRDNs
(Sunset Manor, Inc. Project)/
(Old Kent Bank & Trust Co., Grand Rapids LOC) A-1 2,695,000
------------------------------------------------------ --------------
Total 20,269,268
------------------------------------------------------ --------------
MINNESOTA--3.4%
------------------------------------------------------
2,065,000 Dakota County, MN Housing & Redevelopment Authority,
Multifamily Rental Housing Revenue Bonds (Series
1994-B) Weekly VRDNs (Westwood Ridge Senior Residence
Project)/(First Bank N.A., Minneapolis LOC) A-1 2,065,000
------------------------------------------------------
5,040,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995)
Weekly VRDNs (Walker Methodist Health Center, Inc.
Project)/(First Bank N.A., Minneapolis LOC) A+ 5,040,000
------------------------------------------------------
10,000,000 Minneapolis, MN (Series 1993) Weekly VRDNs
(Market Square Real Estate, Inc.)/(Norwest Bank
Minnesota, Minneapolis LOC) A-1+ 10,000,000
------------------------------------------------------
4,105,000 Minnesota State HFA, Single Family Mortgage Bonds
(Series 1993-T), 4.85% TOBs (Bayerische Landesbank
Girozentrale LOC), Mandatory Tender 12/14/1995 A-1+ 4,105,000
------------------------------------------------------
7,400,000 Minnesota State Higher Education Coordinating Board,
Supplemental Student Loan Program Variable Rate
Refunding Revenue Bonds (Series 1994-A) Weekly VRDNs
(Norwest Bank Minnesota, Minneapolis LIQ) VMIG1 7,400,000
------------------------------------------------------
19,500,000 Rochester, MN Health Care Facility Authority Weekly
VRDNs (Mayo Foundation) VMIG1 19,500,000
------------------------------------------------------
800,000 St. Paul, MN Port Authority (Series 1991) Weekly VRDNs
(West Gate Office)/(First Bank N.A., Minneapolis LOC) A-1 800,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
MINNESOTA--CONTINUED
------------------------------------------------------
$ 4,200,000 University of Minnesota (Series G), 4.50% TOBs
(Regents of University of Minnesota), Optional Tender
8/1/1995 VMIG1 $ 4,200,000
------------------------------------------------------ --------------
Total 53,110,000
------------------------------------------------------ --------------
MISSISSIPPI--1.2%
------------------------------------------------------
1,770,000 Hinds County, MS (Series 1991) Weekly VRDNs (North
State St. Project)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 1,770,000
------------------------------------------------------
16,600,000 Jackson County, MS Port Facility Daily VRDNs
(Chevron U.S.A., Inc.) P-1 16,600,000
------------------------------------------------------ --------------
Total 18,370,000
------------------------------------------------------ --------------
MISSOURI--0.3%
------------------------------------------------------
4,200,000 Poplar Bluff, MO IDA (Series 1987) Weekly VRDNs (Gates
Rubber Co.)/(NBD Bank, N.A., Detroit, MI LOC) A-1+ 4,200,000
------------------------------------------------------ --------------
NEW JERSEY--1.1%
------------------------------------------------------
11,600,000 Essex County, NJ, (Series 1995-B), 5.00% TANs
(Chemical Bank, New York LOC), 8/22/1995 MIG1 11,605,114
------------------------------------------------------
5,000,000 Mercer County, NJ, 5.50% BANs, 9/20/1995 NR(2) 5,003,952
------------------------------------------------------ --------------
Total 16,609,066
------------------------------------------------------ --------------
NEW YORK--8.9%
------------------------------------------------------
16,600,000 New York City Municipal Water Finance Authority, Water
and Sewer System Revenue Bonds (Series 1995-A) Daily
VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ) A-1+ 16,600,000
------------------------------------------------------
29,800,000 New York Metropolitan Transportation Authority Weekly
VRDNs (Bank of Tokyo Ltd., Tokyo, Industrial Bank of
Japan Ltd., Tokyo, J.P. Morgan Wilmington, Delaware,
Mitsubishi Bank Ltd, Tokyo, Morgan Guaranty Trust Co.,
New York, National Westminster Bank, PLC, London and
Sumitomo Bank Ltd., Osaka LOCs) A-1 29,800,000
------------------------------------------------------
29,900,000 New York State Local Government Assistance Corp.
(Series D), 3.20% TOBs (Societe Generale, Paris LOC),
Mandatory Tender 8/2/1995 A-1+ 29,900,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
NEW YORK--CONTINUED
------------------------------------------------------
$21,600,000 New York State Local Government Assistance Corp.
(Series E), 3.20% TOBs (Canadian Imperial Bank of
Commerce, Toronto LOC), Mandatory Tender 8/2/1995 A-1+ $ 21,600,000
------------------------------------------------------
23,110,000 Niagara County, NY IDA, Solid Waste Disposal Facility
Revenue Bonds (Series 1994-A) Weekly VRDNs (American
Ref-Fuel Company)/(Air Products & Chemicals, Inc. and
Browning-Ferris Industries,
Inc. GTDs) A-1 23,110,000
------------------------------------------------------
14,000,000 Suffolk County, NY, 1995 (RA Series I), 5.25% TANs
(Westdeutsche Landesbank Girozentrale LOC), 8/15/1995 SP-1+ 14,002,354
------------------------------------------------------
3,800,000 Syracuse, NY IDA Syracuse, Multi Modal Civic Facility
Revenue Bonds (Series 1993) Daily VRDNs (Syracuse
University Eggers Halls Project)/(Morgan Guaranty
Trust Co., New York LOC) A-1+ 3,800,000
------------------------------------------------------ --------------
Total 138,812,354
------------------------------------------------------ --------------
NORTH CAROLINA--4.4%
------------------------------------------------------
30,000,000 Charlotte-Mecklenburg Hospital Authority, NC, Loan
Participation Certificates (1995) VRNs (The Charlotte-
Mecklenburg Hospital Authority), 5/22/1996 NR(2) 30,000,000
------------------------------------------------------
4,320,000 Fayetteville, NC Public Works Commission, Revenue
Refunding Bonds Weekly VRDNs (FGIC INS)/
(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 4,320,000
------------------------------------------------------
4,000,000 Greensboro, NC, Certificates of Participation 1994
Equipment Project Weekly VRDNs (Greensboro, NC Center
City Corp.)/(Wachovia Bank of Georgia N.A., Atlanta
LIQ) A-1+ 4,000,000
------------------------------------------------------
15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) A-1 15,000,000
------------------------------------------------------
745,000 NCNB Pooled Tax-Exempt Trust (Series 1990-A) Weekly
VRDNs (NCNB Tax Exempt Trust 1990a)/(Nationsbank of
North Carolina N.A. LOC) P-1 745,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
------------------------------------------------------
$ 4,700,000 North Carolina Medical Care Commission Hospital,
Revenue Bonds (Series 1994) Weekly VRDNs (Hugh Chatam
Memorial/Rutherford Hospitals)/(First Union National
Bank, Charlotte, N.C. LOC) VMIG1 $ 4,700,000
------------------------------------------------------
10,000,000 North Carolina Municipal Power Agency No 1, 3.50% CP
(Bank of America NT and SA, San Francisco, Canadian
Imperial Bank of Commerce, Toronto, First Union
National Bank, Charlotte, N.C., Industrial Bank of
Japan Ltd., Tokyo, Morgan Guaranty Trust Co., New York
and Nationsbank of North Carolina N.A. LIQs),
Mandatory Tender 10/26/1995 P-1 10,000,000
------------------------------------------------------ --------------
Total 68,765,000
------------------------------------------------------ --------------
OHIO--5.7%
------------------------------------------------------
2,700,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs
(Visiting Nurses)/(National City Bank, Cleveland, OH
LOC) A-1 2,700,000
------------------------------------------------------
2,585,000 Ashland County, OH Health Care Weekly VRDNs (Brethren
Care, Inc.)/(National City Bank,
Cleveland, OH LOC) P-1 2,585,000
------------------------------------------------------
8,850,000 Cincinnati City School District, OH, 5.80% TANs,
12/29/1995 NR(3) 8,863,842
------------------------------------------------------
1,100,000 Cuyahoga County, OH Hospital Authority Weekly VRDNs
(St. Lukes Hospital)/(First National Bank of Chicago
LOC) VMIG1 1,100,000
------------------------------------------------------
2,650,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking
Co.)/(Society National Bank, Cleveland, OH LOC) P-1 2,650,000
------------------------------------------------------
2,000,000 Dayton, OH Revenue Refunding Bonds (Series 1993-E)
Weekly VRDNs (Emery Air Freight Corp.)/(Mellon Bank
N.A., Pittsburgh LOC) VMIG1 2,000,000
------------------------------------------------------
6,100,000 Franklin County, OH Hospital Facility Authority Weekly
VRDNs (Riverside United Methodist Hospital)/
(National City Bank, Cleveland, OH LOC) VMIG1 6,100,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$12,400,000 Hamilton County, OH Hospital Facilities Authority,
Revenue Bonds (Series 1986-A) Weekly VRDNs
(Good Samaritan Hospital) A-1 $ 12,400,000
------------------------------------------------------
2,500,000 Kettering, OH IDA Weekly VRDNs (Center-Plex
Venture)/(Society National Bank, Cleveland, OH LOC) P-1 2,500,000
------------------------------------------------------
2,885,000 Lorain County, OH, Health Facilities Revenue Bonds
(Series 1992-A) Weekly VRDNs (Elyria United Methodist
Home)/(Fifth Third Bancorp LOC) P-1 2,885,000
------------------------------------------------------
2,000,000 Lucas County, OH IDA (Series 1991) Weekly
VRDNs (Ohio Citizens Bank)/(National City Bank,
Cleveland, OH LOC) P-1 2,000,000
------------------------------------------------------
295,000 Lucas County, OH, Hospital Improvement Revenue Weekly
VRDNs (Sunshine Children's Home)/
(National City Bank, Cleveland, OH LOC) P-1 295,000
------------------------------------------------------
4,300,000 Lucas County, OH, Hospital Refunding Revenue
Bonds Weekly VRDNs (Riverside Hospital, OH)/
(Huntington National Bank, Columbus, OH LOC) P-1 4,300,000
------------------------------------------------------
6,900,000 Mahoning County, OH, Housing Revenue Bonds (Series
1995) Weekly VRDNs (Copeland Oaks Project)/(Bank One,
Akron, N.A. LOC) A-1+ 6,900,000
------------------------------------------------------
2,210,000 Marion County, OH Hospital Authority (Series 1991),
4.25% TOBs (Marion County, OH Pooled Hospital
Program)/(Bank One, Columbus, N.A. LOC) Optional
Tender 11/1/1995 A-1+ 2,210,000
------------------------------------------------------
4,250,000 Mayfield Village, OH IDA Weekly VRDNs (Beta Campus
Co.)/(First Union National Bank, Charlotte, N.C. LOC) P-1 4,250,000
------------------------------------------------------
5,400,000 Medina County, OH, Solid Waste Disposal Revenue Bonds
(Series 1995) Weekly VRDNs (Valley City
Steel Company Project)/(Society National Bank,
Cleveland, OH LOC) P-1 5,400,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 800,000 Montgomery County, OH IDA Weekly VRDNs
(Center-Plex Venture)/(Society National Bank,
Cleveland, OH LOC) P-1 $ 800,000
------------------------------------------------------
1,700,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited
Partnership)/(Huntington National Bank, Columbus, OH
LOC) A-1 1,700,000
------------------------------------------------------
4,700,000 Muskingham County, OH Hospital Facilities
Authority Weekly VRDNs (Bethesda Care System)/
(National City Bank, Columbus, OH LOC) VMIG1 4,700,000
------------------------------------------------------
1,800,000 Ohio State Air Quality Development Authority (Series
1998-A) Weekly VRDNs (PPG Industries, Inc.) P-1 1,800,000
------------------------------------------------------
4,080,000 Ohio State Water Development Authority, Pure Water
Refunding & Improvement Bonds (Series PA-56)
Weekly VRDNs (AMBAC INS)/(Merrill Lynch Capital
Services, Inc. LIQ) VMIG1 4,080,000
------------------------------------------------------
1,800,000 Rickenbacker, OH Port Authority (Series 1992)
Weekly VRDNs (Rickenbacker Holdings, Inc.)/
(Bank One, Columbus, N.A. LOC) P-1 1,800,000
------------------------------------------------------
1,900,000 Seneca County, OH Hospital Facility Authority
Weekly VRDNs (St. Francis Home)/
(National City Bank, Cleveland, OH LOC) VMIG1 1,900,000
------------------------------------------------------
800,000 Solon, OH, IDA Weekly VRDNs (Solon Industries)/
(Society National Bank, Cleveland, OH LOC) P-1 800,000
------------------------------------------------------
1,100,000 Twinsburg, OH IDA Weekly VRDNs (Care of Massara)/
(Society National Bank, Cleveland, OH LOC) P-1 1,100,000
------------------------------------------------------ --------------
Total 87,818,842
------------------------------------------------------ --------------
OKLAHOMA--0.6%
------------------------------------------------------
10,000,000 Holdenville, OK Industrial Authority, Correctional
Facility Revenue Bonds (Series 1995) Weekly VRDNs
(Holdenville, OK Correctional Facility)/(First Union
National Bank, Charlotte, N.C. LOC) VMIG1 10,000,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
OREGON--0.1%
------------------------------------------------------
$ 2,000,000 Oregon Health, Housing & Cultural Facilities
Authority, Adjustable Rate Revenue Bonds (Series
1995-A) Weekly VRDNs (Guide Dogs for the Blind, Inc.
Project)/
(Banque Nationale de Paris LOC) MIG1 $ 2,000,000
------------------------------------------------------ --------------
PENNSYLVANIA--2.5%
------------------------------------------------------
5,000,000 Allegheny County, PA IDA, PCR (Series 1992-A), 4.80%
TOBs (Duquesne Light Power Co.)/(Canadian Imperial
Bank of Commerce, Toronto LOC), Mandatory Tender
10/17/1995 P-1 5,000,000
------------------------------------------------------
4,000,000 Beaver County, PA IDA, PCR Refunding Bonds (1994
Series), 4.50% CP (Duquesne Light Power Co.)/ (Swiss
Bank Corp., New York, NY LOC), Mandatory Tender
10/10/1995 A-1+ 4,000,000
------------------------------------------------------
6,300,000 Delaware County, PA PCR (Series C), 4.00% CP
(Philadelphia Electric Co.)/(FGIC INS), Mandatory
Tender 10/6/1995 A-1+ 6,300,000
------------------------------------------------------
4,200,000 Delaware County, PA Weekly VRDNs
(American College)/(PNC Bank, N.A. LOC) P-1 4,200,000
------------------------------------------------------
5,600,000 Erie County, PA Hospital Authority Weekly VRDNs (St.
Vincent Health System)/(Fuji Bank, Ltd., Tokyo LOC) A-1 5,600,000
------------------------------------------------------
1,300,000 Pennsylvania State Higher Education Facilities
Authority Weekly VRDNs (Carnegie-Mellon University) A-1 1,300,000
------------------------------------------------------
6,000,000 Philadelphia, PA, GO (Series 1990), 3.90% CP (Fuji
Bank, Ltd., Tokyo LOC), Mandatory Tender 8/23/1995 A-1 6,000,000
------------------------------------------------------
3,690,000 Pittsburgh, PA, GO Unlimited Bonds (Series B), 4.10%
BONDs (AMBAC INS), 9/1/1995 NR(1) 3,690,300
------------------------------------------------------
500,000 Sayre, PA, Health Care Facilities Authority Weekly
VRDNs (VHA of Pennsylvania)/(AMBAC INS)/
(First National Bank of Chicago LIQ) A-1 500,000
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
------------------------------------------------------
$ 2,000,000 Washington County, PA Hospital Authority Weekly VRDNs
(Keystone Diversified Management Corp.)/(Mellon Bank
N.A., Pittsburgh LOC) A-1 $ 2,000,000
------------------------------------------------------ --------------
Total 38,590,300
------------------------------------------------------ --------------
PUERTO RICO--0.6%
------------------------------------------------------
10,000,000 Puerto Rico Government Development Bank Weekly VRDNs
(Credit Suisse, Zurich LOC) A-1+ 10,000,000
------------------------------------------------------ --------------
SOUTH CAROLINA--0.5%
------------------------------------------------------
3,000,000 Greenville, SC Hospital System Board of Trustees,
(Series 1993-B) Weekly VRDNs (Greenville County, SC
Hospital Authority) A-1+ 3,000,000
------------------------------------------------------
5,000,000 University of South Carolina, Athletic Facilities
(Series 1995), 5.25% BANs, 3/1/1996 NR(3) 5,031,756
------------------------------------------------------ --------------
Total 8,031,756
------------------------------------------------------ --------------
TENNESSEE--3.1%
------------------------------------------------------
10,000,000 Chattanooga, TN HEFA Weekly VRDNs
(Mccallie School)/(Trust Company Bank, Atlanta LOC) A-1+ 10,000,000
------------------------------------------------------
22,400,000 Chattanooga, TN HEFA Weekly VRDNs
(Sisken Hospital)/(Sumitomo Bank Ltd., Osaka LOC) A-1 22,400,000
------------------------------------------------------
2,200,000 Metropolitan Nashville Tennessee AA, (Series 1993)
Weekly VRDNs (FGIC INS)/(Societe Generale, Paris LIQ) A-1+ 2,200,000
------------------------------------------------------
7,330,000 Nashville and Davidson County, NC IDB, Metropolitan
Government Revenue Bonds (Series 1995) Weekly VRDNs
(YMCA Projects)/(Nationsbank of Tennessee LOC) P-1 7,330,000
------------------------------------------------------
6,200,000 Roane, TN IDB, (Series 1982) Monthly VRDNs
(Fortafil Fibers, Inc. Project)/(ABN AMRO Bank N.V.,
Amsterdam LOC) A-1+ 6,200,000
------------------------------------------------------ --------------
Total 48,130,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
TEXAS--2.0%
------------------------------------------------------
$ 4,325,000 Dallas, TX (Series C), 3.90% TOBs, Optional Tender
6/15/1996 NR(1) $ 4,325,000
------------------------------------------------------
11,050,000 Harris County, TX HFDC (Series B), 3.90% TOBs
(San Jacinto Methodist Hospital)/(Morgan Guaranty
Trust Co., New York LOC), Mandatory Tender 9/1/1995 A-1+ 11,050,000
------------------------------------------------------
7,000,000 Harris County, TX, Toll Road Unlimited Tax & Sub Lien
Revenue (Series 1994-G) Weekly VRDNs A-1+ 7,000,000
------------------------------------------------------
2,000,000 Montgomery County, TX IDC, IDRB Weekly VRDNs (Houston
Area Research Center)/(Morgan Guaranty Trust Co., New
York LOC) A-1+ 2,000,000
------------------------------------------------------
1,920,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol,
Inc.)/(Nationsbank of North Carolina N.A. LOC) P-1 1,920,000
------------------------------------------------------
5,000,000 Texas State Department of Housing & Community
Affairs, Multifamily Housing Revenue Refunding Bonds
(Remington Hill Series B) Weekly VRDNs
(Trust Company Bank, Atlanta LOC) A-1+ 5,000,000
------------------------------------------------------ --------------
Total 31,295,000
------------------------------------------------------ --------------
UTAH--1.3%
------------------------------------------------------
19,670,000 Utah State HFA, Single Family Mortgage Bonds (Series
1995-1) Weekly VRDNs (Westdeutsche Landesbank
Girozentrale LIQ) A-1+ 19,670,000
------------------------------------------------------ --------------
VIRGINIA--0.8%
------------------------------------------------------
1,500,000 Arlington County, VA Weekly VRDNs (Ballston Public
Parking)/(Citibank, NA LOC) A-1+ 1,500,000
------------------------------------------------------
6,200,000 Henrico County, VA IDA, (Series 1994) Daily VRDNs
(Virginia United Methodist Homes, Inc.)/(Nationsbank
of Virginia, N.A. LOC) VMIG1 6,200,000
------------------------------------------------------
5,000,000 Virginia State Housing Development Authority, (Series
1993-A), 3.45% TOBs, Mandatory Tender 9/12/1995 A-1+ 5,000,000
------------------------------------------------------ --------------
Total 12,700,000
------------------------------------------------------ --------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
WASHINGTON--0.4%
------------------------------------------------------
$ 5,535,000 Pierce County, WA (Series 1995), 4.50% TANs,
12/27/1995 NR(3) $ 5,537,682
------------------------------------------------------ --------------
WEST VIRGINIA--0.5%
------------------------------------------------------
7,960,000 Cabell County Commission, WV, Life Care Facilities
Multi-Option Adjustable Rate Revenue Bonds (Series
1995) Weekly VRDNs (Foster Foundation)/(Huntington
National Bank, Columbus, OH LOC) A-1 7,960,000
------------------------------------------------------ --------------
WISCONSIN--2.3%
------------------------------------------------------
1,100,000 Seymour, WI IDA Weekly VRDNs (Beatrice Cheese,
Inc.)/(Bank of New York, New York LOC) P-1 1,100,000
------------------------------------------------------
34,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical
Center)/(Sumitomo Bank Ltd., Osaka LOC) VMIG1 34,000,000
------------------------------------------------------ --------------
Total 35,100,000
------------------------------------------------------ --------------
WYOMING--0.4%
------------------------------------------------------
1,125,000 Natrona County, WY, Hospital Revenue, 5.85% TOBs
(Grainger W.W., Inc.), Optional Tender 12/1/1995 P-1 1,125,000
------------------------------------------------------
4,400,000 Sweetwater County, WY IDA, PCR Refunding Bonds (Series
1990-A) Weekly VRDNs (Pacificorp)/
(Credit Suisse, Zurich LOC) VMIG1 4,400,000
------------------------------------------------------ --------------
Total 5,525,000
------------------------------------------------------ --------------
NO STATE--1.4%
------------------------------------------------------
10,000,000 Clipper Tax Exempt Trust (Series 1993-1) Weekly VRDNs
(State Street Bank and Trust Co. LIQ) A-1+ 10,000,000
------------------------------------------------------
6,440,583 LaSalle National Bank Leasetops Trust (Series 1994-B)
Weekly VRDNs (Lasalle National Bank, Chicago LIQ)/
(Lasalle National Bank, Chicago LOC) A-1+ 6,440,583
------------------------------------------------------
1,934,628 LaSalle National Bank Tax-Exempt Trust (Series 1993-A)
Weekly VRDNs (Lasalle National Bank, Chicago LIQ)/
(Lasalle National Bank, Chicago LOC) A-1+ 1,934,628
------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
--------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
NO STATE--CONTINUED
------------------------------------------------------
$ 3,040,000 Merrill Lynch Puttable FLOATs/RITES Trust (Series PP2)
Weekly VRDNs VMIG1 $ 3,040,000
------------------------------------------------------ --------------
Total 21,415,211
------------------------------------------------------ --------------
TOTAL INVESTMENTS, AT AMORTIZED COST(A) $1,553,856,743
------------------------------------------------------ --------------
</TABLE>
(a) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($1,547,473,496) at July 31, 1995.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
BANs --Bond Anticipation Notes
CDA --Community Development Administration
CP --Commercial Paper
EDA --Economic Development Authority
FGIC --Financial Guaranty Insurance Company
FSA --Financial Security Assurance
GO --General Obligation
GTDs --Guarantees
HEFA --Health and Education Facilities Authority
HFA --Housing Finance Authority
HFDC --Health Facility Development Corporation
IDA --Industrial Development Authority
IDB --Industrial Development Bond
IDC --Industrial Development Corporation
IDR --Industrial Development Revenue
IDRB --Industrial Development Revenue Bonds
IDFA --Industrial Development Finance Authority
IFA --Industrial Finance Authority
INS --Insurance
LIQ --Liquidity Agreement
LOCs --Letter(s) of Credit
LOC --Letter of Credit
MBIA --Municipal Bond Investors Assurance
PCR --Pollution Control Revenue
PFA --Public Facility Authority
PLC --Public Limited Company
RANs --Revenue Anticipation Notes
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
TRANs --Tax and Revenue Anticipation Notes
VHA --Veterans Housing Administration
VRDNs --Variable Rate Demand Notes
VRNs --Variable Rate Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $1,553,856,743
- ------------------------------------------------------------------------------
Cash 933,463
- ------------------------------------------------------------------------------
Income receivable 9,103,589
- ------------------------------------------------------------------------------ --------------
Total assets 1,563,893,795
- ------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------
Payable for investments purchased $11,518,668
- ----------------------------------------------------------------
Income distribution payable 4,394,007
- ----------------------------------------------------------------
Accrued expenses 507,624
- ---------------------------------------------------------------- -----------
Total liabilities 16,420,299
- ------------------------------------------------------------------------------ --------------
NET ASSETS for 1,547,494,731 shares outstanding $1,547,473,496
- ------------------------------------------------------------------------------ --------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Paid in capital 1,547,494,731
- ------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (21,235)
- ------------------------------------------------------------------------------ --------------
Total Net Assets $1,547,473,496
- ------------------------------------------------------------------------------ --------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
Institutional Shares:
($1,295,457,878 / 1,295,478,935 shares outstanding) $1.00
- ------------------------------------------------------------------------------ --------------
Institutional Service Shares:
($252,015,618 / 252,015,796 shares outstanding) $1.00
- ------------------------------------------------------------------------------ --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------
Interest $44,477,152
- ------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------
Investment advisory fee $2,318,805
- ----------------------------------------------------------------------------
Administrative personnel and services fee 877,668
- ----------------------------------------------------------------------------
Custodian fees 110,650
- ----------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 43,928
- ----------------------------------------------------------------------------
Directors'/Trustees' fees 5,202
- ----------------------------------------------------------------------------
Auditing fees 12,951
- ----------------------------------------------------------------------------
Legal fees 16,729
- ----------------------------------------------------------------------------
Portfolio accounting fees 128,996
- ----------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 2,520,292
- ----------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 378,074
- ----------------------------------------------------------------------------
Share registration costs 337,930
- ----------------------------------------------------------------------------
Printing and postage 28,823
- ----------------------------------------------------------------------------
Insurance premiums 15,420
- ----------------------------------------------------------------------------
Taxes 22
- ----------------------------------------------------------------------------
Miscellaneous 14,033
- ---------------------------------------------------------------------------- ----------
Total expenses 6,809,523
- ----------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------
Waiver of investment advisory fee $1,581,210
- ---------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 2,520,292 4,101,502
- --------------------------------------------------------------- ---------- ----------
Net expenses 2,708,021
- ------------------------------------------------------------------------------------------ -----------
Net investment income 41,769,131
- ------------------------------------------------------------------------------------------ -----------
Net realized gain (loss) on investments (1,395)
- ------------------------------------------------------------------------------------------ -----------
Change in net assets resulting from operations $41,767,736
- ------------------------------------------------------------------------------------------ -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 41,769,131 $ 16,807,122
- -------------------------------------------------------------
Net realized gain/loss on investments ($40 net gain and
$19,220 net loss, respectively, as computed for federal
income tax purposes) (1,395) 3,986
- ------------------------------------------------------------- --------------- ---------------
Change in assets resulting from operations 41,767,736 16,811,108
- ------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------
Distributions from net investment income:
- -------------------------------------------------------------
Institutional Shares (36,508,581) (16,783,291)
- -------------------------------------------------------------
Institutional Service Shares (5,260,550) (23,831)
- ------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from distributions
to shareholders (41,769,131) (16,807,122)
- ------------------------------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------
Proceeds from sale of Shares 7,385,500,551 3,346,441,976
- -------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of distributions declared 2,286,899 460,949
- -------------------------------------------------------------
Cost of Shares redeemed (6,655,215,610) (2,986,122,657)
- ------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from share transactions 732,571,840 360,780,268
- ------------------------------------------------------------- --------------- ---------------
Change in net assets 732,570,445 360,784,254
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 814,903,051 454,118,797
- ------------------------------------------------------------- --------------- ---------------
End of period $ 1,547,473,496 $ 814,903,051
- ------------------------------------------------------------- --------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations 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 are only those of Tax-Free Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(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.
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 to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At July 31, 1995, the Fund, for federal tax purposes, had a capital loss
carryforward of $19,800, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
- --------------- -----------------
<S> <C>
2001 $580
2002 $19,220
</TABLE>
Additionally, net capital losses of $1,435 attributable to security
transactions incurred after October 31, 1994 are treated as arising on
August 1, 1995, the first day of the Fund's next taxable year.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
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) for each
class of shares. At July 31, 1995, capital paid-in aggregated $1,547,494,731.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------
INSTITUTIONAL SHARES 1995 1994
- -------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 6,466,015,512 3,312,845,513
- --------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 1,609,289 460,949
- --------------------------------------------------------------
Shares redeemed (5,961,920,320) (2,977,674,630)
- -------------------------------------------------------------- -------------- --------------
Net change resulting from Institutional Share transactions 505,704,481 335,631,832
- -------------------------------------------------------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------
INSTITUTIONAL SERVICE SHARES 1995 1994*
- -------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Shares sold 919,485,039 33,596,463
- --------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 677,610 --
- --------------------------------------------------------------
Shares redeemed (693,295,290) (8,448,027)
- -------------------------------------------------------------- -------------- --------------
Net change resulting from Institutional Service Share
transactions 226,867,359 25,148,436
- -------------------------------------------------------------- -------------- --------------
Net change resulting from share transactions 732,571,840 360,780,268
- -------------------------------------------------------------- -------------- --------------
</TABLE>
* For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
(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 .20 of 1% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This 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 0.25 of
1% of daily average net assets of the Fund for the period. This fee is to obtain
certain personal 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.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
INTERFUND TRANSACTIONS--During the year ended July 31, 1995, the Fund engaged in
purchase and sale transactions with funds that have a common investment adviser
(or affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $2,395,054,229 and $2,346,849,715,
respectively.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust'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 of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST:
(Tax-Free Obligations Fund)
We have audited the accompanying statement of assets and liabilities of Tax-Free
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Tax-Free Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Tax-Free Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
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 60934N880
9110207A-SS (9/95)
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST )
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
Combined Statement of Additional Information
This Combined Statement of Additional Information should be read with the
prospectuses of Treasury Obligations Fund (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
INVESTMENT POLICIES 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 1
BROKERAGE TRANSACTIONS 3
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 3
Share Ownership 7
Trustees Compensation 7
Trustee Liability 8
INVESTMENT ADVISORY SERVICES 8
Investment Adviser 8
Advisory Fees 8
FUND ADMINISTRATION 9
SHAREHOLDER SERVICES AGREEMENT 9
DETERMINING NET ASSET VALUE 9
REDEMPTION IN KIND 10
THE FUND'S TAX STATUS 10
PERFORMANCE INFORMATION 10
Yield 10
Effective Yield 10
Total Return 10
Performance Comparisons 11
ABOUT FEDERATED INVESTORS 11
Mutual Fund Market 11
Institutional 12
Trust Organizations 12
Broker/Dealers and
Bank Broker/Dealer Subsidiaries 12
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be changed by the
Board of Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial institutions,
such as broker/dealers, which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
INVESTMENT LIMITATIONS
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for clearance
of transactions.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow
money in amounts up to one-third of the value of its total assets, including
the amounts borrowed.
The Fund will not borrow money for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while borrowings
in excess of 5% of the value of its total assets are outstanding.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In those cases, it may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets of the Fund at the time of the
pledge.
Lending Cash or Securities
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding bonds, debentures,
notes, certificates of indebtedness or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted by
its investment objective, policies and limitations or Declaration of Trust.
Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
Investing in Real Estate
The Fund will not purchase or sell real estate, including limited partnership
interests.
Underwriting
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
Concentration of Investments
The Fund will not invest 25% or more of the value of its total assets in any
one industry, except that the Fund may invest 25% or more of the value of its
total assets in cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies, or instrumentalities and
repurchase agreement collateralized by such U.S. government securities.
Diversification of Investments
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities) if as a result more than
5% of the value of its total assets would be invested in the securities of
that issuer, or if it would own more than 10% of the outstanding voting
securities of that issuer.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
Investing in Illiquid Securities
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
Investing in Issuers Whose Securities are Owned by Officers of the Trust
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or the Fund's investment adviser owning
individually more than .50 of 1% of the issuer's securities together own more
than 5% of the issuer's securities.
Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Minerals
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items." Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of the value
of its net assets during the last fiscal period and has not 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 July 31, 1995, 1994, and 1993, 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 Institutional Shares of the Fund: Var & Co., St. Paul, MN,
owned approximately 409,599,847 shares (11.60%); Society National Bank,
Cleveland, OH, owned approximately 305,195,188 shares (8.64%); Shawmut Bank, NA,
owned approximately 506,545,170 shares (14,34%); Firstier Bank, NA, Omaha, NE,
owned approximately 194,212,536 shares (5.50%); and Boatmen's Trust Company, St.
Louis, MO, owned approximately 190,419,642 shares (5.39%).
As of September 6, 1995, the following shareholders of record owned 5% or more
of the outstanding Institutional Service Shares of the Fund: M&I Custody of
Nevada Inc., Las Vegas, NV, owned approximately 62,410,210 shares (7.41%); Meba
& Co., Concord, NH, owned approximately 65,085,985 shares (7.72%); Muchmore &
Co., Summit, NJ, owned approximately 68,919,973 shares (8.18%); Bank IV-Kansas,
Wichita, KS, owned approximately 93,457,671 shares (11.09%); AYE Plus, New
Orleans, LA, owned approximately 51,122,750 shares (6.07%); Dai-Ichi Kangyo Bank
of CA, Los Angeles, CA, owned approximately 62,126,974 shares (7.37%); and
Integrated Process Equipment Corp. Phoenix, AZ, owned approximately 56,707,643
shares (6.73%).
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 July 31,
1995, 1994 and 1993, the adviser earned $6,522,177, $4,939,384, and $4,583,447,
respectively, of which $3,742,710, $2,435,439, and $1,647,164, respectively,
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 July 31, 1995, Federated Administrative Services earned $2,468,644.
For the fiscal year ended July 31, 1994, the Administrators collectively earned
$1,380,769. For the fiscal year ended July 31, 1993, Federated Administrative
Services, Inc., earned $770,936. 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 period ending July 31, 1995, the Fund paid shareholder service fees
in the amount of $418,181 pursuant to the Shareholder Services Plan on behalf of
the Institutional Service Shares, all of which was 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 also 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.
For the seven-day period ended July 31, 1995, the yield for Institutional Shares
was 5.69%. For the seven-day period ended July 31, 1995, the yield for
Institutional Service Shares was 5.44%.
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.
For the seven-day period ended July 31, 1995, the effective yield for
Institutional Shares was 5.85%. For the seven-day period ended July 31, 1995,
the effective yield for Institutional Service Shares was 5.59%.
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.
For the one-year period ended July 31, 1995 and for the period from July 5, 1994
(date of initial public offering) through July 31, 1995, the average annual
total returns were 5.23% and 5.15%, respectively, for Institutional Service
Shares.
Prior to the creation of separate classes of shares, for the one-year and five-
year periods ended July 31,1995 and for the period from December 12, 1989 (start
of performance) to July 31, 1995, the average annual total returns were 5.50%,
4.73%, and 5.11%, respectively, for Institutional Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
based on total return, which assumes the reinvestment of all income
dividends and capital gains distributions, if any.
o DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money market
funds weekly. Donoghue's MONEY MARKET INSIGHT publication reports monthly
and 12-month-to-date investment results for the same money funds.
o MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
o SALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
o SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
o DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES is a weekly quote
of the average daily offering price for selected federal agency issues
maturing in 30 days.
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
Cusip 60934N500
Cusip 60934N872
9110208B (9/95)
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST )
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
Combined Statement of Additional Information
This Combined Statement of Additional Information should be read with the
prospectuses of Prime Obligations Fund (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
INVESTMENT POLICIES 1
Bank Instruments 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
U.S. Government Securities 1
Lending of Portfolio Securities 2
INVESTMENT LIMITATIONS 2
BROKERAGE TRANSACTIONS 3
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 4
Share Ownership 8
Trustees Compensation 8
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 9
FUND ADMINISTRATION 10
SHAREHOLDER SERVICES AGREEMENT 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 11
Total Return 11
Performance Comparisons 12
ABOUT FEDERATED INVESTORS 12
Mutual Fund Market 12
Institutional 12
Trust Organizations 13
Broker/Dealers and
Bank Broker/Dealer Subsidiaries 13
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be changed by the
Board of Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
BANK INSTRUMENTS
The instruments of banks and savings and loans whose deposits are insured by the
Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF"),
such as certificates of deposit, demand and time deposits, savings shares, and
bankers' acceptances, are not necessarily guaranteed by those organizations. In
addition to domestic bank instruments, the Fund may invest in: Eurodollar
Certificates of Deposit issued by foreign branches of U.S. or foreign banks;
Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in foreign
branches of U.S. or foreign banks; Canadian Time Deposits, which are U.S.
dollar-denominated deposits issued by branches of major Canadian banks
located in the
United States; and Yankee Certificates of Deposit, which are U.S. dollar-
denominated certificates of deposit issued by U.S. branches of foreign banks and
held in the United States.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial institutions,
such as broker/dealers, which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument in return for a percentage of the
instrument's market value in cash and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but does not ensure
this result. When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are: segregated on the Fund's records at the trade date; marked to
market daily; and maintained until the transaction is settled.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Fund may invest generally
include direct obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
o the credit of the agency or instrumentality issuing the obligations.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
INVESTMENT LIMITATIONS
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to one-
third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of the value of its total assets
are outstanding. During the period any reverse repurchase agreements are
outstanding, the Fund will restrict the purchase of portfolio securities to
money market instruments maturing on or before the expiration date of the
reverse repurchase agreements, but only to the extent necessary to assure
completion of the reverse repurchase agreements.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15%
of the value of total assets of the Fund at the time of the pledge.
Lending Cash or Securities
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding bonds, debentures,
notes, certificates of indebtedness or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted by
its investment objective, policies, and limitations or Declaration of Trust.
Investing in Commodities and Real Estate
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts. The Fund will not purchase or sell real estate,
although it may invest in securities of issuers whose business involves the
purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate.
Underwriting
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
Concentration of Investments
The Fund will not invest 25% or more of the value of its total assets in any
one industry, except that the Fund will generally invest 25% or more of the
value of its total assets in the commercial paper issued by finance
companies. The Fund may invest 25% or more of the value of its total assets
in cash or cash items, securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities or instruments secured by these
money market instruments, such as repurchase agreements.
Diversification of Investments
With respect to 75% of the value of its total assets, the Fund will not
purchase securities issued by any one issuer (other than cash, cash items, or
securities issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by
such securities) if as a result more than 5% of the value of its total assets
would be invested in the securities of that issuer.
Investing in Restricted Securities
The Fund will not invest more than 10% of the value of its net assets in
securities which are subject to legal or contractual restrictions on resale,
except for commercial paper issued under Section 4 (2) of the Securities Act
of 1933.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by 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.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
Investing in Issuers Whose Securities are Owned by Officers of the Trust
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or the Fund's investment adviser owning
individually more than .50 of 1% of the issuer's securities together own more
than 5% of the issuer's securities.
Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Minerals
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items." Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not borrow money 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 July 31, 1995, 1994, and 1993 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 Institutional Shares of the Fund: Anderson & Co.,
Philadelphia, PA, owned approximately 23,680,952 shares (5.77%); and Peoples
Bank, Bridgeport, CT, owned approximately 149,257,858 shares (36.35%).
As of September 6, 1995, the following shareholders of record owned 5% or more
of the outstanding Institutional Service Shares of the Fund: Society National
Bank, Cleveland, OH, owned approximately 174,935,737 shares (6.34%); and Var &
Co., St. Paul, MN, owned approximately 252,541,288 shares (9.15%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 68 other investment companies in the
Fund Complex
Thomas G. Bigley $0 $20,688 for the Trust and
Trustee 49 other investment companies in the
Fund Complex
John T. Conroy, Jr. $6,147 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
William J. Copeland $6,147 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 14 other investment companies in the
Fund Complex
James E. Dowd $6,147 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $5,449 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $6,147 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Peter E. Madden $5,449 $90,563 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Gregor F. Meyer $5,449 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
John E. Murray, Jr., $0 $0 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Wesley W. Posvar $5,449 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Marjorie P. Smuts $5,449 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
*Information is furnished for the fiscal year ended July 31, 1994.
#The aggregate compensation is provided for the Trust which is comprised of six
portfolios.
+The information is provided for the last calendar year.
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 July 31,
1995, 1994 and 1993, the adviser earned $4,370,903, $2,368,688, and $2,033,502,
respectively, of which $2,828,160, $1,615,921, and $955,268, respectively, 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 July 31, 1995, Federated Administrative Services earned $1,654,387.
For the fiscal year ended July 31, 1994, the Administrators collectively earned
$762,145. For the fiscal year ended July 31, 1993, Federated Administrative
Services, Inc., earned $455,288. 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 period ending July 31, 1995, the Fund paid shareholder service fees
in the amount of $554,723 pursuant to the Shareholder Services Plan on behalf of
Institutional Service Shares, all of which was 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 also 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.
For the seven-day period ended July 31, 1995, the yield for Institutional Shares
was 5.76%. For the seven-day period ended July 31, 1995, the yield for
Institutional Service Shares was 5.51%.
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.
For the seven-day period ended July 31, 1995, the effective yield for
Institutional Shares was 5.92%. For the seven-day period ended July 31, 1995,
the effective yield for Institutional Service Shares was 5.66%.
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.
For the one-year period ended July 31, 1995 and for the period from July 5, 1994
(date of initial public offering) through July 31, 1995, the average annual
total returns were 5.38% and 5.31%, respectively, for Institutional Service
Shares.
Prior to the creation of separate classes of shares, for the one-year and five-
year periods ended July 31,1995 and for the period from May 26, 1990 (start of
performance) to July 31, 1995, the average annual total returns were 5.65%,
4.87%, and 5.10%, respectively, for Institutional Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
based on total return, which assumes the reinvestment of all income
dividends and capital gains distributions, if any.
o DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money market
funds weekly. Donoghue's MONEY MARKET INSIGHT publication reports monthly
and 12-month-to-date investment results for the same money funds.
o MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
o BANK RATE MONITORC NATIONAL INDEX, Miami Beach, Florida, published weekly,
is an average of the interest rates of personal money market deposit
accounts at ten of the largest banks and thrifts in each of the five
largest Standard Metropolitan Statistical Areas. If more than one rate is
offered, the lowest rate is used. Account minimums and compounding methods
may vary.
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
Cusip 60934N708
Cusip 60934N203
9110205B (9/95)
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
Combined Statement of Additional Information
This Combined Statement of Additional Information should be read with the
prospectuses of Tax-Free Obligations Fund (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
INVESTMENT POLICIES 1
Acceptable Investments 1
Participation Interests 1
Municipal Leases 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
INVESTMENT LIMITATIONS 2
BROKERAGE TRANSACTIONS 4
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 4
Share Ownership 8
Trustees Compensation 8
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 9
FUND ADMINISTRATION 10
SHAREHOLDER SERVICES AGREEMENT 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 11
Tax-Equivalent Yield 11
Total Return 12
Performance Comparisons 13
ABOUT FEDERATED INVESTORS 13
Mutual Fund Market 13
Institutional 13
Trust Organizations 14
Broker/Dealers and
Bank Broker/Dealer Subsidiaries 14
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may 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 municipal security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of a
municipal security, the issuer of a demand feature if the Fund has the
unconditional right to demand payment for the municipal security, or any
guarantor of payment by either of those issuers.
PARTICIPATION INTERESTS
The financial institutions from which the Fund purchases participation interests
frequently provide or secure from another financial institution irrevocable
letters of credit or guarantees and give the Fund the right to demand payment of
the principal amounts of the participation interests plus accrued interest on
short notice (usually within seven days). The municipal securities subject to
the participation interests are not limited to the Fund's maximum maturity
requirements so long as the participation interests include the right to demand
payment from the issuers of those interests. By purchasing these participation
interests, the Fund is buying a security meeting the maturity and quality
requirements of the Fund and also is receiving the tax-free benefits of the
underlying securities.
MUNICIPAL LEASES
The Fund may purchase municipal securities in the form of participation
interests that represent an undivided proportional interest in lease payments by
a governmental or nonprofit entity. The lease payments and other rights under
the lease provide for and secure payments on the certificates. Lease obligations
may be limited by municipal charter or the nature of the appropriation for the
lease. Furthermore, a lease may provide that the participants cannot accelerate
lease obligations upon default. The participants would only be able to enforce
lease payments as they became due. In the event of a default or failure of
appropriation, unless the participation interests are credit enhanced, it is
unlikely that the participants would be able to obtain an acceptable substitute
source of payment.
In determining the liquidity of municipal lease securities, the investment
adviser, under the authority delegated by the Board of Trustees, will base its
determination on the following factors: whether the lease can be terminated by
the lessee; the potential recovery, if any, from a sale of the leased property
upon termination of the lease; the lessee's general credit strength (e.g., its
debt, administrative, economic and financial characteristics and prospects); the
likelihood that the lessee will discontinue appropriating funding for the leased
property because the property is no longer deemed essential to its operations
(e.g., the potential for an "event of non-appropriation"); and any credit
enhancement or legal recourse provided upon an event of non-appropriation or
other termination of the lease.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
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 securities to
the Fund and agree at the time of sale to repurchase them at a mutually agreed
upon time and price. To the extent that the seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. The Fund or its custodian will take possession
of the securities subject to repurchase agreements, and these securities will be
marked to market daily. In the event that a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Fund might
be delayed pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such securities. The
Fund will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the Trustees.
INVESTMENT LIMITATIONS
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow
money in amounts up to one-third of the value of its total assets, including
the amounts borrowed.
The Fund will not borrow money for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate management of
the portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while borrowings
in excess of 5% of the value of its total assets are outstanding.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15%
of the value of total assets of the Fund at the time of the pledge.
Lending Cash or Securities
The Fund will not lend any of its assets. This shall not prevent the Fund
from purchasing or holding bonds, debentures, notes, certificates of
indebtedness or other debt securities or engaging in other transactions where
permitted by the Fund's investment objective, policies, and limitations or
Declaration of Trust.
Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
Investing in Real Estate
The Fund will not purchase or sell real estate, although it may invest in
securities of issuers whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or interests in real
estate.
Underwriting
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
Concentration of Investments
The Fund will not purchase securities if, as a result of such purchase, 25%
or more of the value of its total assets would be invested in any one
industry or in industrial development bonds or other securities, the interest
upon which is paid from revenues of similar type projects.
The Fund may invest, as temporary investments, 25% or more of the value of
its total assets in cash or cash items, securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities or instruments secured
by these money market instruments, such as repurchase agreements.
The Fund does not intend to purchase securities that would increase the
percentage of its assets invested in the securities of governmental
subdivisions located in any one state, territory, or U.S. possession to 25%
or more. However, the Fund may invest 25% or more of the value of its assets
in tax-exempt project notes guaranteed by the U.S. government, regardless of
the location of the issuing municipality.
If the value of Fund assets invested in the securities of a governmental
subdivision changes because of changing values, the Fund will not be required
to make any reduction in its holdings.
Diversification of Investments
With respect to 75% of the value of its total assets, the Fund will not
purchase securities of any one issuer (other than cash, cash items, or
securities issued or guaranteed by the government of the United States or its
agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities) if, as a result, more than 5% of the value
of its total assets would be invested in the securities of that issuer.
Under this limitation, each governmental subdivision, including states and
the District of Columbia, territories, possessions of the United States, or
their political subdivisions, agencies, authorities, instrumentalities, or
similar entities, will be considered a separate issuer if its assets and
revenues are separate from those of the governmental body creating it and the
security is backed only by its own assets and revenues. Industrial
development bonds, backed only by the assets and revenues of a
nongovernmental user, are considered to be issued solely by that user. If in
the case of an industrial development bond or governmental-issued security, a
governmental or other entity guarantees the security, such guarantee would be
considered a separate security issued by the guarantor as well as the other
issuer, subject to limited exclusions allowed by the Investment Company Act
of 1940, as amended.
Investing in Restricted Securities
The Fund will not invest more than 10% of its total assets in securities
subject to restrictions on resale under federal securities law, except for
restricted securities determined to be liquid under criteria established by
the Trustees.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.
Investing in Illiquid Securities
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers (including companies responsible for paying principal
and interest on industrial development bonds) which have records of less than
three years of continuous operations, including the operation of any
predecessor.
Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
Investing in Issuers Whose Securities are Owned by Officers of the Trust
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or the Fund's investment adviser owning
individually more than .50 of 1% of the issuer's securities together own more
than 5% of the issuer's securities.
Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Minerals
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items." Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not borrow money 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 July 31, 1995, 1994, and 1993, 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 Institutional Shares of the Fund: Var & Co., St. Paul, MN,
owned approximately 399,772,247 shares (24.46%); First Union National Bank,
Charlotte, NC owned approximately 245,023,656 shares (14.99%); Tenneco
Corporation, Houston, TX, owned approximately 157,600,000 shares (9.64%);
Boatmen's Trust Company, St. Louis, MO, owned approximately 101,535,626 shares
(6.21%); and Wachovia Bank of North Carolina, Winston-Salem, NC, owned
approximately 95,006,399 shares (5.81%).
As of September 6, 1995, the following shareholders of record owned 5% or more
of the outstanding Institutional Service Shares of the Fund: Naidot & Co.,
Woodbridge, NJ, owned approximately 55,305,100 shares (20.58%); Hamac, Richmond,
VA, owned approximately 32,930,178 shares (12.26%); Putnam Trust, Greenwich, CT,
owned approximately 30,909,500 shares (11.50%); Anderson & Co., Philadelphia,
PA, owned approximately 24,810,214 shares (9.23%); Morand & Company, Chicago,
IL, owned approximately 22,663,689 shares (8.43%); Saxon & Co., Philadelphia,
PA, owned approximately 18,957,311 shares (7.06%); and Harris Bank Barrington,
Barrington, IL, owned approximately 13,858,578 shares (5.16%).
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 July 31,
1995, 1994 and 1993, the adviser earned $947,091, $1,392,414 and $820,734,
respectively, of which $578,466, $1,014,059, and $582,656, respectively, 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 July 31, 1995, Federated Administrative Services earned $358,474. For
the fiscal year ended July 31, 1994, the Administrators collectively earned
$493,607. For the fiscal year ended July 31, 1993, Federated Administrative
Services, Inc., earned $284,326. 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 period ending July 31, 1995, the Fund paid shareholder service fees
in the amount of $119,592 pursuant to the Shareholder Services Plan on behalf of
the Institutional Service Shares, all of which was 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 also 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.
For the seven-day period ended July 31, 1995, the yield for Institutional Shares
was 3.72%. For the seven-day period ended July 31, 1995, the yield for
Institutional Service Shares was 3.47%.
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.
For the seven-day period ended July 31, 1995, the effective yield for
Institutional Shares was 3.79%. For the seven-day period ended July 31, 1995,
the effective yield for Institutional Service Shares was 3.53%.
TAX-EQUIVALENT YIELD
For the seven-day period ended July 31, 1995, the tax-equivalent yield for
Institutional Shares was 6.16%. For the seven-day period ended July 31, 1995,
the tax-equivalent yield for Institutional Service Shares was 5.75%.
TAX-EQUIVALENCY TABLE
A tax-equivalency table may be used in advertising and sales literature. The
interest earned by the municipal securities in the Fund's portfolio generally
remains free from federal regular income tax,* and is often free from state and
local taxes as well. As the table below indicates, a "tax-free" investment can
be an attractive choice for investors, particularly in times of narrow spreads
between tax-free and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1995
TAX-FREE OBLIGATIONS FUND
FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
Joint $1- $39,001 - $94,251 - $143,601 - OVER
Return 39,000 94,250 143,600 256,500 256,500
Single Return $1- $23,351 - $56,551 - $117,951 - OVER
23,350 56,550 117,950 256,500 $256,500
Tax-Exempt
Yield Taxable Yield Equivalent
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 2.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent.
The chart above is for illustrative purposes only. It is not an indicator
of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
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.
For the one-year period ended July 31, 1995 and for the period from July 5, 1994
(date of initial public offering) through July 31, 1995, the average annual
total returns were 3.39% and 3.57%, respectively, for Institutional Service
Shares.
Prior to the creation of separate classes of shares, for the one-year and five-
year periods ended July 31,1995 and for the period from December 12, 1989 (start
of performance) to July 31, 1995, the average annual total returns were 3.64%,
3.49%, and 3.76%, respectively, for Institutional Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
based on total return, which assumes the reinvestment of all income
dividends and capital gains distributions, if any.
o DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money market
funds weekly. Donoghue's MONEY MARKET INSIGHT publication reports monthly
and 12-month-to-date investment results for the same money funds.
o MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
o SALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
o SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
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
Cusip 60934N401
Cusip 60934N880
9110207B (9/95)
GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST )
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
Combined Statement of Additional Information
This Combined Statement of Additional Information should be read with the
prospectuses of Government Obligations Fund (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
INVESTMENT POLICIES 1
Acceptable Investments 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 2
BROKERAGE TRANSACTIONS 3
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 4
Share Ownership 8
Trustees Compensation 8
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 9
FUND ADMINISTRATION 10
SHAREHOLDER SERVICES AGREEMENT 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 11
Total Return 11
Performance Comparisons 12
ABOUT FEDERATED INVESTORS 12
Mutual Fund Market 12
Institutional 12
Trust Organizations 13
Broker/Dealers and Bank Broker/Dealer Subsidiaries 13
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may 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
Some of the short-term U.S. government securities the Fund may purchase carry
variable interest rates. These securities have a rate of interest subject to
adjustment at least annually. This adjusted interest rate is ordinarily tied to
some objective standard, such as the 91-day U.S. Treasury bill rate. Variable
interest rates will reduce the changes in the market value of such securities
from their original purchase prices. Accordingly, the potential for capital
appreciation or capital depreciation should not be greater than that of fixed
interest rate U.S. government securities having maturities equal to the interest
rate adjustment dates of the variable rate U.S. government securities. The Fund
may purchase variable rate U.S. government securities upon the determination by
the Board of Trustees that the interest rate as adjusted will cause the
instrument to have a current market value that approximates its par value on the
adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending court
action. The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial institutions,
such as broker/dealers, which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument in return for a percentage of the
instrument's market value in cash and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but does not ensure
this result. When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are: segregated on the Fund's records at the trade date; marked to
market daily; and maintained until the transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.
INVESTMENT LIMITATIONS
Selling Short and Buying on Margin
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.
Issuing Senior Securities and Borrowing Money
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to one-
third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of the value of its total assets
are outstanding. During the period any reverse repurchase agreements are
outstanding, the Fund will restrict the purchase of portfolio securities to
money market instruments maturing on or before the expiration date of the
reverse repurchase agreements, but only to the extent necessary to assure
completion of the reverse repurchase agreements.
Pledging Assets
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15%
of the value of total assets of the Fund at the time of the pledge.
Lending Cash or Securities
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding bonds, debentures,
notes, certificates of indebtedness or other debt securities, entering into
repurchase agreements or engaging in other transactions where permitted by
its investment objective, policies, and limitations or Declaration of Trust.
Investing in Commodities
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
Investing in Real Estate
The Fund will not purchase or sell real estate, including limited partnership
interests, although it may invest in securities of issuers whose business
involves the purchase or sale of real estate or in securities which are
secured by real estate or interests in real estate.
Underwriting
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
Concentration of Investments
The Fund will not invest 25% or more of the value of its total assets in any
one industry, except that the Fund may invest 25% or more of the value of its
total assets in cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies, or instrumentalities and
repurchase agreements collateralized by such U.S. government securities.
Diversification of Investments
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities) if as a result more than
5% of the value of its total assets would be invested in the securities of
that issuer, or if it would own more than 10% of the outstanding voting
securities of that issuer.
The above limitations cannot be changed without shareholder approval. The
following investment limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
Investing in Restricted Securities
The Fund will not invest in securities subject to restrictions on resale
under federal securities law.
Investing in Illiquid Securities
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
Investing in Securities of Other Investment Companies
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
Investing in New Issuers
The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.
Investing for Control
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
Investing in Issuers Whose Securities are Owned by Officers of the Trust
The Fund will not purchase or retain the securities of any issuer if the
Officers and Trustees of the Trust or the Fund's investment adviser owning
individually more than .50 of 1% of the issuer's securities together own more
than 5% of the issuer's securities.
Investing in Options
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
Investing in Minerals
The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase the
securities of issuers which invest in or sponsor such programs.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings and loan having capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment to be "cash items." Except with respect
to borrowing money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from any change
in value or net assets will not result in a violation of such limitation.
The Fund did not borrow money 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 July 31, 1995, 1994, and 1993 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 Institutional Shares of the Fund: Var & Co., St. Paul, MN,
owned approximately 145,337,049 shares (7.68%); Palm Beach County, West Palm
Beach, FL, owned approximately 134,986,805 shares (7.13%); First NH Investment
Services, Concord, NH, owned approximately 127,181,075 shares (6.72%); Mertru
and Company, Muncie, IN, owned approximately 102,435,426 shares (5.41%); and COM
II, Jersey City, NJ, owned approximately 99,374,772 shares (5.25%).
As of September 6, 1995, the following shareholders of record owned 5% or more
of the outstanding Institutional Service Shares of the Fund: Putnam Trust
Company, Greenwich, CT, owned approximately 118,529,400 shares (34.82%); Basaba
& Co., Bangor, ME, owned approximately 21,199,729 shares (6.23%); and Shakopee
Mdewakanton Sioux, Prior Lake, MN, owned approximately 18,175,931 shares
(5.34%).
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 July 31,
1995, 1994 and 1993, the adviser earned $2,842,786, $1,348,444, and $1,343,686,
respectively, of which $2,063,842, $990,717, and $768,184, respectively, 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 July 31, 1995, Federated Administrative Services earned $1,075,995.
For the fiscal year ended July 31, 1994, the Administrators collectively earned
$483,421. For the fiscal year ended July 31, 1993, Federated Administrative
Services, Inc., earned $377,706. 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 period ending July 31, 1995, the Fund paid shareholder service fees
in the amount of $369,663 pursuant to the Shareholder Services Plan on behalf of
Institutional Service Shares, all of which was 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 also 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.
For the seven-day period ended July 31, 1995, the yield for Institutional Shares
was 5.72%. For the seven-day period ended July 31, 1995, the yield for
Institutional Service Shares was 5.47%.
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.
For the seven-day period ended July 31, 1995, the effective yield for
Institutional Shares was 5.88%. For the seven-day period ended July 31, 1995,
the effective yield for Institutional Service Shares was 5.62%.
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.
For the one-year period ended July 31, 1995, the average annual total return was
5.31% for Institutional Service Shares.
Prior to the creation of separate classes of shares, for the one-year and five-
year periods ended July 31,1995 and for the period from March 30, 1990 (start of
performance) to July 31, 1995, the average annual total returns were 5.57%,
4.81%, and 5.04%, respectively, for Institutional Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories
based on total return, which assumes the reinvestment of all income
dividends and capital gains distributions, if any.
o DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money market
funds weekly. Donoghue's MONEY MARKET INSIGHT publication reports monthly
and 12-month-to-date investment results for the same money funds.
o MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
o SALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
o SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
o DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES is a weekly quote
of the average daily offering price for selected federal agency issues
maturing in 30 days.
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
Cusip 60934N104
Cusip 60934N807
9110204B (9/95)
TAX-FREE OBLIGATIONS FUND
(A Portfolio of Money Market Obligations Trust)
Institutional Services Shares and Institutional Shares
SUPPLEMENT TO ANNUAL REPORT DATED JULY 31, 1995
A Special Meeting of Fund shareholders was held on March 27, 1995. On February
6, 1995, the record date for shareholders voting at the meeting, there were
1,040,878,756 total outstanding shares. The following item was considered by
shareholders and the result of their voting was as follows:
ABSTENTIONS WITHHELD
Agenda AND AUTHORITY TO
Item FOR AGAINST BROKER NON-VOTES VOTE
1. Approval or disapproval of a change to the Fund's fundamental investment
limitation to exclude restricted securities determined by the Trustees to be
liquid from the 10% of total assets limitation on investment in restricted
securities.
748,941,836.61 102,288,955.26 3,670,941.54
0
THIS SUPPLEMENT MUST BE PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS DATED
SEPTEMBER 30, 1995, AND, TOGETHER WITH THE FINANCIAL STATEMENTS CONTAINED
THEREIN, CONSTITUTES THE FUND'S ANNUAL REPORT.
September 30, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
60934N880
60934N401
G01028-03 (9/95)
