1933 Act File No. 33-31602
1940 Act File No. 811-5950
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ..........
Post-Effective Amendment No. 20 ......... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 21 ...........................
MONEY MARKET OBLIGATIONS TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
X immediately upon filing pursuant to paragraph (b)
on , pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.
-----------------
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on September 16, 1996; or
intends to file the Notice required by that Rule on or about
; or
------------
during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, DC 20037
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of MONEY MARKET
OBLIGATIONS TRUST, which consists of 6 portfolios, (1) Government
Obligations Fund; (2) Prime Obligations Fund; (3) Tax-Free Obligations
Fund, (4) Treasury Obligations Fund; (5) Automated Cash Management Trust,
and (6) Government Obligations Tax-Managed Fund, is comprised of the
following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-6) Cover Page.
Item 2. Synopsis.................(1-6) Summary of Fund Expenses; (1-6)
Financial Highlights.
Item 3. Condensed Financial
Information.............(1-6) Performance Information.
Item 4. General Description of
Registrant..............(1-6) General Information; (1-6)
Investment Information; (1-6) Investment
Objective; (1-6) Investment Policies;
(2,3, 6) Investment Risks; (1-6)
Investment Limitations; Municipal
Securities (3); (1-6) Regulatory
Compliance.
Item 5. Management of the Fund...(1-6) Trust Information; (1-6)
Management of the Trust; (1-6)
Distribution of Shares; (1-6)
Administration of the Fund; Expenses of
the Fund and Institutional
Shares/Institutional Service Shares/Cash
II Shares) (6).
Item 6. Capital Stock and Other
Securities..............(1-6) Dividends; (1-6) Capital Gains;
(1-6) Account and Shareholder
Information; (1-6) Voting Rights; (1-6)
Federal Income Tax; (1-6) State and
Local Taxes.
Item 7. Purchase of Securities Being
Offered.................(1-6) Net Asset Value; (1-6) Investing
in the Fund; (1-6) Share Purchases; (1-
6) Minimum Investment Required; (1-6)
Subaccounting Services; (1-6)
Certificates and Confirmations;
(5(b))Distribution Plan and Shareholder
Services
(1-5(a),6)Shareholder Services.
Item 8. Redemption or Repurchase.(1-6) Redeeming Shares; (1-6) Telephone
Redemption; (1-6) By Mail; (1-6)
Accounts with Low Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1-6) Cover Page.
Item 11. Table of Contents........(1-6) Table of Contents.
Item 12. General Information and
History.................(1-6) About Federated Investors.
Item 13. Investment Objectives and
Policies................(1-6) Investment Policies; (1-6)
Investment Limitations.
Item 14. Management of the Fund...(1-6) Money Market Obligations Trust
Management.
Item 15. Control Persons and Principal
Holders of Securities...(1-6) Share Ownership.
Item 16. Investment Advisory and Other
Services................(1-6) Investment Advisory Services; (1-
6) Other Services; (1-4,6) Shareholder
Services (5) Distribution Plan and
Shareholder Services.
Item 17. Brokerage Allocation.....(1-6) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities..............(1-6) Massachusetts Partnership Law.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered...........(1-6) Determining Net Asset Value. (1-6)
Redemption in Kind.
Item 20. Tax Status...............(1-6) The Fund's Tax Status;.
Item 21. Underwriters.............Not Applicable.
Item 22. Calculation of Performance
Data....................(1-4) Performance Information.
Item 23. Financial Statements.....Filed in Part A.
AUTOMATED CASH MANAGEMENT TRUST
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
The Institutional Service Shares of Automated Cash Management Trust (the "Fund")
offered by this prospectus represent interests in a 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, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge by calling 1-800-341-7400. To
obtain other information, or make inquiries about the Fund, contact your
financial institution. The Statement of Additional Information, material
incorporated by reference into this document, and other information regarding
the Fund is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF TRUST EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE
SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Risks 5
Investment Limitations 6
FUND INFORMATION 6
- ------------------------------------------------------
Management of the Trust 6
Distribution of Institutional
Service Shares 7
Administration of the Fund 7
Expenses of the Fund and
Institutional Service Shares 8
NET ASSET VALUE 8
- ------------------------------------------------------
HOW TO PURCHASE SHARES 9
- ------------------------------------------------------
Special Purchase Features 10
HOW TO REDEEM SHARES 10
- ------------------------------------------------------
ACCOUNT AND SHARE INFORMATION 12
- ------------------------------------------------------
TAX INFORMATION 12
- ------------------------------------------------------
Federal Income Tax 12
State and Local Taxes 13
OTHER CLASSES OF SHARES 13
- ------------------------------------------------------
PERFORMANCE INFORMATION 13
- ------------------------------------------------------
FINANCIAL STATEMENTS 14
- ------------------------------------------------------
ADDRESSES 27
- ------------------------------------------------------
SUMMARY OF TRUST EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Charge 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).......................................................................... 0.20%
12b-1 Fees................................................................................................ None
Total Other Expenses...................................................................................... 0.37%
Shareholder Services Fee (after waiver)(2)................................................ 0.24%
Total 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 shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder service fee. The shareholder service provider can
terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.88% 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 TRUST WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "HOW TO PURCHASE SHARES." Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period............. $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--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 26.
<TABLE>
<CAPTION>
THREE
YEAR MONTHS
ENDED ENDED
JULY 31, JULY 31, YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995(A) 1994 1993 1992 1991 1990 1989 1988
NET ASSET VALUE,
BEGINNING OF PERIOD $ 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 0.05 0.01 0.03 0.03 0.05 0.07 0.08 0.08 0.07
- ---------------------
LESS DISTRIBUTIONS
- ---------------------
Distributions from
net investment
income (0.05) (0.01) (0.03) (0.03) (0.05) (0.07) (0.08) (0.08) (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
- --------------------- ----------- ----------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (B) 5.20% 1.42% 2.84% 3.11% 5.02% 7.52% 8.69% 8.20% 6.72%
- ---------------------
RATIOS TO AVERAGE
NET ASSETS
- ---------------------
Expenses 0.57% 0.57%* 0.57% 0.56% 0.56% 0.55%* 0.55% 0.55% 0.55%
- ---------------------
Net investment
income 5.08% 5.60%* 2.80% 3.07% 4.88% 7.23%* 8.32% 7.93% 6.53%
- ---------------------
Expense waiver/
reimbursement (c) 0.31% 0.40%* 0.07% 0.04% 0.03% 0.12%* 0.09% 0.10% 0.04%
- ---------------------
SUPPLEMENTAL DATA
- ---------------------
Net assets,
end of period
(000 omitted) $1,274,419 $1,141,043 $975,453 $1,172,170 $1,220,212 $1,464,710 $1,164,013 $943,136 $924,558
- ---------------------
<CAPTION>
<S> <C>
1987
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00
- ---------------------
INCOME FROM
INVESTMENT OPERATIONS
- ---------------------
Net investment
income 0.06
- ---------------------
LESS DISTRIBUTIONS
- ---------------------
Distributions from
net investment
income (0.06)
- --------------------- ---------
NET ASSET VALUE,
END OF PERIOD $ 1.00
- --------------------- ---------
TOTAL RETURN (B) 6.00%
- ---------------------
RATIOS TO AVERAGE
NET ASSETS
- ---------------------
Expenses 0.55%
- ---------------------
Net investment
income 5.82%
- ---------------------
Expense waiver/
reimbursement (c) 0.04%
- ---------------------
SUPPLEMENTAL DATA
- ---------------------
Net assets,
end of period
(000 omitted) $867,725
- ---------------------
</TABLE>
* Computed on an annualized basis
(a) For the period May 1, 1995 to July 31, 1995 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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of
Trustees have established two classes of shares known as Institutional Service
Shares and Cash II Shares. This prospectus relates only to Institutional Service
Shares of the Fund, which are designed primarily for retail and private banking
customers of financial institutions as a convenient means of accumulating an
interest in a professionally managed, portfolio investing in short-term money
market securities. A minimum initial investment of $25,000 within a 90-day
period is required, except for retirement plans.
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 complying
with the diversification and other requirements of Rule 2a-7 under the
Investment Company Act of 1940 which regulates money market mutual funds and 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 the
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 may not be changed by the Board of Trustees without shareholder
approval.
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 domestic and 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 & 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.
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 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 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. Any bankruptcy,
receivership, default or change in the credit quality of the party providing the
credit enhancement will adversely affect the quality and marketability of the
underlying security and could cause losses to the Fund and affect its share
price.
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 short-term
U.S. government obligations 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 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.
As a matter of operating policy, 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 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.
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. These investment limitations cannot
be changed without shareholder approval.
FUND INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Fund 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 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.
Also, the adviser 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 $80 billion invested across
more than 250 funds under management and/or administration by its
subsidiaries, as of December 31, 1995, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more
than 1,800 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 interests. 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 INSTITUTIONAL SERVICE 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 the average daily net asset value
of its shares, computed at an annual rate, to obtain certain personal services
for shareholders and to maintain shareholder accounts. 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 wll be
determined from time to time by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS. In addition to payments made
pursuant to the Distribution Plan and Shareholder Services Agreement, Federated
Securities Corp. and Federated Shareholder Services, from their own assets, may
pay financial institutions supplemental fees for the performance of substantial
sales services, distribution-related support services, or shareholder services.
The support may include sponsoring sales, educational and training seminars for
their employees, providing sales literature, and engineering computer software
programs that emphasize the attributes of the Fund. Such assistance will be
predicated upon the amount of shares the financial institution sells or may
sell, and/or upon the type and nature of sales or marketing support furnished by
the financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund at an
annual rate which relates to the average aggregate daily net assets of all funds
advised by affiliates of Federated Investors as specified below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of Institutional Service Shares pay their allocable portion of Trust and
Fund expenses.
The Fund pays all of its own expense and its allocable share of Trust expenses.
These expenses include, but are not limited to the cost of: organizing the Trust
and continuing its existence; registering the Trust and its shares; Trustees
fees; meetings of Trustees and shareholders and proxy solicitations therefor;
auditing, accounting and legal services; investment advisory and administrative
services; custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents, and registrars; issuing, purchasing, repurchasing, and
redeeming shares; reports to government agencies; preparing, printing and
mailing documents to shareholders such as financial statements, prospectuses and
proxies; taxes and commissions; insurance premiums; association membership dues;
and such non-recurring and extraordinary items as may arise. Certain expenses
may be allocated to each class as deemed appropriate. At present, the only
expenses allocated to any class are expenses under a Distribution Plan or a
Shareholder Services Agreement which relate to that class.
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 Institutional
Service Shares from the value of Fund assets attributable to Institutional
Service 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.
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York Stock Exchange
is open for business. Shares may be purchased as described below, either through
a financial institution (such as a bank or broker/dealer) or by wire or by check
directly from the Fund, with a minimum initial investment of $25,000 or more
within a 90-day period. Financial institutions may impose different minimum
investment requirements on their customers.
In connection with any sale, Federated Securities Corp. may from time to time
offer certain items of nominal value to any shareholder or investor. The Fund
reserves the right to reject any purchase request. An account must be
established at a financial institution or by completing, signing, and returning
the new account form available from the Fund before shares can be purchased.
PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION. Investors may purchase shares
through a financial institution which has a sales agreement with the
distributor. Orders are considered received when the Fund receives payment by
wire or converts payment by check from the financial institution into federal
funds. It is the financial institution's responsibility to transmit orders
promptly. Financial institutions may charge additional fees for their services.
PURCHASING SHARES BY WIRE. Shares may be purchased by wire by calling 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 in order to begin earning dividends that same day. Federal funds
should be wired as follows: Federated Shareholder Services Company, c/o State
Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit to:
Automated Cash Management Trust--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.
Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600.
The check should be made payable to Automated Cash Management
Trust--Institutional Service Shares. Please include an account number on the
check. Orders by mail are considered received when payment by check is converted
into federal funds (normally the business day after the check is received), and
shares begin earning dividends the next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send a
request for monies to the shareholder's commercial bank, savings bank, or credit
union ("bank") via the Automated Clearing House. The shareholder's bank, which
must be an Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally entered the
next business day after the initial phone request. For further information and
an application, call the Fund.
BY DIRECT DEPOSIT. Shareholders of the Fund may have their Social Security,
Railroad Retirement, VA Compensation or Pension, Civil Service Retirement, and
certain other retirement payments invested directly into their Fund account.
Shareholders must complete an application and file it with Federated Shareholder
Services Company prior to use of this program. Allow 60 to 90 days for the
application to be processed.
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 predetermined 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.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer agent
to minimize 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.
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM. A minimum of $100 can be automatically withdrawn
periodically from the shareholder's checking account at an Automated Clearing
House ("ACH") member and invested in Fund shares. Shareholders should contact
their financial institution or the Fund to participate in this program.
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION. Shares may be redeemed by
contacting the shareholder's financial institution. Shares will be redeemed at
the net asset value next determined after Federated Shareholder Services Company
receives the redemption request. According to the shareholder's instructions,
redemption proceeds can be sent to the financial institution or t o the
shareholder by check or by wire. The financial institution is responsible for
promptly submitting redemption requests and providing proper written redemption
instructions. Customary fees and commissions may be charged by the financial
institution for this service.
REDEEMING SHARES BY TELEPHONE. Redemptions may be made by calling the Fund
provided the Fund has a properly completed authorization form. These forms can
be obtained from Federated Securities Corp. Proceeds from redemption requests
received before 3:00 p.m. (Eastern time) 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, but will not include that day's dividend. Proceeds from
redemption requests received after that time include that day's dividend but
will be wired 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). Proceeds from redeemed shares purchased by check or through ACH
will not be wired until that method of payment has cleared. Proceeds from
redemption requests on holidays when wire transfers are restricted will be wired
the following business day. Questions about telephone redemptions on days when
wire transfers are restricted should be directed to your shareholder services
representative at the telephone number listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares By Mail"
should be considered. If at any time the Fund shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
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 commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
ACCOUNT AND SHARE INFORMATION
- --------------------------------------------------------------------------------
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.
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class are entitled to
vote. 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 election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting shall be called by the Trustees upon the written request of
shareholders owning at least 10% of the outstanding shares of the Trust.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Cash II Shares are sold at net asset value
primarily to retail customers of financial institutions and are subject to a
minimum initial investment of $25,000 over a 90-day period.
All classes are subject to certain of the same expenses.
Cash II Shares are distributed under a 12b-1 Plan adopted by the Fund and also
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 1-800-341-7400.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and total
return. 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.
AUTOMATED CASH MANAGEMENT TRUST
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
(A) COMMERCIAL PAPER--48.5%
- -----------------------------------------------------------------------------------------------
BANKING--14.4%
--------------------------------------------------------------------------------
$ 6,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank N.V., Amsterdam),
5.373%, 8/1/1996 $ 6,000,000
--------------------------------------------------------------------------------
35,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank PLC, London),
5.489%-5.645%, 12/3/1996-1/6/1997 34,230,467
--------------------------------------------------------------------------------
16,500,000 City of Cleveland, (Union Bank of Switzerland, Zurich LOC, Credit Suisse, Zurich
LOC), 5.590%, 10/3/1996 16,500,000
--------------------------------------------------------------------------------
10,000,000 National Australia Funding, Inc., (Guaranteed by National Australia Bank, Ltd.,
Melbourne), 5.753%, 1/29/1997 9,718,947
--------------------------------------------------------------------------------
33,000,000 Societe Generale North America, Inc., (Guaranteed by Societe Generale, Paris),
5.015%-5.020%, 8/8/1996-8/13/1996 32,963,163
--------------------------------------------------------------------------------
33,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska Handelsbanken, Stockholm),
5.147%-5.753%, 8/26/1996-1/30/1997 32,638,208
--------------------------------------------------------------------------------
25,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of Switzerland, Zurich),
5.681%, 8/1/1996 25,000,000
--------------------------------------------------------------------------------
10,000,000 Westpac Banking, Corp., Sydney, 5.578%, 10/10/1996 9,893,056
--------------------------------------------------------------------------------
17,200,000 Westpac Capital Corp., (Guaranteed by Westpac Banking, Corp., Sydney),
5.475%-5.783%, 9/10/1996-1/17/1997 16,863,668
-------------------------------------------------------------------------------- ----------------
Total 183,807,509
-------------------------------------------------------------------------------- ----------------
FINANCE-COMMERCIAL--18.6%
--------------------------------------------------------------------------------
38,000,000 Asset Securitization Cooperative Corp., 5.445%-5.578%, 9/19/1996-10/16/1996 37,671,281
--------------------------------------------------------------------------------
66,000,000 (c)Beta Finance, Inc., 4.992%-5.789%, 8/2/1996-1/23/1997 65,266,578
--------------------------------------------------------------------------------
30,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.359%-5.502%,
8/2/1996-10/10/1996 29,861,638
--------------------------------------------------------------------------------
21,000,000 (c)Falcon Asset Securitization Corp., 5.435%-5.750%, 10/29/1996-
1/22/1997 20,511,431
--------------------------------------------------------------------------------
23,000,000 General Electric Capital Corp., 5.453%-5.762%, 11/8/1996-1/13/1997 22,553,501
--------------------------------------------------------------------------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
(A) COMMERCIAL PAPER--CONTINUED
- -----------------------------------------------------------------------------------------------
FINANCE-COMMERCIAL--CONTINUED
--------------------------------------------------------------------------------
$ 17,500,000 Greenwich Funding Corp., 5.488%-5.495%, 9/9/1996-9/23/1996 $ 17,371,953
--------------------------------------------------------------------------------
43,700,000 PREFCO-Preferred Receivables Funding Co., 4.972%-5.731%,
8/14/1996-1/23/1997 43,205,327
-------------------------------------------------------------------------------- ----------------
Total 236,441,709
-------------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--7.7%
--------------------------------------------------------------------------------
8,000,000 American Express Credit Corp., 5.278%, 10/9/1996 7,922,106
--------------------------------------------------------------------------------
30,000,000 Associates Corp. of North America, 5.321%-5.691%, 8/1/1996-
9/24/1996 29,912,060
--------------------------------------------------------------------------------
12,000,000 McKenna Triangle National Corp., 5.381%, 8/5/1996 11,992,920
--------------------------------------------------------------------------------
41,000,000 New Center Asset Trust, A1+/P1 Series, 5.412%-5.525%, 9/23/1996-11/15/1996 40,508,128
--------------------------------------------------------------------------------
8,000,000 Norwest Financial, Inc., 5.314%, 9/17/1996 7,946,524
-------------------------------------------------------------------------------- ----------------
Total 98,281,738
-------------------------------------------------------------------------------- ----------------
INSURANCE--2.9%
--------------------------------------------------------------------------------
32,000,000 CXC, Inc., (Cap MAC Surety Bond), 5.428%-5.548%, 9/5/1996-
11/1/1996 31,739,558
--------------------------------------------------------------------------------
5,000,000 Marsh & McLennan Cos., Inc., 5.793%, 1/10/1997 4,873,325
-------------------------------------------------------------------------------- ----------------
Total 36,612,883
-------------------------------------------------------------------------------- ----------------
OIL & OIL FINANCE--4.1%
--------------------------------------------------------------------------------
14,000,000 Chevron Transport Corp., (Guaranteed by Chevron Corp.), 4.991%-5.476%,
8/9/1996-10/15/1996 13,910,014
--------------------------------------------------------------------------------
8,000,000 Chevron U.K. Investment PLC, (Guaranteed by Chevron Corp.), 5.442%, 11/15/1996 7,875,155
--------------------------------------------------------------------------------
30,000,000 Koch Industries, Inc., 5.681%, 8/1/1996 30,000,000
-------------------------------------------------------------------------------- ----------------
Total 51,785,169
-------------------------------------------------------------------------------- ----------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
(A) COMMERCIAL PAPER--CONTINUED
- -----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.8%
--------------------------------------------------------------------------------
$ 10,000,000 Ameritech Capital Funding Corp., (Guaranteed by Ameritech Corp.), 5.671%,
12/2/1996 $ 9,810,375
-------------------------------------------------------------------------------- ----------------
TOTAL COMMERCIAL PAPER 616,739,383
-------------------------------------------------------------------------------- ----------------
BANK NOTE--0.5%
- -----------------------------------------------------------------------------------------------
BANKING--0.5%
--------------------------------------------------------------------------------
6,000,000 Mellon Bank NA, Pittsburgh, 5.75%-5.78%, 9/26/1996-10/16/1996 5,999,766
-------------------------------------------------------------------------------- ----------------
CERTIFICATE OF DEPOSITS--2.0%
- -----------------------------------------------------------------------------------------------
BANKING--2.0%
--------------------------------------------------------------------------------
7,000,000 Lloyds Bank PLC, London, 5.720%, 8/16/1996 7,000,616
--------------------------------------------------------------------------------
3,000,000 Mellon Bank NA, Pittsburgh, 5.680%, 12/10/1996 3,000,000
--------------------------------------------------------------------------------
15,000,000 Societe Generale, Paris, 5.480%, 10/3/1996 15,000,518
-------------------------------------------------------------------------------- ----------------
TOTAL CERTIFICATE OF DEPOSITS 25,001,134
-------------------------------------------------------------------------------- ----------------
(B) VARIABLE RATE INSTRUMENTS--32.1%
- -----------------------------------------------------------------------------------------------
BANKING--15.1%
--------------------------------------------------------------------------------
7,000,000 American Seaway Foods, Inc., (KeyBank, N.A. LOC), 5.702%,
8/2/1996 7,000,000
--------------------------------------------------------------------------------
7,550,000 Associated Materials, Inc., (KeyBank, N.A. LOC), 5.702%, 8/2/1996 7,550,000
--------------------------------------------------------------------------------
15,000,000 Australia & New Zealand Banking Group, Melbourne, 5.480%,
8/2/1996 14,990,704
--------------------------------------------------------------------------------
30,000,000 Bank One, Columbus, N.A., 5.38%, 8/2/1996 29,973,646
--------------------------------------------------------------------------------
6,000,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.559%, 8/5/1996 6,000,000
--------------------------------------------------------------------------------
9,900,000 Cloquet, MN, Series 1996-B Potlach Corp, (Credit Suisse, Zurich LOC), 5.50%,
8/7/1996 9,900,000
--------------------------------------------------------------------------------
6,000,000 Development Authority of Richmond Cty., GA, (PNC Bank, N.A. LOC), 5.559%,
8/5/1996 6,000,000
--------------------------------------------------------------------------------
5,000,000 Kentucky Rural Economic Development Authority, (PNC Bank, N.A. LOC), 5.659%,
8/5/1996 5,000,000
--------------------------------------------------------------------------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
(B) VARIABLE RATE INSTRUMENTS--CONTINUED
- -----------------------------------------------------------------------------------------------
BANKING--CONTINUED
--------------------------------------------------------------------------------
$ 7,000,000 Massachusetts IFA, (Kendell Square), (PNC Bank, N.A. LOC), 5.58%, 8/8/1996 $ 7,000,000
--------------------------------------------------------------------------------
7,495,000 Medic Funding Corp. Series 1993-A, (Bank One, Akron, N.A. LOC), 5.58%, 8/8/1996 7,495,000
--------------------------------------------------------------------------------
12,950,000 Merit Care, Inc., (PNC Bank, N.A. LOC), 5.559%, 8/5/1996 12,950,000
--------------------------------------------------------------------------------
12,000,000 National Funding Corp., Series 1994-A, (American National Bank, Chicago LOC),
5.51%, 8/8/1996 12,000,000
--------------------------------------------------------------------------------
7,500,000 (c)SMM Trust, Series 1995-B, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.546%, 9/1/1996 7,500,000
--------------------------------------------------------------------------------
15,000,000 (c)SMM Trust, Series 1995-N, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.53%, 8/15/1996 15,000,044
--------------------------------------------------------------------------------
4,000,000 (c)SMM Trust, Series 1996-B, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.515%, 9/1/1996 4,000,000
--------------------------------------------------------------------------------
25,000,000 (c)SMM Trust, Series 1996-I, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.55%, 9/1/1996 25,000,000
--------------------------------------------------------------------------------
7,500,000 (c)SMM Trust, Series 1996-L, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.546%, 8/15/1996 7,500,000
--------------------------------------------------------------------------------
5,000,000 (c)SMM Trust, Series 1996-V, (Morgan Guaranty Trust Co., New York Swap
Agreement), 5.616%, 9/26/1996 5,000,000
--------------------------------------------------------------------------------
2,825,000 Vista Funding Corp., Series 1996-A, (Bank One, Dayton, N.A. LOC), 5.587%,
8/8/1996 2,825,000
--------------------------------------------------------------------------------
387,000 Westcourt, (Bank One, Texas N.A. LOC), 5.637%, 8/8/1996 387,000
-------------------------------------------------------------------------------- ----------------
Total 193,071,394
-------------------------------------------------------------------------------- ----------------
ELECTRICAL EQUIPMENT--1.9%
--------------------------------------------------------------------------------
4,200,975 Marta Leasing Ltd., (Guaranteed by General Electric Co.), 5.559%, 8/5/1996 4,200,975
--------------------------------------------------------------------------------
20,181,046 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.585%, 8/5/1996 20,181,046
-------------------------------------------------------------------------------- ----------------
Total 24,382,021
-------------------------------------------------------------------------------- ----------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
(B) VARIABLE RATE INSTRUMENTS--CONTINUED
- -----------------------------------------------------------------------------------------------
FINANCE-EQUIPMENT--0.6%
--------------------------------------------------------------------------------
$ 7,439,880 Caterpillar Financial Asset Trust 1996-A, 5.418%, 5/25/1997 $ 7,439,880
-------------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--2.4%
--------------------------------------------------------------------------------
30,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class A1), 5.55%, 8/15/1996 30,000,000
-------------------------------------------------------------------------------- ----------------
FOOD & BEVERAGE--0.8%
--------------------------------------------------------------------------------
10,000,000 PepsiCo, Inc., 5.750%, 9/6/1996 9,999,923
-------------------------------------------------------------------------------- ----------------
INSURANCE--10.6%
--------------------------------------------------------------------------------
54,500,000 General American Life Insurance Co., 5.638%, 8/21/1996 54,500,000
--------------------------------------------------------------------------------
1,951 Olympic Automobile Receivables Trust 1996-A, (Guaranteed by Financial Security
Assurance, Inc.), 5.250%, 3/15/1997 1,951
--------------------------------------------------------------------------------
25,000,000 Peoples Security Life Insurance, 5.73%, 9/1/1996 25,000,000
--------------------------------------------------------------------------------
12,500,000 SunAmerica Life Insurance Co., 5.65%, 9/1/1996 12,500,000
--------------------------------------------------------------------------------
12,500,000 SunAmerica Life Insurance Co., 5.967%, 9/1/1996 12,500,000
--------------------------------------------------------------------------------
30,000,000 Transamerica Occidental Life Insurance Company, 5.469%, 9/1/1996 30,000,000
-------------------------------------------------------------------------------- ----------------
Total 134,501,951
-------------------------------------------------------------------------------- ----------------
SOVEREIGN GOVERNMENT--0.8%
--------------------------------------------------------------------------------
10,000,000 Short Term Asset Corp., Secured Class F-1 Bonds, (European Bank for
Reconstruction and Development LIQ), 5.516%, 8/13/1996 10,000,000
-------------------------------------------------------------------------------- ----------------
TOTAL VARIABLE RATE INSTRUMENTS 409,395,169
-------------------------------------------------------------------------------- ----------------
(A) TIME DEPOSIT--2.0%
- -----------------------------------------------------------------------------------------------
BANKING--2.0%
--------------------------------------------------------------------------------
25,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.688%, 8/1/1996 25,000,000
-------------------------------------------------------------------------------- ----------------
U.S. TREASURY--1.4%
- -----------------------------------------------------------------------------------------------
TREASURY SECURITIES--1.4%
--------------------------------------------------------------------------------
18,000,000 U.S. Treasury Notes, 7.50%, 1/31/1997 18,205,095
-------------------------------------------------------------------------------- ----------------
(D) REPURCHASE AGREEMENTS--14.6%
- -----------------------------------------------------------------------------------------------
45,615,000 BA Securities, Inc., 5.68%, dated 7/31/1996, due 8/1/1996 45,615,000
--------------------------------------------------------------------------------
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- -------------------------------------------------------------------------------- ----------------
<C> <S> <C>
(D) REPURCHASE AGREEMENTS--CONTINUED
- -----------------------------------------------------------------------------------------------
$ 80,500,000 Goldman Sachs Group, LP, 5.75%, dated 7/31/1996, due 8/1/1996 $ 80,500,000
--------------------------------------------------------------------------------
60,000,000 UBS Securities, Inc., 5.65%, dated 7/31/1996, due 8/1/1996 60,000,000
-------------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 186,115,000
-------------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 1,286,455,547
-------------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at time of purchase.
(b) Denotes variable rate securities which show current rate and next demand
date.
(c) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1996, these securities amounted
to $85,778,008 which represents 6.7% of net assets.
(d) The 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
($1,274,419,364), July 31, 1996.
The following acronyms are used throughout this portfolio:
IFA--Industrial Finance Authority
LIQ--Liquidity Agreement
LOC--Letter of Credit
LP--Limited Partnership
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
AUTOMATED CASH MANAGEMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------
Investments in repurchase agreement $ 186,115,000
- -----------------------------------------------------------------------------
Investments in securities 1,100,340,547
- ----------------------------------------------------------------------------- ----------------
Total investments in securities, at amortized cost and value $ 1,286,455,547
- -----------------------------------------------------------------------------------------------
Cash 130,026
- -----------------------------------------------------------------------------------------------
Income receivable 3,025,186
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 1,289,610,759
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------
Payable for investments purchased 4,000,613
- -----------------------------------------------------------------------------
Payable for shares redeemed 8,760,657
- -----------------------------------------------------------------------------
Income distribution payable 2,028,339
- -----------------------------------------------------------------------------
Accrued expenses 401,786
- ----------------------------------------------------------------------------- ----------------
Total liabilities 15,191,395
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 1,274,419,364 shares outstanding $ 1,274,419,364
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------------------
$1,274,419,364 / 1,274,419,364 shares outstanding $1.00
- ----------------------------------------------------------------------------------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED CASH MANAGEMENT TRUST
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 71,316,972
- --------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 6,308,051
- -----------------------------------------------------------------------------------
Administrative personnel and services fee 954,191
- -----------------------------------------------------------------------------------
Custodian fees 188,742
- -----------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 141,089
- -----------------------------------------------------------------------------------
Directors'/Trustees' fees 23,572
- -----------------------------------------------------------------------------------
Auditing fees 8,861
- -----------------------------------------------------------------------------------
Legal fees 8,346
- -----------------------------------------------------------------------------------
Portfolio accounting fees 128,629
- -----------------------------------------------------------------------------------
Shareholder services fee 3,154,025
- -----------------------------------------------------------------------------------
Share registration costs 91,374
- -----------------------------------------------------------------------------------
Printing and postage 18,498
- -----------------------------------------------------------------------------------
Insurance premiums 37,621
- -----------------------------------------------------------------------------------
Taxes 40,401
- -----------------------------------------------------------------------------------
Miscellaneous 14,093
- ----------------------------------------------------------------------------------- -------------
Total expenses 11,117,493
- -----------------------------------------------------------------------------------
Waivers--
- --------------------------------------------------------------------
Waiver of investment advisory fee $(3,773,437)
- --------------------------------------------------------------------
Waiver of shareholder services fee (97,368)
- -------------------------------------------------------------------- -------------
Total waivers (3,870,805)
- ----------------------------------------------------------------------------------- -------------
Net expenses 7,246,688
- -------------------------------------------------------------------------------------------------- -------------
Net investment income $ 64,070,284
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED CASH MANAGEMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR THREE MONTHS YEAR
ENDED ENDED ENDED
JULY 31, 1996 JULY 31, 1995 APRIL 30, 1995
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------
Net investment income $ 64,070,284 $ 15,102,380 $ 48,731,991
- --------------------------------------------------------- ---------------- ---------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------
Distributions from net investment income (64,070,284) (15,102,380) (48,731,991)
- --------------------------------------------------------- ---------------- ---------------- ------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------
Proceeds from sale of shares 7,830,763,212 2,064,434,014 10,099,261,708
- ---------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 37,792,484 9,139,140 27,788,873
- ---------------------------------------------------------
Cost of shares redeemed (7,735,179,515) (1,915,628,903) (10,119,404,536)
- --------------------------------------------------------- ---------------- ---------------- ------------------
Change in net assets resulting from share
transactions 133,376,181 157,944,251 7,646,045
- --------------------------------------------------------- ---------------- ---------------- ------------------
Change in net assets 133,376,181 157,944,251 7,646,045
- ---------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------
Beginning of period 1,141,043,183 983,098,932 975,452,887
- --------------------------------------------------------- ---------------- ---------------- ------------------
End of period $ 1,274,419,364 $ 1,141,043,183 $ 983,098,932
- --------------------------------------------------------- ---------------- ---------------- ------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
AUTOMATED CASH MANAGEMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
- --------------------------------------------------------------------------------
(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 portfolios. The financial
statements included herein are only those of Automated Cash Management Trust
(the "Fund"), a diversified portfolio. 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 investment objective of the Fund is stability of principal and current
income consistent with stability of principal.
It is anticipated the Trust will add a new class of shares, as follows. All
action regarding this matter is pending approval by the Board of Trustees.
Name of New Class
Cash II Shares
Previously, the Fund provided 1 class of shares (to be named "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 Funds 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.
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
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.
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 Board of
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, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Beta Finance, Inc., 4.992% - 5.789% 2/5/96 - 7/18/96 $ 55,088,289
Falcon Asset Securitization Corp., 5.453% - 5.750% 4/30/96 - 7/10/96 $ 20,418,665
</TABLE>
CHANGE IN FISCAL YEAR--the Fund changed its fiscal year-end from April 30,
to July 31, effective October 27, 1994.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996 capital paid in aggregated $1,274,419,364
AUTOMATED CASH MANAGEMENT TRUST
- --------------------------------------------------------------------------------
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS YEAR ENDED
JULY 31, 1996 JULY 31, 1995 APRIL 30, 1995
<S> <C> <C> <C>
- --------------------------------------------------------- ---------------- ----------------- -----------------
Shares sold 7,830,763,212 2,064,434,014 10,099,261,708
Shares issued to shareholders in payment of distributions
declared 37,792,484 9,139,140 27,788,873
Shares redeemed (7,735,179,515) (1,915,628,903) (10,119,404,536)
- --------------------------------------------------------- ---------------- ----------------- -----------------
Net change resulting from share
transactions 133,376,181 157,944,251 7,646,045
<CAPTION>
- --------------------------------------------------------- ---------------- ----------------- -----------------
</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 0.50% the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 daily average net assets of the Fund for the period. The
fee paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of this fee. FSS can modify or terminate this voluntary waiver at
any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC
is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--Fserv 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.
REPORT OF ARTHUR ANDERSEN LLP
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, 1996, the related statement of operations
for the year then ended and the statement of changes in net assets and the
financial highlights for the year then ended 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 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, 1996, 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 (or audit) provide (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
Automated Cash Management Trust (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1996, and the results of its operations for
the year then ended and the changes in its net assets and its financial
highlights for the year then ended and for the period from May 1, 1995, to July
31, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Automated Cash Management Trust
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 c/o Federated Services Company
P.O. Box 8600
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
AUTOMATED CASH
MANAGEMENT TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Portfolio of Money Market
Obligations Trust, an Open-End
Management
Investment Company
Prospectus dated September 30, 1996
Cusip 60934N864
G00554-01-SS (9/96)
AUTOMATED CASH MANAGEMENT TRUST
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
CASH II SHARES
PROSPECTUS
The Cash II Shares of Automated Cash Management Trust (the "Fund") offered by
this prospectus represent interests in a 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, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge by calling 1-800-341-7400. To
obtain other information, or make inquiries about the Fund, contact your
financial institution. The Statement of Additional Information, material
incorporated by reference into this document, and other information regarding
the Fund is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
INVESTMENT INFORMATION 2
- ------------------------------------------------------
Investment Objective 2
Investment Policies 2
Investment Risks 4
Investment Limitations 5
FUND INFORMATION 5
- ------------------------------------------------------
Management of the Fund 5
Distribution of Cash II Shares 6
Administration of the Fund 7
Expenses of the Fund and Cash II Shares 7
NET ASSET VALUE 8
- ------------------------------------------------------
HOW TO PURCHASE SHARES 8
- ------------------------------------------------------
Special Purchase Features 9
HOW TO REDEEM SHARES 10
- ------------------------------------------------------
Special Redemption Features 11
ACCOUNT AND SHARE INFORMATION 11
- ------------------------------------------------------
TAX INFORMATION 12
- ------------------------------------------------------
Federal Income Tax 12
State and Local Taxes 12
OTHER CLASSES OF SHARES 13
- ------------------------------------------------------
PERFORMANCE INFORMATION 13
- ------------------------------------------------------
ADDRESSES 14
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
CASH II SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Charge 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).......................................................................... 0.19%
12b-1 Fee(2).............................................................................................. 0.17%
Total Other Expenses...................................................................................... 0.39%
Shareholder Services Fee .................................................... 0.25%
Total Operating Expenses(3)...................................................................... 0.75%
</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 12b-1 fee has been reduced to reflect the voluntary waiver of a portion
of the 12b-1 fee. The 12b-1 services provider can terminate this voluntary
waiver at any time at its sole discretion. The maximum 12b-1 fee is 0.25%.
(3) The total operating expenses would have been 1.14% absent the voluntary
waivers of a portion of the management fee and portions of the 12b-1 fee.
*Total operating expenses in the table above are estimated based on average
expenses expected to be incurred during the period ending July 31, 1997. During
the course of this period, expenses may be more or less than the average amount
shown.
Long term shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted under the rules of the National Association of
Securities Dealers, Inc.
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 a more complete description of the various costs and
expenses, see "Trust Information". Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of
each time period............................................................ $8 $24 $42 $93
</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.
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 Board of
Trustees have established two classes of shares known as Cash II Shares and
Institutional Service Shares. This prospectus relates only to Cash II Shares of
the Fund, which are designed primarily for the retail customers of financial
institutions as a convenient means of accumulating an interest in a
professionally managed portfolio investing in short-term money market
securities. A minimum initial investment of $25,000 over a 90-day period is
required except for retirement plans.
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 complying
with the diversification and other requirements of Rule 2a-7 under the
Investment Company Act of 1940 which regulates money market mutual funds and 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 the
money market instruments in the Fund's portfolio computed on a dollar-weighted
basis, will be 90 days or less in order to meet regulatory requirements. Unless
indicated otherwise, the investment policies may not be changed by the Board of
Trustees without shareholder approval.
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 domestic and 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 & 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.
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 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 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. Any bankruptcy,
receivership, default or change in the credit quality of the party providing the
credit enhancement will adversely affect the quality and marketability of the
underlying security and could cause losses to the Fund and affect its share
price.
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 short-term
U.S. government obligations 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 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.
As a matter of operating policy, 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 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.
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. The Fund will not with respect to
75% of its total assets, purchase securities issued by one banking institution,
including repurchase agreements secured by certificates of deposit, having a
value of more than 15% of the Fund's total assets. These investment limitations
cannot be changed without shareholder approval.
FUND INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES. The Fund 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 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.
Also, the adviser 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 $80 billion invested across
more than 250 funds under management and/or administration by its
subsidiaries, as of December 31, 1995, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more
than 1,800 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 interests. 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 CASH II SHARES
Federated Securities Corp. is the principal distributor for Cash II Shares of
the Fund. It is a Pennsylvania corporation organized on November 14, 1969, and
is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan adopted in
accordance with Investment Company Act Rule 12b-1 (the "Distribution Plan"), the
distributor may be paid an amount computed at an annual rate of .25% of the
average daily net asset value of Cash II Shares to finance any activity which is
principally intended to result in the sale of shares subject to the Distribution
Plan. The distributor may select financial institutions such as banks,
fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide services or distribution-related support services as
agents for their clients or customers.
The Distribution Plan is a compensation-type plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the Fund does
not pay for unreimbursed expenses of the distributor, including amounts expended
by the distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Distribution Plan.
In addition, 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 the average daily net asset value of
Cash II Shares to obtain certain personal services for shareholders and for the
maintenance of shareholder accounts. 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. In addition to payments made
pursuant to the Distribution Plan and Shareholder Services Agreement, Federated
Securities Corp. and Federated Shareholder Services, from their own assets, may
pay financial institutions supplemental fees
for the performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and /or upon the type and
nature of sales or marketing support furnished by the financial institution. Any
payments made by the distributor may be reimbursed by the Fund's investment
adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of Federated
Investors, provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund at an
annual rate which relates to the average aggregate daily net assets of all funds
advised by affiliates of Federated Investors as specified below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.
EXPENSES OF THE FUND AND CASH II SHARES
Holders of Cash II Shares pay their allocable portion of Trust and Fund
expenses.
The Fund pays all of its own expense and its allocable share of Trust expenses.
These expenses include, but are not limited to the cost of: organizing the Trust
and continuing its existence; registering the Trust and its shares; Trustees
fees; meetings of Trustees and shareholders and proxy solicitations therefor;
auditing, accounting and legal services; investment advisory and administrative
services; custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents, and registrars; issuing, purchasing, repurchasing, and
redeeming shares; reports to government agencies; preparing, printing and
mailing documents to shareholders such as financial statements, prospectuses and
proxies; taxes and commissions; insurance premiums; association membership dues;
and such non-recurring and extraordinary items as may arise. Certain expenses
may be allocated to each class as deemed appropriate. At present, the only
expenses allocated to any class are expenses under a Distribution Plan or a
Shareholder Services Agreement which relate to that class.
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 Cash II
Shares from the value of Fund assets attributable to Cash II 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.
HOW TO PURCHASE SHARES
- --------------------------------------------------------------------------------
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York Stock Exchange
is open for business. Shares may be purchased as described below, either through
a financial institution (such as a bank or broker/dealer) or by wire or by check
directly from the Fund, with a minimum initial investment of $25,000 over a
90-day period. Financial institutions may impose different minimum investment
requirements on their customers.
In connection with any sale, Federated Securities Corp. may from time to time
offer certain items of nominal value to any shareholder or investor. The Fund
reserves the right to reject any purchase request. An account must be
established at a financial institution or by completing, signing, and returning
the new account form available from the Fund before shares can be purchased.
PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION. Investors may purchase shares
through a financial institution which has a sales agreement with the
distributor. Orders are considered received when the Fund receives payment by
wire or converts payment by check from the financial institution into federal
funds. It is the financial institution's responsibility to transmit orders
promptly. Financial institutions may charge additional fees for their services.
PURCHASING SHARES BY WIRE. Shares may be purchased by wire by calling 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 in order to begin earning dividends that same day. Federal funds
should be wired as follows: Federated Shareholder Services Company, c/o State
Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit to:
Automated Cash Management Trust--Cash II 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. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions on
wire purchases should be directed to your shareholder services representative at
the telephone number listed on your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600.
The check should be made payable to Automated Cash Management Trust--Cash II
Shares. Please include an account number on the check. Orders by mail are
considered received when payment by check is converted into federal funds
(normally the business day after the check is received), and shares begin
earning dividends the next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send a
request for monies to the shareholder's commercial bank, savings bank, or credit
union ("bank") via the Automated Clearing House. The shareholder's bank, which
must be an Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally entered the
next business day after the initial phone request. For further information and
an application, call the Fund.
BY DIRECT DEPOSIT. Shareholders of the Fund may have their Social Security,
Railroad Retirement, VA Compensation or Pension, Civil Service Retirement, and
certain other retirement payments invested directly into their Fund account.
Shareholders must complete an application and file it with Federated Shareholder
Services Company prior to use of this program. Allow 60 to 90 days for the
application to be processed.
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 predetermined 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.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer agent
to minimize 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.
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM. A minimum of $100 can be automatically withdrawn
periodically from the shareholder's checking account at an Automated Clearing
House ("ACH") member
and invested in Fund shares. Shareholders should contact their financial
institution or the Fund to participate in this program.
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION. Shares may be redeemed by
contacting the shareholder's financial institution. Shares will be redeemed at
the net asset value next determined after Federated Shareholder Services Company
receives the redemption request. According to the shareholder's instructions,
redemption proceeds can be sent to the financial institution or to the
shareholder by check or by wire. The financial institution is responsible for
promptly submitting redemption requests and providing proper written redemption
instructions. Customary fees and commissions may be charged by the financial
institution for this service.
REDEEMING SHARES BY TELEPHONE. Redemptions in minimum amounts of $1,000 may be
made by calling the Fund provided the Fund has a properly completed
authorization form. These forms can be obtained from Federated Securities Corp.
Proceeds from redemption requests received before 3:00 p.m. (Eastern time) 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, but will not include that day's
dividend. Proceeds from redemption requests received after that time include
that day's dividend but will be wired 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). Proceeds from redeemed shares
purchased by check or through ACH will not be wired until that method of payment
has cleared. Proceeds from redemption requests on holidays when wire transfers
are restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares By Mail"
should be considered. If at any time the Fund shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
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 commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; 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.
SPECIAL REDEMPTION FEATURES
CHECK WRITING. Upon request, a checking account will be established to allow
shareholders to redeem their Fund shares. Shareholder accounts will continue to
receive the daily dividend declared on the shares to be redeemed until the check
is presented to UMB Bank, N.A., the bank responsible for administering the check
writing program, for payment. However, checks should never be made payable or
sent to UMB Bank, N.A. or the Fund to redeem shares, and a check may not be
written to close an account.
DEBIT CARD. Upon request, a debit account will be established. This account
allows shareholders to redeem shares by using a debit card. A fee will be
charged to the account for this service.
SYSTEMATIC WITHDRAWAL PROGRAM. If a shareholder's account has a value of at
least $25,000, a systematic withdrawal program may be established whereby
automatic redemptions are made from the account and transferred electronically
to any commercial bank, savings bank, or credit union that is an ACH member.
Shareholders may apply for participation in this program through their financial
institutions or the Fund.
ACCOUNT AND SHARE INFORMATION
- --------------------------------------------------------------------------------
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.
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless
requested by contacting the Fund or Federated Shareholder Services Company in
writing. Monthly confirmations are sent to report all transactions as well as
dividends paid during the month.
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 $10,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class are entitled to
vote. 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 election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting shall be called by the Trustees upon the written request of
shareholders owning at least 10% of the outstanding shares of the Trust.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Institutional Service Shares are sold at net
asset value primarily to retail and private banking customers of financial
institutions 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 Plan 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 1-800-341-7400.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and total
return. 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.
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Automated Cash Management Trust
Cash II 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 c/o Federated Services Company
P.O. Box 8600
Boston, MA 02266-8600
- -----------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder 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
CASH II SHARES
PROSPECTUS
A Portfolio of Money Market
Obligations Trust, an Open-End
Management
Investment Company
Prospectus dated September 30, 1996
[LOGO] FEDERATED INVESTORS
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
Cusip 60934N831
G00554-03-CII (9/96)
AUTOMATED CASH MANAGEMENT TRUST
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
CASH II SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectuses of Automated Cash Management Trust (the ``Fund'), a
portfolio of Money Market Obligations Trust (the ``Trust') dated
September 30 , 1996. This Statement is not a prospectus. You may
request a copy of a prospectus or a paper copy of this Statement, if
you have received it electronically, free of charge by calling
1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Federated Securities Corp is the distributor of the Funds and is a
subsidiary of Federated Investors
CUSIP 60934N864
CUSIP 60934N831
G00554-02-CII (9/96)
Statement dated September 30, 1996
TABLE OF CONTENTS
FUND HISTORY 1
INVESTMENT POLICIES 1
Acceptable Investments 1
U.S. Government Securities 1
Bank Instruments 1
Ratings 1
When Issued and Delayed Delivery
Transactions 2
Repurchase Agreements 2
Credit Enhancement 2
INVESTMENT LIMITATIONS 2
Regulatory Compliance 4
MONEY MARKET OBLIGATIONS TRUST
MANAGEMENT 5
Fund Ownership 9
Trustees' Compensation 10
Trustee Liability 10
INVESTMENT ADVISORY SERVICES 11
Investment Adviser 11
Advisory Fees 11
BROKERAGE TRANSACTIONS 11
OTHER SERVICES 12
Fund Administration 12
Custodian and Portfolio Accountant 12
Transfer Agent 12
Independent Public Accountants 12
DISTRIBUTION PLAN AND SHAREHOLDER
SERVICES 12
DETERMINING NET ASSET VALUE 13
REDEMPTION IN KIND 13
MASSACHUSETTS PARTNERSHIP LAW 13
THE FUND'S TAX STATUS 13
PERFORMANCE INFORMATION 13
Yield 14
Effective Yield 14
Total Return 14
Performance Comparisons 14
Economic and Market Information 15
ABOUT FEDERATED INVESTORS 15
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 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.
U.S. GOVERNMENT SECURITIES
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed
by U.S. government agencies or instrumentalities. These securities are
backed by:
the full faith and credit of the U.S. Treasury;
the issuer's right to borrow from the U.S. Treasury;
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:
Federal Farm Credit Bank;
Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation;
Federal National Mortgage Association; and
Student Loan Marketing Association.
BANK INSTRUMENTS
The instruments of banks and savings associations 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.
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.''
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 in a dollar amount sufficient to make payment for the securities 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.
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 sellers 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 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. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities 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.
CREDIT ENHANCEMENT
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 Fund may have more than 25% of its
total assets invested in securities credit enhanced by banks.
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. The fund will invest at least 25% of
the value of its total assets in bank instruments secured by these
instruments unless the Fund assumes a defensive posture.
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 beneficially 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this 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. 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.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Intermediate Municipal Trust and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Chief Executive Officer
and Director, Trustee, or Managing General Partner of the Funds.
Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President 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 or Trustee 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 or Trustee 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 or Trustee 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 Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee 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 or
Trustee 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 or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
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 or Trustee of the Funds; formerly, Counsel, Horizon Financial,
F.A., Western Region.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts; Director
or Trustee of the Funds; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Shareholder, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director or
Trustee 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 or Trustee 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 or Trustee 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 or Trustee 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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President, Secretary
and Treasurer 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.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board
of Trustees handles the responsibilities of the Board 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 Group of
Funds; Blanchard Precious Metals Fund, 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: 5-10 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; Federated
Insurance Series; 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; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond Fund,
Inc.; 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 Obligation;
The Virtus Funds; and World Investment Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Automated Cash
Management Trust: Stephens Inc., Little Rock, AR, owned approximately
148,133,665 shares (11.31%); BHC Securities Inc., Philadelphia, PA, owned
approximately 107,456,525 shares (8.21%); Fiduciary Trust Company
International, New York, NY, owned approximately 90,719,300 shares (6.93%).
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 54 other investment companies in the Fund
Complex
Thomas G. Bigley++ $1,293.06 $86,331 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
John T. Conroy, Jr., $1,826.67 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
William J. Copeland, $1,826.67 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
J. Christopher Donahue $ 0 $ 0 for the Trust and
President and Trustee 16 other investment companies in the Fund
Complex
James E. Dowd, $1,826.67 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D., $1,293.06 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr., $1,826.67 $115,760 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Peter E. Madden, $1,293.06 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Gregor F. Meyer, $1,293.06 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
John E. Murray, Jr., $1,293.06 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Wesley W. Posvar,$1,293.06 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
Marjorie P. Smuts, $1,293.06 $104,898 for the Trust and
Trustee 54 other investment companies in the Fund
Complex
*Information is furnished for the fiscal year ended July 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+The information is provided for the last calendar year.
++ Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds
TRUSTEE LIABILITY
The Trust's 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 31,1996, the adviser earned $6,308,051 of which $3,773,437
was waived. For the fiscal years ended April 30, 1995 and 1994, and for the
period from April 30, 1995 to July 31, 1995, the adviser earned $5,173,695,
$5,207,744 and $1,348,977 respectively, of which $3,374,156, $724,909, and
$1,049,124, 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.
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
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 year ended July 31, 1996 and the
fiscal years ended April 30, 1995 and 1994 and 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.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. 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, 1996, Federated Services Company earned
$954,191. For the fiscal year ended April 30, 1995 and 1994 and the period
from April 30, 1995 to July 31, 1995, the Administrators earned $783,297,
$721,387, and $204,235 respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
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. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, PA.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
With respect to Cash II Shares, the Fund has adopted a Plan pursuant to
Rule 12b-1 which was promulgated by the Securities and Exchange Commission
pursuant to the Investment Company Act of 1940. Both Cash II Shares and
Institutional Service Shares operate subject to shareholder servicing
agreements.
These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services, to stimulate
distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to: marketing efforts; 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 Plan, the Trustees expect that Cash II Shares will be able
to achieve a more predictable flow of cash for investment purposes and to
meet redemptions. This will facilitate more efficient portfolio management
and assist the Fun in pursuing its investment objectives. By identifying
potential investors whose needs are served by the Fund's objectives, and
properly servicing these accounts, it may be possible to curb sharp
fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (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 July 31, 1996, payments in the amount of $0 were
made pursuant to the Plan. In addition, for the fiscal year ended July 31,
1996, the Trust paid shareholder service fees in the amount of $3,056,657
of which $97,368 was waived.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares
of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Trustees will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is not
as liquid as a cash redemption. If redemption is made in kind, shareholders
who sell these securities could receive less than the redemption value and
could incur certain transaction costs.
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.
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, 1996, the yield for Institutional
Service Shares was 4.92%.
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, 1996, the effective yield for
Institutional Service Shares was 5.04%.
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 July 31, 1996 were 5.20%, 4.19% and 5.77%, respectively.
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.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. These total
returns represent the historic change in the value of an investment in the
Fund based on monthly reinvestment of dividends over a specified period of
time.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns in general, that demonstrate
basic investment concepts such as tax-deferred compounding, dollar-cost
averaging and systematic investment. In addition, the Fund can compare its
performance, or performance for the types of securities in which it
invests, to a variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders
handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors 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, 1995, Federated Investors managed
more than $40.2 billion in assets across approximately 47 money market
funds, including 17 government, 10 prime and 20 municipal with assets
approximating $20.9 billion, $11.5 billion and $7.8 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 $3 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 CLIENTS
Federated Investors 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 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. Federated's service to
financial professionals and institutions has earned its high rankings in
several DALBAR Surveys. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
*Source: Investment Company Institute
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 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 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 Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
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
TRUST INFORMATION 5
Management of the Trust 5
Distribution of Institutional Shares 6
Administration of the Fund 7
NET ASSET VALUE 7
HOW TO PURCHASE SHARES 7
HOW TO REDEEM SHARES 8
ACCOUNT AND SHARE INFORMATION 9
TAX INFORMATION 10
Federal Income Tax 10
State and Local Taxes 10
OTHER CLASSES OF SHARES 10
PERFORMANCE INFORMATION 10
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SERVICE SHARES 12
FINANCIAL STATEMENTS 13
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 22
ADDRESSES 23
</TABLE>
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge 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) 0.09%
12b-1 Fee None
Total Other Expenses 0.11%
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 shareholder services fee has been reduced to reflect the voluntary
waiver of a portion of the shareholder services fee. The shareholder
service provider can terminate this voluntary waiver at any time at its
sole discretion. The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.56% 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 Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Trust Information" and "How to Purchase Shares."
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 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,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.03 0.03 0.05 0.07 0.03
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (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 $ 1.00
TOTAL RETURN(B) 5.55% 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% 0.20%*
Net investment income 5.41% 5.58% 3.38% 3.16% 4.55% 6.77% 8.24%*
Expense waiver/
reimbursement(c) 0.36% 0.40% 0.15% 0.11% 0.12% 0.22% 0.34%*
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $2,182,999 $1,926,516 $763,879 $707,146 $679,533 $331,454 $148,598
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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 entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries, and
institutional investors as a convenient means of accumulating an interest in
a professionally managed, diversified portfolio investing only in short-term
U.S. government securities. A minimum initial investment of $1,000,000 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 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 complying with
the diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio
of U.S. government securities maturing in 13 months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise,
the investment policies 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. The Fund invests only in U.S. government securities.
These instruments are either issued or guaranteed by the U.S. government,
its agencies, or instrumentalities. These securities include, but are not
limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities, supported by the full faith and credit of
the United States; and
* notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to Federal funding.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government 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.
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 assets to
secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval. As a matter of non-fundamental policy, the Fund does not intend to
engage in reverse repurchase agreements. The Fund will notify shareholders
prior to any change in this policy. 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.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 0.25% 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 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.
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 and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Shares from the value of Fund assets attributable to
Institutional 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 p.m., 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Government Obligations Fund
- -- Institutional Shares. Orders by mail are considered received when payment
by check is converted into federal funds (normally the business day after
the check is received), and shares begin earning dividends the next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 12:00 noon (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
As of September 4, 1996, Scaup & Co., Boston, Massachusetts, owned 37.5% of
the voting securities of the Fund, and, therefore, may, for certain
purposes, be deemed to control the Fund and be able to affect the outcome of
certain matters presented for a vote of shareholders.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Institutional Services Shares are sold
at net asset value to financial institutions, financial intermediaries, and
other institutional investors, and are subject to a minimum initial
investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Services 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield, and total
return. 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.
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 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
22.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1996 1995(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.29% 5.31%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45%*
Net investment income 5.14% 5.63%*
Expense waiver/reimbursement(c) 0.11% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $702,274 $339,105
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS -- 42.8%
$ 16,500,000 Federal Farm Credit Bank Note -- 0.6%
5.60%, 6/3/1997 $ 16,480,595
99,820,000 (a)Federal Home Loan Bank, Discount Notes -- 3.4%
5.334%-5.657%, 9/12/1996 - 12/24/1996 98,327,819
35,000,000 (b)Federal Home Loan Bank, Floating Rate Note -- 1.2%
5.33%, 8/1/1996 34,993,248
28,000,000 (a)Federal Home Loan Mortgage Corp., Discount Note -- 1.0%
5.418%, 8/23/1996 27,909,311
30,000,000 (b)Federal Home Loan Mortgage Corp., Floating Rate Note -- 1.0%
5.56%, 8/6/1996 29,959,826
41,400,000 Federal National Mortgage Association Notes -- 1.4%
5.41%-5.91%, 8/19/1996 - 12/6/1996 41,385,190
174,975,000 (a)Federal National Mortgage Association, Discount Notes -- 6.0%
5.25%-5.726%, 9/24/1996 - 1/21/1997 171,861,115
180,000,000 (b)Federal National Mortgage Association, Floating Rate Notes -- 6.2%
5.305%-5.67%, 8/1/1996 - 8/6/1996 179,898,964
13,500,000 Student Loan Marketing Association Notes -- 0.5%
5.62%, 6/30/1997 13,456,043
150,355,000 (b)Student Loan Marketing Association, Floating Rate Notes -- 5.2%
5.40%-5.74%, 8/6/1996 150,285,318
77,575,000 (b)Housing Urban Development, Floating Rate Note -- 2.7%
5.825%, 8/1/1996 77,575,000
104,500,000 (a)U.S. Treasury Bills -- 3.5%
4.996%-5.248%, 9/19/1996 - 3/6/1997 102,736,076
289,000,000 U.S. Treasury Notes -- 10.1%
6.50%-8.50%, 9/30/1996 - 4/15/1997 290,973,642
TOTAL SHORT-TERM OBLIGATIONS 1,235,842,147
</TABLE>
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS -- 57.8%
$ 66,900,000 Bear, Stearns and Co., 5.69%, dated 7/31/1996, due 8/1/1996 $ 66,900,000
100,000,000 B.T. Securities Inc., 5.68%, dated 7/31/1996, due 8/1/1996 100,000,000
60,000,000 CIBC Wood Gundy, 5.69%, dated 7/31/1996, due 8/1/1996 60,000,000
35,000,000 Deutsche Morgan Grenfel, 5.70%, dated 7/31/1996, due 8/1/1996 35,000,000
303,800,000 Goldman Sachs & Co., LP, 5.80%, dated 7/31/1996, due 8/1/1996 303,800,000
115,000,000 Merrill Lynch Government Securities, 5.72%, dated 7/31/1996,
due 8/1/1996 115,000,000
80,000,000 Morgan Stanley & Co., Inc., 5.70%, dated 7/31/1996, due 8/1/1996 80,000,000
145,000,000 Nikko Securities, 5.72%, dated 7/31/1996, due 8/1/1996 145,000,000
145,000,000 Nomura Securities International, Inc., 5.72%, dated 7/31/1996,
due 8/1/1996 145,000,000
80,000,000 SBC Capital Markets, 5.70%, dated 7/31/1996, due 8/1/1996 80,000,000
145,000,000 UBS Securities, Inc., 5.70%, dated 7/31/1996, due 8/1/1996 145,000,000
81,000,000 (d)CS First Boston, Inc., 5.40%, dated 7/10/1996, due 9/9/1996 81,000,000
93,000,000 (d)Goldman Sachs & Co., LP, 5.30%, dated 7/10/1996, due 8/12/1996 93,000,000
62,000,000 (d)Lehman Brothers Government Securities, 5.43%, dated 6/12/1996,
due 9/11/1996 62,000,000
30,000,000 (d)Merrill Lynch Government Securities, 5.43%, dated 6/13/1996,
due 9/11/1996 30,000,000
65,000,000 (d)Morgan Stanley & Co., 5.315%, dated 7/16/1996, due 8/20/1996 65,000,000
60,000,000 (d)SBC Capital Markets, 5.32%, dated 7/16/1996, due 8/20/1996 60,000,000
TOTAL REPURCHASE AGREEMENTS 1,666,700,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $2,902,542,147
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Floating rate note with current rate and next reset date shown.
(c) The 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 within seven days if the creditworthiness of the issuer is
downgraded.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,885,272,914) at July 31, 1996.
The following acronym is used throughout this portfolio:
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 1,666,700,000
Investments in securities 1,235,842,147
Total investments in securities, at amortized cost and value $ 2,902,542,147
Cash 97,499
Income receivable 12,266,517
Receivable for shares sold 752,707
Total assets 2,915,658,870
LIABILITIES:
Payable for investments purchased 20,929,898
Payable for shares redeemed 46,812
Income distribution payable 8,840,005
Accrued expenses 569,241
Total liabilities 30,385,956
NET ASSETS for 2,885,272,914 shares outstanding $ 2,885,272,914
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$2,182,998,556 \ 2,182,998,556 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$702,274,358 \ 702,274,358 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $141,959,876
EXPENSES:
Investment advisory fee $ 5,061,781
Administrative personnel and services fee 1,914,143
Custodian fees 225,502
Transfer and dividend disbursing agent fees and expenses 166,025
Directors'/Trustees' fees 31,634
Auditing fees 13,159
Legal fees 15,034
Portfolio accounting fees 227,816
Shareholder services fee -- Institutional Shares 5,006,340
Shareholder services fee -- Institutional Service Shares 1,320,890
Share registration costs 269,109
Printing and postage 18,501
Insurance premiums 29,999
Taxes 16,411
Miscellaneous 11,523
Total expenses 14,327,867
Waivers --
Waiver of investment advisory fee $(2,827,496)
Waiver of shareholder services fee -- Institutional Shares (5,006,340)
Total waivers (7,833,836)
Net expenses 6,494,031
Net investment income $135,465,845
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 135,465,845 $ 79,342,312
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income
Institutional Shares (108,299,075) (71,018,165)
Institutional Service Shares (27,166,770) (8,324,147)
Change in net assets resulting from distributions to
shareholders (135,465,845) (79,342,312)
SHARE TRANSACTIONS --
Proceeds from sale of shares 14,537,344,438 8,123,000,879
Net asset value of shares issued to shareholders in payment of
distributions declared 39,437,151 19,779,451
Cost of shares redeemed (13,957,129,903) (6,641,037,966)
Change in net assets resulting from share transactions 619,651,686 1,501,742,364
Change in net assets 619,651,686 1,501,742,364
NET ASSETS:
Beginning of period 2,265,621,228 763,878,864
End of period $ 2,885,272,914 $ 2,265,621,228
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Government
Obligations Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is
to provide current income consistent with stability of principal.
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.
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.
GOVERNMENT 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.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$2,885,272,914. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995
<S> <C> <C>
Shares sold 11,676,332,015 7,200,004,553
Shares issued to shareholders in payment of distributions declared 27,600,308 16,152,849
Shares redeemed (11,447,449,600) (6,053,520,182)
Net change resulting from Institutional Share transactions 256,482,723 1,162,637,220
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995(A)
<S> <C> <C>
Shares sold 2,861,012,423 922,996,326
Shares issued to shareholders in payment of distributions declared 11,836,843 3,626,602
Shares redeemed (2,509,680,303) (587,517,784)
Net change resulting from Institutional Service Share transactions 363,168,963 339,105,144
Net change resulting from share transactions 619,651,686 1,501,742,364
</TABLE>
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995.
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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule
of portfolio investments, as of July 31, 1996, 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, 1996, 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, 1996, 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 its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
<TABLE>
<S> <S> <S>
Government 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 c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
</TABLE>
GOVERNMENT
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
Federated Investors
<Graphic>
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
<Graphic>
Cusip 60934N104
G01066-01 (9/96)
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 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 Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
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 4
TRUST INFORMATION 5
Management of the Trust 5
Distribution of Institutional Service Shares 6
Administration of the Fund 6
NET ASSET VALUE 7
HOW TO PURCHASE SHARES 7
HOW TO REDEEM SHARES 8
ACCOUNT AND SHARE INFORMATION 9
TAX INFORMATION 10
Federal Income Tax 10
State and Local Taxes 10
OTHER CLASSES OF SHARES 10
PERFORMANCE INFORMATION 10
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES 11
FINANCIAL STATEMENTS 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 21
ADDRESSES 22
</TABLE>
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge 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) 0.09%
12b-1 Fee None
Total Other Expenses 0.36%
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 0.56% 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 "Trust
Information" and "How to Purchase Shares." 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 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
21.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1996 1995(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.29% 5.31%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45%*
Net investment income 5.14% 5.63%*
Expense waiver/reimbursement(c) 0.11% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $702,274 $339,105
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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, financial intermediaries,
and institutional investors as a convenient means of accumulating an
interest in a professionally managed, diversified portfolio investing only
in short-term U.S. government securities. A minimum initial investment of
$1,000,000 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 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 complying with
the diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and 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 Board of Trustees without
shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. government securities.
These instruments are either issued or guaranteed by the U.S. government,
its agencies, or instrumentalities. These securities include, but are not
limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities, supported by the full faith and credit of
the United States; and
* notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to Federal funding.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government 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.
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 assets to
secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval. As a matter of non-fundamental policy, the Fund does not intend to
engage in reverse repurchase agreements. The Fund will notify shareholders
prior to any change in this policy. 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.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL SERVICE 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 0.25% 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 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 Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Service Shares from the value of Fund assets attributable
to Institutional Service 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 p.m., 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Government Obligations Fund
- -- Institutional Service Shares. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next
day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 12:00 noon (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Institutional Shares are sold at net
asset value primarily to financial institutions, financial intermediaries,
institutional investors, and entities holding shares in an agency or
fiduciary capacity, and are subject to a minimum initial investment of
$1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 fees, but are subject to
shareholder services 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and total
return. 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.
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 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,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.03 0.03 0.05 0.07 0.03
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (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 $ 1.00
TOTAL RETURN(B) 5.55% 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% 0.20%*
Net investment income 5.41% 5.58% 3.38% 3.16% 4.55% 6.77% 8.24%*
Expense waiver/
reimbursement(c) 0.36% 0.40% 0.15% 0.11% 0.12% 0.22% 0.34%*
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $2,182,999 $1,926,516 $763,879 $707,146 $679,533 $331,454 $148,598
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS -- 42.8%
$ 16,500,000 Federal Farm Credit Bank Note -- 0.6%
5.60%, 6/3/1997 $ 16,480,595
99,820,000 (a)Federal Home Loan Bank, Discount Notes -- 3.4%
5.334%-5.657%, 9/12/1996 - 12/24/1996 98,327,819
35,000,000 (b)Federal Home Loan Bank, Floating Rate Note -- 1.2%
5.33%, 8/1/1996 34,993,248
28,000,000 (a)Federal Home Loan Mortgage Corp., Discount Note -- 1.0%
5.418%, 8/23/1996 27,909,311
30,000,000 (b)Federal Home Loan Mortgage Corp., Floating Rate Note -- 1.0%
5.56%, 8/6/1996 29,959,826
41,400,000 Federal National Mortgage Association Notes -- 1.4%
5.41%-5.91%, 8/19/1996 - 12/6/1996 41,385,190
174,975,000 (a)Federal National Mortgage Association, Discount Notes -- 6.0%
5.25%-5.726%, 9/24/1996 - 1/21/1997 171,861,115
180,000,000 (b)Federal National Mortgage Association, Floating Rate Notes -- 6.2%
5.305%-5.67%, 8/1/1996 - 8/6/1996 179,898,964
13,500,000 Student Loan Marketing Association Notes -- 0.5%
5.62%, 6/30/1997 13,456,043
150,355,000 (b)Student Loan Marketing Association, Floating Rate Notes -- 5.2%
5.40%-5.74%, 8/6/1996 150,285,318
77,575,000 (b)Housing Urban Development, Floating Rate Note -- 2.7%
5.825%, 8/1/1996 77,575,000
104,500,000 (a)U.S. Treasury Bills -- 3.5%
4.996%-5.248%, 9/19/1996 - 3/6/1997 102,736,076
289,000,000 U. S. Treasury Notes -- 10.1%
6.50%-8.50%, 9/30/1996 - 4/15/1997 290,973,642
TOTAL SHORT-TERM OBLIGATIONS 1,235,842,147
</TABLE>
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS -- 57.8%
$ 66,900,000 Bear, Stearns and Co., 5.69%, dated 7/31/1996, due 8/1/1996 $ 66,900,000
100,000,000 B.T. Securities Inc., 5.68%, dated 7/31/1996, due 8/1/1996 100,000,000
60,000,000 CIBC Wood Gundy, 5.69%, dated 7/31/1996, due 8/1/1996 60,000,000
35,000,000 Deutsche Morgan Grenfel, 5.70%, dated 7/31/1996, due 8/1/1996 35,000,000
303,800,000 Goldman Sachs & Co., LP, 5.80%, dated 7/31/1996, due 8/1/1996 303,800,000
115,000,000 Merrill Lynch Government Securities, 5.72%, dated 7/31/1996,
due 8/1/1996 115,000,000
80,000,000 Morgan Stanley & Co., Inc., 5.70%, dated 7/31/1996, due 8/1/1996 80,000,000
145,000,000 Nikko Securities, 5.72%, dated 7/31/1996, due 8/1/1996 145,000,000
145,000,000 Nomura Securities International, Inc., 5.72%, dated 7/31/1996,
due 8/1/1996 145,000,000
80,000,000 SBC Capital Markets, 5.70%, dated 7/31/1996, due 8/1/1996 80,000,000
145,000,000 UBS Securities, Inc., 5.70%, dated 7/31/1996, due 8/1/1996 145,000,000
81,000,000 (d)CS First Boston, Inc., 5.40%, dated 7/10/1996, due 9/9/1996 81,000,000
93,000,000 (d)Goldman Sachs & Co., LP, 5.30%, dated 7/10/1996, due 8/12/1996 93,000,000
62,000,000 (d)Lehman Brothers Government Securities, 5.43%, dated 6/12/1996,
due 9/11/1996 62,000,000
30,000,000 (d)Merrill Lynch Government Securities, 5.43%, dated 6/13/1996,
due 9/11/1996 30,000,000
65,000,000 (d)Morgan Stanley & Co., 5.315%, dated 7/16/1996, due 8/20/1996 65,000,000
60,000,000 (d)SBC Capital Markets, 5.32%, dated 7/16/1996, due 8/20/1996 60,000,000
TOTAL REPURCHASE AGREEMENTS 1,666,700,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 2,902,542,147
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Floating rate note with current rate and next reset date shown.
(c) The 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 within seven days if the creditworthiness of the issuer is
downgraded.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,885,272,914) at July 31, 1996.
The following acronym is used throughout this portfolio:
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 1,666,700,000
Investments in securities 1,235,842,147
Total investments in securities, at amortized cost and value $ 2,902,542,147
Cash 97,499
Income receivable 12,266,517
Receivable for shares sold 752,707
Total assets 2,915,658,870
LIABILITIES:
Payable for investments purchased 20,929,898
Payable for shares redeemed 46,812
Income distribution payable 8,840,005
Accrued expenses 569,241
Total liabilities 30,385,956
NET ASSETS for 2,885,272,914 shares outstanding $ 2,885,272,914
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$2,182,998,556 \ 2,182,998,556 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$702,274,358 \ 702,274,358 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 141,959,876
EXPENSES:
Investment advisory fee $ 5,061,781
Administrative personnel and services fee 1,914,143
Custodian fees 225,502
Transfer and dividend disbursing agent fees and expenses 166,025
Directors'/Trustees' fees 31,634
Auditing fees 13,159
Legal fees 15,034
Portfolio accounting fees 227,816
Shareholder services fee -- Institutional Shares 5,006,340
Shareholder services fee -- Institutional Service Shares 1,320,890
Share registration costs 269,109
Printing and postage 18,501
Insurance premiums 29,999
Taxes 16,411
Miscellaneous 11,523
Total expenses 14,327,867
Waivers --
Waiver of investment advisory fee $ (2,827,496)
Waiver of shareholder services fee -- Institutional Shares (5,006,340)
Total waivers (7,833,836)
Net expenses 6,494,031
Net investment income $ 135,465,845
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 135,465,845 $ 79,342,312
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income
Institutional Shares (108,299,075) (71,018,165)
Institutional Service Shares (27,166,770) (8,324,147)
Change in net assets resulting from distributions to
shareholders (135,465,845) (79,342,312)
SHARE TRANSACTIONS --
Proceeds from sale of shares 14,537,344,438 8,123,000,879
Net asset value of shares issued to shareholders in payment of
distributions declared 39,437,151 19,779,451
Cost of shares redeemed (13,957,129,903) (6,641,037,966)
Change in net assets resulting from share transactions 619,651,686 1,501,742,364
Change in net assets 619,651,686 1,501,742,364
NET ASSETS:
Beginning of period 2,265,621,228 763,878,864
End of period $ 2,885,272,914 $ 2,265,621,228
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Government
Obligations Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is
to provide current income consistent with stability of principal.
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.
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.
GOVERNMENT 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.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$2,885,272,914. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995
<S> <C> <C>
Shares sold 11,676,332,015 7,200,004,553
Shares issued to shareholders in payment of distributions declared 27,600,308 16,152,849
Shares redeemed (11,447,449,600) (6,053,520,182)
Net change resulting from Institutional Share transactions 256,482,723 1,162,637,220
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995(A)
<S> <C> <C>
Shares sold 2,861,012,423 922,996,326
Shares issued to shareholders in payment of distributions declared 11,836,843 3,626,602
Shares redeemed (2,509,680,303) (587,517,784)
Net change resulting from Institutional Service Share transactions 363,168,963 339,105,144
Net change resulting from share transactions 619,651,686 1,501,742,364
</TABLE>
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995.
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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule
of portfolio investments, as of July 31, 1996, 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, 1996, 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, 1996, 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 its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
<TABLE>
<S> <S> <S>
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 c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
</TABLE>
GOVERNMENT
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
Federated Investors
<Graphic>
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
<Graphic>
Cusip 60934N807
G01066-02 (9/96)
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 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 provide current income consistent with stability of
principal and liquidity. The Fund's investment strategy is intended to
enable the Fund to provide shareholders with dividends that are exempt from
state and local income taxation to the extent permissible by federal and
state law. Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO
SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
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
TRUST INFORMATION 5
Management of the Trust 5
Distribution of Institutional Shares 6
Administration of the Fund 6
NET ASSET VALUE 6
HOW TO PURCHASE SHARES 7
HOW TO REDEEM SHARES 8
ACCOUNT AND SHARE INFORMATION 9
TAX INFORMATION 9
Federal Income Tax 9
State and Local Taxes 10
OTHER CLASSES OF SHARES 10
PERFORMANCE INFORMATION 10
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SERVICE SHARES 11
FINANCIAL STATEMENTS 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 19
ADDRESSES 20
</TABLE>
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge 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>
<CAPTION>
<S> <C> <C>
Management Fee (after waiver)(1) 0.01%
12b-1 Fee None
Total Other Expenses 0.16%
Shareholder Services Fee (after waiver)(2) 0.00%
Total Operating Expenses(3) 0.17%
</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 shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider
can terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.61% absent the voluntary
waivers 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 "How to Purchase Shares" 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 $5 $10 $22
</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 EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1996 1995(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.50% 0.94%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.17% 0.20%*
Net investment income 5.28% 5.78%*
Expense waiver/reimbursement(c) 0.44% 0.65%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $199,243 $3,070
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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 entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries, and
institutional investors as a convenient means of accumulating an interest in
a professionally managed, diversified portfolio investing only in short-term
U.S. government securities. A minimum initial investment of $1,000,000 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 to provide current income consistent
with stability of principal and liquidity. 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
complying with the diversification and other requirements of Rule 2a-7 under
the Investment Company Act of 1940 which regulates money market mutual funds
and by following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio
of U.S. government securities maturing in 13 months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise,
the investment policies may be changed by the Board of Trustees without
shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned directly,
pay interest exempt from state personal income tax. Therefore, dividends
paid by the Fund may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. government securities.
These instruments are either issued or guaranteed by the U.S. government,
its agencies, or instrumentalities. These securities include, but are not
limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities, supported by the full faith and credit of
the United States; and
* notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to Federal funding.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government 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 money and engage in reverse repurchase transactions in amounts 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.
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 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. Also, the
adviser 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 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 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 $80 billion invested
across more than 250 funds under management and/or administration by its
subsidiaries, as of December 31, 1995, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more than
1,800 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 interests. 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 INSTITUTIONAL 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Shares from the value of Fund assets attributable to
Institutional 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 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Government Obligations
Tax-Managed Fund -- Institutional Shares. Orders by mail are considered
received when payment by check is converted into federal funds (normally the
business day after the check is received), and shares begin earning
dividends the next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 1:00 p.m. (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
The Fund will limit its investments to those which, if owned directly, pay
interest exempt from state personal income tax. However, under the laws of
some states, the net investment income distributed by the Fund may be
taxable to shareholders. 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 other classes. Institutional Service Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries and institutional investors, and are subject to a minimum
initial investment of $1,000,000.
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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, and effective yield. 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.
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
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1996 1995(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.23% 0.95%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.42% 0.45%*
Net investment income 5.00% 5.55%*
Expense waiver/reimbursement(c) 0.19% 0.40%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $332,698 $76,165
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
GOVERNMENT AGENCIES -- 94.7%
$ 4,000,000 Federal Farm Credit Bank Notes, 5.40%-5.60%, 12/2/1996-6/3/1997 $ 3,995,915
24,900,000 (a)Federal Farm Credit Bank, Discount Notes, 5.29%-5.36%,
8/9/1996-9/13/1996 24,845,992
9,000,000 (b)Federal Farm Credit Bank, Floating Rate Notes, 5.32%, 8/1/1996 8,993,010
300,730,000 (a)Federal Home Loan Bank, Discount Notes, 5.33%-5.72%,
8/1/1996-1/22/1997 299,239,458
21,600,000 (b)Federal Home Loan Bank, Floating Rate Notes, 5.27%-5.33%,
8/1/1996-8/23/1996 21,583,910
2,500,000 Student Loan Marketing Association, 5.62%, 6/30/1997 2,491,860
15,000,000 (a)Student Loan Marketing Association, Discount Notes, 5.50%,
9/30/1996 14,866,125
56,565,000 (b)Student Loan Marketing Association, Floating Rate Notes,
5.40%-5.69%, 8/6/1996 56,516,451
51,000,000 (b)Student Loan Marketing Association, Floating Rate Master Notes,
5.39%, 8/6/1996 51,000,000
20,000,000 (a)Tennessee Valley Authority, Discount Note, 5.33%, 8/7/1996 19,982,533
TOTAL GOVERNMENT AGENCIES 503,515,254
U.S. TREASURY OBLIGATIONS -- 9.5%
U.S. TREASURY BILLS -- 2.4%
13,000,000 (a)5.00%-5.10%, 9/19/1996-11/14/1996 12,846,865
U.S. TREASURY NOTES -- 7.1%
37,750,000 6.50%-8.00%, 9/30/1996-3/31/1997 37,953,240
TOTAL U.S. TREASURY OBLIGATIONS 50,800,105
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $554,315,359
</TABLE>
(a) The issue shows the rate of discount at 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
($531,940,498) at July 31, 1996.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $554,315,359
Cash 388,596
Income receivable 1,646,780
Deferred expenses 129,605
Total assets 556,480,340
LIABILITIES:
Payable for investments purchased $ 22,505,304
Income distribution payable 1,764,278
Accrued expenses 270,260
Total liabilities 24,539,842
NET ASSETS for 531,940,498 shares outstanding $531,940,498
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$199,242,851 \ 199,242,851 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$332,697,647 \ 332,697,647 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $18,814,183
EXPENSES:
Investment advisory fee $ 692,278
Administrative personnel and services fee 261,681
Custodian fees 63,863
Transfer and dividend disbursing agent fees and expenses 40,487
Directors'/Trustees' fees 2,277
Auditing fees 8,581
Legal fees 2,141
Portfolio accounting fees 86,999
Shareholder services fee -- Institutional Shares 315,936
Shareholder services fee -- Institutional Service Shares 549,412
Share registration costs 69,893
Printing and postage 25,071
Insurance premiums 4,979
Taxes 175
Miscellaneous 6,291
Total expenses 2,130,064
Waivers --
Waiver of investment advisory fee $(664,948)
Waiver of shareholder services fee -- Institutional Shares (315,936)
Total waivers (980,884)
Net expenses 1,149,180
Net investment income $17,665,003
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995(A)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 17,665,003 $ 679,985
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income:
Institutional Shares (6,666,528) (22,005)
Institutional Service Shares (10,998,475) (657,980)
Change in net assets resulting from distributions to shareholders (17,665,003) (679,985)
SHARE TRANSACTIONS --
Proceeds from sale of shares 1,393,097,071 95,754,802
Net asset value of shares issued to shareholders in payment of
distributions declared 2,785,115 304,922
Cost of shares redeemed (943,176,795) (16,824,617)
Change in net assets resulting from share transactions 452,705,391 79,235,107
Change in net assets 452,705,391 79,235,107
NET ASSETS:
Beginning of period 79,235,107 --
End of period $ 531,940,498 $ 79,235,107
</TABLE>
(a) 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, 1996
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 portfolios. The
financial statements included herein are only those of Government
Obligations Tax-Managed Fund (the "Fund"), a diversified portfolio. 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 investment objective
of the Fund is to provide current income consistent with stability of
principal and liquidity.
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 over a period of five years from
the Fund's commencement date.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$531,940,498. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995(A)
<S> <C> <C>
Shares sold 570,331,953 4,997,518
Shares issued to shareholders in payment of distributions declared 2,591,398 2
Shares redeemed (376,750,642) (1,927,378)
Net change resulting from Institutional Shares transactions 196,172,709 3,070,142
</TABLE>
(a) For the period from June 2, 1995 (date of initial public investment) to
July 31, 1995.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995(B)
<S> <C> <C>
Shares sold 822,765,118 90,757,284
Shares issued to shareholders in payment of distributions declared 193,717 304,920
Shares redeemed (566,426,153) (14,897,239)
Net change resulting from Institutional Service Shares transactions 256,532,682 76,164,965
Net change resulting from share transactions 452,705,391 79,235,107
</TABLE>
(b) 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, the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.20% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 0.25% of average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC 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 borne
initially by the Adviser. The Fund has agreed to reimburse the Adviser for
the organizational expenses during the five year period following effective
date. For the period ended July 31, 1996, the Fund paid $2,027 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, 1996, the related
statement of operations for the year then ended, the statement of changes in
net assets and the financial highlights for the year then ended and 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 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, 1996, 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 Tax-Managed Fund (an investment portfolio of Money
Market Obligations Trust) as of July 31, 1996, the results of its operations
for the year then ended, the changes in its net assets and its financial
highlights for the year then ended and 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
August 20, 1996
ADDRESSES
<TABLE>
<S> <S>
Government Obligations Tax-Managed Fund
Institutional Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Administrative Services Federated Investors Tower
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
</TABLE>
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
Federated Investors
<Graphic>
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
<Graphic>
Cusip 60934N856
G01140-01 (9/96)
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 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 provide current income consistent with stability of
principal and liquidity. The Fund's investment strategy is intended to
enable the Fund to provide shareholders with dividends that are exempt from
state and local income taxation to the extent permissible by federal and
state law. Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO
SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
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 4
TRUST INFORMATION 5
Management of the Trust 5
Distribution of Institutional Service Shares 6
Administration of the Fund 6
NET ASSET VALUE 6
HOW TO PURCHASE SHARES 7
HOW TO REDEEM SHARES 8
ACCOUNT AND SHARE INFORMATION 9
TAX INFORMATION 9
Federal Income Tax 9
State and Local Taxes 10
OTHER CLASSES OF SHARES 10
PERFORMANCE INFORMATION 10
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES 11
FINANCIAL STATEMENTS 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 19
ADDRESSES 20
</TABLE>
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge 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) 0.01%
12b-1 Fee None
Total Other Expenses 0.41%
Shareholder Services Fee 0.25%
Total Operating Expenses(2) 0.42%
</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 0.61% absent the voluntary
waiver 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 "How to
Purchase Shares" 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 $4 $13 $24 $53
</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 EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1996 1995(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.23% 0.95%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.42% 0.45%*
Net investment income 5.00% 5.55%*
Expense waiver/reimbursement(c) 0.19% 0.40%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $332,698 $76,165
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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, financial intermediaries,
and institutional investors as a convenient means of accumulating an
interest in a professionally managed, diversified portfolio investing only
in short-term U.S. government securities. A minimum initial investment of
$1,000,000 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 to provide current income consistent
with stability of principal and liquidity. 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
complying with the diversification and other requirements of Rule 2a-7 under
the Investment Company Act of 1940 which regulates money market mutual funds
and by following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio
of U.S. government securities maturing in 13 months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise,
the investment policies may be changed by the Board of Trustees without
shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned directly,
pay interest exempt from state personal income tax. Therefore, dividends
paid by the Fund may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. government securities.
These instruments are either issued or guaranteed by the U.S. government,
its agencies, or instrumentalities. These securities include, but are not
limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities, supported by the full faith and credit of
the United States; and
* notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to Federal funding.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government 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 money and engage in reverse repurchase transactions in amounts 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.
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 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. Also, the
adviser 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 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 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 $80 billion invested
across more than 250 funds under management and/or administration by its
subsidiaries, as of December 31, 1995, Federated Investors is one of the
largest mutual fund investment managers in the United States. With more than
1,800 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 interests. 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 INSTITUTIONAL SERVICE 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <C>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Service Shares from the value of Fund assets attributable
to Institutional Service 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 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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. Shares cannot be purchased by wire on
holidays when wire transfers are restricted. Questions on wire purchases
should be directed to your shareholder services representative at the
telephone number listed on your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Government Obligations
Tax-Managed Fund -- Institutional Service Shares. Orders by mail are
considered received when payment by check is converted into federal funds
(normally the business day after the check is received), and shares begin
earning dividends the next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 1:00 p.m. (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
The Fund will limit its investments to those which, if owned directly, pay
interest exempt from state personal income tax. However, under the laws of
some states, the net investment income distributed by the Fund may be
taxable to shareholders. 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 other classes. Institutional Shares are sold at net
asset value primarily to financial institutions, financial intermediaries,
institutional investors, and entities holding shares in an agency or
fiduciary capacity, and are subject to a minimum initial investment of
$1,000,000.
All classes are subject to certain of the same expenses.
Instutitional Shares are distributed with no 12b-1 fees, but are subject to
shareholder services 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and total
return. 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.
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
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1996 1995(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.50% 0.94%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.17% 0.20%*
Net investment income 5.28% 5.78%*
Expense waiver/reimbursement(c) 0.44% 0.65%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $199,243 $3,070
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
GOVERNMENT AGENCIES -- 94.7%
$ 4,000,000 Federal Farm Credit Bank Notes, 5.40%-5.60%, 12/2/1996-6/3/1997 $ 3,995,915
24,900,000 (a)Federal Farm Credit Bank, Discount Notes, 5.29%-5.36%,
8/9/1996-9/13/1996 24,845,992
9,000,000 (b)Federal Farm Credit Bank, Floating Rate Notes, 5.32%, 8/1/1996 8,993,010
300,730,000 (a)Federal Home Loan Bank, Discount Notes, 5.33%-5.72%,
8/1/1996-1/22/1997 299,239,458
21,600,000 (b)Federal Home Loan Bank, Floating Rate Notes, 5.27%-5.33%,
8/1/1996-8/23/1996 21,583,910
2,500,000 Student Loan Marketing Association, 5.62%, 6/30/1997 2,491,860
15,000,000 (a)Student Loan Marketing Association, Discount Notes, 5.50%,
9/30/1996 14,866,125
56,565,000 (b)Student Loan Marketing Association, Floating Rate Notes,
5.40%-5.69%, 8/6/1996 56,516,451
51,000,000 (b)Student Loan Marketing Association, Floating Rate Master Notes,
5.39%, 8/6/1996 51,000,000
20,000,000 (a)Tennessee Valley Authority, Discount Note, 5.33%, 8/7/1996 19,982,533
TOTAL GOVERNMENT AGENCIES 503,515,254
U.S. TREASURY OBLIGATIONS -- 9.5%
U.S. TREASURY BILLS -- 2.4%
13,000,000 (a)5.00%-5.10%, 9/19/1996-11/14/1996 12,846,865
U.S. TREASURY NOTES -- 7.1%
37,750,000 6.50%-8.00%, 9/30/1996-3/31/1997 37,953,240
TOTAL U.S. TREASURY OBLIGATIONS 50,800,105
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 554,315,359
</TABLE>
(a) The issue shows the rate of discount at 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
($531,940,498) at July 31, 1996.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $554,315,359
Cash 388,596
Income receivable 1,646,780
Deferred expenses 129,605
Total assets 556,480,340
LIABILITIES:
Payable for investments purchased $ 22,505,304
Income distribution payable 1,764,278
Accrued expenses 270,260
Total liabilities 24,539,842
NET ASSETS for 531,940,498 shares outstanding $531,940,498
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$199,242,851 \ 199,242,851 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$332,697,647 \ 332,697,647 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 18,814,183
EXPENSES:
Investment advisory fee $ 692,278
Administrative personnel and services fee 261,681
Custodian fees 63,863
Transfer and dividend disbursing agent fees and expenses 40,487
Directors'/Trustees' fees 2,277
Auditing fees 8,581
Legal fees 2,141
Portfolio accounting fees 86,999
Shareholder services fee -- Institutional Shares 315,936
Shareholder services fee -- Institutional Service Shares 549,412
Share registration costs 69,893
Printing and postage 25,071
Insurance premiums 4,979
Taxes 175
Miscellaneous 6,291
Total expenses 2,130,064
Waivers --
Waiver of investment advisory fee $(664,948)
Waiver of shareholder services fee -- Institutional Shares (315,936)
Total waivers (980,884)
Net expenses 1,149,180
Net investment income $ 17,665,003
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995(A)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 17,665,003 $ 679,985
DISTRIBUTIONS TO SHAREHOLDERS --
Distributions from net investment income:
Institutional Shares (6,666,528) (22,005)
Institutional Service Shares (10,998,475) (657,980)
Change in net assets resulting from distributions to shareholders (17,665,003) (679,985)
SHARE TRANSACTIONS --
Proceeds from sale of shares 1,393,097,071 95,754,802
Net asset value of shares issued to shareholders in payment of
distributions declared 2,785,115 304,922
Cost of shares redeemed (943,176,795) (16,824,617)
Change in net assets resulting from share transactions 452,705,391 79,235,107
Change in net assets 452,705,391 79,235,107
NET ASSETS:
Beginning of period 79,235,107 --
End of period $ 531,940,498 $ 79,235,107
</TABLE>
(a) 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, 1996
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 portfolios. The
financial statements included herein are only those of Government
Obligations Tax-Managed Fund (the "Fund"), a diversified portfolio. 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 investment objective
of the Fund is to provide current income consistent with stability of
principal and liquidity.
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 over a period of five years from
the Fund's commencement date.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$531,940,498. Transactions in shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995(A)
Shares sold 570,331,953 4,997,518
Shares issued to shareholders in payment of distributions declared 2,591,398 2
Shares redeemed (376,750,642) (1,927,378)
Net change resulting from Institutional Shares transactions 196,172,709 3,070,142
</TABLE>
(a) For the period from June 2, 1995 (date of initial public investment) to
July 31, 1995.
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995(B)
Shares sold 822,765,118 90,757,284
Shares issued to shareholders in payment of distributions declared 193,717 304,920
Shares redeemed (566,426,153) (14,897,239)
Net change resulting from Institutional Service Shares transactions 256,532,682 76,164,965
Net change resulting from share transactions 452,705,391 79,235,107
</TABLE>
(b) 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, the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.20% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 0.25% of average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC 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 borne
initially by the Adviser. The Fund has agreed to reimburse the Adviser for
the organizational expenses during the five year period following effective
date. For the period ended July 31, 1996, the Fund paid $2,027 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, 1996, the related
statement of operations for the year then ended, the statement of changes in
net assets and the financial highlights for the year then ended and 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 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, 1996, 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 Tax-Managed Fund (an investment portfolio of Money
Market Obligations Trust) as of July 31, 1996, the results of its operations
for the year then ended, the changes in its net assets and its financial
highlights for the year then ended and 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
August 20, 1996
ADDRESSES
Government Obligations Tax-Managed Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
Federated Administrative Services Federated Investors Tower
Pittsburgh, PA 15222-3779
Custodian
State Street Bank and c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
Federated Investors
<Graphic>
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
<Graphic>
Cusip 60934N849
G01140-02 (9/96)
GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectuses of Government Obligations Fund (the ``Fund'), a portfolio
of Money Market Obligations Trust (the ``Trust') dated September 30,
1996. This Statement is not a prospectus. You may request a copy of a
prospectus or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 60934N104
G01066-03 (9/96)
Table of Contents
INVESTMENT POLICIES 1
Acceptable Investments 1
When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreement 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 1
Regulatory Compliance 3
MONEY MARKET OBLIGATIONS TRUST
MANAGEMENT 4
Share Ownership 7
Trustee Compensation 8
Trustee Liabilty 8
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 10
Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 10
Independent Public Accountants 10
SHAREHOLDER SERVICES AGREEMENT 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 11
MASSACHUSETTS PARTNERSHIP LAW 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 12
Total Return 12
Performance Comparisons 12
ABOUT FEDERATED INVESTORS 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 in a dollar amount sufficient to make payment for the securities 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. 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 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. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities to be purchased, are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous.The Fund will
not purchase any securities while borrowings in excess of 5% of the value
of its total assets are outstanding. During the period any reverse
repurchase agreements are outstanding, the Fund will restrict the purchase
of portfolio securities to money market instruments maturing on or before
the expiration date of the reverse repurchase aggreements, 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. In those cases, it may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets of the Fund at the time of the
pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any assets, except portfolio securities. This shall
not prevent the Fund from purchasing or holding bonds, debentures, notes,
certificates of indebtedness or other debt securities, entering into
repurchase agreements or engaging in other transactions where permitted by
its investment objective, policies, and limitations or the Trust's
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. However, 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. 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 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 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.
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 association 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this 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. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Fund willdetermine 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.
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 or Trustee of the
Funds. .
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Trustees and Officers, `Funds'' includes the
following investment companies:
111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund`s outstanding
Institutional Shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Government Obligations
Fund: Com II, Jersey City, NJ, owned approximately 113,287,745 shares
(5.24%), Odyssey Partner LP, New York, NY, owned approximately 126,644,450
shares (5.86%), and Citizens Trust Co., Providence, RI, owned approximately
116,140,044 shares (5.37%).
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Services Shares of the Government
Obligations Fund: Calif & Co., San Francisco, CA, owned approximately
50,430,408 shares (6.53%).
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 $2,240.23 $20,688 for the Trust and
Trustee 49 other investment companies in the
Fund Complex
John T. Conroy, Jr. $2,839.77 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
William J. Copeland $2,839.77 $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 $2,839.77 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $2,240.23 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $2,839.77 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Peter E. Madden $2,240.23 $90,563 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Gregor F. Meyer $2,240.23 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
John E. Murray, Jr., $2,240.23 $0 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Wesley W. Posvar $2,240.23 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Marjorie P. Smuts $2,240.23 $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, 1996.
#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 Articles of Incorporation privide 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 Government Obligations Fund, 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 Government Obligations Fund.
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, 1996, 1995, and 1994, the adviser earned $5,061,781,
$2,842,786, and $1,348,444, respectively, of which $2,827,496, $2,063,842,
and $990,717, 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.
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
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, 1996, 1995, and
1994 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.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Aministrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred to
as the `Administrators.'' For the fiscal year ended July 31, 1996,
Federated Administrative Services earned $1,914,143. 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.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
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. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, PA.
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 Trustees expect 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 July 31, 1996, payments in the amount of
$1,320,890 were made pursuant to the Shareholder Services Agreement on
behalf of Institutional Service Shares, all of which was retained by
Federated Shareholder Services.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares
of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Trustees will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is
not as liquid as a cash redemption. If redemption is made in kind,
shareholders who sell these securities could receive less than the
redemption value and could incur certain transaction costs.
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.
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, 1996, the yield for
Institutional Shares was 5.23%. For the seven-day period ended July 31,
1996, the yield for Institutional Service Shares was 4.98%.
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, 1996, the the effective yield
for Institutional Shares was 5.37%. For the seven-day period ended July 31,
1996, the effective yield for Institutional Service Shares was 5.11%.
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 and five-year periods ended July 31, 1996, and for the
period from March 31, 1990 (start of performance) through July 31, 1996,
the average annual total returns were 5.55%, 4.48%, and 5.12%,
respectively, for Institutional Shares. For the one-year period ended July
31, 1996, and from August 1, 1994 (start of performance) to July 31, 1996,
the average annual total returns were 5.29% and 5.26%, respectively, for
Institutional Service 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:
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.
Advertising and other promotional literature may include charts, graphs
and other illustrations using the Fund's returns, or returns in general,
that demonstrate baxic investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment. In addition,
the Fund can compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, such as
bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders
handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors 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, 1995, Federated Investors managed
more than $40.2 billion in assets across approximately 47 money market
funds, including 17 government, 10 prime and 20 municipal with assets
approximating $20.9 billion, $11.5 billion and $7.8 billion,
respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' 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 $3 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 CLIENTS
Federated Investors 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 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. Federated's service to
financial professionals and institutions has earned it high rankings in
several DALBAR Surveys. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
*Source: Investment Company Institute
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Government Obligations Tax-Managed Fund (the
``Fund'), a portfolio of Money Market Obligations Trust (the ``Trust'')
dated September 30, 1996. This Statement is not a prospectus. You may
request a copy of a prospectus or a paper copy of this Statement, if
you have received it electronically, free of charge by calling 1-800-
341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 60934N849
G01140-03 (9/96)
TABLE OF CONTENTS
INVESTMENT POLICIES 1
ACCEPTABLE INVESTMENT 1
WHEN-ISSUED AND DELAYED DELIVERY
TRANSACTIONS 1
REVERSE REPURCHASE AGREEMENTS 1
INVESTMENT LIMITATIONS 1
REGULATORY COMPLIANCE 3
MONEY MARKET OBLIGATIONS TRUST
MANAGEMENT 4
SHARE OWNERSHIP 7
TRUSTEE COMPENSATION 8
TRUSTEE LIABILITY 8
INVESTMENT ADVISORY SERVICES 9
INVESTMENT ADVISER 9
ADVISORY FEES 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 10
FUND ADMINISTRATION 10
CUSTODIAN AND PORTFOLIO ACCOUNTANT10
TRANSFER AGENT 10
INDEPENDENT PUBLIC ACCOUNTANTS 10
SHAREHOLDER SERVICES AGREEMENT 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 11
MASSACHUSETTS PARTNERSHIP LAW 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
YIELD 11
EFFECTIVE YIELD 12
TOTAL RETURN 12
PERFORMANCE COMPARISONS 12
ABOUT FEDERATED INVESTORS 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 in a dollar amount sufficient to make payment for the securities 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. 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. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities 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 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 invlolves 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 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 acquire more than 3% of the total outstanding 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 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.
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 association 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this 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. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Fund willdetermine 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.
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 or Trustee of the
Funds. .
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
THE FUNDS
As referred to in the list of Trustees and Officers, `Funds'' includes the
following investment companies:
111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund`s outstanding
Institutional Service Shares.
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Government Obligations
Tax-Managed Fund: Panabco, Newark, OH, owned approximately 31,560,901
shares (16.01%), Citizens Federal S & L Assn., Dayton, OH, owned
approximately 14,679,259 shares (7.45%), Parcol & Co., Akron, OH, owned
approximately 16,067,359 shares (8.15%), Resource Bank & Trust Co.,
Minneapolis, MN, owned approximately 10,201,386 shares (5.18%), and Santa
Monica Bank, Santa Monica, CA, owned approximately 19,805,188 shares
(10.05%).
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Government
Obligations Tax-Managed Fund: Citpad & Co., Paducah, KY, owned
approximately 20,597,122 shares (5.73%), The Washington Trust Co.,
Westerly, RI, owned approximately 52,466,076 shares (14.60%), Pacific Bank,
NA., San Francisco, CA, owned approximately 20,532,217 shares (5.71%),
Currier & Co., Salem, MA, owned approximately 86,922,456 shares (24.18%),
First Union National Bank, Charlotte, NC, owned approximately 68,849,723
shares (19.15%), Citizens Trust Co., Providence, RI, owned approximately
38,814,633 shares (10.80%), and Danco, Fort Wayne, IN, owned approximately
27,441,935 shares (7.63%).
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 $136.56 $20,688 for the Trust and
Trustee 49 other investment companies in the
Fund Complex
John T. Conroy, Jr. $150.24 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
William J. Copeland $150.24 $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 $150.24 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $136.56 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $150.24 $117,202 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Peter E. Madden $136.56 $90,563 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Gregor F. Meyer $136.56 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
John E. Murray, Jr., $136.56 $0 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Wesley W. Posvar $136.56 $106,460 for the Trust and
Trustee 64 other investment companies in the
Fund Complex
Marjorie P. Smuts $136.56 $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, 1996.
#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 Articles of Incorporation privide 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 Government Obligations Tax-Managed
Fund, 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 Government Obligations Tax-
Managed Fund.
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. For the fiscal
year ended July 31, 1996, the adviser earned $692,278, of which $664,948
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.
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
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, and the fiscal year ended July 31,
1996, 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.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Aministrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred to
as the `Administrators. For the period from May 30, 1995 (date of initial
public investment) to July 31, 1995, and the for fiscal year ended July 31,
1996, the Administrators earned $26,329, of which $0 was waived, and
$261,681, of which $0 was waived, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
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. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, PA.
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 Trustees expect 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 was 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 was waived.
For the fiscal year ended July 31, 1996, payments for Institutional Shares
in the amount of $315,936 were made pursuant to the Shareholder Services
Agreement, all of which was waived. For the fiscal year ended July 31,
1996, payments for Institutional Services Shares in the amount of $549,412
were made pursuant to the Shareholder Services Agreement, $0 of which was
waived.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares
of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Trustees will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is
not as liquid as a cash redemption. If redemption is made in kind,
shareholders who sell these securities could receive less than the
redemption value and could incur certain transaction costs.
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.
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, 1996, the yields for
Institutional Shares and Institutional Service Shares were 5.18% and 4.93%,
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, 1996, the effective yields for
Institutional Shares and Institutional Service Shares were 5.32% and 5.05%,
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.
The Fund's cumulative total return (reflecting performance over a
specific period of time) for Institutional Service Shares and Institutional
Shares for the period from June 2, 1995 (date of initial public investment)
through May 30, 1995 (date of initial public investment) was 5.28% and
5.54%, respectively. The Fund's average annual total return for the one-
year period ended July 31, 1996, was 5.23% for Institutional Service Shares
and 5.50% 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:
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.
Advertising and other promotional literature may include charts, graphs
and other illustrations using the Fund's returns, or returns in general,
that demonstrate baxic investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment. In addition,
the Fund can compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, such as
bank savings accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders
handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors 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, 1995, Federated Investors managed
more than $40.2 billion in assets across approximately 47 money market
funds, including 17 government, 10 prime and 20 municipal with assets
approximating $20.9 billion, $11.5 billion and $7.8 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' 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 $3 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 CLIENTS
Federated Investors 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 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. Federated's service to
financial professionals and institutions has earned it high rankings in
several DALBAR Surveys. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
*Source: Investment Company Institute
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 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 Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
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 Risks 6
Investment Limitations 6
TRUST INFORMATION 6
Management of the Trust 6
Distribution of Institutional Shares 7
Administration of the Fund 8
NET ASSET VALUE 8
HOW TO PURCHASE SHARES 9
HOW TO REDEEM SHARES 10
ACCOUNT AND SHARE INFORMATION 11
TAX INFORMATION 11
Federal Income Tax 11
State and Local Taxes 12
OTHER CLASSES OF SHARES 12
PERFORMANCE INFORMATION 12
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SERVICES SHARES 13
FINANCIAL STATEMENTS 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
32
ADDRESSES Inside Back Cover
</TABLE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of None
offering price)
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage None
of offering price)
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 None
applicable)
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.09%
12b-1 Fee None
Total Other Expenses 0.11%
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 shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider
can terminate this voluntary waiver at any time at its sole discretion.
The maximun shareholder services fee is 0.25%
(3) The total operating expenses would have been 0.56% 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 "Trust Information" and "How to Purchase Shares."
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 Independent Public Accountants on
page 32.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
Income from
investment
operations
Net investment
income 0.05 0.06 0.03 0.03 0.05 0.07 0.03
Less distributions
Distributions
from net
investment income (0.05) (0.06) (0.03) (0.03) (0.05) (0.07) (0.03)
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
END OF PERIOD
Total return(b) 5.58% 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% 0.20%*
Net investment
income 5.43% 5.60% 3.47% 3.20% 4.53% 6.54% 8.21%*
Expense waiver/
reimbursement(c) 0.36% 0.38% 0.14% 0.09% 0.10% 0.24% 0.68%*
Supplemental data
Net assets, end
of period
(000 omitted) $3,032,602 $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593 $34,777
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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 entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries and institutional
investors as a convenient means of accumulating an interest in a
professionally managed, portfolio investing in short-term money market
securities. A minimum initial investment of $1,000,000 over a one year
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 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 complying with the
diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies 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. 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.
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. Any
bankruptcy, receivership, default, or change in the credit quality of the
party providing the credit enhancement will adversely affect the quality and
marketability of the underlying security and could cause losses to the Fund
and affect its share price.
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
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.
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. 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 association having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment. Concentrating investments in one industry may subject
the Fund to more risk than if it did not concentrate.
</>
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. These investment limitations cannot be changed
without shareholder approval.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 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.
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 and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Shares from the value of Fund assets attributable to
Institutional 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder Services Company, c/o State Street
Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit to:
Money Market Obligations Trust -- 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. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Money Market Obligations
Trust -- Institutional Shares. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next
day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 5:00 p.m. (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Institutional Service Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries and institutional investors and are subject to a minimum
initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield, and total
return. 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.
PRIME 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 32.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.05 0.05 0.003
Less distributions
Distributions from net investment income (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
Total return (b) 5.32% 5.38% 0.30%
Ratios to average net assets
Expenses 0.45% 0.45% 0.34%*
Net investment income 5.13% 5.66% 4.68%*
Expense waiver/reimbursement(c) 0.11% 0.13% 0.14%*
Supplemental data
Net assets, end of period (000 omitted) $1,297,019 $500,954 $9,387
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
PRIME OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
BANK NOTES--1.5%
BANKING--1.5%
$ 16,000,000 Comerica Bank, Detroit, MI, 5.650%, 9/23/1996 $ 15,998,664
10,000,000 Harris Trust & Savings Bank, Chicago, 5.500%, 3/26/1997 9,996,261
38,000,000 Mellon Bank NA, Pittsburgh, 5.750% - 5.780%, 9/26/1996 -
10/16/1996 37,998,472
TOTAL BANK NOTES 63,993,397
BANKERS ACCEPTANCE--0.3%
BANKING--0.3%
13,500,000 KeyBank, N.A., 5.782%, 1/6/1997 13,167,015
CERTIFICATE OF DEPOSIT--4.3%
BANKING--4.3%
30,000,000 Abbey National Bank PLC, London, 5.800%, 1/13/1997 30,001,796
80,000,000 Bayerische Vereinsbank AG, Munich, 5.380% - 5.420%, 9/30/1996 -
10/1/1996 79,998,842
21,000,000 Dresdner Bank Ag, Frankfurt, 5.026%, 2/26/1997 20,995,280
15,000,000 First Alabama Bank, Birmingham, 5.430%, 10/15/1996 14,999,950
20,000,000 Mellon Bank NA, Pittsburgh, 5.680%, 12/10/1996 20,000,000
20,000,000 Societe Generale, Paris, 5.480%, 10/3/1996 20,000,690
TOTAL CERTIFICATES OF DEPOSIT 185,996,558
(A)COMMERCIAL PAPER--40.0%
BANKING--7.5%
61,000,000 ABN AMRO Bank N.V., Amsterdam, 5.013% - 5.077%, 8/5/1996 -
8/27/1996 60,875,907
65,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank
PLC, London), 5.413% - 5.645%, 10/21/1996 - 1/6/1997 63,773,313
4,135,000 Benedictine Health System, (Lasalle National Bank, Chicago LOC),
5.706%, 10/15/1996 4,086,543
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
BANKING--CONTINUED
$ 90,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian
Imperial Bank of Commerce, Toronto), 5.372% - 5.373%, 8/30/1996 $ 89,615,750
7,900,000 City of Cleveland, (Union Bank of Switzerland, Zurich LOC,
Credit Suisse, Zurich LOC), 5.590%, 10/3/1996 7,900,000
75,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska
Handelsbanken, Stockholm), 5.568%, 10/17/1996 74,119,313
24,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of
Switzerland, Zurich), 5.681%, 8/1/1996 24,000,000
Total 324,370,826
ENTERTAINMENT--0.5%
20,000,000 Disney (Walt) Holding Co., 5.336%, 9/6/1996 19,896,000
FINANCE - AUTOMOTIVE--4.7%
205,000,000 Ford Motor Credit Corp., 5.407% - 5.594%, 8/12/1996 - 10/28/1996 203,842,094
FINANCE - COMMERCIAL--11.2%
17,000,000 Alpha Finance Corp., Ltd., 5.563%, 10/11/1996 16,815,933
15,000,000 Asset Securitization Cooperative Corp., 5.376%, 8/19/1996 14,960,250
153,500,000 Beta Finance, Inc., 4.992% - 5.550%, 8/2/1996 - 11/25/1996 152,386,397
49,700,000 CIESCO, Inc., 4.992% - 5.482%, 8/7/1996 - 9/20/1996 49,402,828
11,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.502%, 10/10/1996 10,884,072
47,250,000 Falcon Asset Securitization Corp., 5.474%, 9/10/1996 46,966,500
132,000,000 General Electric Capital Corp., 5.323% - 5.764%, 9/27/1996 -
1/29/1997 130,001,693
45,177,000 Greenwich Funding Corp., 5.370% - 5.495%, 8/12/1996 - 9/23/1996 45,040,238
17,500,000 Transamerica Finance Corp., 5.782%, 1/6/1997 17,068,353
Total 483,526,264
FINANCE - RETAIL--10.2%
196,800,000 American Express Credit Corp., 5.001% - 5.324%, 8/2/1996 -
10/11/1996 196,048,654
92,700,000 Associates Corp. of North America, 5.322% - 5.691%, 8/1/1996 -
9/26/1996 92,455,998
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - RETAIL--CONTINUED
$135,000,000 New Center Asset Trust, A1+/P1 Series, 5.412% - 5.717%, 9/23/1996 -
1/3/1997 $ 133,339,456
21,000,000 Norwest Financial, Inc., 5.322%, 9/27/1996 20,829,760
Total 442,673,868
OIL & OIL FINANCE--0.6%
27,500,000 Koch Industries, Inc., 5.681%, 8/1/1996 27,500,000
INSURANCE--4.8%
10,000,000 Marsh & McLennan Cos., Inc., 5.214%, 10/11/1996 9,900,994
166,000,000 CXC, Inc., (CAPMAC Surety Bond), 5.378% - 5.575%, 8/7/1996 -
11/1/1996 164,252,316
35,000,000 City of New York G.O. 1995-B, (Guaranteed by FGIC), 5.270%,
8/21/1996 35,000,000
Total 209,153,310
TOTAL COMMERCIAL PAPER 1,710,962,362
CORPORATE NOTES--2.5%
FINANCE - COMMERCIAL--0.6%
25,000,000 Beta Finance, Inc., 5.540%-5.770%, 9/19/96 - 3/27/1997 25,000,000
FINANCE - EQUIPMENT--0.7%
14,879,761 Caterpillar Financial Asset Trust 1996-A, 5.418%, 5/25/1997 14,879,761
17,397,141 Navistar Financial 1996-A Owner Trust, 5.250%, 6/15/1997 17,391,469
Total 32,271,230
FINANCE - RETAIL--0.1%
3,000,000 Beneficial Corp., 9.350%, 2/3/1997 3,049,304
FOOD & BEVERAGE--0.6%
24,000,000 PepsiCo, Inc., 5.830%, 8/27/1996 24,000,612
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE NOTES--CONTINUED
INSURANCE--0.3%
$ 5,853 Olympic Automobile Receivables Trust 1996-A, (Guaranteed by
Financial Security Assurance, Inc.), 5.250%, 3/15/1997 $ 5,853
12,740,000 S & S Financial International, (Guaranteed by Financial Security
Assurance, Inc.), 10.125%, 12/16/1996 12,933,931
Total 12,939,784
FINANCE-AUTO--0.2%
7,219,254 WFS Financial Owner Trust 1996-A, 5.350%, 3/1/1997 7,217,759
TOTAL CORPORATE NOTES 104,478,689
GOVERNMENT AGENCIES--0.1%
FEDERAL HOME LOAN BANK NOTE--0.1%
4,000,000 5.530%, 3/24/1997 4,000,531
(C)VARIABLE RATE INSTRUMENTS--23.4%
BANKING--16.6%
4,000,000 500 South Front St. LP, Series A, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 4,000,000
6,315,000 500 South Front St. LP, Series B, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 6,315,000
6,100,000 Abbott Foods, Series 1996, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 6,100,000
6,100,000 Alabama State IDA, (SERIES 1994) Miltope Project, (First Alabama
Bank, Birmingham LOC), 5.580%, 8/8/1996 6,100,000
10,100,000 Alabama State IDA, (Wellborn Cabinet, Inc.), Tax Revenue Bonds,
(Amsouth Bank N.A., Birmingham LOC), 5.490%, 8/7/1996 10,100,000
8,285,000 Alexandria Executive Club LP, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 8,285,000
8,800,000 Arrow N.A., Inc., (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 8,800,000
3,500,000 Asset Holdings V, (Bayerische Vereinsbank AG, Munich LOC),
5.580%, 8/8/1996 3,500,000
16,500,000 Association of American Medical Colleges, (Chemical Bank,
New York LIQ), 5.618%, 8/7/1996 16,500,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 15,000,000 Australia & New Zealand Banking Group, Melbourne, 5.480%,
8/2/1996 $ 14,990,704
4,000,000 Bardstown City, KY, (RJ Tower Project), (Series 1995), (Comerica, Inc.
LOC), 5.520%, 8/8/1996 4,000,000
16,900,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.559%, 8/5/1996 16,900,000
1,627,790 Bowling Green Manor L.P., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 1,627,790
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH LOC),
5.890%, 1/3/1997 17,400,000
7,231,000 Capital One Funding Corp., SERIES 1994-A, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 7,231,000
23,771,000 Capital One Funding Corp., SERIES 1995-A, (Bank One, Indianapolis,
IN LOC), 5.510%, 8/8/1996 23,771,000
24,558,000 Capital One Funding Corp., SERIES 1995-B, (Liberty National Bank &
Trust Co. LOC), 5.510%, 8/8/1996 24,558,000
20,472,000 Capital One Funding Corp., Series 1994-C, (Bank One, Cleveland,
N.A. LOC), 5.510%, 8/8/1996 20,472,000
9,525,000 Capital One Funding Corp., Series 1994-D, (Liberty National Bank &
Trust Co. LOC), 5.510%, 8/8/1996 9,525,000
22,781,000 Capital One Funding Corp., Series 1995-F, (Bank One, Cleveland,
N.A. LOC), 5.510%, 8/8/1996 22,781,000
11,800,000 Cloquet, MN, Series 1996-B Potlach Corp, (Credit Suisse, Zurich
LOC), 5.500%, 8/7/1996 11,800,000
1,052,337 Clyde Manor LP, (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 1,052,337
3,200,000 Columbia County, GA Development Authority, Series 1993,
(SunTrust Banks, Inc. LOC), 5.550%, 8/7/1996 3,200,000
3,950,000 Eastwinds Investment, Ltd., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,950,000
7,215,000 Fort Craig LP, (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 7,215,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 4,600,000 G.M.H. Enterprises, Inc., (Series 1995), (National City Bank,
Cleveland, OH LOC), 5.500%, 8/8/1996 $ 4,600,000
3,500,000 Gerken Materials, Inc., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,500,000
2,350,000 Grote Family LP, (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 2,350,000
12,165,000 Hunt Club Apartments, Inc., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/7/1996 12,165,000
1,635,000 Jade Sterling Steel Co., Inc., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 1,635,000
245,000 Kenny, Donald R. and Cheryl A., (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 245,000
7,200,000 Kenny, Donald R. and Cheryl A., Series 1995-A, (National City Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 7,200,000
8,150,000 Kenny, Donald R. and Cheryl A., Series 1995-B, (Huntington National
Bank, Columbus, OH LOC), 5.580%, 8/8/1996 8,150,000
3,600,000 Kokosing Construction Co., Inc., (National City Bank, Cleveland,
OH LOC), 5.500%, 8/7/1996 3,600,000
2,883,000 Midwest Funding Corp., Series 1991 A Class A-1, (Bank One,
Columbus, N.A. LOC), 5.510%, 8/8/1996 2,883,000
3,510,000 Midwest Funding Corp., Series 1991 B, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 3,510,000
4,714,000 Midwest Funding Corp., Series 1991-C, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 4,714,000
4,120,000 Midwest Funding Corp., Series 1992-A, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 4,120,000
1,578,000 Midwest Funding Corp., Series 1992-B, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 1,578,000
3,863,000 Midwest Funding Corp., Series 1992-C, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 3,863,000
13,000,000 Mississippi Business Finance Corp., Choctaw Foods, Inc.,
(Rabobank Nederland, Utrecht LOC), 5.550%, 8/7/1996 13,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 8,130,000 Mississippi Business Finance Corp., Metalloy Project, (Comerica Bank,
Detroit, MI LOC), 5.580%, 8/8/1996 $ 8,130,000
12,000,000 Mississippi Business Finance Corp., Series 1994, (Wachovia Bank of
Georgia NA, Atlanta LOC), 5.618%, 8/7/1996 12,000,000
2,000,000 Mississippi Business Finance Corp., Series 1995 Plantation Pointe,
LP Project, (Amsouth Bank N.A., Birmingham LOC),
5.580%, 8/8/1996 2,000,000
2,860,000 Nova University, Inc., Lease Revenue Bonds, Series 1993 Miami
Dolphins Training Facility, (Sun Bank/South Florida LOC),
5.550%, 8/7/1996 2,860,000
4,610,000 Olen Corp., (National City Bank, Cleveland, OH LOC), 5.500%,
8/7/1996 4,610,000
2,475,000 Orangeburg Convalescent Care Center, Inc., Series A 1995,
(PNC Bank, Kentucky LOC), 5.559%, 8/5/1996 2,475,000
1,700,000 PNC Bank, N.A., 5.380%, 8/2/1996 1,699,675
4,994,000 Primex Funding Corp., (Bank One, Indianapolis, IN LOC),
5.510%, 8/8/1996 4,994,000
3,000,000 Roby Company LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,000,000
7,535,000 Roby Company LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 7,535,000
13,150,000 Rooker, J.W., (Wachovia Bank of Georgia NA, Atlanta LOC),
5.618%, 8/7/1996 13,150,000
250,000 Scranton Times, LP, (PNC Bank, N.A. LOC), 5.559%, 8/5/1996 250,000
6,720,000 Shenandoah Partners LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 6,720,000
5,965,000 Springfield Limited Series A, (Union Bank of Switzerland,
Zurich LOC), 5.580%, 8/8/1996 5,965,000
47,825,000 Terry Griffin Gate Partners, Ltd., SERIES 1995, (Liberty National
Bank & Trust Co. LOC), 5.597%, 8/7/1996 47,825,000
6,000,000 Van Dyne Crotty Co., Series 1996, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 6,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 3,194,000 Vista Funding Corp., (Bank One, Akron, N.A. LOC), 5.510%,
8/8/1996 $ 3,194,000
5,468,000 Vista Funding Corp., (Series 1994-A), (Fifth Third Bank of
Northwestern OH LOC), 5.587%, 8/1/1996 5,468,000
11,386,000 Vista Funding Corp., (Series 1995-B), (Fifth Third Bank of
Northwestern OH LOC), 5.587%, 8/8/1996 11,386,000
10,313,000 Vista Funding Corp., (Series 1995-D), (Fifth Third Bank of
Northwestern OH LOC), 5.587%, 8/8/1996 10,313,000
9,133,000 Vista Funding Corp., (Series 1995-E), (Bank One, Dayton, N.A.
LOC), 5.587%, 8/8/1996 9,133,000
6,000,000 Vulcan, Inc., (Amsouth Bank N.A., Birmingham LOC), 5.490%,
8/8/1996 6,000,000
1,001,431 Wauseon Manor II LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 1,001,431
3,775,000 Wexner Heritage House, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,775,000
2,385,000 YMCA of Central, OH, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/1/1996 2,385,000
20,000,000 (b)SMM Trust, (Series 1995-B), (Morgan Guaranty Trust Co.,
New York Swap Agreement), 5.496%, 9/1/1996 20,000,000
10,000,000 (b)SMM Trust, (Series 1995-N), (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.530%, 8/15/1996 10,000,000
6,000,000 (b)SMM Trust, Series 1996-B, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.515%, 9/1/1996 6,000,000
105,000,000 (b)SMM Trust, Series 1996-I, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.550%, 9/1/1996 105,000,000
25,500,000 (b)SMM Trust, Series 1996-L, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.546%, 8/15/1996 25,500,000
35,000,000 (b)SMM Trust, Series 1996-V, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.616%, 9/26/1996 35,000,000
Total 720,655,937
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
ELECTRICAL EQUIPMENT--0.6%
$ 5,839,750 GS Funding Corp., (Guaranteed by General Electric Co.), 5.559%,
8/5/1996 $ 5,839,750
19,613,059 Northwest Airlines, Inc., (Guaranteed by General Electric Co.),
5.585%, 8/5/1996 19,613,059
Total 25,452,809
FINANCE - RETAIL--0.9%
37,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class A1),
5.550%, 8/15/1996 37,000,000
INSURANCE--2.9%
30,000,000 (b)Peoples Security Life Insurance, 5.730%, 9/1/1996 30,000,000
10,000,000 (b)SunAmerica Life Insurance Co., 5.600%, 9/1/1996 10,000,000
89,000,000 Transamerica Occidental Life Insurance Company, 5.500%, 9/1/1996 89,000,000
Total 129,000,000
MUNICIPAL--0.6%
26,300,000 (b)Columbus, OH, 5.700%, 8/8/1996 26,300,000
SOVEREIGN GOVERNMENT--1.8%
78,000,000 Short Term Asset Corp., Secured Class F-1 Bonds, (European Bank for
Reconstruction and Development LIQ), 5.516%, 8/13/1996 78,000,000
TOTAL VARIABLE RATE INSTRUMENTS 1,016,408,746
SHORT-TERM MUNICIPAL SECURITIES--1.0%
BANKING--1.0%
26,310,000 New Haven, CT, IDRB (Series 1994A), (Banque Nationale de Paris
LOC), 5.300%, 11/15/1996 26,263,127
3,000,000 White Bear Lake, MN City of, (Series 1993), (Norwest Bank
Minnesota, Minneapolis LOC), 5.830%, 8/8/1996 3,000,000
12,400,000 New York City, NY, GO Bonds, Fiscal 1996 (Series A-2 Taxable),
(Societe Generale, New York LOC), 5.550%, 9/6/1996 12,400,000
TOTAL SHORT-TERM MUNICIPAL SECURITIES 41,663,127
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
TIME DEPOSITS --12.5%
BANKING--12.5%
$ 25,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.688%, 8/1/1996 $ 25,000,000
93,000,000 Mellon Bank NA, Pittsburgh, 5.750%, 8/1/1996 93,000,000
25,000,000 Nationsbank, N.A., 5.750%, 8/1/1996 25,000,000
100,000,000 Royal Bank of Canada, Montreal, 5.750%, 8/1/1996 100,000,000
100,000,000 Swiss Bank Corp., Basle, 5.750%, 8/1/1996 100,000,000
150,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.750%, 8/1/1996 150,000,000
50,000,000 Toronto-Dominion Bank, 5.750%, 8/1/1996 50,000,000
TOTAL TIME DEPOSITS 543,000,000
U.S. TREASURY--1.6%
U.S. TREASURY NOTES--1.6%
70,000,000 6.875%-7.50%, 1/31/1997-3/31/1997 70,662,511
(d)Repurchase Agreements--12.3%
125,000,000 BA Securities, Inc., 5.680%, dated 7/31/1996, due 8/1/1996 125,000,000
152,752,000 Goldman Sachs & Company, 5.750%, dated 7/31/1996, due 8/1/1996 152,752,000
50,000,000 (e)Lehman Brothers, Inc., 5.320%, dated 7/23/1996, due 8/23/1996 50,000,000
50,000,000 State Street Bank and Trust Co., 5.640%, dated 7/31/1996,
due 8/1/1996 50,000,000
154,975,000 UBS Securities, Inc., 5.650%, dated 7/31/1996, due 8/1/1996 154,975,000
TOTAL REPURCHASE AGREEMENTS 532,727,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(F) $4,287,059,936
</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) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1996, these securities
amounted to $267,800,000 which represents 6.2% of net assets.
(c) Current rate and next reset date shown.
(d) The 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) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the credit worthiness of the issuer is
downgraded.
(f) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($4,329,621,170) at July 31, 1996.
The following acronym(s) are used throughout this portfolio:
CAPMAC -- Capital Municipal Assurance Corporation
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
IDA -- Industrial Development Authority
IDRB -- Industrial Development Revenue Bond
LIQ -- Liquidity Agreement
LOC -- Letter of Credit
LP -- Limited Partnership
LTD -- Limited
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 532,727,000
Investments in securities 3,754,332,936
Total investments in securities, at
amortized cost and value $ 4,287,059,936
Income receivable 16,062,570
Receivable for shares sold 75,093,179
Total assets 4,378,215,685
LIABILITIES:
Payable for investments purchased 18,823,144
Payable for shares
redeemed 362,839
Income distribution payable 12,901,582
Payable to Bank 15,768,177
Accrued expenses 738,773
Total liabilities 48,594,515
Net Assets for
4,329,621,170 shares outstanding $ 4,329,621,170
Net Asset Value, Offering Price and
Redemption Proceeds Per Share:
INSTITUTIONAL SHARES:
$3,032,602,007 / 3,032,602,007 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$1,297,019,163 / 1,297,019,163 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, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 211,121,933
EXPENSES:
Investment advisory fee $ 7,504,715
Administrative personnel and services fee 2,837,919
Custodian fees 337,869
Transfer and dividend disbursing agent fees
and expenses 71,021
Directors'/Trustees' fees 49,742
Auditing fees 15,064
Legal fees 39,704
Portfolio accounting fees 258,365
Shareholder services fee -- Institutional
Shares 7,451,775
Shareholder services fee -- Institutional
Service Shares 1,929,119
Share registration costs 464,188
Printing and postage 18,039
Insurance premiums 58,313
Taxes 95,432
Miscellaneous 34,198
Total expenses 21,165,463
Waivers --
Waiver of investment advisory fee $(4,114,750)
Waiver of shareholder services fee --
Institutional Shares (7,451,775)
Total waivers (11,566,525)
Net expenses 9,598,938
Net investment income $ 201,522,995
</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,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 201,522,995 $ 122,465,120
Distributions to Shareholders--
Distributions from net investment income:
Institutional Shares (161,912,538) (109,911,005)
Institutional Service Shares (39,610,457) (12,554,115)
Change in net assets resulting from
distributions to shareholders (201,522,995) (122,465,120)
SHARE TRANSACTIONS--
Proceeds from sale of shares 39,825,611,659 28,128,464,929
Net asset value of shares issued to
shareholders in payment of
distributions declared 61,968,216 34,127,138
Cost of shares redeemed (38,516,710,023) (26,464,207,220)
Change in net assets resulting
from share transactions 1,370,869,852 1,698,384,847
Change in net assets 1,370,869,852 1,698,384,847
NET ASSETS:
Beginning of period 2,958,751,318 1,260,366,471
End of period $ 4,329,621,170 $ 2,958,751,318
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Prime Obligations
Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is to provide current
income consistent with stability of principal.
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.
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.
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 Board of 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, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Peoples Security Life Insurance 07/08/96 $ 30,000,000
SunAmerica Life Insurance Co. 05/28/96 10,000,000
Columbus, OH 01/30/96 26,300,000
SMM Trust Series 1995-B 08/04/95 20,000,000
SMM Trust Series 1995-N 11/03/95 10,000,000
SMM Trust Series 1996-B 07/30/96 6,000,000
SMM Trust Series 1996-I 05/23/96 105,000,000
SMM Trust Series 1996-L 06/12/96 25,500,000
SMM Trust Series 1996-V 03/18/96 35,000,000
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$4,329,621,170. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
INSTITUTIONAL SHARES SHARES SHARES
<S> <C> <C>
Shares sold 29,766,228,647 23,850,176,668
Shares issued to shareholders in
payment of distributions declared 45,035,407 27,352,248
Shares redeemed (29,236,459,220) (22,670,711,004)
Net change resulting from
Institutional Share transactions 574,804,834 1,206,817,912
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
INSTITUTIONAL SERVICE SHARES SHARES SHARES
<S> <C> <C>
Shares sold 10,059,383,012 4,278,288,261
Shares issued to shareholders in
payment of distributions declared 16,932,809 6,774,890
Shares redeemed (9,280,250,803) (3,793,496,216)
Net change resulting from
Institutional Service Share
transactions 796,065,018 491,566,935
Net change resulting from share
transactions 1,370,869,852 1,698,384,847
</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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 up
to 0.25% of average daily net assets of the Institutional Service Shares for
the period. The fee paid to FSS is used to finance certain services for
shareholders and to maintain shareholder accounts. For the period ended July
31, 1996, the Institutional Service Shares did not incur a shareholder
services fee. FSS may voluntarily choose to waive any portion of its fee.
FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
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, 1996, 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, 1996, by correspondence with the custodian
and brokers. An audit also includes assessing 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 portion of
Prime Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1996, 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 its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
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 c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
[IMAGE]
Cusip 60934N203
601352-01 (9/96)
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 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 Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF FUND EXPENSES 1
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SERVICE SHARES 2
GENERAL INFORMATION 3
INVESTMENT INFORMATION 3
Investment Objective 3
Investment Policies 3
Investment Risks 6
Investment Limitations 6
TRUST INFORMATION 6
Management of the Trust 6
Distribution of Institutional
Service Shares 7
Administration of the Fund 8
NET ASSET VALUE 8
HOW TO PURCHASE SHARES 9
HOW TO REDEEM SHARES 10
ACCOUNT AND SHARE INFORMATION 11
TAX INFORMATION 11
Federal Income Tax 11
State and Local Taxes 12
OTHER CLASSES OF SHARES 12
PERFORMANCE INFORMATION 12
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES 13
FINANCIAL STATEMENTS 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
32
ADDRESSES Inside Back Cover
SUMMARY OF FUND EXPENSES
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <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) 0.09%
12b-1 Fee None
Total Other Expenses 0.36%
Shareholder Services Fee (after waiver)(2) 0.25%
Total Operating Expenses(3) 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 maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.56% 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 "Trust Information" and "How to Purchase Shares."
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 Independent Public Accountants on page
32.
<TABLE>
<CAPTION
YEAR ENDED JULY 31,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.32% 5.38% 0.30%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.34%*
Net investment income 5.13% 5.66% 4.68%*
Expense waiver/reimbursement(c) 0.11% 0.13% 0.14%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,297,019 $500,954 $9,387
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 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 Board of Trustees has 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, financial intermediaries
and institutional investors as a convenient means of accumulating an
interest in a professionally managed, portfolio investing in short-term
money market securities. A minimum initial investment of $1,000,000 over a
one-year 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 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 complying with the
diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies 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. 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.
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. Any
bankruptcy, receivership, default, or change in the credit quality of the
party providing the credit enhancement will adversely affect the quality and
marketability of the underlying security and could cause losses to the Fund
and affect its share price.
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
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.
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. 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 association having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment. Concentrating investments in one industry may subject
the Fund to more risk than if it did not concentrate.
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. These investment limitations cannot be changed
without shareholder approval.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL SERVICE 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 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.
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 and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Service Shares from the value of Fund assets attributable
to Institutional Service 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Prime Obligations Fund --
Institutional Service Shares. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next
day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 5:00 p.m. (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Institutional Shares are sold at net
asset value primarily to entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries and institutional
investors and are subject to a minimum initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield, and total
return. 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.
PRIME
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 32.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.05 0.06 0.03 0.03 0.05 0.07 0.03
LESS DISTRIBUTIONS
Distributions
from net
investment income (0.05) (0.06) (0.03) (0.03) (0.05) (0.07) (0.03)
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
END OF PERIOD
TOTAL RETURN(B) 5.58% 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% 0.20%*
Net investment
income 5.43% 5.60% 3.47% 3.20% 4.53% 6.54% 8.21%*
Expense waiver/
reimbursement(c) 0.36% 0.38% 0.14% 0.09% 0.10% 0.24% 0.68%*
SUPPLEMENTAL DATA
Net assets, end
of period
(000 omitted) $3,032,602 $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593 $34,777
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
PRIME OBLIGATIONS FUND
PRIME OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
BANK NOTES--1.5%
BANKING--1.5%
$ 16,000,000 Comerica Bank, Detroit, MI, 5.650%, 9/23/1996 $ 15,998,664
10,000,000 Harris Trust & Savings Bank, Chicago, 5.500%, 3/26/1997 9,996,261
38,000,000 Mellon Bank NA, Pittsburgh, 5.750% - 5.780%, 9/26/1996 -
10/16/1996 37,998,472
TOTAL BANK NOTES 63,993,397
BANKERS ACCEPTANCE--0.3%
BANKING--0.3%
13,500,000 KeyBank, N.A., 5.782%, 1/6/1997 13,167,015
CERTIFICATE OF DEPOSIT--4.3%
BANKING--4.3%
30,000,000 Abbey National Bank PLC, London, 5.800%, 1/13/1997 30,001,796
80,000,000 Bayerische Vereinsbank AG, Munich, 5.380% - 5.420%, 9/30/1996 -
10/1/1996 79,998,842
21,000,000 Dresdner Bank Ag, Frankfurt, 5.026%, 2/26/1997 20,995,280
15,000,000 First Alabama Bank, Birmingham, 5.430%, 10/15/1996 14,999,950
20,000,000 Mellon Bank NA, Pittsburgh, 5.680%, 12/10/1996 20,000,000
20,000,000 Societe Generale, Paris, 5.480%, 10/3/1996 20,000,690
TOTAL CERTIFICATES OF DEPOSIT 185,996,558
(A)COMMERCIAL PAPER--40.0%
BANKING--7.5%
61,000,000 ABN AMRO Bank N.V., Amsterdam, 5.013% - 5.077%, 8/5/1996 -
8/27/1996 60,875,907
65,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank
PLC, London), 5.413% - 5.645%, 10/21/1996 - 1/6/1997 63,773,313
4,135,000 Benedictine Health System, (Lasalle National Bank, Chicago LOC),
5.706%, 10/15/1996 4,086,543
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
BANKING--CONTINUED
$ 90,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian
Imperial Bank of Commerce, Toronto), 5.372% - 5.373%, 8/30/1996 $ 89,615,750
7,900,000 City of Cleveland, (Union Bank of Switzerland, Zurich LOC,
Credit Suisse, Zurich LOC), 5.590%, 10/3/1996 7,900,000
75,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska
Handelsbanken, Stockholm), 5.568%, 10/17/1996 74,119,313
24,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of
Switzerland, Zurich), 5.681%, 8/1/1996 24,000,000
Total 324,370,826
ENTERTAINMENT--0.5%
20,000,000 Disney (Walt) Holding Co., 5.336%, 9/6/1996 19,896,000
FINANCE - AUTOMOTIVE--4.7%
205,000,000 Ford Motor Credit Corp., 5.407% - 5.594%, 8/12/1996 - 10/28/1996 203,842,094
FINANCE - COMMERCIAL--11.2%
17,000,000 Alpha Finance Corp., Ltd., 5.563%, 10/11/1996 16,815,933
15,000,000 Asset Securitization Cooperative Corp., 5.376%, 8/19/1996 14,960,250
153,500,000 Beta Finance, Inc., 4.992% - 5.550%, 8/2/1996 - 11/25/1996 152,386,397
49,700,000 CIESCO, Inc., 4.992% - 5.482%, 8/7/1996 - 9/20/1996 49,402,828
11,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.502%, 10/10/1996 10,884,072
47,250,000 Falcon Asset Securitization Corp., 5.474%, 9/10/1996 46,966,500
132,000,000 General Electric Capital Corp., 5.323% - 5.764%, 9/27/1996 -
1/29/1997 130,001,693
45,177,000 Greenwich Funding Corp., 5.370% - 5.495%, 8/12/1996 - 9/23/1996 45,040,238
17,500,000 Transamerica Finance Corp., 5.782%, 1/6/1997 17,068,353
Total 483,526,264
FINANCE - RETAIL--10.2%
196,800,000 American Express Credit Corp., 5.001% - 5.324%, 8/2/1996 -
10/11/1996 196,048,654
92,700,000 Associates Corp. of North America, 5.322% - 5.691%, 8/1/1996 -
9/26/1996 92,455,998
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - RETAIL--CONTINUED
$135,000,000 New Center Asset Trust, A1+/P1 Series, 5.412% - 5.717%, 9/23/1996 -
1/3/1997 $ 133,339,456
21,000,000 Norwest Financial, Inc., 5.322%, 9/27/1996 20,829,760
Total 442,673,868
OIL & OIL FINANCE--0.6%
27,500,000 Koch Industries, Inc., 5.681%, 8/1/1996 27,500,000
INSURANCE--4.8%
10,000,000 Marsh & McLennan Cos., Inc., 5.214%, 10/11/1996 9,900,994
166,000,000 CXC, Inc., (CAPMAC Surety Bond), 5.378% - 5.575%, 8/7/1996 -
11/1/1996 164,252,316
35,000,000 City of New York G.O. 1995-B, (Guaranteed by FGIC), 5.270%,
8/21/1996 35,000,000
Total 209,153,310
TOTAL COMMERCIAL PAPER 1,710,962,362
CORPORATE NOTES--2.5%
FINANCE - COMMERCIAL--0.6%
25,000,000 Beta Finance, Inc., 5.540%-5.770%, 9/19/96 - 3/27/1997 25,000,000
FINANCE - EQUIPMENT--0.7%
14,879,761 Caterpillar Financial Asset Trust 1996-A, 5.418%, 5/25/1997 14,879,761
17,397,141 Navistar Financial 1996-A Owner Trust, 5.250%, 6/15/1997 17,391,469
Total 32,271,230
FINANCE - RETAIL--0.1%
3,000,000 Beneficial Corp., 9.350%, 2/3/1997 3,049,304
FOOD & BEVERAGE--0.6%
24,000,000 PepsiCo, Inc., 5.830%, 8/27/1996 24,000,612
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE NOTES--CONTINUED
INSURANCE--0.3%
$ 5,853 Olympic Automobile Receivables Trust 1996-A, (Guaranteed by
Financial Security Assurance, Inc.), 5.250%, 3/15/1997 $ 5,853
12,740,000 S & S Financial International, (Guaranteed by Financial Security
Assurance, Inc.), 10.125%, 12/16/1996 12,933,931
Total 12,939,784
FINANCE-AUTO--0.2%
7,219,254 WFS Financial Owner Trust 1996-A, 5.350%, 3/1/1997 7,217,759
TOTAL CORPORATE NOTES 104,478,689
GOVERNMENT AGENCIES--0.1%
FEDERAL HOME LOAN BANK NOTE--0.1%
4,000,000 5.530%, 3/24/1997 4,000,531
(C)VARIABLE RATE INSTRUMENTS--23.4%
BANKING--16.6%
4,000,000 500 South Front St. LP, Series A, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 4,000,000
6,315,000 500 South Front St. LP, Series B, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 6,315,000
6,100,000 Abbott Foods, Series 1996, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 6,100,000
6,100,000 Alabama State IDA, (SERIES 1994) Miltope Project, (First Alabama
Bank, Birmingham LOC), 5.580%, 8/8/1996 6,100,000
10,100,000 Alabama State IDA, (Wellborn Cabinet, Inc.), Tax Revenue Bonds,
(Amsouth Bank N.A., Birmingham LOC), 5.490%, 8/7/1996 10,100,000
8,285,000 Alexandria Executive Club LP, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 8,285,000
8,800,000 Arrow N.A., Inc., (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 8,800,000
3,500,000 Asset Holdings V, (Bayerische Vereinsbank AG, Munich LOC),
5.580%, 8/8/1996 3,500,000
16,500,000 Association of American Medical Colleges, (Chemical Bank,
New York LIQ), 5.618%, 8/7/1996 16,500,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 15,000,000 Australia & New Zealand Banking Group, Melbourne, 5.480%,
8/2/1996 $ 14,990,704
4,000,000 Bardstown City, KY, (RJ Tower Project), (Series 1995), (Comerica, Inc.
LOC), 5.520%, 8/8/1996 4,000,000
16,900,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.559%, 8/5/1996 16,900,000
1,627,790 Bowling Green Manor L.P., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 1,627,790
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH LOC),
5.890%, 1/3/1997 17,400,000
7,231,000 Capital One Funding Corp., SERIES 1994-A, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 7,231,000
23,771,000 Capital One Funding Corp., SERIES 1995-A, (Bank One, Indianapolis,
IN LOC), 5.510%, 8/8/1996 23,771,000
24,558,000 Capital One Funding Corp., SERIES 1995-B, (Liberty National Bank &
Trust Co. LOC), 5.510%, 8/8/1996 24,558,000
20,472,000 Capital One Funding Corp., Series 1994-C, (Bank One, Cleveland,
N.A. LOC), 5.510%, 8/8/1996 20,472,000
9,525,000 Capital One Funding Corp., Series 1994-D, (Liberty National Bank &
Trust Co. LOC), 5.510%, 8/8/1996 9,525,000
22,781,000 Capital One Funding Corp., Series 1995-F, (Bank One, Cleveland,
N.A. LOC), 5.510%, 8/8/1996 22,781,000
11,800,000 Cloquet, MN, Series 1996-B Potlach Corp, (Credit Suisse, Zurich
LOC), 5.500%, 8/7/1996 11,800,000
1,052,337 Clyde Manor LP, (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 1,052,337
3,200,000 Columbia County, GA Development Authority, Series 1993,
(SunTrust Banks, Inc. LOC), 5.550%, 8/7/1996 3,200,000
3,950,000 Eastwinds Investment, Ltd., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,950,000
7,215,000 Fort Craig LP, (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 7,215,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 4,600,000 G.M.H. Enterprises, Inc., (Series 1995), (National City Bank,
Cleveland, OH LOC), 5.500%, 8/8/1996 $ 4,600,000
3,500,000 Gerken Materials, Inc., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,500,000
2,350,000 Grote Family LP, (Huntington National Bank, Columbus, OH LOC),
5.580%, 8/8/1996 2,350,000
12,165,000 Hunt Club Apartments, Inc., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/7/1996 12,165,000
1,635,000 Jade Sterling Steel Co., Inc., (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 1,635,000
245,000 Kenny, Donald R. and Cheryl A., (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 245,000
7,200,000 Kenny, Donald R. and Cheryl A., Series 1995-A, (National City Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 7,200,000
8,150,000 Kenny, Donald R. and Cheryl A., Series 1995-B, (Huntington National
Bank, Columbus, OH LOC), 5.580%, 8/8/1996 8,150,000
3,600,000 Kokosing Construction Co., Inc., (National City Bank, Cleveland,
OH LOC), 5.500%, 8/7/1996 3,600,000
2,883,000 Midwest Funding Corp., Series 1991 A Class A-1, (Bank One,
Columbus, N.A. LOC), 5.510%, 8/8/1996 2,883,000
3,510,000 Midwest Funding Corp., Series 1991 B, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 3,510,000
4,714,000 Midwest Funding Corp., Series 1991-C, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 4,714,000
4,120,000 Midwest Funding Corp., Series 1992-A, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 4,120,000
1,578,000 Midwest Funding Corp., Series 1992-B, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 1,578,000
3,863,000 Midwest Funding Corp., Series 1992-C, (Bank One, Columbus,
N.A. LOC), 5.510%, 8/8/1996 3,863,000
13,000,000 Mississippi Business Finance Corp., Choctaw Foods, Inc.,
(Rabobank Nederland, Utrecht LOC), 5.550%, 8/7/1996 13,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 8,130,000 Mississippi Business Finance Corp., Metalloy Project, (Comerica Bank,
Detroit, MI LOC), 5.580%, 8/8/1996 $ 8,130,000
12,000,000 Mississippi Business Finance Corp., Series 1994, (Wachovia Bank of
Georgia NA, Atlanta LOC), 5.618%, 8/7/1996 12,000,000
2,000,000 Mississippi Business Finance Corp., Series 1995 Plantation Pointe,
LP Project, (Amsouth Bank N.A., Birmingham LOC),
5.580%, 8/8/1996 2,000,000
2,860,000 Nova University, Inc., Lease Revenue Bonds, Series 1993 Miami
Dolphins Training Facility, (Sun Bank/South Florida LOC),
5.550%, 8/7/1996 2,860,000
4,610,000 Olen Corp., (National City Bank, Cleveland, OH LOC), 5.500%,
8/7/1996 4,610,000
2,475,000 Orangeburg Convalescent Care Center, Inc., Series A 1995,
(PNC Bank, Kentucky LOC), 5.559%, 8/5/1996 2,475,000
1,700,000 PNC Bank, N.A., 5.380%, 8/2/1996 1,699,675
4,994,000 Primex Funding Corp., (Bank One, Indianapolis, IN LOC),
5.510%, 8/8/1996 4,994,000
3,000,000 Roby Company LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,000,000
7,535,000 Roby Company LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 7,535,000
13,150,000 Rooker, J.W., (Wachovia Bank of Georgia NA, Atlanta LOC),
5.618%, 8/7/1996 13,150,000
250,000 Scranton Times, LP, (PNC Bank, N.A. LOC), 5.559%, 8/5/1996 250,000
6,720,000 Shenandoah Partners LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 6,720,000
5,965,000 Springfield Limited Series A, (Union Bank of Switzerland,
Zurich LOC), 5.580%, 8/8/1996 5,965,000
47,825,000 Terry Griffin Gate Partners, Ltd., SERIES 1995, (Liberty National
Bank & Trust Co. LOC), 5.597%, 8/7/1996 47,825,000
6,000,000 Van Dyne Crotty Co., Series 1996, (Huntington National Bank,
Columbus, OH LOC), 5.580%, 8/8/1996 6,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 3,194,000 Vista Funding Corp., (Bank One, Akron, N.A. LOC), 5.510%,
8/8/1996 $ 3,194,000
5,468,000 Vista Funding Corp., (Series 1994-A), (Fifth Third Bank of
Northwestern OH LOC), 5.587%, 8/1/1996 5,468,000
11,386,000 Vista Funding Corp., (Series 1995-B), (Fifth Third Bank of
Northwestern OH LOC), 5.587%, 8/8/1996 11,386,000
10,313,000 Vista Funding Corp., (Series 1995-D), (Fifth Third Bank of
Northwestern OH LOC), 5.587%, 8/8/1996 10,313,000
9,133,000 Vista Funding Corp., (Series 1995-E), (Bank One, Dayton, N.A.
LOC), 5.587%, 8/8/1996 9,133,000
6,000,000 Vulcan, Inc., (Amsouth Bank N.A., Birmingham LOC), 5.490%,
8/8/1996 6,000,000
1,001,431 Wauseon Manor II LP, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 1,001,431
3,775,000 Wexner Heritage House, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/8/1996 3,775,000
2,385,000 YMCA of Central, OH, (Huntington National Bank, Columbus,
OH LOC), 5.580%, 8/1/1996 2,385,000
20,000,000 (b)SMM Trust, (Series 1995-B), (Morgan Guaranty Trust Co.,
New York Swap Agreement), 5.496%, 9/1/1996 20,000,000
10,000,000 (b)SMM Trust, (Series 1995-N), (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.530%, 8/15/1996 10,000,000
6,000,000 (b)SMM Trust, Series 1996-B, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.515%, 9/1/1996 6,000,000
105,000,000 (b)SMM Trust, Series 1996-I, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.550%, 9/1/1996 105,000,000
25,500,000 (b)SMM Trust, Series 1996-L, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.546%, 8/15/1996 25,500,000
35,000,000 (b)SMM Trust, Series 1996-V, (Morgan Guaranty Trust Co., New York
Swap Agreement), 5.616%, 9/26/1996 35,000,000
Total 720,655,937
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
ELECTRICAL EQUIPMENT--0.6%
$ 5,839,750 GS Funding Corp., (Guaranteed by General Electric Co.), 5.559%,
8/5/1996 $ 5,839,750
19,613,059 Northwest Airlines, Inc., (Guaranteed by General Electric Co.),
5.585%, 8/5/1996 19,613,059
Total 25,452,809
FINANCE - RETAIL--0.9%
37,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class A1),
5.550%, 8/15/1996 37,000,000
INSURANCE--2.9%
30,000,000 (b)Peoples Security Life Insurance, 5.730%, 9/1/1996 30,000,000
10,000,000 (b)SunAmerica Life Insurance Co., 5.600%, 9/1/1996 10,000,000
89,000,000 Transamerica Occidental Life Insurance Company, 5.500%, 9/1/1996 89,000,000
Total 129,000,000
MUNICIPAL--0.6%
26,300,000 (b)Columbus, OH, 5.700%, 8/8/1996 26,300,000
SOVEREIGN GOVERNMENT--1.8%
78,000,000 Short Term Asset Corp., Secured Class F-1 Bonds, (European Bank for
Reconstruction and Development LIQ), 5.516%, 8/13/1996 78,000,000
TOTAL VARIABLE RATE INSTRUMENTS 1,016,408,746
SHORT-TERM MUNICIPAL SECURITIES--1.0%
BANKING--1.0%
26,310,000 New Haven, CT, IDRB (Series 1994A), (Banque Nationale de Paris
LOC), 5.300%, 11/15/1996 26,263,127
3,000,000 White Bear Lake, MN City of, (Series 1993), (Norwest Bank
Minnesota, Minneapolis LOC), 5.830%, 8/8/1996 3,000,000
12,400,000 New York City, NY, GO Bonds, Fiscal 1996 (Series A-2 Taxable),
(Societe Generale, New York LOC), 5.550%, 9/6/1996 12,400,000
TOTAL SHORT-TERM MUNICIPAL SECURITIES 41,663,127
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
TIME DEPOSITS --12.5%
BANKING--12.5%
$ 25,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.688%, 8/1/1996 $ 25,000,000
93,000,000 Mellon Bank NA, Pittsburgh, 5.750%, 8/1/1996 93,000,000
25,000,000 Nationsbank, N.A., 5.750%, 8/1/1996 25,000,000
100,000,000 Royal Bank of Canada, Montreal, 5.750%, 8/1/1996 100,000,000
100,000,000 Swiss Bank Corp., Basle, 5.750%, 8/1/1996 100,000,000
150,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.750%, 8/1/1996 150,000,000
50,000,000 Toronto-Dominion Bank, 5.750%, 8/1/1996 50,000,000
TOTAL TIME DEPOSITS 543,000,000
U.S. TREASURY--1.6%
U.S. TREASURY NOTES--1.6%
70,000,000 6.875%-7.50%, 1/31/1997-3/31/1997 70,662,511
(d)Repurchase Agreements--12.3%
125,000,000 BA Securities, Inc., 5.680%, dated 7/31/1996, due 8/1/1996 125,000,000
152,752,000 Goldman Sachs & Company, 5.750%, dated 7/31/1996, due 8/1/1996 152,752,000
50,000,000 (e)Lehman Brothers, Inc., 5.320%, dated 7/23/1996, due 8/23/1996 50,000,000
50,000,000 State Street Bank and Trust Co., 5.640%, dated 7/31/1996,
due 8/1/1996 50,000,000
154,975,000 UBS Securities, Inc., 5.650%, dated 7/31/1996, due 8/1/1996 154,975,000
TOTAL REPURCHASE AGREEMENTS 532,727,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(F) $4,287,059,936
</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) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1996, these securities
amounted to $267,800,000 which represents 6.2% of net assets.
(c) Current rate and next reset date shown.
(d) The 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) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days if the credit worthiness of the issuer is
downgraded.
(f) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($4,329,621,170) at July 31, 1996.
The following acronym(s) are used throughout this portfolio:
CAPMAC -- Capital Municipal Assurance Corporation
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
IDA -- Industrial Development Authority
IDRB -- Industrial Development Revenue Bond
LIQ -- Liquidity Agreement
LOC -- Letter of Credit
LP -- Limited Partnership
LTD -- Limited
PLC -- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 532,727,000
Investments in securities 3,754,332,936
Total investments in securities, at
amortized cost and value $ 4,287,059,936
Income receivable 16,062,570
Receivable for shares sold 75,093,179
Total assets 4,378,215,685
LIABILITIES:
Payable for investments purchased 18,823,144
Payable for shares
redeemed 362,839
Income distribution payable 12,901,582
Payable to Bank 15,768,177
Accrued expenses 738,773
Total liabilities 48,594,515
NET ASSETS for
4,329,621,170 shares outstanding $ 4,329,621,170
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,032,602,007 / 3,032,602,007 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$1,297,019,163 / 1,297,019,163 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, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 211,121,933
EXPENSES:
Investment advisory fee $ 7,504,715
Administrative personnel and services fee 2,837,919
Custodian fees 337,869
Transfer and dividend disbursing agent fees
and expenses 71,021
Directors'/Trustees' fees 49,742
Auditing fees 15,064
Legal fees 39,704
Portfolio accounting fees 258,365
Shareholder services fee -- Institutional
Shares 7,451,775
Shareholder services fee -- Institutional
Service Shares 1,929,119
Share registration costs 464,188
Printing and postage 18,039
Insurance premiums 58,313
Taxes 95,432
Miscellaneous 34,198
Total expenses 21,165,463
Waivers --
Waiver of investment advisory fee $(4,114,750)
Waiver of shareholder services fee --
Institutional Shares (7,451,775)
Total waivers (11,566,525)
Net expenses 9,598,938
Net investment income $ 201,522,995
</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,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 201,522,995 $ 122,465,120
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income:
Institutional Shares (161,912,538) (109,911,005)
Institutional Service Shares (39,610,457) (12,554,115)
Change in net assets resulting from
distributions to shareholders (201,522,995) (122,465,120)
SHARE TRANSACTIONS--
Proceeds from sale of shares 39,825,611,659 28,128,464,929
Net asset value of shares issued to
shareholders in payment of
distributions declared 61,968,216 34,127,138
Cost of shares redeemed (38,516,710,023) (26,464,207,220)
Change in net assets resulting
from share transactions 1,370,869,852 1,698,384,847
Change in net assets 1,370,869,852 1,698,384,847
NET ASSETS:
Beginning of period 2,958,751,318 1,260,366,471
End of period $ 4,329,621,170 $ 2,958,751,318
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Prime Obligations
Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is to provide current
income consistent with stability of principal.
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.
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.
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 Board of 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, 1996 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Peoples Security Life Insurance 07/08/96 $ 30,000,000
SunAmerica Life Insurance Co. 05/28/96 10,000,000
Columbus, OH 01/30/96 26,300,000
SMM Trust Series 1995-B 08/04/95 20,000,000
SMM Trust Series 1995-N 11/03/95 10,000,000
SMM Trust Series 1996-B 07/30/96 6,000,000
SMM Trust Series 1996-I 05/23/96 105,000,000
SMM Trust Series 1996-L 06/12/96 25,500,000
SMM Trust Series 1996-V 03/18/96 35,000,000
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$4,329,621,170. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
INSTITUTIONAL SHARES SHARES SHARES
<S> <C> <C>
Shares sold 29,766,228,647 23,850,176,668
Shares issued to shareholders in
payment of distributions declared 45,035,407 27,352,248
Shares redeemed (29,236,459,220) (22,670,711,004)
Net change resulting from
Institutional Share transactions 574,804,834 1,206,817,912
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
INSTITUTIONAL SERVICE SHARES SHARES SHARES
<S> <C> <C>
Shares sold 10,059,383,012 4,278,288,261
Shares issued to shareholders in
payment of distributions declared 16,932,809 6,774,890
Shares redeemed (9,280,250,803) (3,793,496,216)
Net change resulting from
Institutional Service Share
transactions 796,065,018 491,566,935
Net change resulting from share
transactions 1,370,869,852 1,698,384,847
</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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 up
to 0.25% of average daily net assets of the Institutional Service Shares for
the period. The fee paid to FSS is used to finance certain services for
shareholders and to maintain shareholder accounts. For the period ended July
31, 1996, the Institutional Service Shares did not incur a shareholder
services fee. FSS may voluntarily choose to waive any portion of its fee.
FSS can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
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, 1996, 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, 1996, by correspondence with the custodian
and brokers. An audit also includes assessing 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 portion of
Prime Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1996, 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 its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
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 c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
[IMAGE]
Cusip 60934N708
601352-02 (9/96)
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES, INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Prime Obligations Fund (the ``Fund'), a portfolio of
Money Market Obligations Trust (the ``Trust') dated September 30, 1996.
This Statement is not a prospectus. You may request a copy of a
prospectus or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 60934N708
Cusip 60934N203
G01352-03 (9/96)
Table of Contents
INVESTMENT POLICIES 1
Acceptable Investments 1
U.S. government Securities 1
Bank Instruments 1
Ratings 1
When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 2
Credit Enhancement 2
Lending of Portfolio Securities 2
INVESTMENT LIMITATIONS 2
Regulatory Compliance 4
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 5
Share Ownership 8
Trustees Compensation 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 10
Investment Adviser 10
Advisory Fees 10
BROKERAGE TRANSACTIONS 10
OTHER SERVICES 11
Fund Administration 11
SHAREHOLDER SERVICES AGREEMENT 11
Custodian and Portfolio Accountant 11
Transfer Agent 11
Independent Public Accountants 11
DETERMINING NET ASSET VALUE 11
REDEMPTION IN KIND 12
MASSACHUSETTS PARTNERSHIP LAW 12
THE FUND'S TAX STATUS 12
PERFORMANCE INFORMATION 12
Yield 12
Effective Yield 12
Total Return 13
Performance Comparisons 13
Economic and Market Information 13
ABOUT FEDERATED INVESTORS 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 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.
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:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
othe credit of the agency or instrumentality issuing the obligations.
BANK INSTRUMENTS
The instruments of banks and savings associations 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.
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.''
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 in a dollar amount sufficient to make payment for the securities 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. 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 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. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment
for the securities 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.
CREDIT ENHANCEMENT
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 being issued by the credit enhancer for diversification
purposes. However, under certain circumstances applicable regulations may
require the Fund to treat securities as having been issued by both the
issuer and the credit enhancer.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of the value
of its total assets are outstanding.
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 assets, except portfolio securities. This shall
not prevent the Fund from engaging in transactions permitted by its
investment objective, policies, and limitations or the Trust's 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 will invest 25% or more of the value
of its total assets in commercial paper issued by finance companies. The
Fund may invest 25% or more of the value of its total assets in cash, cash
items, or securities issued or guaranteed by the government of the United
States or its agencies, or instrumentalities and repurchase agreements
collateralized by such U.S. government securities.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities 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 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 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.
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 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.
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 association 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this 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. In particular,
the Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. 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.
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 or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Trustees and Officers, `Funds'' includes the
following investment companies:
111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust;
Federated Stock and Bond Fund, Inc.; 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: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Utility Fund, Inc.; High
Yield Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term Trust,
Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and 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 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Prime Obligations Fund:
Key Trust Company, Brooklyn, OH, owned approximately 146,853,466
shares(5.10%); VAR and Company, Saint Paul, MN, owned approximately
252,324,458 shares (8.76%).
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Prime
Obligations Fund: LABA and Company, Chicago, IL, owned approximately
257,139,701 shares(20.52%); Peoples Bank, Bridgeport, CT, owned
approximately 133,071,114 shares (10.62%); VAR and Company, Saint Paul, MN,
owned approximately 76,150,006 shares (6.08%).
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 54 other investment companies in the
Fund Complex
Thomas G. Bigley++ $3,045.86 $86,331 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
John T. Conroy, Jr. $3,699.37 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
William J. Copeland $3,699.37 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 16 other investment companies in the
Fund Complex
James E. Dowd $3,699.37 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $3,045.36 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $3,699.37 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Peter E. Madden $3,045.36 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Gregor F. Meyer $3,045.36 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
John E. Murray, Jr., $3,045.36 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Wesley W. Posvar $3,045.36 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Marjorie P. Smuts $3,045.36 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
*Information is furnished for the fiscal year ended July 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+The information is provided for the last calendar year.
++ Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds
TRUSTEE LIABILITY
The Trust's 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, 1996, 1995, and 1994, the adviser earned $7,504,715,
$4,370,903, and $2,368,688 respectively, of which $4,114,750, $2,828,160,
and $1,615,921, 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.
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
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, 1996, 1995 and
1994 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.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred to
as the `Administrators. For the fiscal years ended July 31, 1996, 1995 and
1994, the Administrators earned $2,837,919, $1,654,387, and $762,145,
respectively.
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, 1996, the Fund paid shareholder
service fees in the amount of $1,929,119 pursuant to the Shareholder
Services Agreement on behalf of Institutional Service Shares, all of which
was paid to financial institutions.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
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. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, PA.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares
of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Trustees will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is not
as liquid as a cash redemption. If redemption is made in kind, shareholders
who sell these securities could receive less than the redemption value and
could incur certain transaction costs.
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.
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, 1996, the yield for Institutional
Shares and Institutional Service Shares was 5.25% and 5.00%, 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, 1996, the effective yield for
Institutional Shares and Institutional Service Shares was 5.39%, and 5.13%,
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.
Prior to the creation of separate classes of shares, for the one-year and
five -year periods ended July 31, 1996 and for the period from May 26, 1990
(start of performance) to July 31, 1996, the average annual total returns
were 5.58%, 4.53%, and 5.18%, respectively for Institutional Shares.
For the one-year period ended July 31, 1996 and for the period from July 5,
1994 (date of initial public offering) through July 31, 1995, the average
annual total returns were 5.32% and 5.31%, respectively, for Institutional
Service 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:
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.
O BANK RATE MONITOR(C) NATIONAL INDEX, Miami Beach, Florida,
published weekly, is an average of the interest rates of personal
money market deposit accounts at ten of the largest banks and
thrifts in each of the five largest Standard Metropolitan
Statistical Areas. If more than one rate is offered, the lowest rate
is used. Account minimums and compounding methods may vary.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. These total
returns represent the historic change in the value of an investment in the
Fund based on monthly reinvestment of dividends over a specified period of
time.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns in general, that demonstrate
basic investment concepts such as tax-deferred compounding, dollar-cost
averaging and systematic investment. In addition, the Fund can compare its
performance, or performance for the types of securities in which it
invests, to a variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders
handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors 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, 1995, Federated Investors managed
more than $40.2 billion in assets across approximately 47 money market
funds, including 17 government, 10 prime and 20 municipal with assets
approximating $20.9 billion, $11.5 billion and $7.8 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' 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 $3 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 CLIENTS
Federated Investors 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 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. Federated's service to
financial professionals and institutions has earned its high rankings in
several DALBAR Surveys. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
*Source: Investment Company Institute
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 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 Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR 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, 1996
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
Municipal Securities 5
Investment Risks 6
Investment Limitations 6
TRUST INFORMATION 6
Management of the Trust 6
Distribution of Institutional Shares 7
Administration of the Fund 8
NET ASSET VALUE 8
HOW TO PURCHASE SHARES 8
HOW TO REDEEM SHARES 9
ACCOUNT AND SHARE INFORMATION 10
TAX INFORMATION 11
Federal Income Tax 11
State and Local Taxes 11
OTHER CLASSES OF SHARES 12
PERFORMANCE INFORMATION 12
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SERVICE SHARES 13
FINANCIAL STATEMENTS 14
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 42
ADDRESSES 43
</TABLE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) None
Maximum Sales Charge 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) 0.09%
12b-1 Fee None
Total Other Expenses 0.11%
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 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 shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider
can terminate this voluntary waiver at any time at its sole discretion.
The maximun shareholder services fee is 0.25%
(3) Total operating expenses would have been 0.56% 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 "Trust Information" and "How to Purchase Shares."
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 42.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.03 0.04 0.02 0.03 0.04 0.05 0.04
LESS DISTRIBUTIONS
Distributions
from net
investment income (0.03) (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 $ 1.00
TOTAL RETURN(B) 3.55% 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% 0.20%*
Net investment income 3.46% 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%*
Expense waiver/
reimbursement(c) 0.36% 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%*
SUPPLEMENTAL DATA
Net assets, end
of period
(000 omitted) $1,514,979 $1,295,458 $789,755 $454,119 $308,855 $165,669 $145,552
* Computed on an annualized basis.
</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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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 entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries and institutional
investors as a convenient means of accumulating an interest in a
professionally managed, portfolio investing primarily in short-term
municipal securities. The Fund may not be a suitable investment for
retirement plans because it invests in municipal securities. A minimum
initial investment of $1,000,000 over a one year 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 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 complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940 which
regulates money market mutual funds and 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 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. 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.) Unless
indicated otherwise, the investment policies 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. 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 issued to finance working capital needs
in anticipation of receiving taxes or other revenues;
* bond anticipation notes 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 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. Lease obligations may be subject to periodic appropriation.
Municipal leases are subject to certain specific risks in the event of
default or failure of appropriation.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance. Any
bankruptcy, receivership, default, or change in the credit quality of the
party providing the credit enhancement will adversely affect the quality and
marketability of the underlying security and could cause losses to the Fund
and affect its share price. The Fund may have more than 25% of its total
assets invested in securities credit-enhanced by banks.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts
and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or default
by the issuer of the demand feature, or a default on the underlying security
or other event that terminates the demand feature before its exercise, will
adversely affect the liquidity of the underlying security. Demand features
that are exercisable even after a payment default on the underlying security
may be treated as a form of credit enhancement.
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 law. Under
criteria established by the Trustees, certain restricted securities are
determined to be liquid. To the extent that restricted securities are not
determined to be liquid the Fund will limit their purchase, together with
other illiquid securities, to 10% of its net assets.
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, all of comparable
quality to other securities in which the Fund invests, such as: obligations
issued by or on behalf of municipal or corporate issuers; 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
institutions 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. These investment
limitations cannot be changed without shareholder approval.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 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.
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 and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Shares from the value of Fund assets attributable to
Institutional 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Tax-Free Obligations Fund --
Institutional Shares. Orders by mail are considered received when payment by
check is converted into federal funds (normally the business day after the
check is received), and shares begin earning dividends the next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 12:00 noon (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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 $1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
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, within the limits of its investment
policies, 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.
STATE AND LOCAL TAXES
These tax consequences apply whether dividends are received in cash or as
additional shares.
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.
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 other classes. Institutional Service Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries and institutional investors and are subject to a minimum
initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield,
tax-equivalent yield, and total return. 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 Fund's 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
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 42.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.002
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.03) (0.002)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 3.29% 3.39% 0.18%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.39%*
Net investment income 3.22% 3.48% 3.04%*
Expense waiver/reimbursement(c) 0.11% 0.14% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $406,408 $252,016 $25,148
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
TAX-FREE OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--101.9%
ALABAMA--4.1%
$ 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) $ 3,140,000
700,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills, Inc.)/(SunTrust
Bank, Atlanta LOC) 700,000
3,500,000 Cherokee, AL IDB, IDR Refunding Bonds (Series 1993) Weekly
VRDNs (BOC Group, Inc.)/(Wachovia Bank of Georgia NA,
Atlanta LOC) 3,500,000
1,500,000 Decatur, AL IDB, Revenue Refunding Bonds (Series 1993) Weekly
VRDNs (Allied-Signal, Inc.) 1,500,000
4,350,000 Eutaw, AL IDB Weekly VRDNs (Mississippi Power Co.)/(Mississippi
Power Co. GTD) 4,350,000
9,295,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn
(Homewood AL))/(SouthTrust Bank of Alabama, Birmingham LOC) 9,295,000
245,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project (Huntsville,
Al))/(First Alabama Bank, Birmingham LOC) 245,000
2,931,000 Irondale, AL IDB, Revenue Bonds (Series 1989) Weekly VRDNs
(Collateral Mortgage, Ltd.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 2,931,000
4,500,000 Jefferson County, AL, GO Warrants (Series 1996) Weekly VRDNs
(Bayerische Landesbank Girozentrale LOC) 4,500,000
7,000,000 Jefferson County, AL, Sewer Revenue Warrants (Series 1995-A)
Weekly VRDNs (Bayerische Landesbank Girozentrale LOC) 7,000,000
2,900,000 Madison, AL IDA, (Series A) Weekly VRDNs (Executive Inn)/
(Amsouth Bank NA, Birmingham LOC) 2,900,000
1,425,000 Marshall County, AL, Special Obligation School Refunding Warrant
(Series 1994) Weekly VRDNs (Marshall County, AL Board of
Education)/(First Alabama Bank, Birmingham LOC) 1,425,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ALABAMA--CONTINUED
$ 2,500,000 Mobile, AL IDA Weekly VRDNs (McRae's Industries, Inc.)/
(Nationsbank, NA LOC) $ 2,500,000
3,500,000 Mobile, AL IDB, PCR (Series 1993A) Weekly VRDNs (Alabama
Power Co.)/(Alabama Power Co. GTD) 3,500,000
9,250,000 Mobile, AL IDB, PCR (Series 1993B) Weekly VRDNs (Alabama Power
Co.)/(Alabama Power Co. GTD) 9,250,000
4,155,000 Montgomery, AL BMC Special Care Facilities Finance Authority,
(Series 94A) Weekly VRDNs (Baptist Medical Center, AL)/(Amsouth
Bank NA, Birmingham LOC) 4,155,000
10,230,000 Montgomery, AL IDB, Pollution Control & Solid Disposal Revenue,
3.60% CP (General Electric Co.), Mandatory Tender 8/1/1996 10,230,000
970,000 Tuscaloosa County, AL Port Authority, (Series 1989A) Weekly VRDNs
(Capstone Hotel Ltd.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 970,000
1,330,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) Weekly
VRDNs (Harco, Inc.)/(Amsouth Bank NA, Birmingham LOC) 1,330,000
4,425,000 Vincent, AL IDB Weekly VRDNs (Headquarters Partnership Project)/
(National Australia Bank, Ltd., Melbourne LOC) 4,425,000
Total 77,846,000
ARIZONA--1.9%
7,300,000 Apache County, AZ Weekly VRDNs (Tucson Electric Power Co.)/
(Chemical Bank, New York LOC) 7,300,000
4,000,000 Arizona Health Facilities Authority Weekly VRDNs (University
Physicians, Inc.)/(Bank One, Arizona NA LOC) 4,000,000
6,800,000 Arizona Health Facilities Authority, Pooled Loan Program Revenue
Bonds (Series 1885B) Weekly VRDNs (FGIC INS)/(Chemical Bank,
New York LIQ) 6,800,000
1,000,000 Arizona Insured Municipal Securities Trust, (Series 1996A) Weekly
VRDNs (Chandler Street and Highway)/(MBIA INS)/
(Norwest Bank Minnesota, Minneapolis LIQ) 1,000,000
1,500,000 Arizona Insured Municipal Securities Trust, (Series 1996C) Weekly
VRDNs (Maricopa County, AZ University School District No. 93)/
(FGIC INS)/(Norwest Bank Minnesota, Minneapolis LIQ) 1,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ARIZONA--CONTINUED
$ 1,250,000 Arizona Insured Municipal Securities Trust, (Series 1996E) Weekly
VRDNs (Scottsdale (Memorial Hospitals))/(AMBAC INS)/(Norwest
Bank Minnesota, Minneapolis LIQ) $ 1,250,000
10,000,000 Coconino County, AZ Pollution Control Corporation, PCR Refunding
Bonds (Series 1995E) Weekly VRDNs (Nevada Power Co.)/(Societe
Generale, Paris LOC) 10,000,000
5,000,000 Pima County, AZ IDA Weekly VRDNs (Tucson Electric Power Co.)/
(Barclays Bank PLC, London LOC) 5,000,000
Total 36,850,000
ARKANSAS--0.3%
4,595,000 Little Rock, AR Pulaski County School District, (Series 1996), 3.85%
TRANs, 12/30/1996 4,595,000
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson Co.)/(PNC Bank,
NA LOC) 1,000,000
Total 5,595,000
CALIFORNIA--7.7%
27,585,000 California Public Capital Improvements Financing Authority, Trust
Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA INS)/
(Bank of New York, New York LIQ) 27,585,000
22,000,000 California School Cash Reserve Program Authority, (Series A), 4.75%
TRANs (MBIA INS), 7/2/1997 22,174,937
20,000,000 California State, (Series A), 4.50% RANs, 6/30/1997 20,091,600
22,000,000 California Statewide Communities Development Authority,
(1996 Series A), 4.75% TRANs (FSA INS), 6/30/1997 22,144,709
4,000,000 Livermore Valley, CA USD, (Series 1995-96), 4.75% TRANs, 9/19/1996 4,003,599
4,300,000 Lompoc, CA, 4.125% TRANs, 6/30/1997 4,309,599
26,000,000 Los Angeles County, CA Unified School District, 4.50% TRANs,
6/30/1997 26,171,257
3,500,000 Los Angeles, CA Wastewater System, Tender Option Certificates
(Series 1995H) Weekly VRDNs (MBIA INS)/(Swiss Bank Corp.,
Basle LIQ) 3,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
CALIFORNIA--CONTINUED
$ 3,000,000 Orange County, CA IDA, (Series 1991A) Weekly VRDNs
(The Lakes)/(Citibank NA, New York LOC) $ 3,000,000
10,000,000 South Coast, CA Local Education Agencies, (Series 1996A), 4.75%
TRANs, 6/30/1997 10,059,537
5,000,000 Vacaville Unified School District, CA, 4.375% TRANs, 7/1/1997 5,024,224
Total 148,064,462
COLORADO--0.1%
2,625,000 Denver (City & County), CO, 4.50% TOBs (Blake Street
Compendium)/(Norwest Bank Minnesota, Minneapolis LOC),
Optional Tender 12/15/1996 2,625,000
CONNECTICUT--1.2%
5,500,000 Connecticut Development Health Care Facilities Weekly VRDNs
(Independence Living)/(Chemical Bank, New York LOC) 5,500,000
17,300,000 Connecticut State Transportation Infrastructure Authority Weekly
VRDNs (Connecticut State)/(Commerzbank AG, Frankfurt LOC) 17,300,000
Total 22,800,000
DELAWARE--0.3%
5,000,000 Delaware Health Facilities Authority, Revenue Bonds (Series 1988)
Weekly VRDNs (Delaware Health Facilities Pooled Loan Program)/
(MBIA INS)/(J.P. Morgan Delaware, Wilmington LIQ) 5,000,000
FLORIDA--9.6%
10,000,000 Broward County, FL School District, (Series 1996A and 1996 B), 4.25%
RANs, 4/24/1997 10,042,165
4,270,000 Dade County, FL IDA Weekly VRDNs (Futernick Associates, Inc.)/
(First Union National Bank, Charlotte, N.C. LOC) 4,270,000
1,200,000 Dade County, FL IDA, Industrial Development Revenue Refunding
Bonds Weekly VRDNs (Continental Farms, Inc.)/(Nationsbank,
NA LOC) 1,200,000
13,305,000 Florida HFA Weekly VRDNs (Cornerstone Imaging, Inc.)/(PNC
Bank, NA LOC) 13,305,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 1,400,000 Florida HFA, (Series 1989 E) Weekly VRDNs (Fairmont Oaks Project)/
(Comerica Bank, Detroit, MI LOC) $ 1,400,000
3,200,000 Florida HFA, Multifamily Housing Revenue Bonds (1985 Series YY)
Weekly VRDNs (Monterey Meadows Apartments, FL)/(Citibank
NA, New York LOC) 3,200,000
7,235,000 Florida State Board of Education Administration, (CR49D),
3.60% TOBs (Citibank NA, New York LIQ), Optional Tender
12/1/1996 7,235,000
5,120,000 Florida State Board of Education Administration, (CR55), (Series
1989A), 3.75% TOBs (Citibank NA, New York LIQ), Optional Tender
3/1/1997 5,120,000
8,000,000 Gulf Breeze, FL, Variable Rate Demand Revenue Bonds (Series
1995A) Weekly VRDNs (Florida Municipal Bond Fund)/(Barnett
Bank, NA LOC) 8,000,000
10,000,000 Jacksonville, FL Electric Authority, Tender Option Certificates (Series
1995C) Weekly VRDNs (Bayerische Hypotheken-Und Wechsel-Bank
Ag LIQ) 10,000,000
3,000,000 Jacksonville, FL HFDC, Health Facilities Revenue Bonds (Series 1994)
Weekly VRDNs (River Garden/The Coves Project)/(First Union
National Bank, Charlotte, N.C. LOC) 3,000,000
4,300,000 Key West, FL Community Redevelopment Authority Weekly VRDNs
(Pier House Joint Venture)/(PNC Bank, NA LOC) 4,300,000
3,900,000 Lake Shore, FL Hospital Authority, Health Facilities Revenue Bonds
(Series 1991) Weekly VRDNs (Lake Shore Hospital)/(Kredietbank
N.V., Brussels LOC) 3,900,000
5,710,000 Manatee County, FL HFA Weekly VRDNs (Carriage Club)/(Mellon
Bank NA, Pittsburgh LOC) 5,710,000
2,850,000 Marion County, FL IDA, IDRB (Series 1989) Weekly VRDNs (Charter
Springs Hospital, Inc.)/(Bankers Trust Co., New York LOC) 2,850,000
4,000,000 Orange County, FL HFA, Multifamily Housing Refunding Revenue
Bonds (1992 Series A) Weekly VRDNs (Smokewood/Sun Key
Apartments Project (FL))/(Citibank NA, New York LOC) 4,000,000
5,500,000 Orange County, FL HFA, Multifamily Housing Revenue Bonds
Weekly VRDNs (Sutton Place. Ltd. Project)/(Nationsbank, NA LOC) 5,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 3,000,000 Orange County, FL, Health Facilities Authority Weekly VRDNs
(Mayflower Retirement Community)/(Rabobank Nederland,
Utrecht LOC) $ 3,000,000
7,000,000 Orange County, FL, Health Facilities Authority, Revenue Bonds
(Series 1995) Weekly VRDNs (Adventist Health System)/(Rabobank
Nederland, Utrecht LOC) 7,000,000
2,770,000 Palm Beach County, FL IDA Weekly VRDNs (Palm Beach Jewish
Community Campus)/(SunTrust Bank, Central Florida LOC) 2,770,000
6,000,000 Palm Beach County, FL, Revenue Bonds, (Series 1995) Weekly
VRDNs (Norton Gallery and School of Art, Inc. Project)/(Northern
Trust Co., Chicago, IL LOC) 6,000,000
3,000,000 Pinellas County, FL Health Facility Authority, (Series 1987) Weekly
VRDNs (St. Mark Village Project)/(NationsBank, South LOC) 3,000,000
5,525,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs
(IMC Fertilizer, Inc. Project)/(Rabobank Nederland, Utrecht LOC) 5,525,000
7,300,000 Sarasota County, FL Public Hospital District, 3.60% CP (Sarasota
Memorial Hospital), Mandatory Tender 9/19/1996 7,300,000
9,100,000 Sarasota County, FL Public Hospital District, 3.65% CP
(Sarasota Memorial Hospital), Mandatory Tender 10/10/1996 9,100,000
6,000,000 Southeast Volusia Hospital District, Revenue Bonds (Series 1995)
Weekly VRDNs (Bert Fish Medical Center (FL))/(SouthTrust Bank of
Alabama, Birmingham LOC) 6,000,000
6,000,000 St. Lucie County, FL PCR, (Series 94A), 3.65% CP (Florida Power &
Light Co.), Mandatory Tender 10/10/1996 6,000,000
7,720,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs
(Savannahs Hospital)/(NationsBank, South LOC) 7,720,000
25,000,000 Sunshine State Governmental Finance Commission, FL, 3.65% CP
(Morgan Guaranty Trust Co., New York, National Westminster Bank,
PLC, London and Union Bank of Switzerland, Zurich LOCs),
Mandatory Tender 8/14/1996 25,000,000
3,390,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/
(Mellon Bank NA, Pittsburgh LOC) 3,390,000
Total 184,837,165
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--2.3%
$ 4,000,000 Atlanta, GA, Urban Residential Finance Authority, Residential
Construction Revenue Bonds, (Series 1995) Weekly VRDNs
(Summerhill Neighborhood Bond Program)/(First Union National
Bank, Charlotte, N.C. LOC) $ 4,000,000
1,200,000 Coweta County, GA IDA Daily VRDNs (Eckerds Warehouse)/
(Union Bank of Switzerland, Zurich LOC) 1,200,000
1,600,000 De Kalb County, GA Development Authority, (Series 1992) Weekly
VRDNs (American Cancer Society, GA)/(SunTrust Bank, Atlanta
LOC) 1,600,000
4,470,000 Fulton County, GA Housing Authority, (Series 1994B) Weekly VRDNs
(Champions Green Apartments Project)/(SouthTrust Bank of
Alabama, Birmingham LOC) 4,470,000
3,110,000 Georgia State HFA, Single Family Mortgage Revenue, 3.60% TOBs
(Citibank NA, New York LIQ), Optional Tender 9/1/1996 3,110,000
3,000,000 Marietta, GA Housing Authority, Multifamily Housing Revenue
Refunding Bonds (Series 1996) Weekly VRDNs (Winterset
Apartments Project)/(Wachovia Bank of Georgia NA, Atlanta LOC) 3,000,000
18,145,000 Municipal Electric Authority of Georgia, General Resolutions Projects
Subordinated Bonds (Series 1995B), 3.55% CP (Bayerische
Landesbank Girozentrale, Credit Suisse, Zurich and Morgan
Guaranty Trust Co., New York LOCs), Mandatory Tender 8/12/1996 18,145,000
9,100,000 Putnam County, GA, (Series 1996) Daily VRDNs (Georgia Power
Company Plant Branch Project) 9,100,000
Total 44,625,000
ILLINOIS--11.7%
11,900,000 Chicago O'Hare International Airport, Bonds (Series 1983A) Daily
VRDNs (American Airlines)/(Westdeutsche Landesbank
Girozentrale LOC) 11,900,000
20,000,000 Chicago, IL Board of Education, Variable Rate Certificates
(Series 1996BB) Weekly VRDNs (MBIA INS)/(Bank of America NT
and SA, San Francisco LIQ) 20,000,000
25,000,000 Chicago, IL, GO (Series 1996), 3.10% TOBs (Landesbank Hessen-
Thueringen, Frankfurt LOC), Mandatory Tender 2/4/1997 25,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ILLINOIS--CONTINUED
$ 3,000,000 Illinois Development Finance Authority Weekly VRDNs (Newlywed
Food)/(Mellon Bank NA, Pittsburgh LOC) $ 3,000,000
50,400,000 Illinois Development Finance Authority, PCR, (Series 1996B) Weekly
VRDNs (Commonwealth Edison Co.)/(AMBAC INS)/(Bank of
New York, New York LIQ) 50,400,000
7,500,000 Illinois Educational Facilities Authority, 3.65% CP (Field Museum of
Natural History)/(Northern Trust Co., Chicago, IL LOC), Mandatory
Tender 8/15/1996 7,500,000
9,500,000 Illinois Educational Facilities Authority, Revenue Bonds (Series 1995)
Weekly VRDNs (Ravinia Festival Association (IL))/(NBD Bank,
Michigan LOC) 9,500,000
16,100,000 Illinois Health Facilities Authority Weekly VRDNs (OSF Health Care
Systems) 16,100,000
20,200,000 Illinois Health Facilities Authority, (Series 1989A) Weekly VRDNs
(Methodist Health Services Corp.)/(Fuji Bank, Ltd., Tokyo LOC) 20,200,000
35,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series 1985B)
Weekly VRDNs (OSF Health Care Systems)/(Bank of America
Illinois and Rabobank Nederland, Utrecht LIQs) 35,000,000
11,650,000 Illinois Health Facilities Authority, Revenue Bonds, (Series 1996B),
3.65% CP (Rush-Presbyterian St. Luke's Medical)/(Northern Trust
Co., Chicago, IL LOC), Mandatory Tender 9/24/1996 11,650,000
15,000,000 Lisle (Village of), IL, Multifamily Housing Mortgage Revenue Bonds,
(1985 Series A) Weekly VRDNs (Four Lakes Project)/(Chemical Bank,
New York LOC) 15,000,000
Total 225,250,000
INDIANA--3.0%
980,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/(National City
Bank, Kentucky LOC) 980,000
6,350,000 Elkhart, IN, Community Schools, Time Warrants, 4.00% TANs,
12/31/1996 6,360,196
14,500,000 Fort Wayne, IN Community Schools, Time Warrants, 3.75% TANs,
12/31/1996 14,514,567
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
INDIANA--CONTINED
$ 2,110,000 Indiana Health Facilities Finance Authority Rehabilitation Center
Weekly VRDNs (Crossroads Rehabilitation Center)/(Bank One,
Indianapolis, IN LOC) $ 2,110,000
13,000,000 Indianapolis, IN Local Public Improvement, (Series 1996 B), 4.25%
BANs, 1/9/1997 13,025,260
2,780,000 Lake City, IN Public Library District, Time Warrants, 3.63% TANs,
12/31/1996 2,782,028
8,600,000 Purdue University, IN, Student Fee Bonds (Series L) Weekly VRDNs 8,600,000
9,100,000 Washington Township, IN, Temporary Loan Warrants, 4.10% TANs,
12/31/1996 9,107,357
Total 57,479,408
IOWA--0.5%
2,085,000 Iowa Finance Authority, Single Family Mortgage Bonds (Series 1996A),
3.10% TOBs (FGIC GIC), Mandatory Tender 2/28/1997 2,085,000
7,425,000 Iowa School Corporations, Warrant Certificates (Series 1995-96 B),
4.25% TRANs (FSA INS), 1/30/1997 7,455,405
Total 9,540,405
KENTUCKY--2.5%
1,400,000 Boone County, KY, Revenue Refunding Bonds Weekly VRDNs
(Spring Meadow Associates)/(Huntington National Bank,
Columbus, OH LOC) 1,400,000
12,242,000 Kentucky Interlocal School Transportation Association, (Series A),
4.05% TRANs, 6/30/1997 12,242,000
35,000,000 Owensboro, KY, (Series 1996) Weekly VRDNs (Owensboro Mercy
Health System, Inc. Project)/(Bank of America Illinois LOC) 35,000,000
Total 48,642,000
LOUISIANA--0.4%
3,255,000 East Baton Rouge, LA Mortgage Finance Authority, SFM Revenue
Refunding Bonds (Series 1996A), 3.40% TOBs (United States
Treasury COL), Mandatory Tender 10/3/1996 3,255,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
LOUISIANA--CONTINUED
$ 5,025,000 Louisiana PFA, Advance Funding Notes/School Board Advance
Funding Program (Series 1995 B), 4.50% TANs (St. Charles Parish,
LA), 8/29/1996 $ 5,026,668
Total 8,281,668
MARYLAND--2.7%
400,000 Baltimore County, MD Port Facility Monthly VRDNs (Occidental
Petroleum Corp.)/(Morgan Guaranty Trust Co., New York LOC) 400,000
1,000,000 Maryland EDC, Pooled Financing Revenue Bonds, (Series 1995)
Weekly VRDNs (Maryland Municipal Bond Fund)/(Nationsbank,
NA LOC) 1,000,000
1,200,000 Maryland Health & Higher Educational Facilities Authority, (Series
1985B) Weekly VRDNs (First National Bank of Chicago LOC) 1,200,000
1,800,000 Maryland Health & Higher Educational Facilities Authority,
Revenue Bonds (Series 1985A) Weekly VRDNs (First National Bank
of Chicago LOC) 1,800,000
9,430,000 Maryland State Community Development Administration,
(Series 1987-2), 3.60% TOBs (First National Bank of Chicago LIQ),
Optional Tender 10/1/1996 9,430,000
29,800,000 Montgomery County, MD, Consolidated CP BANs (Series 1995),
3.45% CP, Mandatory Tender 8/12/1996 29,800,000
7,900,000 Montgomery County, MD, EDR Weekly VRDNs (U.S. Pharmacopeial
Convention Facility)/(Chemical Bank, New York LOC) 7,900,000
Total 51,530,000
MASSACHUSETTS--1.7%
6,000,000 Commonwealth of Massachusetts, (Series B), 5.00% Bonds, 6/1/1997 6,058,234
10,408,000 Easton, MA, 4.00% BANs, 4/10/1997 10,432,216
14,500,000 Massachusetts HEFA, (Series D) Daily VRDNs (Capital Asset
Program)/(MBIA INS)/(Credit Suisse, Zurich LIQ) 14,500,000
1,200,000 Massachusetts Port Authority, (Series 1995A) Daily VRDNs
(Landesbank Hessen-Thueringen, Frankfurt LOC) 1,200,000
Total 32,190,450
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--3.9%
$ 1,909,000 Battle Creek, MI Economic Development Corporation, Ltd Obligation
Economic Development Revenue Refunding Bonds (Series 1992)
Weekly VRDNs (Michigan Carton & Paperboard Company)/
(American National Bank, Chicago LOC) $ 1,909,000
5,000,000 Dearborn, MI Economic Development Corp., (Series 1991) Weekly
VRDNs (Oakbrook Common)/(Mellon Bank NA, Pittsburgh LOC) 5,000,000
1,450,000 Kalamazoo, MI Economic Development Corp., 1995 Limited
Obligation Revenue Refunding Bonds Weekly VRDNs (Wyndham
Project, MI)/(First of America Bank - Illinois LOC) 1,450,000
4,600,000 Michigan State Hospital Finance Authority, (Series A) Weekly
VRDNs (OSF Health Care Systems) 4,600,000
20,000,000 Michigan State, GO UT Notes, 4.00% TRANs, 9/30/1996 20,032,287
12,000,000 Michigan Strategic Fund, Limited Obligation PCRs (Series 1993)
Weekly VRDNs (Allied-Signal, Inc.) 12,000,000
15,000,000 Michigan Strategic Fund, Refunding Revenue Bonds, Series 1995CC
Daily VRDNs (Detroit Edison Co.)/(Barclays Bank PLC, London LOC) 15,000,000
10,000,000 Michigan Underground Storage Tank Financial Assurance Authority,
(Series I - 1995), 3.45% CP (Canadian Imperial Bank of Commerce,
Toronto LOC), Mandatory Tender 8/15/1996 10,000,000
2,695,000 Ottawa County, MI Economic Development Corp., Limited Obligation
Revenue Bonds (Series 1995B) Weekly VRDNs (Sunset Manor, Inc.
Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) 2,695,000
1,400,000 Regents of University of Michigan, Intercollegiate Athletic Revenue
Bonds (Series 1995) Daily VRDNs 1,400,000
Total 74,086,287
MINNESOTA--3.6%
8,335,000 Anoka-Hennepin, MN ISD 11, GO Certificates of Indebtedness
(Series 1996A), 3.44% TANs (Minnesota Tax and Aid Anticipation
Borrowing Program GTD), 3/13/1997 8,335,379
5,000,000 Bloomington, MN Port Authority, Special Tax Revenue Refunding
Bonds (Series 1994B) Weekly VRDNs (Mall of America)/(FSA INS)/
(Credit Local de France LIQ) 5,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MINNESOTA--CONTINUED
$ 1,965,000 Dakota County, MN Housing & Redevelopment Authority,
Multifamily Rental Housing Revenue Bonds (Series 1994-B) Weekly
VRDNs (Westwood Ridge Senior Residence Project)/(First Bank NA,
Minneapolis LOC) $ 1,965,000
10,000,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) Weekly
VRDNs (Walker Methodist Health Center, Inc. Project)/(First Bank
NA, Minneapolis LOC) 10,000,000
7,500,000 Minnesota State Higher Education Coordinating Board,
Supplemental Student Loan Program Refunding Revenue Bonds
(Series 1994A) Weekly VRDNs (Norwest Bank Minnesota,
Minneapolis LIQ) 7,500,000
7,000,000 Minnesota Tax and Aid Anticipation Borrowing Program, Certificates
of Participation (Series 1996A), 4.25% TANs (Minnesota Aid
Anticipation Pooled Borrowing Program)/(Minnesota Tax and Aid
Anticipation Borrowing Program GTD), 2/21/1997 7,036,636
10,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs
(Mayo Foundation) 10,000,000
14,500,000 Rochester, MN Health Care Facility Authority Weekly VRDNs
(Mayo Foundation) 14,500,000
1,000,000 Shakopee, MN Hospital Finance Authority Weekly VRDNs
(St. Francis Regional Medical Center)/(Citibank NA, New York LOC) 1,000,000
3,000,000 Southern Minnesota Municipal Power Agency, 3.65% CP, Mandatory
Tender 8/6/1996 3,000,000
800,000 St. Paul, MN Port Authority, (Series 1991) Weekly VRDNs
(West Gate Office)/(First Bank NA, Minneapolis LOC) 800,000
Total 69,137,015
MISSISSIPPI--0.1%
1,685,000 Hinds County, MS, (Series 1991) Weekly VRDNs (North State St.
Project)/(Amsouth Bank NA, Birmingham LOC) 1,685,000
MISSOURI--0.2%
4,200,000 Poplar Bluff, MO IDA, (Series 1987) Weekly VRDNs (Gates Rubber
Co.)/(NBD Bank, Michigan LOC) 4,200,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NEVADA--1.8%
$ 34,900,000 Nevada Housing Division, Multi-Unit Housing Revenue Refunding
Bonds (1991 Series A) Weekly VRDNs (Park Vista Apartments
Project)/(Sumitomo Bank Ltd., Osaka LOC) $ 34,900,000
NEW JERSEY--1.7%
28,500,000 Essex County, NJ, (1996 Series A), 4.00% TANs (Chemical Bank,
New York LOC), 8/19/1996 28,509,224
5,000,000 New Jersey EDA, (Series 1995) Weekly VRDNs (Hillcrest Health
Service System, Inc.)/(Industrial Bank of Japan Ltd., Tokyo LOC) 5,000,000
Total 33,509,224
NEW YORK--3.4%
10,000,000 Nassau County, NY, (Series 1996A), 4.00% RANs, 3/5/1997 10,036,039
21,800,000 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) 21,800,000
5,500,000 New York City, NY Daily VRDNs (FGIC INS)/(FGIC Securities
Purchase, Inc. LIQ) 5,500,000
19,000,000 New York City, NY, (Series A), 4.50% TANs, 2/12/1997 19,071,060
4,000,000 New York City, NY, GO Bonds Series-B Daily VRDNs (FGIC INS)/
(FGIC Securities Purchase, Inc. LIQ) 4,000,000
5,200,000 New York State Energy Research & Development Authority Daily
VRDNs (Niagara Mohawk Power Corp.)/(Toronto-Dominion
Bank LOC) 5,200,000
270,000 New York State Local Government Assistance Corp., Bonds
(Series 1995F) Weekly VRDNs (Toronto-Dominion Bank LOC) 270,000
Total 65,877,099
NORTH CAROLINA--2.6%
4,500,000 Charlotte, NC Airport, Refunding Revenue Bonds (Series 1993A)
Weekly VRDNs (MBIA INS)/(Commerzbank AG, Frankfurt LIQ) 4,500,000
3,800,000 Greensboro, NC, Certificates of Participation 1994 Equipment
Project Weekly VRDNs (Greensboro, NC Center City Corp.)/
(Wachovia Bank of Georgia NA, Atlanta LIQ) 3,800,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NORTH CAROLINA--CONTINUED
$ 15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) $ 15,000,000
50,000 NCNB Pooled Tax-Exempt Trust, (Series 1990A) Weekly VRDNs
(NCNB Tax Exempt Trust 1990a)/(Nationsbank, NA LOC) 50,000
12,450,000 North Carolina Eastern Municipal Power Agency, (Series B),
3.10% CP (Morgan Guaranty Trust Co., New York and Union Bank
of Switzerland, Zurich LOCs), Mandatory Tender 8/13/1996 12,450,000
1,100,000 North Carolina Medical Care Commission Hospital, Revenue Bonds
(Series 1992B) Weekly VRDNs (North Carolina Baptist) 1,100,000
10,000,000 North Carolina Municipal Power Agency No. 1, (Series A), 3.65% CP
(Morgan Guaranty Trust Co., New York and Union Bank of
Switzerland, Zurich LOCs), Mandatory Tender 9/27/1996 10,000,000
3,000,000 Winston-Salem, NC, GO Bonds (Series 1990) Weekly VRDNs
(Credit Suisse, Zurich LIQ) 3,000,000
Total 49,900,000
OHIO--5.5%
2,000,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs
(Visiting Nurses)/(National City Bank, Cleveland, OH LOC) 2,000,000
3,000,000 Cleveland, OH, Waterworks Revenue Bonds (Series D), 7.25% Bonds
(United States Treasury PRF), 1/1/1997 (@102) 3,104,803
4,000,000 Columbus, OH Sewer System, Revenue Bonds (Series 1994) Weekly
VRDNs 4,000,000
12,600,000 Cuyahoga County, OH Hospital Authority Daily VRDNs
(University Hospitals Health System, Inc.)/(Dai-Ichi Kangyo Bank
Ltd., Tokyo LOC) 12,600,000
3,600,000 Cuyahoga County, OH Hospital Authority Weekly VRDNs
(St. Lukes Hospital)/(First National Bank of Chicago LOC) 3,600,000
2,550,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking Co.)/
(KeyBank, NA LOC) 2,550,000
7,800,000 Franklin County, OH Hospital Facility Authority Weekly VRDNs
(Riverside United Methodist Hospital)/(National City Bank,
Cleveland, OH LOC) 7,800,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 3,620,000 Franklin County, OH Hospital Facility Authority, (Series 1992) Weekly
VRDNs (Wesley Glenn, Inc.)/(Fifth Third Bank, Cincinnati LOC) $ 3,620,000
18,700,000 Greater Cleveland Regional Transportation Authority, OH, 3.90%
BANs, 10/17/1996 18,717,339
7,447,000 Greene County, OH, Certificates of Indebtedness - Issue III, 4.00%
BANs, 3/26/1997 7,463,292
3,000,000 Hamilton County, OH Health System Weekly VRDNs (West Park
Community)/(Fifth Third Bank, Cincinnati LOC) 3,000,000
2,000,000 Lorain County, OH, Health Facilities Revenue Bonds (Series 1992A)
Weekly VRDNs (Elyria United Methodist Home)/(Fifth Third Bank,
Cincinnati LOC) 2,000,000
2,000,000 Lucas County, OH IDA, (Series 1991) Weekly VRDNs (Ohio Citizens
Bank)/(National City Bank, Cleveland, OH LOC) 2,000,000
270,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs
(Sunshine Children's Home)/(National City Bank, Cleveland,
OH LOC) 270,000
6,900,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995)
Weekly VRDNs (Copeland Oaks Project)/(Bank One, Akron,
NA LOC) 6,900,000
1,645,000 Marion County, OH Hospital Authority, (Series 1991) Weekly VRDNs
(Marion County, OH Pooled Hospital Program)/(Bank One,
Columbus, NA LOC) 1,645,000
4,000,000 Mayfield Village, OH IDA Weekly VRDNs (Beta Campus Co.)/
(KeyBank, NA LOC) 4,000,000
2,000,000 Medina County, OH, Solid Waste Disposal Revenue Bonds
(Series 1995) Weekly VRDNs (Valley City Steel Company Project)/
(KeyBank, NA LOC) 2,000,000
5,900,000 Montgomery County, OH Health Facilities Authority, (Series 1995)
Weekly VRDNs (Sisters of Charity Health Care System)/
(Toronto-Dominion Bank LIQ) 5,900,000
750,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex
Venture)/(KeyBank, NA LOC) 750,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 1,665,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited
Partnership)/(Huntington National Bank, Columbus, OH LOC) $ 1,665,000
2,000,000 Ohio State Air Quality Development Authority, (Series 1998A)
Weekly VRDNs (PPG Industries, Inc.) 2,000,000
3,700,000 Rickenbacker, OH Port Authority, (Series 1992) Weekly VRDNs
(Rickenbacker Holdings, Inc.)/(Bank One, Columbus, NA LOC) 3,700,000
1,800,000 Seneca County, OH Hospital Facility Authority Weekly VRDNs
(St. Francis Home)/(National City Bank, Cleveland, OH LOC) 1,800,000
1,050,000 Twinsburg, OH IDA Weekly VRDNs (Carl J Massara Project)/
(KeyBank, NA LOC) 1,050,000
2,175,000 Wayne County, OH, Health Care Facility Revenue Bonds (Series 1995)
Weekly VRDNs (D & M Realty Project)/(Bank One, Youngstown,
NA LOC) 2,175,000
Total 106,310,434
OKLAHOMA--4.5%
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) 10,000,000
24,500,000 Oklahoma State Industrial Authority, Flexible Rate Hospital Revenue
Bonds (Series 1990B) Weekly VRDNs (Baptist Medical Center, OK)/
(Credit Suisse, Zurich and Morgan Guaranty Trust Co.,
New York LIQs) 24,500,000
51,675,000 Oklahoma State Industrial Authority, Health System Revenue Bonds
(Series 1995A) Weekly VRDNs (Baptist Medical Center, OK)/(Credit
Suisse, Zurich and Morgan Guaranty Trust Co., New York LIQs) 51,675,000
Total 86,175,000
OREGON--0.4%
5,000,000 Multnomah County, OR School District, 4.50% TANs, 6/26/1997 5,025,962
2,000,000 Oregon Health, Housing & Cultural Facilities Authority, Revenue
Bonds (1995 Series A) Weekly VRDNs (Guide Dogs for the Blind, Inc.
Project)/(Banque Nationale de Paris LOC) 2,000,000
Total 7,025,962
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--3.4%
$ 1,850,000 Allegheny County, PA HDA, (Series 1988A) Weekly VRDNs
(Allegheny Hospital)/(PNC Bank, NA LOC) $ 1,850,000
200,000 Allegheny County, PA HDA, Hosp Revenue Bonds (Series B 1995)
Weekly VRDNs (Allegheny General Hospital)/(Morgan Guaranty
Trust Co., New York LOC) 200,000
5,000,000 Allegheny County, PA IDA, PCR (Series 1992A), 3.75% TOBs
(Duquesne Light Power Co.)/(Canadian Imperial Bank of
Commerce, Toronto LOC), Optional Tender 11/7/1996 5,000,000
3,305,000 Clinton County, PA Municipal Authority, (Series A) Weekly VRDNs
(Lock Haven Hospital)/(Mellon Bank NA, Pittsburgh LOC) 3,305,000
9,075,000 Commonwealth of Pennsylvania, GO Bonds (Second Series of 1995),
5.00% BANs, 11/15/1996 9,109,938
1,900,000 Delaware County Authority, PA, Hospital Revenue Bonds
(Series of 1996) Weekly VRDNs (Crozer-Chester Medical Center)/
(Kredietbank N.V., Brussels LOC) 1,900,000
3,700,000 Delaware County, PA Weekly VRDNs (American College)/
(PNC Bank, NA LOC) 3,700,000
23,500,000 Erie County, PA Hospital Authority Weekly VRDNs (St. Vincent
Health System)/(Mellon Bank NA, Pittsburgh LOC) 23,500,000
3,710,000 Lehigh County, PA General Purpose Authority, Revenue Bonds
(Series 1990) Weekly VRDNs (Phoebe Terrace, Inc.)/(Corestates
Bank NA, Philadelphia, PA LOC) 3,710,000
1,500,000 Montgomery County, PA Higher Education and Health Authority,
(Series 1992) Weekly VRDNs (Pottstown Healthcare Corporation
Project)/(Corestates Bank NA, Philadelphia, PA LOC) 1,500,000
5,000,000 North Lebanon Township, PA, Municipal Authority Mortgage
Weekly VRDNs (Grace Community, Inc.)/(Corestates Bank NA,
Philadelphia, PA LOC) 5,000,000
4,000,000 Northeastern, PA Hospital & Education Authority, VRDB's
(Series 1996) Weekly VRDNs (Allhealth Pooled Financing Program)/
(Chase Manhattan Bank NA, New York LOC) 4,000,000
1,265,000 Philadelphia, PA IDA, (Series 93) Weekly VRDNs (Sackett
Development)/(Mellon Bank NA, Pittsburgh LOC) 1,265,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 2,000,000 Washington County, PA Hospital Authority Weekly VRDNs
(Keystone Diversified Management Corp.)/(Mellon Bank NA,
Pittsburgh LOC) $ 2,000,000
Total 66,039,938
SOUTH CAROLINA--0.1%
1,090,000 South Carolina Job Development Authority Daily VRDNs (Chemical
Bank, New York LOC) 1,090,000
TENNESSEE--5.6%
8,000,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie School)/(SunTrust
Bank, Atlanta LOC) 8,000,000
12,500,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/
(Sumitomo Bank Ltd., Osaka LOC) 12,500,000
8,300,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/
(Sumitomo Bank Ltd., Osaka LOC) 8,300,000
6,500,000 Chattanooga-Hamilton County, TN Hospital Authority Daily
VRDNs (Erlanger Medical Center)/(Morgan Guaranty Trust Co.,
New York SA) 6,500,000
2,785,000 Clarksville, TN Public Building Authority, Pooled Financing Revenue
Bonds (Series 1990) Weekly VRDNs (Tennessee Municipal Bond
Fund)/(MBIA INS)/(Credit Suisse, Zurich LIQ) 2,785,000
8,115,000 Knox County, TN Health Education & Housing Facilities Board,
Hospital Facilities Revenue Bonds (Series 1985 B) Weekly VRDNs
(Mercy Health Care System, Province of Cincinnatti)/(MBIA INS)/
(Morgan Guaranty Trust Co., New York LIQ) 8,115,000
5,265,000 Maury County, TN HEFA, (Series 1996E) Weekly VRDNs (Southern
Healthcare Systems, Inc.)/(Bank One, Texas NA LOC) 5,265,000
1,000,000 Memphis, TN, (Series 1996), 5.00% Bonds, 7/1/1997 1,009,762
6,000,000 Memphis, TN, General Improvement Refunding Bonds, (Series
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale LOC) 6,000,000
1,700,000 Memphis, TN, General Improvement Refunding Bonds, (Series
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale LOC) 1,700,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
TENNESSEE--CONTINUED
$ 2,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA,
(Series 1996) Weekly VRDNs (Dede Wallace Center Project)/
(SunTrust Bank, Nashville LOC) $ 2,000,000
7,400,000 Metropolitan Government Nashville & Davidson County, TN HEFA,
Hospital Revenue Bonds, (Series 1992), 3.30% CP (Baptist Hospital,
Inc. (TN))/(NationsBank, South LIQ), Mandatory Tender 8/30/1996 7,400,000
20,800,000 Metropolitan Government Nashville & Davidson County, TN HEFA,
Hospital Revenue Bonds, (Series 1992), 3.65% CP (Baptist Hospital,
Inc. (TN))/(NationsBank, South LIQ), Mandatory Tender 9/3/1996 20,800,000
6,830,000 Metropolitan Government Nashville & Davidson County, TN IDB,
Metropolitan Government Revenue Bonds (Series 1995) Weekly
VRDNs (YMCA Projects)/(Nationsbank of Tennessee LOC) 6,830,000
2,600,000 Metropolitan Nashville Tennessee AA, Airport Improvement
Revenue Bonds Refunding (Series 1995) Weekly VRDNs (FGIC INS)/
(Credit Local de France LIQ) 2,600,000
5,500,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil Fibers, Inc.
Project)/(ABN AMRO Bank N.V., Amsterdam LOC) 5,500,000
2,000,000 Tennessee State, GO Bans (Series 1996C) Weekly VRDNs 2,000,000
Total 107,304,762
TEXAS--8.1%
3,995,000 Dallas, TX, (Series C), 3.75% TOBs, Optional Tender 6/15/1997 3,995,000
3,950,000 Harris County, TX HFDC Daily VRDNs (St. Luke's Episcopal
Hospital) 3,950,000
23,300,000 Harris County, TX HFDC, (Series 1994) Daily VRDNs (Methodist
Hospital, Harris County, TX) 23,300,000
21,600,000 Harris County, TX HFDC, (Series B) Daily VRDNs (St. Luke's
Episcopal Hospital) 21,600,000
10,850,000 Harris County, TX HFDC, (Series B), 3.60% TOBs (San Jacinto
Methodist Hospital)/(Morgan Guaranty Trust Co., New York LOC),
Optional Tender 9/3/1996 10,850,000
1,820,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/
(Nationsbank, NA LOC) 1,820,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$ 80,000,000 Texas State, (Series 1995A), 4.75% TRANs, 8/30/1996 $ 80,070,869
10,000,000 Texas State, (Series 1995B), 3.65% CP, Mandatory Tender 8/20/1996 10,000,000
Total 155,585,869
UTAH--0.3%
5,700,000 Salt Lake County, UT, PCR Bonds (Series 1994B) Daily VRDNs
(British Petroleum Co. PLC) 5,700,000
VIRGINIA--0.9%
7,000,000 Fairfax County, VA Housing Authority Weekly VRDNs (Chase
Commons Associates)/(Bankers Trust Co., New York LOC) 7,000,000
9,600,000 York County, VA IDA, (Series 1985), 3.75% CP (Virginia Electric
Power Co.), Mandatory Tender 8/14/1996 9,600,000
Total 16,600,000
WASHINGTON--0.1%
2,200,000 Port of Seattle, WA, IDRB (Series 1985) Weekly VRDNs (Douglas
Management Company Project)/(Mellon Bank NA, Pittsburgh LOC) 2,200,000
WEST VIRGINIA--1.6%
15,960,000 Cabell County Commission, WV, Life Care Facilities Multi-Option
Revenue Bonds (Series 1995) Weekly VRDNs (Foster Foundation)/
(Huntington National Bank, Columbus, OH LOC) 15,960,000
14,500,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG
Industries, Inc.) 14,500,000
Total 30,460,000
WISCONSIN--1.9%
1,100,000 Seymour, WI IDA Weekly VRDNs (Beatrice Cheese, Inc.)/(Bank of
New York, New York LOC) 1,100,000
30,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical Center)/
(Sumitomo Bank Ltd., Osaka LOC) 30,000,000
5,000,000 Wisconsin State, 7.30% Bonds (United States Treasury PRF),
5/1/1997 (@101) 5,176,873
Total 36,276,873
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
WYOMING--0.7%
$ 6,300,000 Lincoln County, WY, PCR Refunding Bonds (Series 1994) Daily
VRDNs (Pacificorp)/(AMBAC INS)/(Bank of New York,
New York LIQ) $ 6,300,000
1,125,000 Natrona County, WY, Hospital Revenue, 5.3625% TOBs (Grainger
(W.W.), Inc.), Optional Tender 12/1/1996 1,125,000
6,000,000 Sweetwater County, WY IDA, PCR Refunding Bonds (Series 1994)
Daily VRDNs (Pacificorp)/(AMBAC INS)/(Bank of New York,
New York LIQ) 6,000,000
Total 13,425,000
NO STATE--1.5%
19,081,010 Equity Trust II, (1996 Series) Weekly VRDNs (Republic National
Bank of New York LOC) 19,081,010
9,106,744 LaSalle National Bank Leasetops Trust, Series 1995A Leasetops
Certificates Weekly VRDNs (Lasalle National Bank, Chicago LOC) 9,106,744
1,560,000 Merrill Lynch Puttable Floats/Rites Trust, (Series PP2) Weekly
VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 1,560,000
Total 29,747,754
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $1,958,392,775
</TABLE>
(a) The Fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An
NRSRO's two highest rating categories are determined without regard for
sub-categories and gradations. For example, securities rated SP-1+, SP-1
or SP-2 by Standard & Poor's Corporation, MIG-1, or MIG-2 by Moody's
Investors Service, Inc., F-1+, F-1 and F-2 by Fitch Investors Service,
Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier
securities. Securities rated in the second highest short-term rating
category (and unrated securities of comparable quality) are identified
as Second Tier securities. The Fund follows applicable regulations in
determining whether a security is rated and whether a security rated by
multiple NRSROs in different rating categories should be identified as a
First or Second Tier security.
At July 31, 1996, the portfolio securities were rated as follows:
TIER RATING PERCENT BASED ON TOTAL MARKET VALUE (UNAUDITED)
First Tier Second Tier
100.00% 0.00%
(b) The cost of investments for federal tax purposes amounts to
$1,958,173,048.
Note: The categories of investments are shown as a percentage of net assets
($1,921,387,122) at July 31, 1996.
The following acronyms are used throughout this portfolio:
AMBAC -- American Municipal Bond Assurance Corporation
BANs -- Bond Anticipation Notes
CDA -- Community Development Administration
COL -- Collateralized
CP -- Commercial Paper
EDA -- Economic Development Authority
EDC -- Economic Development Commission
EDR -- Economic Development Revenue
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GO -- General Obligation
GTD -- Guaranty
HDA -- Hospital Development Authority
HEFA -- Health and Education Facilities Authority
HFA -- Housing Finance Authority
HFDC -- Health Facility Development Corporation
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDC -- Industrial Development Corporation
IDR -- Industrial Development Revenue
IDRB -- Industrial Development Revenue Bond
IFA -- Industrial Finance Authority
INS -- Insured
ISD -- Independent School District
LIQ -- Liquidity Agreement
LOC(s) -- Letter(s) of Credit
MBIA -- Municipal Bond Investors Assurance
PCR -- Pollution Control Revenue
PFA -- Public Facility Authority
PLC -- Public Limited Company
PRF -- Prerefunded
RANs -- Revenue Anticipation Notes
SA -- Support Agreement
SFM -- Single Family Mortgage
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
TRANs -- Tax and Revenue Anticipation Notes
USD -- University School District
UT -- Unlimited Tax
VRDBs -- Variable Rate Demand Bonds
VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value
(tax value, $1,958,173,048) $ 1,958,392,775
Cash 452,506
Income receivable 13,594,030
Receivable for shares sold 1,817,688
Total assets 1,974,256,999
LIABILITIES:
Payable for investments purchased $ 47,784,559
Income distribution payable 4,664,726
Accrued expenses 420,592
Total liabilities 52,869,877
NET ASSETS for 1,921,475,250 shares
outstanding $ 1,921,387,122
NET ASSETS CONSIST OF:
Paid in capital $ 1,921,475,250
Accumulated net realized loss on
investments (88,128)
Total Net Assets $ 1,921,387,122
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$1,514,978,944 / 1,515,048,255 shares
outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$406,408,178 / 406,426,995 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, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 67,301,023
EXPENSES:
Investment advisory fee $ 3,668,956
Administrative personnel and services fee 1,387,430
Custodian fees 132,278
Transfer and dividend disbursing agent
fees and expenses 82,029
Directors'/Trustees' fees 26,347
Auditing fees 13,017
Legal fees 12,581
Portfolio accounting fees 181,541
Shareholder services fee --
Institutional Shares 3,693,322
Shareholder services fee --
Institutional Service Shares 892,872
Share registration costs 176,345
Printing and postage 31,849
Insurance premiums 22,231
Taxes 6,598
Miscellaneous 8,752
Total expenses 10,336,148
Waivers --
Waiver of investment advisory fee $(2,000,281)
Waiver of shareholder services
fee -- Institutional
Shares (3,693,322)
Total waivers (5,693,603)
Net expenses 4,642,545
Net investment income 62,658,478
Net realized loss on investments (66,893)
Change in net assets resulting
from operations $ 62,591,585
</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,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 62,658,478 $ 41,769,131
Net realized gain (loss) on
investments ($36,269 net loss and
$40 net gain, respectively, as
computed for federal income tax
purposes) (66,893) (1,395)
Change in net assets resulting from
operations 62,591,585 41,767,736
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (51,152,839) (36,508,581)
Institutional Service Shares (11,505,639) (5,260,550)
Change in net assets resulting
from distributions to shareholders (62,658,478) (41,769,131)
SHARE TRANSACTIONS--
Proceeds from sale of shares 12,426,624,832 7,385,500,551
Net asset value of shares issued to
shareholders in payment of
distributions declared 4,751,851 2,286,899
Cost of shares redeemed (12,057,396,164) (6,655,215,610)
Change in net assets resulting
from share transactions 373,980,519 732,571,840
Change in net assets 373,913,626 732,570,445
NET ASSETS:
Beginning of period 1,547,473,496 814,903,051
End of period $ 1,921,387,122 $ 1,547,473,496
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Tax-Free Obligations
Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is to provide current
income exempt from federal regular income tax consistent with stability of
principal.
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, 1996, the Fund, for federal tax purposes, had a capital loss
carryforward of $56,069, 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
<C> <C>
2001 $ 580
2002 $ 19,220
2004 $ 36,269
</TABLE>
Additionally, net capital losses of $96,260 attributable to security
transactions incurred after October 31, 1995 are treated as arising on
August 1, 1996 the first day of the Fund's next taxable year.
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.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$1,921,475,250. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995
<S> <C> <C>
Shares sold 10,558,231,210 6,466,015,512
Shares issued to shareholders in
payment of distributions
declared 3,176,723 1,609,289
Shares redeemed (10,341,838,613) (5,961,920,320)
Net change resulting from
Institutional Share transactions 219,569,320 505,704,481
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995
<S> <C> <C>
Shares sold 1,868,393,621 919,485,039
Shares issued to shareholders in
payment of distributions declared 1,575,128 677,610
Shares redeemed (1,715,557,550) (693,295,290)
Net change resulting from
Institutional Service Share
transactions 154,411,199 226,867,359
Net change resulting from share
transactions 373,980,519 732,571,840
</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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
INTERFUND TRANSACTIONS -- During the period ended July 31, 1996, 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 purchase and sale
transactions were made at current market value pursuant to Rule 17a-7 under
the Act amounting to $3,275,502,963 and $3,474,752,378, respectively.
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
(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, 1996, 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, 1996, by correspondence with the custodian
and brokers. An audit also includes assessing 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 portion of
Tax-Free Obligations Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1996, 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 its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
Tax-Free 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 c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
[IMAGE]
Cusip 60934N401
9110207A-IS (9/96)
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 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 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, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
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 5
Investment Risks 6
Investment Limitations 6
TRUST INFORMATION 6
Management of the Trust 6
Distribution of Institutional Service Shares 7
Administration of the Fund 8
NET ASSET VALUE 8
HOW TO PURCHASE SHARES 9
HOW TO REDEEM SHARES 10
ACCOUNT AND SHARE INFORMATION 11
TAX INFORMATION 11
Federal Income Tax 11
State and Local Taxes 12
OTHER CLASSES OF SHARES 12
PERFORMANCE INFORMATION 12
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES 13
FINANCIAL STATEMENTS 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
42
ADDRESSES 43
</TABLE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) None
Maximum Sales Charge 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) 0.09%
12b-1 Fee None
Total Other Expenses 0.36%
Shareholder Services Fee 0.25%
Total Operating Expenses(2) 0.45%
</TABLE>
(1) The management fee has been reduced to reflect the 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) Total operating expenses would have been 0.56% 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 the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Trust Information" and "How to Purchase Shares."
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
42.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.002
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.03) (0.002)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 3.29% 3.39% 0.18%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.39%*
Net investment income 3.22% 3.48% 3.04%*
Expense waiver/reimbursement(c) 0.11% 0.14% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $406,408 $252,016 $25,148
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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, financial intermediaries
and institutional investors as a convenient means of accumulating an
interest in a professionally managed, portfolio investing primarily in
short-term municipal securities. The Fund may not be a suitable investment
for retirement plans because it invests in municipal securities. A minimum
initial investment of $1,000,000 over a one-year 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 to provide dividend income exempt
from federal regular 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 complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940 which
regulates money market mutual funds and 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 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. 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.) Unless
indicated otherwise, the investment policies 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. 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 issued to finance working capital needs
in anticipation of receiving taxes or other revenues;
* bond anticipation notes 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 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. Lease obligations may be subject to periodic appropriation.
Municipal leases are subject to certain specific risks in the event of
default or failure of appropriation.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be
credit-enhanced by a guaranty, letter of credit, or insurance. Any
bankruptcy, receivership, default, or change in the credit quality of the
party providing the credit enhancement will adversely affect the quality and
marketability of the underlying security and could cause losses to the Fund
and affect its share price. The Fund may have more than 25% of its total
assets invested in securities credit-enhanced by banks.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts
and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or default
by the issuer of the demand feature, or a default on the underlying security
or other event that terminates the demand feature before its exercise, will
adversely affect the liquidity of the underlying security. Demand features
that are exercisable even after a payment default on the underlying security
may be treated as a form of credit enhancement.
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 law. Under
criteria established by the Trustees, certain restricted securities are
determined to be liquid. To the extent that restricted securities are not
determined to be liquid the Fund will limit their purchase, together with
other illiquid securities, to 10% of its net assets.
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, all of comparable
quality to other securities in which the Fund invests, such as: obligations
issued by or on behalf of municipal or corporate issuers; 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
institutions 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. These investment
limitations cannot be changed without shareholder approval.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL SERVICE 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 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.
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 and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Service Shares from the value of Fund assets attributable
to Institutional Service 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Tax-Free Obligations Fund --
Institutional Service Shares. Orders by mail are considered received when
payment by check is converted into federal funds (normally the business day
after the check is received), and shares begin earning dividends the next
day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 12:00 noon (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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 $1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
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, within the limits of its investment
policies, 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.
STATE AND LOCAL 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.
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 other classes. Institutional Shares are sold at net
asset value primarily to entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries and institutional
investors and are subject to a minimum initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield,
tax-equivalent yield, and total return. 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 Fund's 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
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 42.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.03 0.04 0.02 0.03 0.04 0.05 0.04
LESS DISTRIBUTIONS
Distributions
from net
investment income (0.03) (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 $ 1.00
TOTAL RETURN(B) 3.55% 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% 0.20%*
Net investment income 3.46% 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%*
Expense waiver/
reimbursement(c) 0.36% 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%*
SUPPLEMENTAL DATA
Net assets, end
of period
(000 omitted) $1,514,979 $1,295,458 $789,755 $454,119 $308,855 $165,669 $145,552
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
TAX-FREE OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--101.9%
ALABAMA--4.1%
$ 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) $ 3,140,000
700,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills, Inc.)/(SunTrust
Bank, Atlanta LOC) 700,000
3,500,000 Cherokee, AL IDB, IDR Refunding Bonds (Series 1993) Weekly
VRDNs (BOC Group, Inc.)/(Wachovia Bank of Georgia NA,
Atlanta LOC) 3,500,000
1,500,000 Decatur, AL IDB, Revenue Refunding Bonds (Series 1993) Weekly
VRDNs (Allied-Signal, Inc.) 1,500,000
4,350,000 Eutaw, AL IDB Weekly VRDNs (Mississippi Power Co.)/(Mississippi
Power Co. GTD) 4,350,000
9,295,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn
(Homewood AL))/(SouthTrust Bank of Alabama, Birmingham LOC) 9,295,000
245,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project (Huntsville,
Al))/(First Alabama Bank, Birmingham LOC) 245,000
2,931,000 Irondale, AL IDB, Revenue Bonds (Series 1989) Weekly VRDNs
(Collateral Mortgage, Ltd.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 2,931,000
4,500,000 Jefferson County, AL, GO Warrants (Series 1996) Weekly VRDNs
(Bayerische Landesbank Girozentrale LOC) 4,500,000
7,000,000 Jefferson County, AL, Sewer Revenue Warrants (Series 1995-A)
Weekly VRDNs (Bayerische Landesbank Girozentrale LOC) 7,000,000
2,900,000 Madison, AL IDA, (Series A) Weekly VRDNs (Executive Inn)/
(Amsouth Bank NA, Birmingham LOC) 2,900,000
1,425,000 Marshall County, AL, Special Obligation School Refunding Warrant
(Series 1994) Weekly VRDNs (Marshall County, AL Board of
Education)/(First Alabama Bank, Birmingham LOC) 1,425,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ALABAMA--CONTINUED
$ 2,500,000 Mobile, AL IDA Weekly VRDNs (McRae's Industries, Inc.)/
(Nationsbank, NA LOC) $ 2,500,000
3,500,000 Mobile, AL IDB, PCR (Series 1993A) Weekly VRDNs (Alabama
Power Co.)/(Alabama Power Co. GTD) 3,500,000
9,250,000 Mobile, AL IDB, PCR (Series 1993B) Weekly VRDNs (Alabama Power
Co.)/(Alabama Power Co. GTD) 9,250,000
4,155,000 Montgomery, AL BMC Special Care Facilities Finance Authority,
(Series 94A) Weekly VRDNs (Baptist Medical Center, AL)/(Amsouth
Bank NA, Birmingham LOC) 4,155,000
10,230,000 Montgomery, AL IDB, Pollution Control & Solid Disposal Revenue,
3.60% CP (General Electric Co.), Mandatory Tender 8/1/1996 10,230,000
970,000 Tuscaloosa County, AL Port Authority, (Series 1989A) Weekly VRDNs
(Capstone Hotel Ltd.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 970,000
1,330,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) Weekly
VRDNs (Harco, Inc.)/(Amsouth Bank NA, Birmingham LOC) 1,330,000
4,425,000 Vincent, AL IDB Weekly VRDNs (Headquarters Partnership Project)/
(National Australia Bank, Ltd., Melbourne LOC) 4,425,000
Total 77,846,000
ARIZONA--1.9%
7,300,000 Apache County, AZ Weekly VRDNs (Tucson Electric Power Co.)/
(Chemical Bank, New York LOC) 7,300,000
4,000,000 Arizona Health Facilities Authority Weekly VRDNs (University
Physicians, Inc.)/(Bank One, Arizona NA LOC) 4,000,000
6,800,000 Arizona Health Facilities Authority, Pooled Loan Program Revenue
Bonds (Series 1885B) Weekly VRDNs (FGIC INS)/(Chemical Bank,
New York LIQ) 6,800,000
1,000,000 Arizona Insured Municipal Securities Trust, (Series 1996A) Weekly
VRDNs (Chandler Street and Highway)/(MBIA INS)/
(Norwest Bank Minnesota, Minneapolis LIQ) 1,000,000
1,500,000 Arizona Insured Municipal Securities Trust, (Series 1996C) Weekly
VRDNs (Maricopa County, AZ University School District No. 93)/
(FGIC INS)/(Norwest Bank Minnesota, Minneapolis LIQ) 1,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ARIZONA--CONTINUED
$ 1,250,000 Arizona Insured Municipal Securities Trust, (Series 1996E) Weekly
VRDNs (Scottsdale (Memorial Hospitals))/(AMBAC INS)/(Norwest
Bank Minnesota, Minneapolis LIQ) $ 1,250,000
10,000,000 Coconino County, AZ Pollution Control Corporation, PCR Refunding
Bonds (Series 1995E) Weekly VRDNs (Nevada Power Co.)/(Societe
Generale, Paris LOC) 10,000,000
5,000,000 Pima County, AZ IDA Weekly VRDNs (Tucson Electric Power Co.)/
(Barclays Bank PLC, London LOC) 5,000,000
Total 36,850,000
ARKANSAS--0.3%
4,595,000 Little Rock, AR Pulaski County School District, (Series 1996), 3.85%
TRANs, 12/30/1996 4,595,000
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson Co.)/(PNC Bank,
NA LOC) 1,000,000
Total 5,595,000
CALIFORNIA--7.7%
27,585,000 California Public Capital Improvements Financing Authority, Trust
Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA INS)/
(Bank of New York, New York LIQ) 27,585,000
22,000,000 California School Cash Reserve Program Authority, (Series A), 4.75%
TRANs (MBIA INS), 7/2/1997 22,174,937
20,000,000 California State, (Series A), 4.50% RANs, 6/30/1997 20,091,600
22,000,000 California Statewide Communities Development Authority,
(1996 Series A), 4.75% TRANs (FSA INS), 6/30/1997 22,144,709
4,000,000 Livermore Valley, CA USD, (Series 1995-96), 4.75% TRANs, 9/19/1996 4,003,599
4,300,000 Lompoc, CA, 4.125% TRANs, 6/30/1997 4,309,599
26,000,000 Los Angeles County, CA Unified School District, 4.50% TRANs,
6/30/1997 26,171,257
3,500,000 Los Angeles, CA Wastewater System, Tender Option Certificates
(Series 1995H) Weekly VRDNs (MBIA INS)/(Swiss Bank Corp.,
Basle LIQ) 3,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
CALIFORNIA--CONTINUED
$ 3,000,000 Orange County, CA IDA, (Series 1991A) Weekly VRDNs
(The Lakes)/(Citibank NA, New York LOC) $ 3,000,000
10,000,000 South Coast, CA Local Education Agencies, (Series 1996A), 4.75%
TRANs, 6/30/1997 10,059,537
5,000,000 Vacaville Unified School District, CA, 4.375% TRANs, 7/1/1997 5,024,224
Total 148,064,462
COLORADO--0.1%
2,625,000 Denver (City & County), CO, 4.50% TOBs (Blake Street
Compendium)/(Norwest Bank Minnesota, Minneapolis LOC),
Optional Tender 12/15/1996 2,625,000
CONNECTICUT--1.2%
5,500,000 Connecticut Development Health Care Facilities Weekly VRDNs
(Independence Living)/(Chemical Bank, New York LOC) 5,500,000
17,300,000 Connecticut State Transportation Infrastructure Authority Weekly
VRDNs (Connecticut State)/(Commerzbank AG, Frankfurt LOC) 17,300,000
Total 22,800,000
DELAWARE--0.3%
5,000,000 Delaware Health Facilities Authority, Revenue Bonds (Series 1988)
Weekly VRDNs (Delaware Health Facilities Pooled Loan Program)/
(MBIA INS)/(J.P. Morgan Delaware, Wilmington LIQ) 5,000,000
FLORIDA--9.6%
10,000,000 Broward County, FL School District, (Series 1996A and 1996 B), 4.25%
RANs, 4/24/1997 10,042,165
4,270,000 Dade County, FL IDA Weekly VRDNs (Futernick Associates, Inc.)/
(First Union National Bank, Charlotte, N.C. LOC) 4,270,000
1,200,000 Dade County, FL IDA, Industrial Development Revenue Refunding
Bonds Weekly VRDNs (Continental Farms, Inc.)/(Nationsbank,
NA LOC) 1,200,000
13,305,000 Florida HFA Weekly VRDNs (Cornerstone Imaging, Inc.)/(PNC
Bank, NA LOC) 13,305,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 1,400,000 Florida HFA, (Series 1989 E) Weekly VRDNs (Fairmont Oaks Project)/
(Comerica Bank, Detroit, MI LOC) $ 1,400,000
3,200,000 Florida HFA, Multifamily Housing Revenue Bonds (1985 Series YY)
Weekly VRDNs (Monterey Meadows Apartments, FL)/(Citibank
NA, New York LOC) 3,200,000
7,235,000 Florida State Board of Education Administration, (CR49D),
3.60% TOBs (Citibank NA, New York LIQ), Optional Tender
12/1/1996 7,235,000
5,120,000 Florida State Board of Education Administration, (CR55), (Series
1989A), 3.75% TOBs (Citibank NA, New York LIQ), Optional Tender
3/1/1997 5,120,000
8,000,000 Gulf Breeze, FL, Variable Rate Demand Revenue Bonds (Series
1995A) Weekly VRDNs (Florida Municipal Bond Fund)/(Barnett
Bank, NA LOC) 8,000,000
10,000,000 Jacksonville, FL Electric Authority, Tender Option Certificates (Series
1995C) Weekly VRDNs (Bayerische Hypotheken-Und Wechsel-Bank
Ag LIQ) 10,000,000
3,000,000 Jacksonville, FL HFDC, Health Facilities Revenue Bonds (Series 1994)
Weekly VRDNs (River Garden/The Coves Project)/(First Union
National Bank, Charlotte, N.C. LOC) 3,000,000
4,300,000 Key West, FL Community Redevelopment Authority Weekly VRDNs
(Pier House Joint Venture)/(PNC Bank, NA LOC) 4,300,000
3,900,000 Lake Shore, FL Hospital Authority, Health Facilities Revenue Bonds
(Series 1991) Weekly VRDNs (Lake Shore Hospital)/(Kredietbank
N.V., Brussels LOC) 3,900,000
5,710,000 Manatee County, FL HFA Weekly VRDNs (Carriage Club)/(Mellon
Bank NA, Pittsburgh LOC) 5,710,000
2,850,000 Marion County, FL IDA, IDRB (Series 1989) Weekly VRDNs (Charter
Springs Hospital, Inc.)/(Bankers Trust Co., New York LOC) 2,850,000
4,000,000 Orange County, FL HFA, Multifamily Housing Refunding Revenue
Bonds (1992 Series A) Weekly VRDNs (Smokewood/Sun Key
Apartments Project (FL))/(Citibank NA, New York LOC) 4,000,000
5,500,000 Orange County, FL HFA, Multifamily Housing Revenue Bonds
Weekly VRDNs (Sutton Place. Ltd. Project)/(Nationsbank, NA LOC) 5,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 3,000,000 Orange County, FL, Health Facilities Authority Weekly VRDNs
(Mayflower Retirement Community)/(Rabobank Nederland,
Utrecht LOC) $ 3,000,000
7,000,000 Orange County, FL, Health Facilities Authority, Revenue Bonds
(Series 1995) Weekly VRDNs (Adventist Health System)/(Rabobank
Nederland, Utrecht LOC) 7,000,000
2,770,000 Palm Beach County, FL IDA Weekly VRDNs (Palm Beach Jewish
Community Campus)/(SunTrust Bank, Central Florida LOC) 2,770,000
6,000,000 Palm Beach County, FL, Revenue Bonds, (Series 1995) Weekly
VRDNs (Norton Gallery and School of Art, Inc. Project)/(Northern
Trust Co., Chicago, IL LOC) 6,000,000
3,000,000 Pinellas County, FL Health Facility Authority, (Series 1987) Weekly
VRDNs (St. Mark Village Project)/(NationsBank, South LOC) 3,000,000
5,525,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs
(IMC Fertilizer, Inc. Project)/(Rabobank Nederland, Utrecht LOC) 5,525,000
7,300,000 Sarasota County, FL Public Hospital District, 3.60% CP (Sarasota
Memorial Hospital), Mandatory Tender 9/19/1996 7,300,000
9,100,000 Sarasota County, FL Public Hospital District, 3.65% CP
(Sarasota Memorial Hospital), Mandatory Tender 10/10/1996 9,100,000
6,000,000 Southeast Volusia Hospital District, Revenue Bonds (Series 1995)
Weekly VRDNs (Bert Fish Medical Center (FL))/(SouthTrust Bank of
Alabama, Birmingham LOC) 6,000,000
6,000,000 St. Lucie County, FL PCR, (Series 94A), 3.65% CP (Florida Power &
Light Co.), Mandatory Tender 10/10/1996 6,000,000
7,720,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs
(Savannahs Hospital)/(NationsBank, South LOC) 7,720,000
25,000,000 Sunshine State Governmental Finance Commission, FL, 3.65% CP
(Morgan Guaranty Trust Co., New York, National Westminster Bank,
PLC, London and Union Bank of Switzerland, Zurich LOCs),
Mandatory Tender 8/14/1996 25,000,000
3,390,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/
(Mellon Bank NA, Pittsburgh LOC) 3,390,000
Total 184,837,165
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--2.3%
$ 4,000,000 Atlanta, GA, Urban Residential Finance Authority, Residential
Construction Revenue Bonds, (Series 1995) Weekly VRDNs
(Summerhill Neighborhood Bond Program)/(First Union National
Bank, Charlotte, N.C. LOC) $ 4,000,000
1,200,000 Coweta County, GA IDA Daily VRDNs (Eckerds Warehouse)/
(Union Bank of Switzerland, Zurich LOC) 1,200,000
1,600,000 De Kalb County, GA Development Authority, (Series 1992) Weekly
VRDNs (American Cancer Society, GA)/(SunTrust Bank, Atlanta
LOC) 1,600,000
4,470,000 Fulton County, GA Housing Authority, (Series 1994B) Weekly VRDNs
(Champions Green Apartments Project)/(SouthTrust Bank of
Alabama, Birmingham LOC) 4,470,000
3,110,000 Georgia State HFA, Single Family Mortgage Revenue, 3.60% TOBs
(Citibank NA, New York LIQ), Optional Tender 9/1/1996 3,110,000
3,000,000 Marietta, GA Housing Authority, Multifamily Housing Revenue
Refunding Bonds (Series 1996) Weekly VRDNs (Winterset
Apartments Project)/(Wachovia Bank of Georgia NA, Atlanta LOC) 3,000,000
18,145,000 Municipal Electric Authority of Georgia, General Resolutions Projects
Subordinated Bonds (Series 1995B), 3.55% CP (Bayerische
Landesbank Girozentrale, Credit Suisse, Zurich and Morgan
Guaranty Trust Co., New York LOCs), Mandatory Tender 8/12/1996 18,145,000
9,100,000 Putnam County, GA, (Series 1996) Daily VRDNs (Georgia Power
Company Plant Branch Project) 9,100,000
Total 44,625,000
ILLINOIS--11.7%
11,900,000 Chicago O'Hare International Airport, Bonds (Series 1983A) Daily
VRDNs (American Airlines)/(Westdeutsche Landesbank
Girozentrale LOC) 11,900,000
20,000,000 Chicago, IL Board of Education, Variable Rate Certificates
(Series 1996BB) Weekly VRDNs (MBIA INS)/(Bank of America NT
and SA, San Francisco LIQ) 20,000,000
25,000,000 Chicago, IL, GO (Series 1996), 3.10% TOBs (Landesbank Hessen-
Thueringen, Frankfurt LOC), Mandatory Tender 2/4/1997 25,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ILLINOIS--CONTINUED
$ 3,000,000 Illinois Development Finance Authority Weekly VRDNs (Newlywed
Food)/(Mellon Bank NA, Pittsburgh LOC) $ 3,000,000
50,400,000 Illinois Development Finance Authority, PCR, (Series 1996B) Weekly
VRDNs (Commonwealth Edison Co.)/(AMBAC INS)/(Bank of
New York, New York LIQ) 50,400,000
7,500,000 Illinois Educational Facilities Authority, 3.65% CP (Field Museum of
Natural History)/(Northern Trust Co., Chicago, IL LOC), Mandatory
Tender 8/15/1996 7,500,000
9,500,000 Illinois Educational Facilities Authority, Revenue Bonds (Series 1995)
Weekly VRDNs (Ravinia Festival Association (IL))/(NBD Bank,
Michigan LOC) 9,500,000
16,100,000 Illinois Health Facilities Authority Weekly VRDNs (OSF Health Care
Systems) 16,100,000
20,200,000 Illinois Health Facilities Authority, (Series 1989A) Weekly VRDNs
(Methodist Health Services Corp.)/(Fuji Bank, Ltd., Tokyo LOC) 20,200,000
35,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series 1985B)
Weekly VRDNs (OSF Health Care Systems)/(Bank of America
Illinois and Rabobank Nederland, Utrecht LIQs) 35,000,000
11,650,000 Illinois Health Facilities Authority, Revenue Bonds, (Series 1996B),
3.65% CP (Rush-Presbyterian St. Luke's Medical)/(Northern Trust
Co., Chicago, IL LOC), Mandatory Tender 9/24/1996 11,650,000
15,000,000 Lisle (Village of), IL, Multifamily Housing Mortgage Revenue Bonds,
(1985 Series A) Weekly VRDNs (Four Lakes Project)/(Chemical Bank,
New York LOC) 15,000,000
Total 225,250,000
INDIANA--3.0%
980,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/(National City
Bank, Kentucky LOC) 980,000
6,350,000 Elkhart, IN, Community Schools, Time Warrants, 4.00% TANs,
12/31/1996 6,360,196
14,500,000 Fort Wayne, IN Community Schools, Time Warrants, 3.75% TANs,
12/31/1996 14,514,567
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
INDIANA--CONTINUED
$ 2,110,000 Indiana Health Facilities Finance Authority Rehabilitation Center
Weekly VRDNs (Crossroads Rehabilitation Center)/(Bank One,
Indianapolis, IN LOC) $ 2,110,000
13,000,000 Indianapolis, IN Local Public Improvement, (Series 1996 B), 4.25%
BANs, 1/9/1997 13,025,260
2,780,000 Lake City, IN Public Library District, Time Warrants, 3.63% TANs,
12/31/1996 2,782,028
8,600,000 Purdue University, IN, Student Fee Bonds (Series L) Weekly VRDNs 8,600,000
9,100,000 Washington Township, IN, Temporary Loan Warrants, 4.10% TANs,
12/31/1996 9,107,357
Total 57,479,408
IOWA--0.5%
2,085,000 Iowa Finance Authority, Single Family Mortgage Bonds (Series 1996A),
3.10% TOBs (FGIC GIC), Mandatory Tender 2/28/1997 2,085,000
7,425,000 Iowa School Corporations, Warrant Certificates (Series 1995-96 B),
4.25% TRANs (FSA INS), 1/30/1997 7,455,405
Total 9,540,405
KENTUCKY--2.5%
1,400,000 Boone County, KY, Revenue Refunding Bonds Weekly VRDNs
(Spring Meadow Associates)/(Huntington National Bank,
Columbus, OH LOC) 1,400,000
12,242,000 Kentucky Interlocal School Transportation Association, (Series A),
4.05% TRANs, 6/30/1997 12,242,000
35,000,000 Owensboro, KY, (Series 1996) Weekly VRDNs (Owensboro Mercy
Health System, Inc. Project)/(Bank of America Illinois LOC) 35,000,000
Total 48,642,000
LOUISIANA--0.4%
3,255,000 East Baton Rouge, LA Mortgage Finance Authority, SFM Revenue
Refunding Bonds (Series 1996A), 3.40% TOBs (United States
Treasury COL), Mandatory Tender 10/3/1996 3,255,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
LOUISIANA--CONTINUED
$ 5,025,000 Louisiana PFA, Advance Funding Notes/School Board Advance
Funding Program (Series 1995 B), 4.50% TANs (St. Charles Parish,
LA), 8/29/1996 $ 5,026,668
Total 8,281,668
MARYLAND--2.7%
400,000 Baltimore County, MD Port Facility Monthly VRDNs (Occidental
Petroleum Corp.)/(Morgan Guaranty Trust Co., New York LOC) 400,000
1,000,000 Maryland EDC, Pooled Financing Revenue Bonds, (Series 1995)
Weekly VRDNs (Maryland Municipal Bond Fund)/(Nationsbank,
NA LOC) 1,000,000
1,200,000 Maryland Health & Higher Educational Facilities Authority, (Series
1985B) Weekly VRDNs (First National Bank of Chicago LOC) 1,200,000
1,800,000 Maryland Health & Higher Educational Facilities Authority,
Revenue Bonds (Series 1985A) Weekly VRDNs (First National Bank
of Chicago LOC) 1,800,000
9,430,000 Maryland State Community Development Administration,
(Series 1987-2), 3.60% TOBs (First National Bank of Chicago LIQ),
Optional Tender 10/1/1996 9,430,000
29,800,000 Montgomery County, MD, Consolidated CP BANs (Series 1995),
3.45% CP, Mandatory Tender 8/12/1996 29,800,000
7,900,000 Montgomery County, MD, EDR Weekly VRDNs (U.S. Pharmacopeial
Convention Facility)/(Chemical Bank, New York LOC) 7,900,000
Total 51,530,000
MASSACHUSETTS--1.7%
6,000,000 Commonwealth of Massachusetts, (Series B), 5.00% Bonds, 6/1/1997 6,058,234
10,408,000 Easton, MA, 4.00% BANs, 4/10/1997 10,432,216
14,500,000 Massachusetts HEFA, (Series D) Daily VRDNs (Capital Asset
Program)/(MBIA INS)/(Credit Suisse, Zurich LIQ) 14,500,000
1,200,000 Massachusetts Port Authority, (Series 1995A) Daily VRDNs
(Landesbank Hessen-Thueringen, Frankfurt LOC) 1,200,000
Total 32,190,450
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--3.9%
$ 1,909,000 Battle Creek, MI Economic Development Corporation, Ltd Obligation
Economic Development Revenue Refunding Bonds (Series 1992)
Weekly VRDNs (Michigan Carton & Paperboard Company)/
(American National Bank, Chicago LOC) $ 1,909,000
5,000,000 Dearborn, MI Economic Development Corp., (Series 1991) Weekly
VRDNs (Oakbrook Common)/(Mellon Bank NA, Pittsburgh LOC) 5,000,000
1,450,000 Kalamazoo, MI Economic Development Corp., 1995 Limited
Obligation Revenue Refunding Bonds Weekly VRDNs (Wyndham
Project, MI)/(First of America Bank - Illinois LOC) 1,450,000
4,600,000 Michigan State Hospital Finance Authority, (Series A) Weekly
VRDNs (OSF Health Care Systems) 4,600,000
20,000,000 Michigan State, GO UT Notes, 4.00% TRANs, 9/30/1996 20,032,287
12,000,000 Michigan Strategic Fund, Limited Obligation PCRs (Series 1993)
Weekly VRDNs (Allied-Signal, Inc.) 12,000,000
15,000,000 Michigan Strategic Fund, Refunding Revenue Bonds, Series 1995CC
Daily VRDNs (Detroit Edison Co.)/(Barclays Bank PLC, London LOC) 15,000,000
10,000,000 Michigan Underground Storage Tank Financial Assurance Authority,
(Series I - 1995), 3.45% CP (Canadian Imperial Bank of Commerce,
Toronto LOC), Mandatory Tender 8/15/1996 10,000,000
2,695,000 Ottawa County, MI Economic Development Corp., Limited Obligation
Revenue Bonds (Series 1995B) Weekly VRDNs (Sunset Manor, Inc.
Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) 2,695,000
1,400,000 Regents of University of Michigan, Intercollegiate Athletic Revenue
Bonds (Series 1995) Daily VRDNs 1,400,000
Total 74,086,287
MINNESOTA--3.6%
8,335,000 Anoka-Hennepin, MN ISD 11, GO Certificates of Indebtedness
(Series 1996A), 3.44% TANs (Minnesota Tax and Aid Anticipation
Borrowing Program GTD), 3/13/1997 8,335,379
5,000,000 Bloomington, MN Port Authority, Special Tax Revenue Refunding
Bonds (Series 1994B) Weekly VRDNs (Mall of America)/(FSA INS)/
(Credit Local de France LIQ) 5,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MINNESOTA--CONTINUED
$ 1,965,000 Dakota County, MN Housing & Redevelopment Authority,
Multifamily Rental Housing Revenue Bonds (Series 1994-B) Weekly
VRDNs (Westwood Ridge Senior Residence Project)/(First Bank NA,
Minneapolis LOC) $ 1,965,000
10,000,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) Weekly
VRDNs (Walker Methodist Health Center, Inc. Project)/(First Bank
NA, Minneapolis LOC) 10,000,000
7,500,000 Minnesota State Higher Education Coordinating Board,
Supplemental Student Loan Program Refunding Revenue Bonds
(Series 1994A) Weekly VRDNs (Norwest Bank Minnesota,
Minneapolis LIQ) 7,500,000
7,000,000 Minnesota Tax and Aid Anticipation Borrowing Program, Certificates
of Participation (Series 1996A), 4.25% TANs (Minnesota Aid
Anticipation Pooled Borrowing Program)/(Minnesota Tax and Aid
Anticipation Borrowing Program GTD), 2/21/1997 7,036,636
10,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs
(Mayo Foundation) 10,000,000
14,500,000 Rochester, MN Health Care Facility Authority Weekly VRDNs
(Mayo Foundation) 14,500,000
1,000,000 Shakopee, MN Hospital Finance Authority Weekly VRDNs
(St. Francis Regional Medical Center)/(Citibank NA, New York LOC) 1,000,000
3,000,000 Southern Minnesota Municipal Power Agency, 3.65% CP, Mandatory
Tender 8/6/1996 3,000,000
800,000 St. Paul, MN Port Authority, (Series 1991) Weekly VRDNs
(West Gate Office)/(First Bank NA, Minneapolis LOC) 800,000
Total 69,137,015
MISSISSIPPI--0.1%
1,685,000 Hinds County, MS, (Series 1991) Weekly VRDNs (North State St.
Project)/(Amsouth Bank NA, Birmingham LOC) 1,685,000
MISSOURI--0.2%
4,200,000 Poplar Bluff, MO IDA, (Series 1987) Weekly VRDNs (Gates Rubber
Co.)/(NBD Bank, Michigan LOC) 4,200,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NEVADA--1.8%
$ 34,900,000 Nevada Housing Division, Multi-Unit Housing Revenue Refunding
Bonds (1991 Series A) Weekly VRDNs (Park Vista Apartments
Project)/(Sumitomo Bank Ltd., Osaka LOC) $ 34,900,000
NEW JERSEY--1.7%
28,500,000 Essex County, NJ, (1996 Series A), 4.00% TANs (Chemical Bank,
New York LOC), 8/19/1996 28,509,224
5,000,000 New Jersey EDA, (Series 1995) Weekly VRDNs (Hillcrest Health
Service System, Inc.)/(Industrial Bank of Japan Ltd., Tokyo LOC) 5,000,000
Total 33,509,224
NEW YORK--3.4%
10,000,000 Nassau County, NY, (Series 1996A), 4.00% RANs, 3/5/1997 10,036,039
21,800,000 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) 21,800,000
5,500,000 New York City, NY Daily VRDNs (FGIC INS)/(FGIC Securities
Purchase, Inc. LIQ) 5,500,000
19,000,000 New York City, NY, (Series A), 4.50% TANs, 2/12/1997 19,071,060
4,000,000 New York City, NY, GO Bonds Series-B Daily VRDNs (FGIC INS)/
(FGIC Securities Purchase, Inc. LIQ) 4,000,000
5,200,000 New York State Energy Research & Development Authority Daily
VRDNs (Niagara Mohawk Power Corp.)/(Toronto-Dominion
Bank LOC) 5,200,000
270,000 New York State Local Government Assistance Corp., Bonds
(Series 1995F) Weekly VRDNs (Toronto-Dominion Bank LOC) 270,000
Total 65,877,099
NORTH CAROLINA--2.6%
4,500,000 Charlotte, NC Airport, Refunding Revenue Bonds (Series 1993A)
Weekly VRDNs (MBIA INS)/(Commerzbank AG, Frankfurt LIQ) 4,500,000
3,800,000 Greensboro, NC, Certificates of Participation 1994 Equipment
Project Weekly VRDNs (Greensboro, NC Center City Corp.)/
(Wachovia Bank of Georgia NA, Atlanta LIQ) 3,800,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NORTH CAROLINA--CONTINUED
$ 15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) $ 15,000,000
50,000 NCNB Pooled Tax-Exempt Trust, (Series 1990A) Weekly VRDNs
(NCNB Tax Exempt Trust 1990a)/(Nationsbank, NA LOC) 50,000
12,450,000 North Carolina Eastern Municipal Power Agency, (Series B),
3.10% CP (Morgan Guaranty Trust Co., New York and Union Bank
of Switzerland, Zurich LOCs), Mandatory Tender 8/13/1996 12,450,000
1,100,000 North Carolina Medical Care Commission Hospital, Revenue Bonds
(Series 1992B) Weekly VRDNs (North Carolina Baptist) 1,100,000
10,000,000 North Carolina Municipal Power Agency No. 1, (Series A), 3.65% CP
(Morgan Guaranty Trust Co., New York and Union Bank of
Switzerland, Zurich LOCs), Mandatory Tender 9/27/1996 10,000,000
3,000,000 Winston-Salem, NC, GO Bonds (Series 1990) Weekly VRDNs
(Credit Suisse, Zurich LIQ) 3,000,000
Total 49,900,000
OHIO--5.5%
2,000,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs
(Visiting Nurses)/(National City Bank, Cleveland, OH LOC) 2,000,000
3,000,000 Cleveland, OH, Waterworks Revenue Bonds (Series D), 7.25% Bonds
(United States Treasury PRF), 1/1/1997 (@102) 3,104,803
4,000,000 Columbus, OH Sewer System, Revenue Bonds (Series 1994) Weekly
VRDNs 4,000,000
12,600,000 Cuyahoga County, OH Hospital Authority Daily VRDNs
(University Hospitals Health System, Inc.)/(Dai-Ichi Kangyo Bank
Ltd., Tokyo LOC) 12,600,000
3,600,000 Cuyahoga County, OH Hospital Authority Weekly VRDNs
(St. Lukes Hospital)/(First National Bank of Chicago LOC) 3,600,000
2,550,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking Co.)/
(KeyBank, NA LOC) 2,550,000
7,800,000 Franklin County, OH Hospital Facility Authority Weekly VRDNs
(Riverside United Methodist Hospital)/(National City Bank,
Cleveland, OH LOC) 7,800,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 3,620,000 Franklin County, OH Hospital Facility Authority, (Series 1992) Weekly
VRDNs (Wesley Glenn, Inc.)/(Fifth Third Bank, Cincinnati LOC) $ 3,620,000
18,700,000 Greater Cleveland Regional Transportation Authority, OH, 3.90%
BANs, 10/17/1996 18,717,339
7,447,000 Greene County, OH, Certificates of Indebtedness - Issue III, 4.00%
BANs, 3/26/1997 7,463,292
3,000,000 Hamilton County, OH Health System Weekly VRDNs (West Park
Community)/(Fifth Third Bank, Cincinnati LOC) 3,000,000
2,000,000 Lorain County, OH, Health Facilities Revenue Bonds (Series 1992A)
Weekly VRDNs (Elyria United Methodist Home)/(Fifth Third Bank,
Cincinnati LOC) 2,000,000
2,000,000 Lucas County, OH IDA, (Series 1991) Weekly VRDNs (Ohio Citizens
Bank)/(National City Bank, Cleveland, OH LOC) 2,000,000
270,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs
(Sunshine Children's Home)/(National City Bank, Cleveland,
OH LOC) 270,000
6,900,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995)
Weekly VRDNs (Copeland Oaks Project)/(Bank One, Akron,
NA LOC) 6,900,000
1,645,000 Marion County, OH Hospital Authority, (Series 1991) Weekly VRDNs
(Marion County, OH Pooled Hospital Program)/(Bank One,
Columbus, NA LOC) 1,645,000
4,000,000 Mayfield Village, OH IDA Weekly VRDNs (Beta Campus Co.)/
(KeyBank, NA LOC) 4,000,000
2,000,000 Medina County, OH, Solid Waste Disposal Revenue Bonds
(Series 1995) Weekly VRDNs (Valley City Steel Company Project)/
(KeyBank, NA LOC) 2,000,000
5,900,000 Montgomery County, OH Health Facilities Authority, (Series 1995)
Weekly VRDNs (Sisters of Charity Health Care System)/
(Toronto-Dominion Bank LIQ) 5,900,000
750,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex
Venture)/(KeyBank, NA LOC) 750,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 1,665,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited
Partnership)/(Huntington National Bank, Columbus, OH LOC) $ 1,665,000
2,000,000 Ohio State Air Quality Development Authority, (Series 1998A)
Weekly VRDNs (PPG Industries, Inc.) 2,000,000
3,700,000 Rickenbacker, OH Port Authority, (Series 1992) Weekly VRDNs
(Rickenbacker Holdings, Inc.)/(Bank One, Columbus, NA LOC) 3,700,000
1,800,000 Seneca County, OH Hospital Facility Authority Weekly VRDNs
(St. Francis Home)/(National City Bank, Cleveland, OH LOC) 1,800,000
1,050,000 Twinsburg, OH IDA Weekly VRDNs (Carl J Massara Project)/
(KeyBank, NA LOC) 1,050,000
2,175,000 Wayne County, OH, Health Care Facility Revenue Bonds (Series 1995)
Weekly VRDNs (D & M Realty Project)/(Bank One, Youngstown,
NA LOC) 2,175,000
Total 106,310,434
OKLAHOMA--4.5%
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) 10,000,000
24,500,000 Oklahoma State Industrial Authority, Flexible Rate Hospital Revenue
Bonds (Series 1990B) Weekly VRDNs (Baptist Medical Center, OK)/
(Credit Suisse, Zurich and Morgan Guaranty Trust Co.,
New York LIQs) 24,500,000
51,675,000 Oklahoma State Industrial Authority, Health System Revenue Bonds
(Series 1995A) Weekly VRDNs (Baptist Medical Center, OK)/(Credit
Suisse, Zurich and Morgan Guaranty Trust Co., New York LIQs) 51,675,000
Total 86,175,000
OREGON--0.4%
5,000,000 Multnomah County, OR School District, 4.50% TANs, 6/26/1997 5,025,962
2,000,000 Oregon Health, Housing & Cultural Facilities Authority, Revenue
Bonds (1995 Series A) Weekly VRDNs (Guide Dogs for the Blind, Inc.
Project)/(Banque Nationale de Paris LOC) 2,000,000
Total 7,025,962
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--3.4%
$ 1,850,000 Allegheny County, PA HDA, (Series 1988A) Weekly VRDNs
(Allegheny Hospital)/(PNC Bank, NA LOC) $ 1,850,000
200,000 Allegheny County, PA HDA, Hosp Revenue Bonds (Series B 1995)
Weekly VRDNs (Allegheny General Hospital)/(Morgan Guaranty
Trust Co., New York LOC) 200,000
5,000,000 Allegheny County, PA IDA, PCR (Series 1992A), 3.75% TOBs
(Duquesne Light Power Co.)/(Canadian Imperial Bank of
Commerce, Toronto LOC), Optional Tender 11/7/1996 5,000,000
3,305,000 Clinton County, PA Municipal Authority, (Series A) Weekly VRDNs
(Lock Haven Hospital)/(Mellon Bank NA, Pittsburgh LOC) 3,305,000
9,075,000 Commonwealth of Pennsylvania, GO Bonds (Second Series of 1995),
5.00% BANs, 11/15/1996 9,109,938
1,900,000 Delaware County Authority, PA, Hospital Revenue Bonds
(Series of 1996) Weekly VRDNs (Crozer-Chester Medical Center)/
(Kredietbank N.V., Brussels LOC) 1,900,000
3,700,000 Delaware County, PA Weekly VRDNs (American College)/
(PNC Bank, NA LOC) 3,700,000
23,500,000 Erie County, PA Hospital Authority Weekly VRDNs (St. Vincent
Health System)/(Mellon Bank NA, Pittsburgh LOC) 23,500,000
3,710,000 Lehigh County, PA General Purpose Authority, Revenue Bonds
(Series 1990) Weekly VRDNs (Phoebe Terrace, Inc.)/(Corestates
Bank NA, Philadelphia, PA LOC) 3,710,000
1,500,000 Montgomery County, PA Higher Education and Health Authority,
(Series 1992) Weekly VRDNs (Pottstown Healthcare Corporation
Project)/(Corestates Bank NA, Philadelphia, PA LOC) 1,500,000
5,000,000 North Lebanon Township, PA, Municipal Authority Mortgage
Weekly VRDNs (Grace Community, Inc.)/(Corestates Bank NA,
Philadelphia, PA LOC) 5,000,000
4,000,000 Northeastern, PA Hospital & Education Authority, VRDB's
(Series 1996) Weekly VRDNs (Allhealth Pooled Financing Program)/
(Chase Manhattan Bank NA, New York LOC) 4,000,000
1,265,000 Philadelphia, PA IDA, (Series 93) Weekly VRDNs (Sackett
Development)/(Mellon Bank NA, Pittsburgh LOC) 1,265,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 2,000,000 Washington County, PA Hospital Authority Weekly VRDNs
(Keystone Diversified Management Corp.)/(Mellon Bank NA,
Pittsburgh LOC) $ 2,000,000
Total 66,039,938
SOUTH CAROLINA--0.1%
1,090,000 South Carolina Job Development Authority Daily VRDNs (Chemical
Bank, New York LOC) 1,090,000
TENNESSEE--5.6%
8,000,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie School)/(SunTrust
Bank, Atlanta LOC) 8,000,000
12,500,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/
(Sumitomo Bank Ltd., Osaka LOC) 12,500,000
8,300,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/
(Sumitomo Bank Ltd., Osaka LOC) 8,300,000
6,500,000 Chattanooga-Hamilton County, TN Hospital Authority Daily
VRDNs (Erlanger Medical Center)/(Morgan Guaranty Trust Co.,
New York SA) 6,500,000
2,785,000 Clarksville, TN Public Building Authority, Pooled Financing Revenue
Bonds (Series 1990) Weekly VRDNs (Tennessee Municipal Bond
Fund)/(MBIA INS)/(Credit Suisse, Zurich LIQ) 2,785,000
8,115,000 Knox County, TN Health Education & Housing Facilities Board,
Hospital Facilities Revenue Bonds (Series 1985 B) Weekly VRDNs
(Mercy Health Care System, Province of Cincinnatti)/(MBIA INS)/
(Morgan Guaranty Trust Co., New York LIQ) 8,115,000
5,265,000 Maury County, TN HEFA, (Series 1996E) Weekly VRDNs (Southern
Healthcare Systems, Inc.)/(Bank One, Texas NA LOC) 5,265,000
1,000,000 Memphis, TN, (Series 1996), 5.00% Bonds, 7/1/1997 1,009,762
6,000,000 Memphis, TN, General Improvement Refunding Bonds, (Series
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale LOC) 6,000,000
1,700,000 Memphis, TN, General Improvement Refunding Bonds, (Series
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale LOC) 1,700,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
TENNESSEE--CONTINUED
$ 2,000,000 Metropolitan Government Nashville & Davidson County, TN HEFA,
(Series 1996) Weekly VRDNs (Dede Wallace Center Project)/
(SunTrust Bank, Nashville LOC) $ 2,000,000
7,400,000 Metropolitan Government Nashville & Davidson County, TN HEFA,
Hospital Revenue Bonds, (Series 1992), 3.30% CP (Baptist Hospital,
Inc. (TN))/(NationsBank, South LIQ), Mandatory Tender 8/30/1996 7,400,000
20,800,000 Metropolitan Government Nashville & Davidson County, TN HEFA,
Hospital Revenue Bonds, (Series 1992), 3.65% CP (Baptist Hospital,
Inc. (TN))/(NationsBank, South LIQ), Mandatory Tender 9/3/1996 20,800,000
6,830,000 Metropolitan Government Nashville & Davidson County, TN IDB,
Metropolitan Government Revenue Bonds (Series 1995) Weekly
VRDNs (YMCA Projects)/(Nationsbank of Tennessee LOC) 6,830,000
2,600,000 Metropolitan Nashville Tennessee AA, Airport Improvement
Revenue Bonds Refunding (Series 1995) Weekly VRDNs (FGIC INS)/
(Credit Local de France LIQ) 2,600,000
5,500,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil Fibers, Inc.
Project)/(ABN AMRO Bank N.V., Amsterdam LOC) 5,500,000
2,000,000 Tennessee State, GO Bans (Series 1996C) Weekly VRDNs 2,000,000
Total 107,304,762
TEXAS--8.1%
3,995,000 Dallas, TX, (Series C), 3.75% TOBs, Optional Tender 6/15/1997 3,995,000
3,950,000 Harris County, TX HFDC Daily VRDNs (St. Luke's Episcopal
Hospital) 3,950,000
23,300,000 Harris County, TX HFDC, (Series 1994) Daily VRDNs (Methodist
Hospital, Harris County, TX) 23,300,000
21,600,000 Harris County, TX HFDC, (Series B) Daily VRDNs (St. Luke's
Episcopal Hospital) 21,600,000
10,850,000 Harris County, TX HFDC, (Series B), 3.60% TOBs (San Jacinto
Methodist Hospital)/(Morgan Guaranty Trust Co., New York LOC),
Optional Tender 9/3/1996 10,850,000
1,820,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/
(Nationsbank, NA LOC) 1,820,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$ 80,000,000 Texas State, (Series 1995A), 4.75% TRANs, 8/30/1996 $ 80,070,869
10,000,000 Texas State, (Series 1995B), 3.65% CP, Mandatory Tender 8/20/1996 10,000,000
Total 155,585,869
UTAH--0.3%
5,700,000 Salt Lake County, UT, PCR Bonds (Series 1994B) Daily VRDNs
(British Petroleum Co. PLC) 5,700,000
VIRGINIA--0.9%
7,000,000 Fairfax County, VA Housing Authority Weekly VRDNs (Chase
Commons Associates)/(Bankers Trust Co., New York LOC) 7,000,000
9,600,000 York County, VA IDA, (Series 1985), 3.75% CP (Virginia Electric
Power Co.), Mandatory Tender 8/14/1996 9,600,000
Total 16,600,000
WASHINGTON--0.1%
2,200,000 Port of Seattle, WA, IDRB (Series 1985) Weekly VRDNs (Douglas
Management Company Project)/(Mellon Bank NA, Pittsburgh LOC) 2,200,000
WEST VIRGINIA--1.6%
15,960,000 Cabell County Commission, WV, Life Care Facilities Multi-Option
Revenue Bonds (Series 1995) Weekly VRDNs (Foster Foundation)/
(Huntington National Bank, Columbus, OH LOC) 15,960,000
14,500,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG
Industries, Inc.) 14,500,000
Total 30,460,000
WISCONSIN--1.9%
1,100,000 Seymour, WI IDA Weekly VRDNs (Beatrice Cheese, Inc.)/(Bank of
New York, New York LOC) 1,100,000
30,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical Center)/
(Sumitomo Bank Ltd., Osaka LOC) 30,000,000
5,000,000 Wisconsin State, 7.30% Bonds (United States Treasury PRF),
5/1/1997 (@101) 5,176,873
Total 36,276,873
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
WYOMING--0.7%
$ 6,300,000 Lincoln County, WY, PCR Refunding Bonds (Series 1994) Daily
VRDNs (Pacificorp)/(AMBAC INS)/(Bank of New York,
New York LIQ) $ 6,300,000
1,125,000 Natrona County, WY, Hospital Revenue, 5.3625% TOBs (Grainger
(W.W.), Inc.), Optional Tender 12/1/1996 1,125,000
6,000,000 Sweetwater County, WY IDA, PCR Refunding Bonds (Series 1994)
Daily VRDNs (Pacificorp)/(AMBAC INS)/(Bank of New York,
New York LIQ) 6,000,000
Total 13,425,000
NO STATE--1.5%
19,081,010 Equity Trust II, (1996 Series) Weekly VRDNs (Republic National
Bank of New York LOC) 19,081,010
9,106,744 LaSalle National Bank Leasetops Trust, Series 1995A Leasetops
Certificates Weekly VRDNs (Lasalle National Bank, Chicago LOC) 9,106,744
1,560,000 Merrill Lynch Puttable Floats/Rites Trust, (Series PP2) Weekly
VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 1,560,000
Total 29,747,754
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $1,958,392,775
</TABLE>
(a) The Fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An
NRSRO's two highest rating categories are determined without regard for
sub-categories and gradations. For example, securities rated SP-1+, SP-1
or SP-2 by Standard & Poor's Corporation, MIG-1, or MIG-2 by Moody's
Investors Service, Inc., F-1+, F-1 and F-2 by Fitch Investors Service,
Inc. are all considered rated in one of the two highest short-term
rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier
securities. Securities rated in the second highest short-term rating
category (and unrated securities of comparable quality) are identified
as Second Tier securities. The Fund follows applicable regulations in
determining whether a security is rated and whether a security rated by
multiple NRSROs in different rating categories should be identified as a
First or Second Tier security.
At July 31, 1996, the portfolio securities were rated as follows:
TIER RATING PERCENT BASED ON TOTAL MARKET VALUE (UNAUDITED)
First Tier Second Tier
100.00% 0.00%
(b) The cost of investments for federal tax purposes amounts to
$1,958,173,048.
Note: The categories of investments are shown as a percentage of net assets
($1,921,387,122) at July 31, 1996.
The following acronyms are used throughout this portfolio:
AMBAC -- American Municipal Bond Assurance Corporation
BANs -- Bond Anticipation Notes
CDA -- Community Development Administration
COL -- Collateralized
CP -- Commercial Paper
EDA -- Economic Development Authority
EDC -- Economic Development Commission
EDR -- Economic Development Revenue
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GO -- General Obligation
GTD -- Guaranty
HDA -- Hospital Development Authority
HEFA -- Health and Education Facilities Authority
HFA -- Housing Finance Authority
HFDC -- Health Facility Development Corporation
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDC -- Industrial Development Corporation
IDR -- Industrial Development Revenue
IDRB -- Industrial Development Revenue Bond
IFA -- Industrial Finance Authority
INS -- Insured
ISD -- Independent School District
LIQ -- Liquidity Agreement
LOC(s) -- Letter(s) of Credit
MBIA -- Municipal Bond Investors Assurance
PCR -- Pollution Control Revenue
PFA -- Public Facility Authority
PLC -- Public Limited Company
PRF -- Prerefunded
RANs -- Revenue Anticipation Notes
SA -- Support Agreement
SFM -- Single Family Mortgage
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
TRANs -- Tax and Revenue Anticipation Notes
USD -- University School District
UT -- Unlimited Tax
VRDBs -- Variable Rate Demand Bonds
VRDNs -- Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value
(tax value, $1,958,173,048) $ 1,958,392,775
Cash 452,506
Income receivable 13,594,030
Receivable for shares sold 1,817,688
Total assets 1,974,256,999
LIABILITIES:
Payable for investments purchased $ 47,784,559
Income distribution payable 4,664,726
Accrued expenses 420,592
Total liabilities 52,869,877
NET ASSETS for 1,921,475,250 shares
outstanding $ 1,921,387,122
NET ASSETS CONSIST OF:
Paid in capital $ 1,921,475,250
Accumulated net realized loss on
investments (88,128)
Total Net Assets $ 1,921,387,122
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$1,514,978,944 / 1,515,048,255 shares
outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$406,408,178 / 406,426,995 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, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 67,301,023
EXPENSES:
Investment advisory fee $ 3,668,956
Administrative personnel and services fee 1,387,430
Custodian fees 132,278
Transfer and dividend disbursing agent
fees and expenses 82,029
Directors'/Trustees' fees 26,347
Auditing fees 13,017
Legal fees 12,581
Portfolio accounting fees 181,541
Shareholder services fee --
Institutional Shares 3,693,322
Shareholder services fee --
Institutional Service Shares 892,872
Share registration costs 176,345
Printing and postage 31,849
Insurance premiums 22,231
Taxes 6,598
Miscellaneous 8,752
Total expenses 10,336,148
Waivers --
Waiver of investment advisory fee $(2,000,281)
Waiver of shareholder services
fee -- Institutional
Shares (3,693,322)
Total waivers (5,693,603)
Net expenses 4,642,545
Net investment income 62,658,478
Net realized loss on investments (66,893)
Change in net assets resulting
from operations $ 62,591,585
</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,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 62,658,478 $ 41,769,131
Net realized gain (loss) on
investments ($36,269 net loss and
$40 net gain, respectively, as
computed for federal income tax
purposes) (66,893) (1,395)
Change in net assets resulting from
operations 62,591,585 41,767,736
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (51,152,839) (36,508,581)
Institutional Service Shares (11,505,639) (5,260,550)
Change in net assets resulting
from distributions to shareholders (62,658,478) (41,769,131)
SHARE TRANSACTIONS--
Proceeds from sale of shares 12,426,624,832 7,385,500,551
Net asset value of shares issued to
shareholders in payment of
distributions declared 4,751,851 2,286,899
Cost of shares redeemed (12,057,396,164) (6,655,215,610)
Change in net assets resulting
from share transactions 373,980,519 732,571,840
Change in net assets 373,913,626 732,570,445
NET ASSETS:
Beginning of period 1,547,473,496 814,903,051
End of period $ 1,921,387,122 $ 1,547,473,496
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Tax-Free Obligations
Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is to provide current
income exempt from federal regular income tax consistent with stability of
principal.
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, 1996, the Fund, for federal tax purposes, had a capital loss
carryforward of $56,069, 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
<C> <C>
2001 $ 580
2002 $ 19,220
2004 $ 36,269
</TABLE>
Additionally, net capital losses of $96,260 attributable to security
transactions incurred after October 31, 1995 are treated as arising on
August 1, 1996 the first day of the Fund's next taxable year.
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.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$1,921,475,250. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995
<S> <C> <C>
Shares sold 10,558,231,210 6,466,015,512
Shares issued to shareholders in
payment of distributions
declared 3,176,723 1,609,289
Shares redeemed (10,341,838,613) (5,961,920,320)
Net change resulting from
Institutional Share transactions 219,569,320 505,704,481
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995
<S> <C> <C>
Shares sold 1,868,393,621 919,485,039
Shares issued to shareholders in
payment of distributions declared 1,575,128 677,610
Shares redeemed (1,715,557,550) (693,295,290)
Net change resulting from
Institutional Service Share
transactions 154,411,199 226,867,359
Net change resulting from share
transactions 373,980,519 732,571,840
</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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
INTERFUND TRANSACTIONS -- During the period ended July 31, 1996, 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 purchase and sale
transactions were made at current market value pursuant to Rule 17a-7 under
the Act amounting to $3,275,502,963 and $3,474,752,378, respectively.
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
(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, 1996, 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, 1996, by correspondence with the custodian
and brokers. An audit also includes assessing 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 portion of
Tax-Free Obligations Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1996, 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 its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
Tax-Free 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 c/o Federated Services Company
& Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
[IMAGE]
Cusip 60934N880
9110207A-SS (9/96)
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES, INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Tax-Free Obligations Fund (the ``Fund'), a portfolio
of Money Market Obligations Trust (the ``Trust') dated September 30,
1996. This Statement is not a prospectus. You may request a copy of a
prospectus or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 60934N401
Cusip 60934N880
9110207B (9/96)
TABLE OF CONTENTS
INVESTMENT POLICIES 1
Acceptable Investments 1
Participation Interests 1
Municipal Leases 1
Ratings 1
When-Issued and delayed Delivery
Transactions 1
Repurchase Agreements 1
Credit Enhancement 1
INVESTMENT LIMITATIONS 2
Regulatory Compliance 4
MONEY MARKET OBLIGATIONS TRUST
MANAGEMENT 5
Share Ownership 8
Trustees Compensation 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 10
Investment Adviser 10
Advisory Fees 10
BROKERAGE TRANSACTIONS 10
OTHER SERVICES 11
Fund Administration 11
SHAREHOLDER SERVICES AGREEMENT 11
Custodian and Portfolio Accountant 11
Transfer Agent 11
Independent Public Accountants 11
DETERMINING NET ASSET VALUE 11
REDEMPTION IN KIND 12
MASSACHUSETTS PARTNERSHIP LAW 12
THE FUND'S TAX STATUS 12
PERFORMANCE INFORMATION 12
Yield 12
Effective Yield 12
Tax-Equivalent Yield 13
Tax-Equivalency Table 13
Total Return 14
Performance Comparisons 15
Economic and Market Information 15
ABOUT FEDERATED INVESTORS 15
APPENDIX 17
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 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.
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 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.
RATINGS
The securities in which the Fund invests must be rated in the highest
short-term rating category by one or more nationally recognized statistical
rating organizations (`NRSROs'') or be of comparable quality to securities
having such ratings. An NRSRO's highest rating category is determined
without regard for sub-categories and gradations. For example, securities
rated SP-1+ or SP-1 by Standard & Poor's Ratings Group (`S&P''), MIG-1 by
Moody's Investors Service, Inc. (`Moody's''), or F-1+ or F-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.''
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 in a dollar amount sufficient to make payment for the securities 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. 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.
CREDIT ENHANCEMENT
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 Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.
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. 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 its investment objective, policies, limitations or the
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 types of 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 the Fund's 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 Fund's 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.
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.
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 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 (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 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.
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 association 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this 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. 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.
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 or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Trustees and Officers, `Funds'' includes the
following investment companies:
111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; and 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 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Tax-Free Obligations
Fund: First Union National Bank, Charlotte, North Carolina, owned
approximately 285, 163,305 shares (17.78%); Var & Company, St. Paul,
Minnesota, owned approximately 242,776,767 shares (15.14%); Wachovia Bank
of North Carolina, owned approximately 164,961,433 shares (10.29%).
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Tax-Free
Obligations Fund: Naidot & Company, Woodbridge, New Jersey, owned
approximately 69,454,100 shares (16.59%); HAMAC, Richmond, Virginia, owned
approximately 37,132,407 shares (8.87%); First Union National Bank,
Charlotte, North Carolina, owned approximately 28,500,910 shares (6.81%)
Saxon & Company, Philadelphia, PA, owned approximately 23,452,568 shares
(5.60%).
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +
John F. Donahue $ $0 for the Trust and
Chairman and Trustee 54 other investment companies in the
Fund Complex
Thomas G. Bigley++ $1,595.92 $86,331 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
John T. Conroy, Jr. $2,146.75 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
William J. Copeland $2,146.75 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 16 other investment companies in the
Fund Complex
James E. Dowd $2,146.75 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $1,595.92 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $2,146.75 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Peter E. Madden $1,595.92 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Gregor F. Meyer $1,595.92 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
John E. Murray, Jr., $1,595.92 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Wesley W. Posvar $1,595.92 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Marjorie P. Smuts $1,595.92 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
*Information is furnished for the fiscal year ended July 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+The information is provided for the last calendar year.
++ Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds
TRUSTEE LIABILITY
The Trust's 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, 1996, 1995, and 1994, the adviser earned $3,668,956,
$2,318,805, and $1,392,414, respectively, of which $2,000,281, $1,581,210,
and $1,041,059, 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.
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
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, 1996, 1995 and
1994 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.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company , Federated Administrative Services and
Federated Administrative Services, Inc. may hereinafter collectively be
referred to as the `Administrators. For the fiscal years ended July 31,
1996, 1995 and 1994, the Administrators earned $1,387,430, $877,668, and
$493,607, respectively.
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, 1996, the Fund paid shareholder
service fees in the amount of $892,872 pursuant to the Shareholder Services
Agreement on behalf of the Institutional Service Shares, all of which was
paid to financial institutions.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
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. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, PA.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares
of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Trustees will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is not
as liquid as a cash redemption. If redemption is made in kind, shareholders
who sell these securities could receive less than the redemption value and
could incur certain transaction costs.
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.
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, 1996, the yield for Institutional
Shares and Institutional Service Shares was 3.38%, was 3.13%, 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, 1996, the effective yield for
Institutional Shares and Institutional Service Shares was 3.44%, was 3.18%,
respectively.
TAX-EQUIVALENT YIELD
The tax-equivalent yield of the Fund is calculated similarly to the yield
but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming 28% tax rate (the maximum
effective federal rate for individuals) and assuming that the income is
100% tax exempt.
For the seven-day period ended July 31, 1996, the tax-equivalent yield for
Institutional Shares and Institutional Service Shares was 4.69%, was 4.35%,
respectively.
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 1996
TAX-FREE OBLIGATIONS FUND
FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
JOINT $1- $40,101- $96,901- $147,701- OVER
RETURN 40,100 96,900 147,700 263,750 $263,750
SINGLE $1- $24,001- $58,151- $121,301- OVER
RETURN 24,000 58,150 121,300 263,750 $263,750
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% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
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.
The Fund's average annual total returns for the one-year, five-year, and
for the period from December 12, 1989 (start of performance) to July 31,
1996 were 3.55%, 3.18% and 3.73%, respectively, for Institutional Shares.
The Fund's average annual total returns for the one-year period and for the
period from July 5, 1994 (date of initial public offering) to July 31, 1996
were 3.29% and 3.31%, respectively, for Institutional Service 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:
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.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. These total
returns represent the historic change in the value of an investment in the
Fund based on monthly reinvestment of dividends over a specified period of
time.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns in general, that demonstrate
basic investment concepts such as tax-deferred compounding, dollar-cost
averaging and systematic investment. In addition, the Fund can compare its
performance, or performance for the types of securities in which it
invests, to a variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders
handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors 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, 1995, Federated Investors managed
more than $40.2 billion in assets across approximately 47 money market
funds, including 17 government, 10 prime and 20 municipal with assets
approximating $20.9 billion, $11.5 billion and $7.8 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' 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 $3 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 CLIENTS
Federated Investors 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 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. Federated's service to
financial professionals and institutions has earned its high rankings in
several DALBAR Surveys. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
*Source: Investment Company Institute
APPENDIX
STANDARD & POOR'S RATINGS GROUP
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
A Standard & Poor's Ratings Group (S&P) note rating reflects the liquidity
concerns and market access risks unique to notes.
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will
be given a plus sign (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
S&P assigns dual ratings to all long-term debt issues that have as part of
their provisions a variable rate demand feature. The first rating (long-
term rating) addresses the likelihood of repayment of principal and
interest when due, and the second rating (short-term rating) describes the
demand characteristics. Several examples are AAA/A-l+, AA/A-I+, A/A-1. (The
definitions for the long-term and the short-term ratings are provided
below.)
COMMERCIAL PAPER (CP) RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365
days.
A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+)
designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.
LONG-TERM DEBT RATINGS
AAA Debt rated `AAA'' has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA Debt rate `AA'' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small
degree.
A Debt rated `A'' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
MOODYS INVESTORS SERVICE, INC.,
SHORT-TERM MUNICIPAL OBLIGATION RATINGS
Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG) (see below). The purpose of the MIG
or VMIG ratings is to provide investors with a simple system by which the
relative investment qualities of short-term obligations may be evaluated.
MIG1 This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG2 This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
Short-term ratings on issues with demand features are differentiated by the
use of the VMIG symbol to reflect such characteristics as payment upon
periodic demand rather than fixed maturity dates and payment relying on
external liquidity. In this case, two ratings are usually assigned, (for
example, AAA/VMIG-1); the first representing an evaluation of the degree of
risk associated with scheduled principal and interest payments, and the
second representing an evaluation of the degree of risk associated with the
demand feature. The VMIG rating can be assigned a 1 or 2 designation using
the same definitions described above for the MIG rating.
COMMERCIAL PAPER (CP) RATINGS
P-1 Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established
industries, high rates of return on funds employed, conservative
capitalization structure with moderate reliance on debt and ample
asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to
a range of financial markets and assured sources of alternate
liquidity.
P-2 Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
LONG-TERM DEBT RATINGS
AAA Bonds which are rated AAA are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as `gilt edged.'' Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA Bonds which are rated AA are judged to be of high quality by all
standards. Together with the AAA group, they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in AAA
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in AAA securities.
A Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
NR Indicates that both the bonds and the obligor or credit enhancer are
not currently rated by S&P or Moody's with respect to short-term
indebtedness. However, management considers them to be of comparable
quality to first and second tier securities.
NR(1) The underlying issuer/obligor/guarantor has other outstanding
debt rated `AAA'' by S&P or ``AAA'' by Moody's.
NR(2) The underlying issuer/obligor/guarantor has other outstanding
debt rated `AA'' by S&P or ``AA'' by Moody's.
NR(3) The underlying issuer/obligor/guarantor has other outstanding
debt rated `A'' by S&P or Moody's.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATING DEFINITIONS
F-1+ - Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely
payment.
F-1 - Very Strong Credit Quality. Issues assigned this rating
reflect an assurance for timely payment but only slightly less in
degree than issues rated F-1+.
F-2 - Good Credit Quality. Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ and F-1 ratings.
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 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 Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
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
TRUST INFORMATION 4
Management of the Trust 4
Distribution of Institutional Shares 5
Administration of the Fund 6
NET ASSET VALUE 6
HOW TO PURCHASE SHARES 6
HOW TO REDEEM SHARES 8
ACCOUNT AND SHARE INFORMATION 9
TAX INFORMATION 9
Federal Income Tax 9
State and Local Taxes 10
OTHER CLASSES OF SHARES 10
PERFORMANCE INFORMATION 10
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SERVICE SHARES 11
FINANCIAL STATEMENTS 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 20
ADDRESSES Inside Back Cover
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
</TABLE>
<TABLE>
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge 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) 0.09%
12b-1 Fee None
Total Other Expenses 0.11%
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 shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholders services fee. The shareholder service provider
can terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.56% 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 "Trust Information." and "How to Purchase Shares."
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.
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 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.03 0.03 0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (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 $ 1.00
TOTAL RETURN(B) 5.53% 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% 0.20%*
Net investment income 5.37% 5.42% 3.29% 3.11% 4.49% 6.65% 8.16%*
Expense
waiver/reimbursement(c) 0.36% 0.36% 0.10% 0.07% 0.08% 0.09% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037 $1,678,880 $576,048
</TABLE>
*Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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 entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries and institutional
investors as a convenient means of accumulating an interest in a
professionally managed, portfolio investing in short-term U.S. Treasury
securities. A minimum initial investment of $1,000,000 over a one year
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 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 complying with
the diversification and other various requirements of Rule 2a-7 under the
Investment Company Act of 1940 which regulates money market mutual funds and
by following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only 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, the investment policies
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. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United
States.
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.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 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.
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 and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Shares from the value of Fund assets attributable to
Institutional 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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 Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Treasury Obligations Fund --
Institutional Shares. Orders by mail are considered received when payment by
check is converted into federal funds (normally the business day after the
check is received), and shares begin earning dividends the next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 5:00 p.m. (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Institutional Service Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries and institutional investors and are subject to a minimum
initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield, and total
return. 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.
TREASURY 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 20.
<TABLE>
<caption
YEAR ENDED JULY 31,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.26% 5.23% 0.29%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.39%*
Net investment income 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,516,839 $543,855 $8,887
* Computed on an annualized basis.
</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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS -- 21.8%
$572,000,000 (a)U.S. Treasury Bills -- 9.1%
4.620%-5.455%, 10/17/1996-6/26/1997 $ 559,540,299
781,000,000 U.S. Treasury Notes -- 12.7%
6.500%-8.000%, 9/30/96-4/30/1997 786,341,012
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,345,881,311
(B)REPURCHASE AGREEMENTS -- 78.3%
260,000,000 Aubrey G. Lanston and Company, Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 260,000,000
210,000,000 BT Securities Corporation, 5.680%, dated 7/31/1996, due 8/1/1996 210,000,000
170,000,000 BOT Securities, Inc., 5.700%, dated 7/31/1996, due 8/1/1996 170,000,000
331,100,000 Barclays de Zoete Wedd Securities, Inc., 5.680%, dated 7/31/1996,
due 8/1/1996 331,100,000
310,000,000 Bear, Stearns and Co., 5.650%, dated 7/31/1996, due 8/1/1996 310,000,000
260,000,000 CIBC Wood Gundy Securities Corp., 5.650%, dated 7/31/1996,
due 8/1/1996 260,000,000
96,000,000 (c)CS First Boston, Inc., 5.250%, dated 7/10/1996, due 8/12/1996 96,000,000
260,000,000 Daiwa Securities America, Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 260,000,000
60,000,000 Dean Witter Reynolds, Inc., 5.700%, dated 7/31/1996, due 8/1/1996 60,000,000
145,000,000 Deutsche Bank Government Securities, Inc., 5.670%,
dated 7/31/1996, due 8/1/1996 145,000,000
260,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.650%,
dated 7/31/1996, due 8/1/1996 260,000,000
250,000,000 Dresdner Securities (USA), Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 250,000,000
310,000,000 First Union Capital Markets, 5.650%, dated 7/31/1996,
due 8/1/1996 310,000,000
139,000,000 (c)Goldman Sachs Group, LP, 5.270%, dated 7/16/1996,
due 8/20/1996 139,000,000
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS -- CONTINUED
$200,000,000 Harris Government Securities, Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 $ 200,000,000
50,000,000 Harris Government Securities, Inc., 5.680%, dated 7/31/1996,
due 8/1/1996 50,000,000
270,000,000 Lehman Brothers Government Securities, 5.700%, dated 7/31/1996,
due 8/1/1996 270,000,000
139,000,000 (c)Merrill Lynch Government Securities, 5.250%, dated 7/16/1996,
due 8/20/1996 139,000,000
190,000,000 (c)Morgan Stanley Group, Inc., 5.250%, dated 7/10/1996,
due 8/12/1996 190,000,000
50,000,000 State Street Bank and Trust Co., 5.640%, dated 7/31/1996,
due 8/1/1996 50,000,000
120,000,000 (c)Swiss Bank Capital Markets, 5.350%, dated 6/26/1996, due 8/26/1996 120,000,000
200,000,000 Swiss Bank Capital Markets, 5.650%, dated 7/31/1996, due 8/1/1996 200,000,000
250,000,000 Swiss Bank Capital Markets, 5.670%, dated 7/31/1996, due 8/1/1996 250,000,000
240,000,000 UBS Securities, Inc., 5.650%, dated 7/31/1996, due 8/1/1996 240,000,000
60,000,000 UBS Securities, Inc., 5.670%, dated 7/31/1996, due 8/1/1996 60,000,000
TOTAL REPURCHASE AGREEMENTS 4,830,100,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $ 6,175,981,311
</TABLE>
(a) The issue shows the rate of discount at 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 within seven days if the creditworthiness of the issuer is
downgraded.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($6,166,709,677) at July 31, 1996.
The following acronym is used throughout this portfolio:
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $4,830,100,000
Investments in securities 1,345,881,311
Total investments in securities, at
amortized cost and value $6,175,981,311
Income receivable 15,052,302
Receivable for shares sold 4,366
Total assets 6,191,037,979
LIABILITIES:
Payable for shares redeemed 103,000
Income distribution payable 21,458,676
Payable to Bank 1,504,833
Accrued expenses 1,261,793
Total liabilities 24,328,302
NET ASSETS for 6,166,709,677 shares outstanding $6,166,709,677
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$4,649,870,283 O 4,649,870,283 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$1,516,839,394 O 1,516,839,394 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $315,013,638
EXPENSES:
Investment advisory fee $ 11,303,978
Administrative personnel and services fee 4,274,511
Custodian fees 422,049
Transfer and dividend disbursing agent
fees and expenses 140,712
Directors'/Trustees' fees 79,455
Auditing fees 13,017
Legal fees 21,953
Portfolio accounting fees 363,529
Shareholder services fee --
Institutional Shares 11,203,430
Shareholder services fee --
Institutional Service Shares 2,926,628
Share registration costs 707,419
Printing and postage 14,108
Insurance premiums 53,387
Taxes 67,335
Miscellaneous 27,430
Total expenses 31,618,941
Waivers --
Waiver of investment advisory fee $ (5,936,217)
Waiver of shareholder services fee (11,203,430)
-- Institutional Shares
Total waivers (17,139,647)
Net expenses 14,479,294
Net investment income $300,534,344
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 300,534,344 $ 176,982,155
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (240,569,688) (167,724,558)
Institutional Service Shares (59,964,656) (9,257,597)
Change in net assets
resulting from distributions
to shareholders (300,534,344) (176,982,155)
SHARE TRANSACTIONS--
Proceeds from sale of shares 36,669,931,962 19,110,121,123
Net asset value of shares issued to
shareholders in payment of
distributions declared 62,692,910 22,269,297
Cost of shares redeemed (34,550,837,468) (17,739,330,600)
Change in net assets resulting
from share transactions 2,181,787,404 1,393,059,820
Change in net assets 2,181,787,404 1,393,059,820
NET ASSETS:
Beginning of period 3,984,922,273 2,591,862,453
End of period $ 6,166,709,677 $ 3,984,922,273
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Treasury Obligations
Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is to provide current
income consistent with stability of principal.
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.
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.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$6,166,709,677. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995
<S> <C> <C>
Shares sold 27,640,869,241 17,554,361,142
Shares issued to shareholders in payment of distributions declared 35,998,981 18,926,732
Shares redeemed (26,468,065,612) (16,715,195,395)
Net change resulting from Institutional Share transactions 1,208,802,610 858,092,479
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995
Shares sold 9,029,062,721 1,555,759,981
Shares issued to shareholders in payment of distributions declared 26,693,929 3,342,565
Shares redeemed (8,082,771,856) (1,024,135,205)
Net change resulting from Institutional Service Share transactions 972,984,794 534,967,341
Net change resulting from share transactions 2,181,787,404 1,393,059,820
</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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
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 of investments, as of July 31, 1996, 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, 1996, 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, 1996, 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 its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
Treasury 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 c/o Federated Services Company
Trust Company P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend
Disbursing Agent
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
TREASURY
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
[Graphic]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[Graphic]
Cusip 60934N500
9110208A-IS (9/96)
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 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 Statement of Additional Information dated
September 30, 1996, with the Securities and Exchange Commission ("SEC"). 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 or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov.).
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, 1996
Table of Contents
<TABLE>
<S> <C>
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 4
TRUST INFORMATION 4
Management of the Trust 4
Distribution of Institutional Service Shares 5
Administration of the Fund 6
NET ASSET VALUE 6
HOW TO PURCHASE SHARES 6
HOW TO REDEEM SHARES 8
ACCOUNT AND SHARE INFORMATION 9
TAX INFORMATION 9
Federal Income Tax 9
State and Local Taxes 10
OTHER CLASSES OF SHARES 10
PERFORMANCE INFORMATION 10
FINANCIAL HIGHLIGHTS --
INSTITUTIONAL SHARES 11
FINANCIAL STATEMENTS 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 20
ADDRESSES Inside Back Cover
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
</TABLE>
<TABLE>
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge 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) 0.09%
12b-1 Fee None
Total Other Expenses 0.36%
Shareholder Services Fee (after waiver) 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 0.56% 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 the Fund will bear, either
directly or indirectly. For more complete descriptions of the various costs
and expenses, see "Trust Information" and "How to Purchase Shares."
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.
TREASURY 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 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.26% 5.23% 0.29%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.39%*
Net investment income 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,516,839 $543,855 $8,887
</TABLE>
* Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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 Board of Trustees has 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, financial intermediaries
and institutional investors as a convenient means of accumulating an
interest in a professionally managed, portfolio investing in short-term U.S.
Treasury securities. A minimum initial investment of $1,000,000 over a
one-year 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 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 complying with
the diversification and other various requirements of Rule 2a-7 under the
Investment Company Act of 1940 which regulates money market mutual funds and
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, the investment policies
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. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United
States.
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.
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 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. Also, the
adviser 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 $80 billion invested across more
than 250 funds under management and/or administration by its subsidiaries,
as of December 31, 1995, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 1,800
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 interests. 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 INSTITUTIONAL SERVICE 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.
State securities laws may require certain financial institutions such as
depository institutions to register as dealers.
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 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 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.
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 and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund at an annual rate as which relates to the average aggregate
daily net assets of all funds advised by affiliates of Federated Investors
specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <S>
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
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 Institutional Service Shares from the value of Fund assets attributable
to Institutional Service 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.
HOW TO PURCHASE SHARES
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 is open for business. Shares may be purchased either by wire or by
check. 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. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Minimum investments will be calculated by combining all
accounts maintained with the Fund. Financial institutions may impose
different minimum investment requirements on their customers.
PURCHASING SHARES BY WIRE. Shares may be purchased by Federal Reserve wire
by calling 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 Shareholder 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; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be directed to
your shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK. Shares may be purchased by sending a check to
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. The check should be made payable to Treasury Obligations
Fund--Institutional Service Shares. Orders by mail are considered received
when payment by check is converted into federal funds (normally the business
day after the check is received), and shares begin earning dividends the
next day.
INVEST-BY-PHONE. Once an account has been opened, a shareholder may use
invest-by-phone for investments if an authorization form has been filed with
Federated Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated Shareholder
Services Company to purchase shares. Federated Shareholder Services Company
will send a request for monies to the shareholder's commercial bank, savings
bank, or credit union ("bank") via the Automated Clearing House. The
shareholder's bank, which must be an Automated Clearing House member, will
then forward the monies to Federated Shareholder Services Company. The
purchase is normally entered the next business day after the initial phone
request. For further information and an application, call the Fund.
SUBACCOUNTING SERVICES. Financial institutions are encouraged to open single
master accounts. A subaccounting system is available through the transfer
agent to minimize 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.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder 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.
REDEEMING SHARES BY TELEPHONE. Redemptions in any amount may be made by
calling the Fund provided the Fund has a properly completed authorization
form. These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 5:00 p.m. (Eastern time) 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, but will not include
that day's dividend. Proceeds from redemption requests received after that
time include that day's dividend but will be wired the following business
day. Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
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.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL. Shares may be redeemed in any amount by mailing a
written request to: Federated Shareholder Services Company, P.O. Box 8600,
Boston, MA 02266-8600. If share certificates have been issued, they should
be sent unendorsed with the written request by registered or certified mail
to the address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
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
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
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.
ACCOUNT AND SHARE INFORMATION
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.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each shareholder.
Share certificates are not issued unless requested by contacting the Fund or
Federated Shareholder Services Company in writing. Monthly confirmations are
sent to report all transactions as well as dividends paid during the month.
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
$1,000,000 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.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
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 shareholders of that portfolio or class
are entitled to vote. 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 election of Trustees under
certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
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.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
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.
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 other classes. Institutional Shares are sold at net
asset value primarily to entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries and institutional
investors and are subject to a minimum initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan 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 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield, and total
return. 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.
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 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995 1994 1993 1992 1991 1990(A)
<S> <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
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.03 0.03 0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (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 $ 1.00
TOTAL RETURN(B) 5.53% 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% 0.20%*
Net investment income 5.37% 5.42% 3.29% 3.11% 4.49% 6.65% 8.16%*
Expense
waiver/reimbursement(c) 0.36% 0.36% 0.10% 0.07% 0.08% 0.09% 0.15%*
SUPPLEMENTAL DATA
Net assets,
end of period
(000 omitted) $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037 $1,678,880 $576,048
</TABLE>
*Computed on an annualized basis.
(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 charge or
contingent deferred sales charge, if applicable.
(c) 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)
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS -- 21.8%
$ 572,000,000 (a)U.S. Treasury Bills -- 9.1%
4.620%-5.455%, 10/17/1996-6/26/1997 $ 559,540,299
781,000,000 U.S. Treasury Notes -- 12.7%
6.500%-8.000%, 9/30/96-4/30/1997 786,341,012
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,345,881,311
(B)REPURCHASE AGREEMENTS -- 78.3%
260,000,000 Aubrey G. Lanston and Company, Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 260,000,000
210,000,000 BT Securities Corporation, 5.680%, dated 7/31/1996, due 8/1/1996 210,000,000
170,000,000 BOT Securities, Inc., 5.700%, dated 7/31/1996, due 8/1/1996 170,000,000
331,100,000 Barclays de Zoete Wedd Securities, Inc., 5.680%, dated 7/31/1996,
due 8/1/1996 331,100,000
310,000,000 Bear, Stearns and Co., 5.650%, dated 7/31/1996, due 8/1/1996 310,000,000
260,000,000 CIBC Wood Gundy Securities Corp., 5.650%, dated 7/31/1996,
due 8/1/1996 260,000,000
96,000,000 (c)CS First Boston, Inc., 5.250%, dated 7/10/1996, due 8/12/1996 96,000,000
260,000,000 Daiwa Securities America, Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 260,000,000
60,000,000 Dean Witter Reynolds, Inc., 5.700%, dated 7/31/1996, due 8/1/1996 60,000,000
145,000,000 Deutsche Bank Government Securities, Inc., 5.670%,
dated 7/31/1996, due 8/1/1996 145,000,000
260,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.650%,
dated 7/31/1996, due 8/1/1996 260,000,000
250,000,000 Dresdner Securities (USA), Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 250,000,000
310,000,000 First Union Capital Markets, 5.650%, dated 7/31/1996,
due 8/1/1996 310,000,000
139,000,000 (c)Goldman Sachs Group, LP, 5.270%, dated 7/16/1996,
due 8/20/1996 139,000,000
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS -- CONTINUED
$200,000,000 Harris Government Securities, Inc., 5.650%, dated 7/31/1996,
due 8/1/1996 $ 200,000,000
50,000,000 Harris Government Securities, Inc., 5.680%, dated 7/31/1996,
due 8/1/1996 50,000,000
270,000,000 Lehman Brothers Government Securities, 5.700%, dated 7/31/1996,
due 8/1/1996 270,000,000
139,000,000 (c)Merrill Lynch Government Securities, 5.250%, dated 7/16/1996,
due 8/20/1996 139,000,000
190,000,000 (c)Morgan Stanley Group, Inc., 5.250%, dated 7/10/1996,
due 8/12/1996 190,000,000
50,000,000 State Street Bank and Trust Co., 5.640%, dated 7/31/1996,
due 8/1/1996 50,000,000
120,000,000 (c)Swiss Bank Capital Markets, 5.350%, dated 6/26/1996, due 8/26/1996 120,000,000
200,000,000 Swiss Bank Capital Markets, 5.650%, dated 7/31/1996, due 8/1/1996 200,000,000
250,000,000 Swiss Bank Capital Markets, 5.670%, dated 7/31/1996, due 8/1/1996 250,000,000
240,000,000 UBS Securities, Inc., 5.650%, dated 7/31/1996, due 8/1/1996 240,000,000
60,000,000 UBS Securities, Inc., 5.670%, dated 7/31/1996, due 8/1/1996 60,000,000
TOTAL REPURCHASE AGREEMENTS 4,830,100,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $6,175,981,311
</TABLE>
(a) The issue shows the rate of discount at 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 within seven days if the creditworthiness of the issuer is
downgraded.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($6,166,709,677) at July 31, 1996.
The following acronym is used throughout this portfolio:
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1996
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $4,830,100,000
Investments in securities 1,345,881,311
Total investments in securities, at $6,175,981,311
amortized cost and value
Income receivable 15,052,302
Receivable for shares sold 4,366
Total assets 6,191,037,979
LIABILITIES:
Payable for shares redeemed 103,000
Income distribution payable 21,458,676
Payable to Bank 1,504,833
Accrued expenses 1,261,793
Total liabilities 24,328,302
NET ASSETS for 6,166,709,677 shares $6,166,709,677
outstanding
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$4,649,870,283 O 4,649,870,283 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$1,516,839,394 O 1,516,839,394 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1996
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $315,013,638
EXPENSES:
Investment advisory fee $11,303,978
Administrative personnel and services fee 4,274,511
Custodian fees 422,049
Transfer and dividend disbursing agent
fees and expenses 140,712
Directors'/Trustees' fees 79,455
Auditing fees 13,017
Legal fees 21,953
Portfolio accounting fees 363,529
Shareholder services fee --
Institutional Shares 11,203,430
Shareholder services fee --
Institutional Service Shares 2,926,628
Share registration costs 707,419
Printing and postage 14,108
Insurance premiums 53,387
Taxes 67,335
Miscellaneous 27,430
Total expenses 31,618,941
Waivers --
Waiver of investment advisory fee $ (5,936,217)
Waiver of shareholder services fee (11,203,430)
-- Institutional Shares
Total waivers (17,139,647)
Net expenses 14,479,294
Net investment income $300,534,344
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1996 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 300,534,344 $ 176,982,155
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (240,569,688) (167,724,558)
Institutional Service Shares (59,964,656) (9,257,597)
Change in net assets
resulting from distributions
to shareholders (300,534,344) (176,982,155)
SHARE TRANSACTIONS--
Proceeds from sale of shares 36,669,931,962 19,110,121,123
Net asset value of shares issued to
shareholders in payment of
distributions declared 62,692,910 22,269,297
Cost of shares redeemed (34,550,837,468)
(17,739,330,600)
Change in net assets resulting
from share transactions 2,181,787,404 1,393,059,820
Change in net assets 2,181,787,404 1,393,059,820
NET ASSETS:
Beginning of period 3,984,922,273 2,591,862,453
End of period $ 6,166,709,677 $ 3,984,922,273
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
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 portfolios. The
financial statements included herein are only those of Treasury Obligations
Fund (the "Fund"), a diversified portfolio. 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 investment objective of the Fund is to provide current
income consistent with stability of principal.
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.
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.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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, 1996, capital paid-in aggregated
$6,166,709,677. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1996 1995
<S> <C> <C>
Shares sold 27,640,869,241 17,554,361,142
Shares issued to shareholders in payment of distributions declared 35,998,981 18,926,732
Shares redeemed (26,468,065,612) (16,715,195,395)
Net change resulting from Institutional Share transactions 1,208,802,610 858,092,479
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1996 1995
Shares sold 9,029,062,721 1,555,759,981
Shares issued to shareholders in payment of distributions declared 26,693,929 3,342,565
Shares redeemed (8,082,771,856) (1,024,135,205)
Net change resulting from Institutional Service Share transactions 972,984,794 534,967,341
Net change resulting from share transactions 2,181,787,404 1,393,059,820
</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 0.20% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The fee paid to FServ 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 average daily net assets of the Fund for the period. The fee
paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ 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.
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 of investments, as of July 31, 1996, 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, 1996, 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, 1996, 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 its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
August 20, 1996
ADDRESSES
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
c/o Federated Services Company
P.O. Box 8600
Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Independent Public Accountants
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Portfolio of
Money Market Obligations Trust,
an Open-End Management
Investment Company
Prospectus dated September 30, 1996
[Graphic]
Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors.
[Graphic]
Cusip 60934N872
9110208A-SS (9/96)
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES, INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Treasury Obligations Fund (the ``Fund'), a portfolio
of Money Market Obligations Trust (the ``Trust') dated September 30,
1996. This Statement is not a prospectus. You may request a copy of a
prospectus or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1996
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip 60934N500
Cusip 60934N872
9110208B (9/96)
TABLE OF CONTENTS
INVESTMENT POLICIES 1
When-issued and Delayed Delivery
Transactions 1
Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 1
Regulatory Compliance 3
MONEY MARKET OBLIGATIONS TRUST
MANAGEMENT 4
Share Ownership 7
Trustees Compensation 8
Trustee Liability 8
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 10
Fund Administration 10
SHAREHOLDER SERVICES AGREEMENT 10
Custodian and Portfolio Accountant 10
Transfer Agent 10
Independent Public Accountants 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 11
MASSACHUSETTS PARTNERSHIP LAW 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 11
Total Return 12
Performance Comparisons 12
Economic and Market Information 12
ABOUT FEDERATED INVESTORS 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.
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 in a dollar amount sufficient to make payment for the securities 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. 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 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 endebtedness or other debt securities, entering into
repurchase agreements, or engaging in transactions 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 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 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 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.
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 association 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this 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. 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.
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 or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
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; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
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.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Trustee of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, 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
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
Seacliff
562 Bellevue Avenue
Newport, RI
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee 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 or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee 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 Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some 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.
*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Trustees and Officers, `Funds'' includes the
following investment companies:
111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; 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: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund`s outstanding
Institutional Service Shares .
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Treasury Obligations
Fund: Fleet Securities Corporation, Rochester, NY, owned approximately
780,204,663 shares(16.34%); First Union National Bank, Charlotte, NC, owned
approximately 266,479,442 shares (5.58%); VAR & Company, Saint Paul, MN,
owned approximately 626,317,691 shares (13.12%).
As of September 3, 1996, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Treasury
Obligations Fund: The Chase Manhattan Bank, N.A., New York, NY, owned
approximately 139,860,085 shares(9.27%); KEITHCO, Monroe, LA, owned
approximately 97,090,681 shares (6.43%).
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 54 other investment companies in the
Fund Complex
Thomas G. Bigley++ $4,405.62 $86,331 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
John T. Conroy, Jr. $5,155.80 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
William J. Copeland $5,155.80 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 16 other investment companies in the
Fund Complex
James E. Dowd $5,155.80 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $4,405.62 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $5,155.80 $115,760 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Peter E. Madden $4,405.62 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Gregor F. Meyer $4,405.62 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
John E. Murray, Jr., $4,405.62 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Wesley W. Posvar $4,405.62 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
Marjorie P. Smuts $4,405.62 $104,898 for the Trust and
Trustee 54 other investment companies in the
Fund Complex
*Information is furnished for the fiscal year ended July 31, 1996.
#The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+The information is provided for the last calendar year.
++ Mr. Bigley served on 39 investment companies in the Federated Funds
Complex from January 1 through September 30, 1995. On October 1, 1995, he
was appointed a Trustee on 15 additional Federated Funds
TRUSTEE LIABILITY
The Trust's 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, 1996, 1995, and 1994, the adviser earned $11,303,978,
$6,522,177, and $4,939,384, respectively, of which $5,936,217, $3,742,710,
and $2,435,439, 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.
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
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, 1996, 1995 and
1994 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.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services served as the Fund's Administrator. Prior to March
1, 1994, Federated Administrative Services, Inc. served as the Fund's
Administrator. Both former Administrators are subsidiaries of Federated
Investors. For purposes of this Statement of Additional Information,
Federated Services Company, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred to
as the `Administrators. For the fiscal years ended July 31, 1996, 1995 and
1994, the Administrators earned $4,274,511, $2,468,644, and $1,380,769,
respectively.
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, 1996, the Fund paid shareholder
service fees in the amount of $2,926,628 pursuant to the Shareholder
Services Agreement on behalf of the Institutional Service Shares, all of
which was paid to financial institutions.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
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. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, PA.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on shares
of the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-7
(the `Rule'') promulgated by the Securities and Exchange Commission under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective. The procedures include monitoring the
relationship between the amortized cost value per share and the net asset
value per share based upon available indications of market value. The
Trustees will decide what, if any, steps should be taken if there is a
difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the two
methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is
not as liquid as a cash redemption. If redemption is made in kind,
shareholders who sell these securities could receive less than the
redemption value and could incur certain transaction costs.
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.
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, 1996, the yield for Institutional
Shares and Institutional Service Shares was 5.17%, and 4.92%, 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, 1996, the effective yield for
Institutional Shares and Institutional Service Shares was 5.30%, and 5.04%,
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.
Prior to the creation of separate classes of shares, for the one-year and
five -year periods ended July 31, 1996 and for the period from December 12,
1989 (start of performance) to July 31, 1996, the average annual total
returns were 5.53%, 4.42%, and 5.17%, respectively for Institutional
Shares.
For the one-year period ended July 31, 1996 and for the period from July 5,
1994 (date of initial public offering) through July 31, 1996, the average
annual total returns were 5.26% and 5.21%, respectively, for Institutional
Service 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:
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.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. These total
returns represent the historic change in the value of an investment in the
Fund based on monthly reinvestment of dividends over a specified period of
time.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns in general, that demonstrate
basic investment concepts such as tax-deferred compounding, dollar-cost
averaging and systematic investment. In addition, the Fund can compare its
performance, or performance for the types of securities in which it
invests, to a variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors 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. These traders
handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors 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, 1995, Federated Investors managed
more than $40.2 billion in assets across approximately 47 money market
funds, including 17 government, 10 prime and 20 municipal with assets
approximating $20.9 billion, $11.5 billion and $7.8 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic fixed
income management. Henry A. Frantzen, Executive Vice President, oversees
the management of Federated Investors' 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 CLIENTS
Federated Investors 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 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. Federated's service to
financial professionals and institutions has earned its high rankings in
several DALBAR Surveys. The marketing effort to these firms is headed by
James F. Getz, President, Broker/Dealer Division.
*Source: Investment Company Institute
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements. (Filed in Part A)
(b) Exhibits:
(1) Copy of Declaration of Trust of the Registrant dated
October 3, 1988 (12);
(i) Amendment to the Declaration of Trust dated
October 3, 1989(12);
(ii) Conformed copy of Amendment No. 8 to Declaration
of Trust dated December 28, 1994 (10);
(iii)Conformed copy of Amendment No. 9 to Declaration
of Trust dated
February 26, 1996 ;+
(2) Copy of By-Laws of the Registrant(12);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant (8);
(5) Copy of Investment Advisory Contract of the Registrant
(1);
(i) Conformed copy of Exhibits A through G to
Investment Advisory Contract(12);
(ii) Conformed copy of Investment Advisory Contract,
including Exhibit A, between Registrant and
Federated Administrative Services dated March 1,
1995 (11);
(6) Copy of Distributor's Contract of the Registrant (7);
(i) Conformed Copy of Exhibit B (regarding the
Institutional Service Shares of Government
Obligations Fund, Prime Obligations Fund, Tax-Free
Obligations Fund and Treasury Obligations Fund)to
the
Distributor's Contract;+
(ii) Copy of Exhibit D (regarding Government
Obligations Tax Managed Fund, Institutional
Service Shares only) to Distributor's Contract;+
(iii) The Registrant incorporates the conformed
copy of the specimen Mutual Funds Sales
and Service Agreement; Mutual Funds
Service Agreement; and Plan Trustee/
Mutual Funds Service Agreement from Item
24(b)(6) of the Cash Trust Series II
Registration Statement filed with the
Commission on July 24, 1995. (File Number
33-38550 and 811-2669).
(7) Not applicable;
(8) Conformed copy of Custodian Agreement of the Registrant
(8);
(9) (i) ......Conformed copy of the Agreement for
Fund Accounting Services, Administrative
Services, Transfer Agency Services, Shareholder
Recordkeeping Services, and Custody Services
Procurement; +
(ii) The response and exhibits described in Item
24(b)(vi) are hereby incorporated by reference;
(iii)Conformed copy of Shareholder Services Agreement
of the Registrant(13);
(10) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered (12);
(11) Conformed copy of Consent of the Independent Public
Accountants;+
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding(12);
(14) Not applicable;
(15) (i) Copy of Rule 12b-1 Plan dated June 1, 1994 (9);
(ii) Copy of Rule 12b-1 Agreement dated June 1, 1994
(9);
(16) Schedule for Computation of Fund Performance Data(14);
(17) Financial Data Schedules;+
(18) The Registrant hereby incorporates the conformed copy
of the specimen Multiple Class Plan from Item
24(b)(18)of the World Investment Series, Inc.
Registration Statement on Form N-1A, filed with the
Commission on January 26, 1996. (File Nos. 33-52149 and
811-07141);
(19) Power of Attorney(14).
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed October 20, 1989. (File
No. 33-31602)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 of Form N-1A filed May 6, 1994. (File No. 33-31602)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed June 1, 1994. (File No. 33-31602)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed November 25, 1994. (File No. 33-
31602)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 filed February 21, 1995. (File No. 33-31602)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 filed May 7, 1995. (File No. 33-31602)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 filed September 29, 1995. (File No. 33-31602)
13. Response is incorporated by reference to Form N-14 filed September 16,
1996. (File No. 33-31602)
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 filed September 19, 1996. (File No. 33-31602)
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of September 3, 1996
Shares of Beneficial Interest
Government Obligations Fund
Institutional Shares 688
Institutional Service Shares 2,071
Prime Obligations Fund
Institutional Shares 1,381
Institutional Service Shares 1,788
Tax-Free Obligations Fund
Institutional Shares 315
Institutional Service Shares 504
Treasury Obligations Fund
Institutional Shares 1,744
Institutional Service Shares 752
Automated Cash Management Trust
Institutional Shares 10,271
Cash II Shares
Government Obligations Tax-Managed Fund
Institutional Shares 26
Institutional Service Shares 62
Item 27. Indemnification: (1)
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of Federated Management,
the investment adviser for Automated Cash Management Trust,
Government Obligations Fund, Prime Obligations Fund, Tax-Free
Obligations Fund and Treasury Obligations Fund, see the section
entitled "Management of Money Market Obligations Trust" in Part
A. The affiliations with the Registrant of four of the Trustees
and two of the Officers of the Federated Management and their
business addresses are included in Part B of this Registration
Statement under "Money Market Obligations Trust Management." The
remaining Trustee of Federated Management, his principal
occupation and business address is: Mark D. Olson (Partner,
Wilson, Halbrook & Bayard), 107 West Market Street, Georgetown,
Delaware 19947.
The remaining Officers of Federated Management are: William D.
Dawson, III, Henry A. Frantzen, J. Thomas Madden, and Mark L.
Mallon, Executive Vice Presidents; Peter R. Anderson, Drew J.
Collins, Jonathan C. Conley, aMark E.Durbiano, J. Alan Minteer,
and Mary Jo Ochson, Senior Vice Presidents; J. Scott Albrecht,
Joseph M. Ballestrino, Randall A. Bauer, David F. Belton, David
A. Briggs, Kenneth J. Cody, Deborah A. Cunningham, Michael P.
Donnelly, Alexandre de Bethmann, Linda A. Duessel, Kathleen M.
Foody-Malus, Thomas M. Franks, Stephen A. Keen, Mark S. Kopinski,
Robert M. Kowit, Jeff A. Kozemchak, Marian R. Marinack, Sandra L.
McInerney, Susan M. Nason, Robert J. Ostrowski, Charles A.
Ritter, Frank Semack, William F. Stotz, Tracy P. Stouffer, Edward
J. Tiedge, Christopher H. Wiles, Jolanta M. Wysocka, Vice
Presidents; Thomas R. Donahue, Treasurer; and Stephen A. Keen,
Secretary. The business address of each of the Officers of the
investment adviser is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. These individuals are also officers of
a majority of the investment advisers to the Funds listed in Part
B of this Registration Statement under "The Funds."
For a description of the other business of Federated
Administrative Services, the investment adviser for Government
Obligations Tax-Managed Fund, see the section entitled
"Management of Money Market Obligations Trust" in Part A. The
affiliations with the Registrant of three of the Trustees and two
of the Officers of the Federated Administrative Services and
their business addresses are included in Part B of this
Registration Statement under "Money Market Obligations Trust
Management." The remaining Trustees of Federated Administrative
Services, their principal occupations and business addresses are:
James J. Dolan, (President, COO, Federated Administrative
Services), David M. Taylor, (Senior Vice President, Federated
Administrative Services), Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, and Mark D. Olson (Partner, Wilson,
Halbrook & Bayard), 107 West Market Street, Georgetown, Delaware
19947.
The remaining Officers of Federated Administrative Services are:
S. Elliott Cohan, Emily H. Emigh, William D. Genge, Douglas L.
Hein, Ronald M. Petnuch, Frank E. Polefrone, and Thomas J. Ward,
Senior Vice Presidents; Debbie Adams-Marshall, John C. Anderson,
Cathy Z. Angellis, Keith A. Antle, Timothy Biedrzycki, F.
Jefferson Bragdon, Craig P. Churman, Charles L. Davis, Jr.,
Jeannete Fisher-Garber, Peter J. Germain, Michael L. Guzzi, Steve
S. Holstein, J. Crilley Kelly, Thomas P. Kelly, Dennis M. Laffey,
Hans W. Lange, Jr. Joseph S. Machi, Jan H. Maczka, Mary Beth
Marchionda, Diane M. Marzula, Charles H. Miller, Jay S. Neuman,
Kenneth W. Pegher, Lynne Plakidas-Klim, J. David Richter, Melinda
Schmidt, Thomas P. Sholes, Victor R. Siclari, Jeffrey W.
Sterling, Richard J. Thomas, and C. Christine Thomson, Vice
Presidents. The business address of each of the Officers of the
investment adviser is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779.
Item 29. Principal Underwriters:
Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the following
open-end investment companies: 111 Corcoran Funds; Annuity
Management Series; Arrow Funds; Automated Government Money Trust;
BayFunds; Blanchard Funds; Blanchard Precious Metals Fund, Inc.;
Cash Trust Series II; Cash Trust Series, Inc.; DG Investor
Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated
Equity Funds; Federated Equity Income Fund, Inc.; Federated Fund
for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated
Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term
U.S. Government Trust; Federated Stock and Bond Fund, Inc.;
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: 2-5 Years; Federated U.S.
Government Securities Fund: 5-10 Years; Federated Utility Fund,
Inc.; First Priority Funds; Fixed Income Securities, Inc.; High
Yield Cash Trust; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Marshall Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument
Funds; SouthTrust Vulcan Funds; Star Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Biltmore Funds; The
Biltmore Municipal Funds; The Monitor Funds; The Planters Funds;
The Starburst Funds; The Starburst Funds II; The Virtus Funds;
Tower Mutual Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; andWorld Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive ViceExecutive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dale R. Browne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joeseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Assistant Secretary,
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Item 30. Location of Accounts and Records: (4).
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to removal of Trustees
and the calling of special shareholder meetings by shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment,
using financial statements which need not be certified, within
fout to six months from the effective date of Registrant's 1933
Act Registration Statement.
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed December 17, 1991. (File
No. 33-31602)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, MONEY MARKET OBLIGATIONS
TRUST, certifies tht it maeets all the requirements for effectiveness of
this Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on
the 23th day of September, 1996.
MONEY MARKET OBLIGAITONS TRUST
BY: /s/ J. Crilley Kelly
J. Crilley Kelly, Assistant Secretary
Attorney in Fact for John F. Donahue
September 23, 1996
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By:/s/ J. Crilley Kelly
J. Crilley Kelly Attorney In Fact September 23, 1996
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
J. Christopher Donahue* President and Trustee
John W. McGonigle* Treasurer and Executive Vice
President
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 11 under Form N-1A
Exhibit 8 under Item 601/Reg. S-K
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No. 20 to Form N-1A Registration Statement of Money
Market Obligations Trust of our reports dated August 20, 1996, on the
financial statements of Money Market Obligations Trust (consisting of
Automated Cash Management Trust, Government Obligations Fund, Government
Obligations Tax Managed Fund, Prime Obligations Fund, Tax-Free Obligations
Fund, and Treasury Obligations Fund) as of July 31, 1996, included in or
made a part of this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
September 19, 1996
Exhibit 1(iii) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
MONEY MARKET OBLIGATIONS TRUST
Amendment No. 9
DECLARATION OF TRUST
dated October 3, 1988
THIS Declaration of Trust is amended as follows:
Strike the first paragraph of Section 5 of Article III from the
Declaration of Trust and substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.''
Without limiting the authority of the Trustees set forth herein, to
establish and designate any additional series or class or to modify the
rights or preferences of any existing series or class, the series and
classes have been established and designated as:
Automated Cash Management Trust
Cash II Shares
Institutional Service Shares
Government Obligations Fund
Institutional Shares
Institutional Service Shares
Government Obligations Tax Managed Fund
Institutional Shares
Institutional Service Shares
Prime Obligations Fund
Institutional Shares
Institutional Service Shares
Tax-Free Obligations Fund
Institutional Shares
Institutional Service Shares
Treasury Obligations Fund
Institutional Shares
Institutional Service Shares
The establishment and designation of any series or class of shares in
addition to those established and designated above shall be effective upon
the execution by a majority of the then Trustees, without the need for
Shareholder approval, of an amendment to this Declaration of Trust, taking
the form of a complete restatement or otherwise, setting forth such
establishment and designation and the relative rights and preferences of
any such series or class, or as otherwise provided in such instrument.
The undersigned Assistant Secretary of Money Market Obligations Trust
hereby certifies that the above-stated Amendment is a true and correct
Amendment to the Declaration of Trust, as adopted by the Board of Trustees
on the 26th day of February, 1996.
WITNESS the due execution hereof this 26th day of February, 1996.
/s/ J Crilley Kelly
J Crilley Kelly
Assistant Secretary
Exhibit 6(i) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit B
to the
Distributor's Contract
MONEY MARKET OBLIGATIONS TRUST
GOVERNMENT OBLIGATIONS FUND - INSTITUTIONAL SERVICE SHARES
PRIME OBLIGATIONS FUND - INSTITUTIONAL SERVICE SHARES
TAX-FREE OBLIGATIONS FUND - INSTITUTIONAL SERVICE SHARES
TREASURY OBLIGATIONS FUND - INSTITUTIONAL SERVICE SHARES
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1994 between Money Market Obligations
Trust and Federated Securities Corp., Money Market Obligations Trust
execy\utes and delivers this Exhibit on behalf of the Funds, and with
respect to the separate Classes of Shares thereof, first set forth in this
Exhibit.
Witness the due execution hereof this 1st day of September, 1996.
ATTEST: MONEY MARKET OBLIGATIONS TRUST
/s/ John W. McGonigle /s/ J. Christopher Donahue
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ Byron F. Bowman /s/ Edward C. Gonzales
Secretary Executive Vice-President
(SEAL)
Exhibit 6(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit D
to the
Distributor's Contract
MONEY MARKET OBLIGATIONS TRUST
GOVERNMENT OBLIGATIONS TAX MANAGED FUND - INSTITUTIONAL SERVICE SHARES
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1994 between Money Market Obligations
Trust and Federated Securities Corp., Money Market Obligations Trust
executes and delivers this Exhibit on behalf of the Funds, and with respect
to the separate Classes of Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1995.
ATTEST: MONEY MARKET OBLIGATIONS TRUST
/s/ S. Elliott Cohan /s/ J. Christopher Donahue
Assistant Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan /s/ Richard B. Fisher
Secretary Chairman
(SEAL)
Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
TRANSFER AGENCY SERVICES
AND
CUSTODY SERVICES PROCUREMENT
AGREEMENT made as of March 1, 1996, by and between those investment
companies listed on Exhibit 1 as may be amended from time to time, having
their principal office and place of business at Federated Investors Tower,
Pittsburgh, PA 15222-3779 (the `Investment Company''), on behalf of the
portfolios (individually referred to herein as a `Fund'' and collectively
as `Funds'') of the Investment Company, and FEDERATED SERVICES COMPANY, a
Pennsylvania corporation, having its principal office and place of business
at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 on behalf
of itself and its subsidiaries (the `Company'').
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
(the `1940 Act''), with authorized and issued shares of capital stock or
beneficial interest (`Shares'');
WHEREAS, the Investment Company may desire to retain the Company as fund
accountant to provide fund accounting services (as herein defined)
including certain pricing, accounting and recordkeeping services for each
of the Funds, including any classes of shares issued by any Fund
(`Classes'') if so indicated on Exhibit 1, and the Company desires to
accept such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
administrator to provide it with administrative services (as herein
defined), if so indicated on Exhibit, and the Company desires to accept
such appointment;
WHEREAS, the Investment Company may desire to appoint the Company as its
transfer agent and dividend disbursing agent to provide it with transfer
agency services (as herein defined) if so indicated on Exhibit 1, and agent
in connection with certain other activities, and the Company desires to
accept such appointment; and
WHEREAS, the Investment Company may desire to appoint the Company as its
agent to select, negotiate and subcontract for custodian services from an
approved list of qualified banks if so indicated on Exhibit 1, and the
Company desires to accept such appointment; and
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: FUND ACCOUNTING.
ARTICLE 1. APPOINTMENT.
The Investment Company hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the Classes, for the
period and on the terms set forth in this Agreement. The Company accepts
such appointment and agrees to furnish the services herein set forth in
return for the compensation as provided in Article 3 of this Section.
ARTICLE 2. THE COMPANY'S DUTIES.
Subject to the supervision and control of the Investment Company's Board
of Trustees or Directors (`Board''), the Company will assist the
Investment Company with regard to fund accounting for the Investment
Company, and/or the Funds, and/or the Classes, and in connection therewith
undertakes to perform the following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide
a price for a security which the Company believes should be
available by market quotation, the Company may obtain a price by
calling brokers designated by the investment adviser of the fund
holding the security, or if the adviser does not supply the names of
such brokers, the Company will attempt on its own to find brokers to
price those securities; thirdly, for securities for which no market
price is available, the Pricing Committee of the Board will
determine a fair value in good faith. Consistent with Rule 2a-4 of
the 40 Act, estimates may be used where necessary or appropriate.
The Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside
sources, is to exercise reasonable care in the supervision of the
pricing agent. The Company is not the guarantor of the securities
prices received from such agents and the Company is not liable to
the Fund for potential errors in valuing a Fund's assets or
calculating the net asset value per share of such Fund or Class when
the calculations are based upon such prices. All of the above
sources of prices used as described are deemed by the Company to be
authorized sources of security prices. The Company provides daily to
the adviser the securities prices used in calculating the net asset
value of the fund, for its use in preparing exception reports for
those prices on which the adviser has comment. Further, upon receipt
of the exception reports generated by the adviser, the Company
diligently pursues communication regarding exception reports with
the designated pricing agents;
B. Determine the net asset value per share of each Fund and/or Class,
at the time and in the manner from time to time determined by the
Board and as set forth in the Prospectus and Statement of Additional
Information (``Prospectus') of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate realized capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Investment Company, including for each Fund, and/or
Class, as required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Investment
Company are the property of the Investment Company and further
agrees to surrender promptly to the Investment Company such records
upon the Investment Company's request;
G. At the request of the Investment Company, prepare various reports or
other financial documents in accordance with generally accepted
accounting principles as required by federal, state and other
applicable laws and regulations; and
H. Such other similar services as may be reasonably requested by the
Investment Company.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section
One, shall hereafter be referred to as `Fund Accounting Services.''
ARTICLE 3. COMPENSATION AND ALLOCATION OF EXPENSES.
A. The Funds will compensate the Company for Fund Accounting Services
in accordance with the fees agreed upon from time to time between
the parties hereto. Such fees do not include out-of-pocket
disbursements of the Company for which the Funds shall reimburse the
Company. Out-of-pocket disbursements shall include, but shall not be
limited to, the items agreed upon between the parties from time to
time.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Investment Company; independent
auditors expenses; legal and audit department expenses billed to the
Company for work performed related to the Investment Company, the
Funds, or the Classes; law firm expenses; organizational expenses;
or other expenses not specified in this Article 3 which may be
properly payable by the Funds and/or Classes.
C. The compensation and out-of-pocket expenses attributable to the Fund
shall be accrued by the Fund and shall be paid to the Company no
less frequently than monthly, and shall be paid daily upon request
of the Company. The Company will maintain detailed information about
the compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period bears
to the full month period. Upon any termination of this Agreement
before the end of any month, the fee for such period shall be
prorated according to the proportion which such period bears to the
full month period. For purposes of determining fees payable to the
Company, the value of the Fund's net assets shall be computed at the
time and in the manner specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing Fund Accounting Services. Such person or
persons may be affiliates of the Company, third-party service
providers, or they may be officers and employees who are employed by
both the Company and the Investment Company; provided, however, that
the Company shall be as fully responsible to each Fund for the acts
and omissions of any such subcontractor as it is for its own acts
and omissions. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf of
the Investment Company, the Funds, or the Classes in such respect.
SECTION TWO: ADMINISTRATIVE SERVICES.
ARTICLE 4. APPOINTMENT.
The Investment Company hereby appoints the Company as Administrator for
the period on the terms and conditions set forth in this Agreement. The
Company hereby accepts such appointment and agrees to furnish the services
set forth in Article 5 of this Agreement in return for the compensation set
forth in Article 9 of this Agreement.
ARTICLE 5. THE COMPANY'S DUTIES.
As Administrator, and subject to the supervision and control of the
Board and in accordance with Proper Instructions (as defined hereafter)
from the Investment Company, the Company will provide facilities,
equipment, and personnel to carry out the following administrative services
for operation of the business and affairs of the Investment Company and
each of its portfolios:
A. prepare, file, and maintain the Investment Company's governing
documents and any amendments thereto, including the Charter (which
has already been prepared and filed), the By-laws and minutes of
meetings of the Board and Shareholders;
B. prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements
for the Investment Company and the Investment Company's shares and
all amendments thereto, reports to regulatory authorities and
shareholders, prospectuses, proxy statements, and such other
documents all as may be necessary to enable the Investment Company
to make a continuous offering of its shares;
C. prepare, negotiate, and administer contracts (if any) on behalf of
the Investment Company with, among others, the Investment Company's
investment advisers and distributors, subject to any applicable
restrictions of the Board or the 1940 Act;
D. calculate performance data of the Investment Company for
dissemination to information services covering the investment
company industry;
E. prepare and file the Investment Company's tax returns;
F. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
G. perform internal audit examinations in accordance with a charter to
be adopted by the Company and the Investment Company;
H. assist with the design, development, and operation of the Investment
Company and the Funds;
I. provide individuals reasonably acceptable to the Board for
nomination, appointment, or election as officers of the Investment
Company, who will be responsible for the management of certain of
the Investment Company's affairs as determined by the Investment
Company's Board; and
J. consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section
4, shall hereafter be referred to as "Administrative Services."
ARTICLE 6. RECORDS.
The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but
not limited to records required by Section 31(a) of the Investment Company
act of 1940 and the rules thereunder, as the same may be amended from time
to time, pertaining to the Administrative Services performed by it and not
otherwise created and maintained by another party pursuant to contract with
the Investment Company. Where applicable, such records shall be maintained
by the Company for the periods and in the places required by Rule 31a-2
under the 1940 Act. The books and records pertaining to the Investment
Company which are in the possession of the Company shall be the property of
the Investment Company. The Investment Company, or the Investment
Company's authorized representatives, shall have access to such books and
records at all times during the Company's normal business hours. Upon the
reasonable request of the Investment Company, copies of any such books and
records shall be provided promptly by the Company to the Investment Company
or the Investment Company's authorized representatives.
ARTICLE 7. DUTIES OF THE FUND.
The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all
applicable requirements the 1940 Act, the Internal Revenue Code, and any
other laws, rules and regulations of government authorities having
jurisdiction.
ARTICLE 8. EXPENSES.
The Company shall be responsible for expenses incurred in providing
office space, equipment, and personnel as may be necessary or convenient to
provide the Administrative Services to the Investment Company, including
the compensation of the Company employees who serve as trustees or
directors or officers of the Investment Company. The Investment Company
shall be responsible for all other expenses incurred by the Company on
behalf of the Investment Company, including without limitation postage and
courier expenses, printing expenses, travel expenses, registration fees,
filing fees, fees of outside counsel and independent auditors, or other
professional services, organizational expenses, insurance premiums, fees
payable to persons who are not the Company's employees, trade association
dues, and other expenses properly payable by the Funds and/or the Classes.
ARTICLE 9. COMPENSATION.
For the Administrative Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation
for its services rendered hereunder an administrative fee at an annual rate
per Fund, as specified below.
The compensation and out of pocket expenses attributable to the Fund
shall be accrued by the Fund and paid to the Company no less frequently
than monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and out
of pocket expenses by the Fund.
MAX. ADMIN. AVERAGE DAILY NET ASSETS
FEE OF THE FUNDS
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
(Average Daily Net Asset break-points are on a complex-wide basis)
However, in no event shall the administrative fee received during any
year of the Agreement be less than, or be paid at a rate less than would
aggregate $125,000 per Fund and $30,000 per Class. The minimum fee set
forth above in this Article 9 may increase annually upon each March 1
anniversary of this Agreement over the minimum fee during the prior 12
months, as calculated under this agreement, in an amount equal to the
increase in Pennsylvania Consumer Price Index (not to exceed 6% annually)
as last reported by the U.S. Bureau of Labor Statistics for the twelve
months immediately preceding such anniversary.
ARTICLE 10. RESPONSIBILITY OF ADMINISTRATOR.
A. The Company shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Investment Company in
connection with the matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement. The Company shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Investment
Company) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Any
person, even though also an officer, director, trustee, partner,
employee or agent of the Company, who may be or become an officer,
director, trustee, partner, employee or agent of the Investment
Company, shall be deemed, when rendering services to the Investment
Company or acting on any business of the Investment Company (other
than services or business in connection with the duties of the
Company hereunder) to be rendering such services to or acting solely
for the Investment Company and not as an officer, director, trustee,
partner, employee or agent or one under the control or direction of
the Company even though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and
be without liability for any action taken or thing done by it in
performing the Administrative Services in accordance with the above
standards. In order that the indemnification provisions contained
in this Article 10 shall apply, however, it is understood that if in
any case the Investment Company may be asked to indemnify or hold
the Company harmless, the Investment Company shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Company will use all
reasonable care to identify and notify the Investment Company
promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification
against the Investment Company. The Investment Company shall have
the option to defend the Company against any claim which may be the
subject of this indemnification. In the event that the Investment
Company so elects, it will so notify the Company and thereupon the
Investment Company shall take over complete defense of the claim,
and the Company shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
Article. the Company shall in no case confess any claim or make any
compromise in any case in which the Investment Company will be asked
to indemnify the Company except with the Investment Company's
written consent.
SECTION THREE: TRANSFER AGENCY SERVICES.
ARTICLE 11. TERMS OF APPOINTMENT.
Subject to the terms and conditions set forth in this Agreement, the
Investment Company hereby appoints the Company to act as, and the Company
agrees to act as, transfer agent and dividend disbursing agent for each
Fund's Shares, and agent in connection with any accumulation, open-account
or similar plans provided to the shareholders of any Fund
(`Shareholder(s)''), including without limitation any periodic investment
plan or periodic withdrawal program.
ARTICLE 12. DUTIES OF THE COMPANY.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Investment
Company as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the ``Custodian'). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile the
amounts so requested and the amounts actually received with the
Custodian on a daily basis. If a Shareholder is entitled to
receive additional Shares by virtue of any such distribution or
dividend, appropriate credits shall be made to the
Shareholder's account, for certificated Funds and/or Classes,
delivered where requested; and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Investment Company, each Fund and Class
and its Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company by
the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor,
and shall effect such redemption at the price applicable to the
date and time of receipt of documents complying with said
procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission (``SEC') a record of the
total number of Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also provide the Fund
on a regular basis or upon reasonable request with the total
number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Investment Company or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall forthwith
upon the Fund's demand, turn over to the Fund and cease to
retain in the Company's files, records and documents created
and maintained by the Company pursuant to this Agreement, which
are no longer needed by the Company in performance of its
services or for its protection. If not so turned over to the
Fund, such records and documents will be retained by the
Company for six years from the year of creation, during the
first two of which such documents will be in readily accessible
form. At the end of the six year period, such records and
documents will either be turned over to the Fund or destroyed
in accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for ``blue sky''purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other conformable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund (and/or Class) sold in
each state (``blue sky reporting'). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's (and/or Class's) state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in
connection with Shareholder meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
ARTICLE 13. DUTIES OF THE INVESTMENT COMPANY.
A. Compliance
The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of their own and/or their
classes' Prospectus and for complying with all applicable
requirements of the Securities Act of 1933, as amended (the ``1933
Act''), the 1940 Act and any laws, rules and regulations of
government authorities having jurisdiction.
B. Share Certificates
The Investment Company shall supply the Company with a sufficient
supply of blank Share certificates and from time to time shall renew
such supply upon request of the Company. Such blank Share
certificates shall be properly signed, manually or by facsimile, if
authorized by the Investment Company and shall bear the seal of the
Investment Company or facsimile thereof; and notwithstanding the
death, resignation or removal of any officer of the Investment
Company authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Investment
Company.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
ARTICLE 14. COMPENSATION AND EXPENSES.
A. Annual Fee
For performance by the Company pursuant to Section Three of this
Agreement, the Investment Company and/or the Fund agree to pay the
Company an annual maintenance fee for each Shareholder account as
agreed upon between the parties and as may be added to or amended
from time to time. Such fees may be changed from time to time
subject to written agreement between the Investment Company and the
Company. Pursuant to information in the Fund Prospectus or other
information or instructions from the Fund, the Company may sub-
divide any Fund into Classes or other sub-components for
recordkeeping purposes. The Company will charge the Fund the same
fees for each such Class or sub-component the same as if each were a
Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time to
time. In addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company and/or the
Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
SECTION FOUR: CUSTODY SERVICES PROCUREMENT.
ARTICLE 15. APPOINTMENT.
The Investment Company hereby appoints Company as its agent to evaluate
and obtain custody services from a financial institution that (i) meets the
criteria established in Section 17(f) of the 1940 Act and (ii) has been
approved by the Board as eligible for selection by the Company as a
custodian (the `Eligible Custodian''). The Company accepts such
appointment.
ARTICLE 16. THE COMPANY AND ITS DUTIES.
Subject to the review, supervision and control of the Board, the Company
shall:
A. evaluate and obtain custody services from a financial institution
that meets the criteria established in Section 17(f) of the 1940 Act
and has been approved by the Board as being eligible for selection by
the Company as an Eligible Custodian;
B. negotiate and enter into agreements with Eligible Custodians for the
benefit of the Investment Company, with the Investment Company as a
party to each such agreement. The Company may, as paying agent, be a
party to any agreement with any such Eligible Custodian;
C. establish procedures to monitor the nature and the quality of the
services provided by Eligible Custodians;
D. monitor and evaluate the nature and the quality of services provided
by Eligible Custodians;
E. periodically provide to the Investment Company (i) written reports
on the activities and services of Eligible Custodians; (ii) the
nature and amount of disbursements made on account of the each Fund
with respect to each custodial agreement; and (iii) such other
information as the Board shall reasonably request to enable it to
fulfill its duties and obligations under Sections 17(f) and 36(b) of
the 1940 Act and other duties and obligations thereof;
F. periodically provide recommendations to the Board to enhance
Eligible Custodian's customer services capabilities and improve upon
fees being charged to the Fund by Eligible Custodian; and
The foregoing, along with any additional services that Company shall
agree in writing to perform for the Fund under this Section Four, shall
hereafter be referred to as "Custody Services Procurement."
ARTICLE 17. FEES AND EXPENSES.
A. Annual Fee
For the performance of Custody Services Procurement by the Company
pursuant to Section Four of this Agreement, the Investment Company
and/or the Fund agree to compensate the Company in accordance with
the fees agreed upon from time to time.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Investment
Company and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items agreed
upon between the parties, as may be added to or amended from time to
time. In addition, any other expenses incurred by the Company at the
request or with the consent of the Investment Company and/or the
Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
ARTICLE 18. REPRESENTATIONS.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter
into this arrangement and to provide the services contemplated in Section
Four of this Agreement.
SECTION FIVE: GENERAL PROVISIONS.
ARTICLE 19. PROPER INSTRUCTIONS.
As used throughout this Agreement, a ``Proper Instruction'' means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set forth
the specific transaction or type of transaction involved. Oral instructions
will be deemed to be Proper Instructions if (a) the Company reasonably
believes them to have been given by a person previously authorized in
Proper Instructions to give such instructions with respect to the
transaction involved, and (b) the Investment Company, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Investment
Company, or the Fund, and the Company are satisfied that such procedures
afford adequate safeguards for the Fund's assets. Proper Instructions may
only be amended in writing.
ARTICLE 20. ASSIGNMENT.
Except as provided below, neither this Agreement nor any of the rights
or obligations under this Agreement may be assigned by either party without
the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Transfer Agency Services, the Company may without
further consent on the part of the Investment Company subcontract
for the performance of Transfer Agency Services with
(1) its subsidiary, Federated Shareholder Service Company, a
Delaware business trust, which is duly registered as a transfer
agent pursuant to Section 17A(c)(1) of the Securities Exchange
Act of 1934, as amended, or any succeeding statute (``Section
17A(c)(1)''); or
(2) such other provider of services duly registered as a transfer
agent under Section 17A(c)(1) as Company shall select.
The Company shall be as fully responsible to the Investment Company
for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
C. With regard to Fund Accounting Services, Administrative Services and
Custody Procurement Services, the Company may without further
consent on the part of the Investment Company subcontract for the
performance of such services with Federated Administrative Services,
a wholly-owned subsidiary of the Company.
D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement
with an Agent selected by the Investment Company, other than as
described in B. and C. above; provided, however, that the Company
shall in no way be responsible to the Investment Company for the
acts and omissions of the Agent.
ARTICLE 21. DOCUMENTS.
A. In connection with the appointment of the Company under this
Agreement, the Investment Company shall file with the Company the
following documents:
(1) A copy of the Charter and By-Laws of the Investment Company and
all amendments thereto;
(2) A copy of the resolution of the Board of the Investment Company
authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Investment Company or the Funds in the forms approved by the
Board of the Investment Company with a certificate of the
Secretary of the Investment Company as to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Investment Company
authorizing the original issuance of each Fund's, and/or
Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Investment Company;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for
fund accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
ARTICLE 22. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;
(2) It is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;
(4) all requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement;
(5) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(6) it is in compliance with federal securities law requirements
and in good standing as an administrator and fund accountant;
and
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Investment Company is an open-end investment company
registered under the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each
Fund being offered for sale.
ARTICLE 23. STANDARD OF CARE AND INDEMNIFICATION.
A. Standard of Care
With regard to Sections One, Three and Four, the Company shall be
held to a standard of reasonable care in carrying out the provisions
of this Contract. The Company shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Investment
Company) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice, provided
that such action is not in violation of applicable federal or state
laws or regulations, and is in good faith and without negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment Company
or Fund shall indemnify and hold the Company, including its
officers, directors, shareholders and their agents, employees and
affiliates, harmless against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Investment Company
or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of the
Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and Shareholder
account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other third
parties contracted by or approved by the Investment
Company of Fund for use in the performance of services
under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Investment Company or the Fund.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be
registered in such state or in violation of any stop order or
other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that the Company shall not be protected by
this Article 23.B. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties or failure to
meet the standard of care set forth in 23.A. above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions, and may consult with legal counsel
with respect to any matter arising in connection with the services
to be performed by the Company under this Agreement, and the Company
and its agents or subcontractors shall not be liable and shall be
indemnified by the Investment Company or the appropriate Fund for
any action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Investment Company or the Fund,
and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 23 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior written
consent.
ARTICLE 24. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall be effective from March 1, 1996 and shall continue
until February 28, 2003 (`Term'). Thereafter, the Agreement will continue
for 18 month terms. The Agreement can be terminated by either party upon
18 months notice to be effective as of the end of such 18 month period. In
the event, however, of willful misfeasance, bad faith, negligence or
reckless disregard of its duties by the Company, the Investment Company has
the right to terminate the Agreement upon 60 days written notice, if
Company has not cured such willful misfeasance, bad faith, negligence or
reckless disregard of its duties within 60 days. The termination date for
all original or after-added Investment companies which are, or become, a
party to this Agreement. shall be coterminous. Investment Companies that
merge or dissolve during the Term, shall cease to be a party on the
effective date of such merger or dissolution.
Should the Investment Company exercise its rights to terminate, all out-
of-pocket expenses associated with the movement of records and materials
will be borne by the Investment Company or the appropriate Fund.
Additionally, the Company reserves the right to charge for any other
reasonable expenses associated with such termination. The provisions of
Articles 10 and 23 shall survive the termination of this Agreement.
ARTICLE 25. AMENDMENT.
This Agreement may be amended or modified by a written agreement
executed by both parties.
ARTICLE 26. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Agreement as may
in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that
no such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the Charter. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
ARTICLE 27. GOVERNING LAW.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts
ARTICLE 28. NOTICES.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Investment Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Company at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779,
or to such other address as the Investment Company or the Company may
hereafter specify, shall be deemed to have been properly delivered or given
hereunder to the respective address.
ARTICLE 29. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
ARTICLE 30. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE
COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any
of the Trustees or Shareholders of the Company, but bind only the
appropriate property of the Fund, or Class, as provided in the Declaration
of Trust.
ARTICLE 31. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
ARTICLE 32. SUCCESSOR AGENT.
If a successor agent for the Investment Company shall be appointed by
the Investment Company, the Company shall upon termination of this
Agreement deliver to such successor agent at the office of the Company all
properties of the Investment Company held by it hereunder. If no such
successor agent shall be appointed, the Company shall at its office upon
receipt of Proper Instructions deliver such properties in accordance with
such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before
the date when such termination shall become effective, then the Company
shall have the right to deliver to a bank or trust company, which is a
`bank'' as defined in the 1940 Act, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $2,000,000, all properties held by the
Company under this Agreement. Thereafter, such bank or trust company shall
be the successor of the Company under this Agreement.
ARTICLE 33. FORCE MAJEURE.
The Company shall have no liability for cessation of services hereunder
or any damages resulting therefrom to the Fund as a result of work
stoppage, power or other mechanical failure, natural disaster, governmental
action, communication disruption or other impossibility of performance.
ARTICLE 34. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign all
of or a substantial portion of its business to a successor, or to a party
controlling, controlled by, or under common control with such party.
Nothing in this Article 34 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
ARTICLE 35. SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
ARTICLE 36. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF
THE INVESTMENT COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Investment Company and signed by an authorized officer of
the Investment Company, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this Agreement
are not binding upon any of the Trustees or Shareholders of the Investment
Company, but bind only the property of the Fund, or Class, as provided in
the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first above
written.
INVESTMENT COMPANIES
(LISTED ON EXHIBIT 1)
By: /s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
FEDERATED SERVICES COMPANY
By: /s/ Thomas J. Ward
Thomas J. Ward
Secretary
EXHIBIT 1
March 1, 1996 Money Market Obligations Trust
Automated Cash Management Trust
Cash II Shares
Institutional Shares
Government Obligations Fund
Institutional Services Shares
Institutional Shares
Government Obligations Tax Managed Fund
Institutional Service Shares
Institutional Shares
Prime Obligations Fund
Institutional Services Shares
Institutional Shares
Tax-Free Obligations Fund
Institutional Services Shares
Institutional Shares
Treasury Obligations Fund
Institutional Services Shares
Institutional Shares
FEDERATED SERVICES COMPANY provides the following services:
Fund Accounting Services,
Administrative Services,
Shareholder Recordkeeping,
and Custody Services Procurement.
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<NAME> Money Market Obligations Trust
Automated Cash Management Trust
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 1,286,455,547
<INVESTMENTS-AT-VALUE> 1,286,455,547
<RECEIVABLES> 3,025,186
<ASSETS-OTHER> 130,026
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,289,610,759
<PAYABLE-FOR-SECURITIES> 4,000,613
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,190,782
<TOTAL-LIABILITIES> 15,191,395
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,274,419,364
<SHARES-COMMON-STOCK> 1,274,419,364
<SHARES-COMMON-PRIOR> 1,141,043,183
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,274,419,364
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 71,316,972
<OTHER-INCOME> 0
<EXPENSES-NET> 7,246,688
<NET-INVESTMENT-INCOME> 64,070,284
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 64,070,284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 64,070,284
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,830,763,212
<NUMBER-OF-SHARES-REDEEMED> 7,735,179,515
<SHARES-REINVESTED> 37,792,484
<NET-CHANGE-IN-ASSETS> 133,376,181
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,308,051
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,117,493
<AVERAGE-NET-ASSETS> 1,261,610,084
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
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<SERIES>
<NUMBER> 011
<NAME> Money Market Obligations Trust
Government Obligations Fund
Institutional Shares
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 2,902,542,147
<INVESTMENTS-AT-VALUE> 2,902,542,147
<RECEIVABLES> 13,019,224
<ASSETS-OTHER> 97,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,915,658,870
<PAYABLE-FOR-SECURITIES> 20,929,898
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,456,058
<TOTAL-LIABILITIES> 30,385,956
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,885,272,914
<SHARES-COMMON-STOCK> 2,182,998,556
<SHARES-COMMON-PRIOR> 1,926,515,833
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 2,182,998,556
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141,959,876
<OTHER-INCOME> 0
<EXPENSES-NET> 6,494,031
<NET-INVESTMENT-INCOME> 135,465,845
<REALIZED-GAINS-CURRENT> 0
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 108,299,075
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 11,676,332,015
<NUMBER-OF-SHARES-REDEEMED> 11,447,449,600
<SHARES-REINVESTED> 27,600,308
<NET-CHANGE-IN-ASSETS> 619,651,686
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<GROSS-ADVISORY-FEES> 5,061,781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,327,867
<AVERAGE-NET-ASSETS> 2,530,890,512
<PER-SHARE-NAV-BEGIN> 1.000
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<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.20
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<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> Money Market Obligations Trust
Government Obligations Fund
Institutional Service Shares
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 2,902,542,147
<INVESTMENTS-AT-VALUE> 2,902,542,147
<RECEIVABLES> 13,019,224
<ASSETS-OTHER> 97,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,915,658,870
<PAYABLE-FOR-SECURITIES> 20,929,898
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,456,058
<TOTAL-LIABILITIES> 30,385,956
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,885,272,914
<SHARES-COMMON-STOCK> 702,274,358
<SHARES-COMMON-PRIOR> 339,105,395
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 702,274,358
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141,959,876
<OTHER-INCOME> 0
<EXPENSES-NET> 6,494,031
<NET-INVESTMENT-INCOME> 135,465,845
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 135,465,845
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 27,166,770
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,861,012,423
<NUMBER-OF-SHARES-REDEEMED> 2,509,680,303
<SHARES-REINVESTED> 11,836,843
<NET-CHANGE-IN-ASSETS> 619,651,686
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,061,781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,327,867
<AVERAGE-NET-ASSETS> 2,530,890,512
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 061
<NAME> Money Market Obligations Trust
Government Obligations Tax-Managed Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 554,315,359
<INVESTMENTS-AT-VALUE> 554,315,359
<RECEIVABLES> 1,646,780
<ASSETS-OTHER> 518,201
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 556,480,340
<PAYABLE-FOR-SECURITIES> 22,505,304
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,034,538
<TOTAL-LIABILITIES> 24,539,842
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 531,940,498
<SHARES-COMMON-STOCK> 199,242,851
<SHARES-COMMON-PRIOR> 3,070,142
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 199,242,851
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,814,183
<OTHER-INCOME> 0
<EXPENSES-NET> 1,149,180
<NET-INVESTMENT-INCOME> 17,665,003
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 17,665,003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,666,528
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 570,331,953
<NUMBER-OF-SHARES-REDEEMED> 376,750,642
<SHARES-REINVESTED> 2,591,398
<NET-CHANGE-IN-ASSETS> 452,705,391
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 692,278
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,130,064
<AVERAGE-NET-ASSETS> 346,139,198
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 062
<NAME> Money Market Obligations Trust
Government Obligations Tax-Managed Fund
Institutional Service Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 554,315,359
<INVESTMENTS-AT-VALUE> 554,315,359
<RECEIVABLES> 1,646,780
<ASSETS-OTHER> 518,201
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 556,480,340
<PAYABLE-FOR-SECURITIES> 22,505,304
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,034,538
<TOTAL-LIABILITIES> 24,539,842
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 531,940,498
<SHARES-COMMON-STOCK> 332,697,647
<SHARES-COMMON-PRIOR> 76,164,965
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 332,697,647
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,814,183
<OTHER-INCOME> 0
<EXPENSES-NET> 1,149,180
<NET-INVESTMENT-INCOME> 17,665,003
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 17,665,003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10,998,475
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 822,765,118
<NUMBER-OF-SHARES-REDEEMED> 566,426,153
<SHARES-REINVESTED> 193,717
<NET-CHANGE-IN-ASSETS> 452,705,391
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 692,278
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,130,064
<AVERAGE-NET-ASSETS> 346,139,198
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> Money Market Obligations Trust
Prime Obligations Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 4,287,059,936
<INVESTMENTS-AT-VALUE> 4,287,059,936
<RECEIVABLES> 91,155,749
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,378,215,685
<PAYABLE-FOR-SECURITIES> 18,823,144
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,771,371
<TOTAL-LIABILITIES> 48,594,515
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,329,621,170
<SHARES-COMMON-STOCK> 3,032,602,007
<SHARES-COMMON-PRIOR> 2,457,797,173
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,032,602,007
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 211,121,933
<OTHER-INCOME> 0
<EXPENSES-NET> 9,598,938
<NET-INVESTMENT-INCOME> 201,522,995
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 201,522,995
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 161,912,538
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29,766,228,647
<NUMBER-OF-SHARES-REDEEMED> 29,236,459,220
<SHARES-REINVESTED> 45,035,407
<NET-CHANGE-IN-ASSETS> 1,370,869,852
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,504,715
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21,165,463
<AVERAGE-NET-ASSETS> 3,752,357,608
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> Money Market Obligations Trust
Prime Obligations Fund
Institutional Service Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 4,287,059,936
<INVESTMENTS-AT-VALUE> 4,287,059,936
<RECEIVABLES> 91,155,749
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,378,215,685
<PAYABLE-FOR-SECURITIES> 18,823,144
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,771,371
<TOTAL-LIABILITIES> 48,594,515
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,329,621,170
<SHARES-COMMON-STOCK> 1,297,019,163
<SHARES-COMMON-PRIOR> 500,954,145
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,297,019,163
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 211,121,933
<OTHER-INCOME> 0
<EXPENSES-NET> 9,598,938
<NET-INVESTMENT-INCOME> 201,522,995
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 201,522,995
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 39,610,457
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,059,383,012
<NUMBER-OF-SHARES-REDEEMED> 9,280,250,803
<SHARES-REINVESTED> 16,932,809
<NET-CHANGE-IN-ASSETS> 1,370,869,852
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,504,715
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21,165,463
<AVERAGE-NET-ASSETS> 3,752,357,608
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> Money Market Obligations Trust
Tax-Free Obligations Fund
Institutional Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 1,958,392,775
<INVESTMENTS-AT-VALUE> 1,958,392,775
<RECEIVABLES> 15,411,718
<ASSETS-OTHER> 452,506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,974,256,999
<PAYABLE-FOR-SECURITIES> 47,784,559
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,085,318
<TOTAL-LIABILITIES> 52,869,877
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,921,475,250
<SHARES-COMMON-STOCK> 1,515,048,255
<SHARES-COMMON-PRIOR> 1,295,478,935
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,514,978,944
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 67,301,023
<OTHER-INCOME> 0
<EXPENSES-NET> 4,642,545
<NET-INVESTMENT-INCOME> 62,658,478
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 62,591,585
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 51,152,839
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,558,231,210
<NUMBER-OF-SHARES-REDEEMED> 10,341,838,613
<SHARES-REINVESTED> 3,176,723
<NET-CHANGE-IN-ASSETS> 373,913,626
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,668,956
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,336,148
<AVERAGE-NET-ASSETS> 1,834,477,747
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> Money Market Obligations Trust
Tax-Free Obligations Fund
Institutional Service Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 1,958,392,775
<INVESTMENTS-AT-VALUE> 1,958,392,775
<RECEIVABLES> 15,411,718
<ASSETS-OTHER> 452,506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,974,256,999
<PAYABLE-FOR-SECURITIES> 47,784,559
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,085,318
<TOTAL-LIABILITIES> 52,869,877
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,921,475,250
<SHARES-COMMON-STOCK> 406,426,995
<SHARES-COMMON-PRIOR> 252,015,796
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 406,408,178
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 67,301,023
<OTHER-INCOME> 0
<EXPENSES-NET> 4,642,545
<NET-INVESTMENT-INCOME> 62,658,478
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 62,591,585
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,505,639
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,868,393,621
<NUMBER-OF-SHARES-REDEEMED> 1,715,557,550
<SHARES-REINVESTED> 1,575,128
<NET-CHANGE-IN-ASSETS> 373,913,626
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,668,956
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,336,148
<AVERAGE-NET-ASSETS> 1,834,477,747
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> Money Market Obligations Trust
Treasury Obligations Fund
Institutional Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jul-31-1996
<PERIOD-END> Jul-31-1996
<INVESTMENTS-AT-COST> 6,175,981,311
<INVESTMENTS-AT-VALUE> 6,175,981,311
<RECEIVABLES> 15,056,668
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,191,037,979
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24,328,302
<TOTAL-LIABILITIES> 24,328,302
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,166,709,677
<SHARES-COMMON-STOCK> 4,649,870,283
<SHARES-COMMON-PRIOR> 3,441,067,673
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,649,870,283
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 315,013,638
<OTHER-INCOME> 0
<EXPENSES-NET> 14,479,294
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<NAME> Money Market Obligations Trust
Treasury Obligations Fund
Institutional Service Shares
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