GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Government Obligations Fund (the "Fund") offered by
this prospectus represent interests in a diversified portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in U.S. government securities to provide current
income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Investment Limitations 4
Regulatory Compliance 5
TRUST INFORMATION 5
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Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 7
NET ASSET VALUE 7
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INVESTING IN THE FUND 8
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Share Purchases 8
Minimum Investment Required 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 9
REDEEMING SHARES 9
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By Mail 9
Telephone Redemption 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
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Voting Rights 10
Massachusetts Partnership Law 11
TAX INFORMATION 11
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Federal Income Tax 11
Pennsylvania Corporate and
Personal Property Taxes 11
OTHER CLASSES OF SHARES 11
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PERFORMANCE INFORMATION 12
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FINANCIAL STATEMENTS 13
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 22
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ADDRESSES 23
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SUMMARY OF FUND EXPENSES
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<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)..................
None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)........................................................................ 0.05%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.15%
Shareholder Services Fee (after waiver) (2)............................................. 0.00%
Total Operating Expenses (3).................................................................. 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.60% absent the voluntary
waiver of a portion of the management fee and the shareholder services fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND" AND "TRUST INFORMATION". WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $2 $6 $11 $26
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
GOVERNMENT OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
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(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,
<S> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
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Net investment income 0.05 0.03 0.03 0.05 0.07 0.03
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LESS DISTRIBUTIONS
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Distributions from net
investment income (0.05) (0.03) (0.03) (0.05) (0.07) (0.03)
- ----------------------------------------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 5.57% 3.41% 3.22% 4.70% 7.20% 2.80%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS
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Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- -----------------------------------------
Net investment income 5.58% 3.38% 3.16% 4.55% 6.77% 8.24%(c)
- -----------------------------------------
Expense waiver/reimbursement (d) 0.40% 0.15% 0.11% 0.12% 0.22% 0.34%(c)
- -----------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------
Net assets, end of period
(000 omitted) $1,926,516 $763,879 $707,146 $679,533 $331,454 $148,598
- -----------------------------------------
</TABLE>
(a) Reflects operations for the period from March 31, 1990, (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions,
financial intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
investing in short-term U.S. government securities. A minimum initial investment
of $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
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INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal. This investment objective cannot be changed without
shareholder approval. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio of
U.S. government securities maturing in thirteen months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise, the
investment policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities. These
instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These instrumentalities are supported by:
the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument for
a percentage of its cash value with an agreement to buy it back on a set date)
or pledge securities except, under certain circumstances, the Fund may borrow
up to one-third of the value of its total assets and pledge up to 15% of the
value of its total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
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 may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors
are owned by a trust, the trustees of which are John F. Donahue, Chairman
and Trustee of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's
son, J. Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of the Institutional Shares, computed at an annual rate,
to obtain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
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The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUND
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SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Government Obligations Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Fund-- Institutional Shares to: Federated Services Company,
Government Obligations Fund, P.O. Box 8600, Boston, MA 02266-8600. Orders by
mail are considered received when payment by check is converted into federal
funds. This is normally the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
acccounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing. Monthly
confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
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Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Government Obligations Fund--Institutional Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road-2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 3:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 3:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required mini-mum 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.
SHAREHOLDER INFORMATION
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VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Putnam Trust Company, Greenwich, CT, owned approximately 118,529,400 shares
(34.82%) of the voting securities of the Fund's Institutional Service Shares
and, therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary
capacity, and 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 Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ---------------------------------------------------------------------------- ----------------
SHORT-TERM OBLIGATIONS--31.1%
- --------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--0.5%
----------------------------------------------------------------------------
$ 11,000,000 (a)6.578%, 2/23/1996 $ 10,611,633
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN BANK, DISCOUNT NOTES--3.4%
----------------------------------------------------------------------------
78,280,000 (a)6.229%-7.00%, 11/2/1995-1/16/1996 76,473,379
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN BANK, FLOATING RATE NOTES--3.5%
----------------------------------------------------------------------------
78,500,000 (b)5.715%-5.790%, 8/1/95 78,449,946
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN BANK, DISCOUNT NOTES--2.8%
----------------------------------------------------------------------------
63,500,000 (a)6.015%-6.850%, 2/28/1996-6/13/1996 63,554,612
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN MORTGAGE CORP., DISCOUNT NOTES--0.6%
----------------------------------------------------------------------------
13,165,000 (a)6.798%-7.013%, 11/1/1995-2/8/1996 12,837,593
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN MORTGAGE CORP., FLOATING RATE NOTES--0.7%
----------------------------------------------------------------------------
16,500,000 (b)5.720%, 8/1/95 16,499,593
---------------------------------------------------------------------------- ----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--10.6%
----------------------------------------------------------------------------
246,920,000 (a)5.755%-6.399%, 8/17/1995-4/15/1996 241,643,739
---------------------------------------------------------------------------- ----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTES--2.2%
----------------------------------------------------------------------------
50,000,000 (b)5.740%-5.880%, 8/1/95 49,995,969
---------------------------------------------------------------------------- ----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--0.5%
----------------------------------------------------------------------------
11,000,000 (a)5.500%, 6/12/1996 10,961,811
---------------------------------------------------------------------------- ----------------
STUDENT LOAN MARKETING ASSOCIATION, DISCOUNT NOTES--0.4%
----------------------------------------------------------------------------
8,000,000 (a)6.752%, 2/21/1996 8,007,761
---------------------------------------------------------------------------- ----------------
STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--2.4%
----------------------------------------------------------------------------
55,230,000 (b)5.790%-6.040%, 8/7/95 55,243,249
---------------------------------------------------------------------------- ----------------
U.S. TREASURY BILLS--1.5%
----------------------------------------------------------------------------
34,500,000 (a)5.270%-6.505%, 8/24/1995-6/27/1996 33,583,557
---------------------------------------------------------------------------- ----------------
</TABLE>
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ---------------------------------------------------------------------------- ----------------
SHORT-TERM OBLIGATIONS--CONTINUED
- --------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--2.0%
----------------------------------------------------------------------------
$ 45,000,000 7.750%-9.250%, 1/15/1996-3/31/1996 $ 45,653,539
---------------------------------------------------------------------------- ----------------
TOTAL SHORT-TERM OBLIGATIONS 703,516,381
---------------------------------------------------------------------------- ----------------
(C) REPURCHASE AGREEMENTS--70.9%
- --------------------------------------------------------------------------------------------
335,000,000 BT Securities Corp., 5.840%, dated 7/31/1995, due 8/1/1995 335,000,000
----------------------------------------------------------------------------
27,200,000 BZW Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 27,200,000
----------------------------------------------------------------------------
50,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 50,000,000
----------------------------------------------------------------------------
40,000,000 Deutsche Bank Government Securities, Inc., 5.870%, dated
7/31/1995, due 8/1/1995 40,000,000
----------------------------------------------------------------------------
240,000,000 Goldman, Sachs and Co., 5.870%, dated 7/31/1995, due 8/1/1995 240,000,000
----------------------------------------------------------------------------
110,000,000 HSBC Securities, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
110,000,000 Harris, Nesbitt, Thomson Securities, Inc., 5.820%, dated
7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
25,000,000 J.P. Morgan Securities, Inc., 5.870%, dated 7/31/1995, due
8/1/1995 25,000,000
----------------------------------------------------------------------------
110,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 110,000,000
----------------------------------------------------------------------------
100,000,000 Nomura Securities International, Inc., 5.860%, dated 7/31/1995, due 8/1/1995 100,000,000
----------------------------------------------------------------------------
110,000,000 Smith Barney, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
80,000,000 Swiss Bank Capital Markets, 5.840%, dated 7/31/1995, due
8/1/1995 80,000,000
----------------------------------------------------------------------------
110,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
43,000,000 (d)CS First Boston Corp., 5.770%, dated 7/14/1995, due 8/14/1995 43,000,000
----------------------------------------------------------------------------
28,000,000 (d)CS First Boston Corp., 5.800%, dated 7/7/1995, due 8/7/1995 28,000,000
----------------------------------------------------------------------------
45,000,000 (d)Goldman, Sachs & Co., 5.750%, dated 7/7/1995, due 9/5/1995 45,000,000
----------------------------------------------------------------------------
</TABLE>
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ---------------------------------------------------------------------------- ----------------
(C) REPURCHASE AGREEMENTS--CONTINUED
- --------------------------------------------------------------------------------------------
$ 44,000,000 (d)Goldman, Sachs & Co., 5.750%, dated 7/25/1995, due 10/23/1995 $ 44,000,000
---------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 1,607,200,000
---------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $ 2,310,716,381
---------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at time of purchase.
(b) Current rate and next demand date shown.
(c) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,265,621,228) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements.)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 1,607,200,000
- -----------------------------------------------------------------------------
Investments in securities 703,516,381
- ----------------------------------------------------------------------------- ----------------
Total investments in securities, at amortized cost and value $ 2,310,716,381
- -----------------------------------------------------------------------------------------------
Cash 1,277,143
- -----------------------------------------------------------------------------------------------
Income receivable 4,063,752
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 50,790
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 2,316,108,066
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------
Payable for investments purchased 33,980,946
- -----------------------------------------------------------------------------
Payable for shares redeemed 8,642,732
- -----------------------------------------------------------------------------
Income distribution payable 7,242,088
- -----------------------------------------------------------------------------
Accrued expenses 621,072
- ----------------------------------------------------------------------------- ----------------
Total liabilities 50,486,838
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 2,265,621,228 shares outstanding $ 2,265,621,228
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
- -----------------------------------------------------------------------------------------------
($1,926,515,833 / 1,926,515,833 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
- -----------------------------------------------------------------------------------------------
($339,105,395 / 339,105,395 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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 82,570,212
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,842,786
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 1,075,995
- ------------------------------------------------------------------------------------
Custodian fees 164,968
- ------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 51,116
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 8,207
- ------------------------------------------------------------------------------------
Auditing fees 11,809
- ------------------------------------------------------------------------------------
Legal fees 4,496
- ------------------------------------------------------------------------------------
Portfolio accounting fees 149,536
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 3,183,649
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 369,663
- ------------------------------------------------------------------------------------
Share registration costs 561,996
- ------------------------------------------------------------------------------------
Printing and postage 23,120
- ------------------------------------------------------------------------------------
Insurance premiums 16,366
- ------------------------------------------------------------------------------------
Taxes 6,980
- ------------------------------------------------------------------------------------
Miscellaneous 4,704
- ------------------------------------------------------------------------------------ ------------
Total expenses 8,475,391
- ------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $ 2,063,842
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 3,183,649 5,247,491
- ---------------------------------------------------------------------- ------------ ------------
Net expenses 3,227,900
- -------------------------------------------------------------------------------------------------- -------------
Net investment income $ 79,342,312
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 79,342,312 $ 22,768,833
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (71,018,165) (22,768,833)
- ----------------------------------------------------------------------------
Institutional Service Shares (8,324,147) 0
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from distributions to shareholders (79,342,312) (22,768,833)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of Shares 8,123,000,879 3,045,297,053
- ----------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of distributions
declared 19,779,451 1,181,007
- ----------------------------------------------------------------------------
Cost of Shares redeemed (6,641,037,966) (2,989,745,626)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 1,501,742,364 56,732,434
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 1,501,742,364 56,732,434
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 763,878,864 707,146,430
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 2,265,621,228 $ 763,878,864
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust consists of six diversified portfolios. The
financial statements included herein are only those of Government Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,265,621,228.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
INSTITUTIONAL SHARES 1995 1994
- ------------------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Shares sold 7,200,004,553 3,045,297,053
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 16,152,849 1,181,007
- ------------------------------------------------------------------------------
Shares redeemed (6,053,520,182) (2,989,745,626)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional share transactions 1,162,637,220 56,732,434
- ------------------------------------------------------------------------------ ---------------- ----------------
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
INSTITUTIONAL SERVICE SHARES 1995(A) 1994
- ------------------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Shares sold 922,996,326 --
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,626,602 --
- ------------------------------------------------------------------------------
Shares redeemed (587,517,784) --
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional Service share transactions 339,105,144 --
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Fund share transactions 1,501,742,364 56,732,434
- ------------------------------------------------------------------------------ ---------------- ----------------
</TABLE>
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), provides the Fund
with administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily chose to waive a portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Fserv also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
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, 1995, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Government Obligations Fund
Institutional Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, MA 02266-8600
- -----------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, MA 02266-8600
- -----------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
GOVERNMENT
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- --------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N104
G01066-01 (3/96)
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 diversified portfolio of
Money Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in U.S. government securities to
provide current income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 4
Regulatory Compliance 5
TRUST INFORMATION 5
- ------------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 7
NET ASSET VALUE 7
- ------------------------------------------------------
INVESTING IN THE FUND 8
- ------------------------------------------------------
Share Purchases 8
Minimum Investment Required 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 9
REDEEMING SHARES 9
- ------------------------------------------------------
By Mail 9
Telephone Redemption 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
- ------------------------------------------------------
Voting Rights 10
Massachusetts Partnership Law 11
TAX INFORMATION 11
- ------------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 11
OTHER CLASSES OF SHARES 11
- ------------------------------------------------------
PERFORMANCE INFORMATION 12
- ------------------------------------------------------
FINANCIAL STATEMENTS 13
- ------------------------------------------------------
REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS 22
- ------------------------------------------------------
ADDRESSES 23
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.05%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.40%
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 0.60% absent the voluntary
waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION". WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $5 $14 $25 $57
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
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>
PERIOD ENDED
JULY 31, 1995(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income 0.05
- ---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------------------------
Distributions from net investment income (0.05)
- --------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- --------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 5.31%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses 0.45%(c)
- ---------------------------------------------------------------------------------------------
Net investment income 5.63%(c)
- ---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.15%(c)
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $339,105
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from August 1, 1994, (date of initial
public investment) to July 31, 1995. For the period from the effective
date, July 5, 1994 to July 31, 1994, all net investment income was
distributed to the Fund's adviser.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Service Shares of the Fund, which are designed primarily for financial
institutions, financial intermediaries, and institutional investors as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing in short-term U.S. government securities. A
minimum initial investment of $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 following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio of
U.S. government securities maturing in thirteen months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise, the
investment policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities. These
instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These instrumentalities are supported by:
the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument for
a percentage of its cash value with an agreement to buy it back on a set date)
or pledge securities except, under certain circumstances, the Fund may borrow
up to one-third of the value of its total assets and pledge up to 15% of the
value of its total assets to secure such borrowings.
The above investment limitation cannot be changed without shareholder approval.
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 may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities,
including repurchase agreements providing for settlement in more than seven days
after notice.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors
are owned by a trust, the trustees of which are John F. Donahue, Chairman
and Trustee of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's
son, J. Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of the Institutional Service Shares, computed at an annual
rate, to obtain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Government Obligations Fund--Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Fund-- Institutional Service Shares to: Federated Services Company,
Government Obligations Fund, P.O. Box 8600, Boston, MA 02266-8600. Orders by
mail are considered received when payment by check is converted into federal
funds. This is normally the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
accounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Government Obligations Fund--Institutional Service
Shares; shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road--2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 3:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 3:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Putnam Trust Company, Greenwich, CT, owned approximately 118,529,400 shares
(34.82%) of the voting securities of the Fund's Institutional Service Shares
and, therefore, may, for certain purposes, be deemed to control the Fund and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies. The Fund will be
treated as a single, separate entity for federal income tax purposes so that
income (including capital gains) and losses realized by the Trust's other
portfolios will not be combined for tax purposes with those realized by the
Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity, and 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 Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
GOVERNMENT OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ---------------------------------------------------------------------------- ----------------
SHORT-TERM OBLIGATIONS--31.1%
- --------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK, DISCOUNT NOTES--0.5%
----------------------------------------------------------------------------
$ 11,000,000 (a)6.578%, 2/23/1996 $ 10,611,633
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN BANK, DISCOUNT NOTES--3.4%
----------------------------------------------------------------------------
78,280,000 (a)6.229%-7.00%, 11/2/1995-1/16/1996 76,473,379
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN BANK, FLOATING RATE NOTES--3.5%
----------------------------------------------------------------------------
78,500,000 (b)5.715%-5.790%, 8/1/95 78,449,946
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN BANK, DISCOUNT NOTES--2.8%
----------------------------------------------------------------------------
63,500,000 (a)6.015%-6.850%, 2/28/1996-6/13/1996 63,554,612
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN MORTGAGE CORP., DISCOUNT NOTES--0.6%
----------------------------------------------------------------------------
13,165,000 (a)6.798%-7.013%, 11/1/1995-2/8/1996 12,837,593
---------------------------------------------------------------------------- ----------------
FEDERAL HOME LOAN MORTGAGE CORP., FLOATING RATE NOTES--0.7%
----------------------------------------------------------------------------
16,500,000 (b)5.720%, 8/1/95 16,499,593
---------------------------------------------------------------------------- ----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--10.6%
----------------------------------------------------------------------------
246,920,000 (a)5.755%-6.399%, 8/17/1995-4/15/1996 241,643,739
---------------------------------------------------------------------------- ----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, FLOATING RATE NOTES--2.2%
----------------------------------------------------------------------------
50,000,000 (b)5.740%-5.880%, 8/1/95 49,995,969
---------------------------------------------------------------------------- ----------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DISCOUNT NOTES--0.5%
----------------------------------------------------------------------------
11,000,000 (a)5.500%, 6/12/1996 10,961,811
---------------------------------------------------------------------------- ----------------
STUDENT LOAN MARKETING ASSOCIATION, DISCOUNT NOTES--0.4%
----------------------------------------------------------------------------
8,000,000 (a)6.752%, 2/21/1996 8,007,761
---------------------------------------------------------------------------- ----------------
STUDENT LOAN MARKETING ASSOCIATION, FLOATING RATE NOTES--2.4%
----------------------------------------------------------------------------
55,230,000 (b)5.790%-6.040%, 8/7/95 55,243,249
---------------------------------------------------------------------------- ----------------
U.S. TREASURY BILLS--1.5%
----------------------------------------------------------------------------
34,500,000 (a)5.270%-6.505%, 8/24/1995-6/27/1996 33,583,557
---------------------------------------------------------------------------- ----------------
</TABLE>
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- ---------------------------------------------------------------------------- ----------------
<C> <S> <C>
SHORT-TERM OBLIGATIONS--CONTINUED
- --------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--2.0%
----------------------------------------------------------------------------
$ 45,000,000 7.750%-9.250%, 1/15/1996-3/31/1996 $ 45,653,539
---------------------------------------------------------------------------- ----------------
TOTAL SHORT-TERM OBLIGATIONS 703,516,381
---------------------------------------------------------------------------- ----------------
(C) REPURCHASE AGREEMENTS--70.9%
- --------------------------------------------------------------------------------------------
335,000,000 BT Securities Corp., 5.840%, dated 7/31/1995, due 8/1/1995 335,000,000
----------------------------------------------------------------------------
27,200,000 BZW Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 27,200,000
----------------------------------------------------------------------------
50,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 50,000,000
----------------------------------------------------------------------------
40,000,000 Deutsche Bank Government Securities, Inc., 5.870%, dated
7/31/1995, due 8/1/1995 40,000,000
----------------------------------------------------------------------------
240,000,000 Goldman, Sachs and Co., 5.870%, dated 7/31/1995, due 8/1/1995 240,000,000
----------------------------------------------------------------------------
110,000,000 HSBC Securities, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
110,000,000 Harris, Nesbitt, Thomson Securities, Inc., 5.820%, dated
7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
25,000,000 J.P. Morgan Securities, Inc., 5.870%, dated 7/31/1995, due
8/1/1995 25,000,000
----------------------------------------------------------------------------
110,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 110,000,000
----------------------------------------------------------------------------
100,000,000 Nomura Securities International, Inc., 5.860%, dated 7/31/1995, due 8/1/1995 100,000,000
----------------------------------------------------------------------------
110,000,000 Smith Barney, Inc., 5.870%, dated 7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
80,000,000 Swiss Bank Capital Markets, 5.840%, dated 7/31/1995, due
8/1/1995 80,000,000
----------------------------------------------------------------------------
110,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 110,000,000
----------------------------------------------------------------------------
43,000,000 (d)CS First Boston Corp., 5.770%, dated 7/14/1995, due 8/14/1995 43,000,000
----------------------------------------------------------------------------
28,000,000 (d)CS First Boston Corp., 5.800%, dated 7/7/1995, due 8/7/1995 28,000,000
----------------------------------------------------------------------------
45,000,000 (d)Goldman, Sachs & Co., 5.750%, dated 7/7/1995, due 9/5/1995 45,000,000
----------------------------------------------------------------------------
</TABLE>
GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ---------------------------------------------------------------------------- ----------------
(C) REPURCHASE AGREEMENTS--CONTINUED
- --------------------------------------------------------------------------------------------
$ 44,000,000 (d)Goldman, Sachs & Co., 5.750%, dated 7/25/1995, due 10/23/1995 $ 44,000,000
---------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 1,607,200,000
---------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $ 2,310,716,381
---------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at time of purchase.
(b) Current rate and next demand date shown.
(c) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,265,621,228) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements.)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 1,607,200,000
- -----------------------------------------------------------------------------
Investments in securities 703,516,381
- ----------------------------------------------------------------------------- ----------------
Total investments in securities, at amortized cost and value $ 2,310,716,381
- -----------------------------------------------------------------------------------------------
Cash 1,277,143
- -----------------------------------------------------------------------------------------------
Income receivable 4,063,752
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 50,790
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 2,316,108,066
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------
Payable for investments purchased 33,980,946
- -----------------------------------------------------------------------------
Payable for shares redeemed 8,642,732
- -----------------------------------------------------------------------------
Income distribution payable 7,242,088
- -----------------------------------------------------------------------------
Accrued expenses 621,072
- ----------------------------------------------------------------------------- ----------------
Total liabilities 50,486,838
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 2,265,621,228 shares outstanding $ 2,265,621,228
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
- -----------------------------------------------------------------------------------------------
($1,926,515,833 / 1,926,515,833 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
- -----------------------------------------------------------------------------------------------
($339,105,395 / 339,105,395 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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 82,570,212
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,842,786
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 1,075,995
- ------------------------------------------------------------------------------------
Custodian fees 164,968
- ------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 51,116
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 8,207
- ------------------------------------------------------------------------------------
Auditing fees 11,809
- ------------------------------------------------------------------------------------
Legal fees 4,496
- ------------------------------------------------------------------------------------
Portfolio accounting fees 149,536
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 3,183,649
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 369,663
- ------------------------------------------------------------------------------------
Share registration costs 561,996
- ------------------------------------------------------------------------------------
Printing and postage 23,120
- ------------------------------------------------------------------------------------
Insurance premiums 16,366
- ------------------------------------------------------------------------------------
Taxes 6,980
- ------------------------------------------------------------------------------------
Miscellaneous 4,704
- ------------------------------------------------------------------------------------ ------------
Total expenses 8,475,391
- ------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $ 2,063,842
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 3,183,649 5,247,491
- ---------------------------------------------------------------------- ------------ ------------
Net expenses 3,227,900
- -------------------------------------------------------------------------------------------------- -------------
Net investment income $ 79,342,312
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 79,342,312 $ 22,768,833
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (71,018,165) (22,768,833)
- ----------------------------------------------------------------------------
Institutional Service Shares (8,324,147) 0
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from distributions to shareholders (79,342,312) (22,768,833)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of Shares 8,123,000,879 3,045,297,053
- ----------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of distributions
declared 19,779,451 1,181,007
- ----------------------------------------------------------------------------
Cost of Shares redeemed (6,641,037,966) (2,989,745,626)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 1,501,742,364 56,732,434
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 1,501,742,364 56,732,434
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 763,878,864 707,146,430
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 2,265,621,228 $ 763,878,864
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust consists of six diversified portfolios. The
financial statements included herein are only those of Government Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares: Institutional Shares and Institutional
Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,265,621,228.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
INSTITUTIONAL SHARES 1995 1994
- ------------------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Shares sold 7,200,004,553 3,045,297,053
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 16,152,849 1,181,007
- ------------------------------------------------------------------------------
Shares redeemed (6,053,520,182) (2,989,745,626)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional share transactions 1,162,637,220 56,732,434
- ------------------------------------------------------------------------------ ---------------- ----------------
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
INSTITUTIONAL SERVICE SHARES 1995(A) 1994
- ------------------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Shares sold 922,996,326 --
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,626,602 --
- ------------------------------------------------------------------------------
Shares redeemed (587,517,784) --
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional Service share transactions 339,105,144 --
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Fund share transactions 1,501,742,364 56,732,434
- ------------------------------------------------------------------------------ ---------------- ----------------
</TABLE>
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), provides the Fund
with administrative personnel and services. The FAS fee is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during the
period of the Administrative Services Agreement shall be at least $125,000 per
portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily chose to waive a portion of its fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Fserv also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
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, 1995, the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the periods
presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Government Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- -----------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and Trust Company P.O. Box 8600
Boston, MA 02266-8600
- -----------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, MA 02266-8600
- -----------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
GOVERNMENT
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- --------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-37779
Cusip 60934N807
G01066-02 (3/96)
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 diversified portfolio of
Money Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in short-term U.S. government
securities to achieve current income consistent with stability of principal and
liquidity. The Fund's investment strategy is intended to enable the Fund to
provide shareholders with dividends that are exempt from state and local income
taxation to the extent permissible by federal and state law. Unless otherwise
exempt, shareholders are required to pay federal income tax on any dividends.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 4
Regulatory Compliance 5
TRUST INFORMATION 5
- ------------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 6
Expenses of the Fund and
Institutional Shares 7
NET ASSET VALUE 8
- ------------------------------------------------------
INVESTING IN THE FUND 8
- ------------------------------------------------------
Share Purchases 8
Minimum Investment Required 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING SHARES 9
- ------------------------------------------------------
By Mail 9
Telephone Redemption 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 11
- ------------------------------------------------------
Voting Rights 11
Massachusetts Partnership Law 11
TAX INFORMATION 11
- ------------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and
Personal Property Taxes 12
OTHER CLASSES OF SHARES 12
- ------------------------------------------------------
PERFORMANCE INFORMATION 12
- ------------------------------------------------------
FINANCIAL STATEMENTS 14
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 21
- ------------------------------------------------------
ADDRESSES 22
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)........................................................................ 0.00%
12b-1 Fee............................................................................................... None
Total Other Expenses (after expense reimbursement)...................................................... 0.20%
Shareholder Services Fee (after waiver)(2).............................................. 0.00%
Total Operating Expenses(3)................................................................... 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is 0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.85% absent the voluntary
waivers of the management fee, a portion of the shareholder services fee and
the voluntary reimbursement of certain other operating expenses.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND" AND "TRUST INFORMATION." WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and
(2) redemption at the end of each time period......................... $2 $6 $11 $26
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 21.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995(A)
<S> <C>
- ---------------------------------------------------------------------------------------------- -------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.01
- ----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------
Distributions from net investment income (0.01)
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 0.94%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 0.20%(c)
- ----------------------------------------------------------------------------------------------
Net investment income 5.78%(c)
- ----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.65%(c)
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $3,070
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 2, 1995 (date of initial
public investment) to July 31, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions,
financial intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
investing in short-term U.S. government securities. A minimum initial investment
of $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 current income consistent with stability
of principal and liquidity. This investment objective cannot be changed without
shareholder approval. The Fund's investment strategy is intended to enable the
Fund to provide shareholders with dividends that are exempt from state and local
income taxation to the extent permissible by federal and state law. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. government
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, the investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned directly, pay
interest exempt from state personal income tax. Therefore, dividends paid by the
Fund may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities. These
instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These instrumentalities are supported by:
the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
the credit of the agency or instrumentality.
AGENCY MASTER DEMAND NOTES. The Fund may enter into master demand notes
with various federal agencies and instrumentalities. Under a master demand
note, the Fund has the right to increase or decrease the amount of the note
on a daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon seven
or more days notice by either the Fund or the borrower and bear interest at
a variable rate. The Fund relies on master demand notes, in part, to
provide daily liquidity. To the extent that the Fund cannot obtain
liquidity through master demand notes, it may be required to maintain a
larger cash position, invest more assets in securities with current
maturities or dispose of assets at a gain or loss to maintain sufficient
liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
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 may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7.
The Fund may change these operational policies to reflect changes in the laws
and regulations without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Administrative Services, the Fund's investment adviser, subject to direction by
the Trustees. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Administrative Services, a Delaware
business trust, organized on June 14, 1990, is a registered investment
adviser under the Investment Advisers Act of 1940. It is a subsidiary of
Federated Investors. All of the Class A (voting) shares of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue,
Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and Mr.
Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment companies
and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. 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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of Fund shares, computed at an annual rate, to obtain
certain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services. Financial institutions will
receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
EXPENSES OF THE FUND AND INSTITUTIONAL SHARES
Holders of shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, no expenses are allocated to Institutional Shares as a class.
However, the Trustees reserve the right to allocate certain expenses to holders
of shares as it deems appropriate ("class expenses"). In any case, class
expenses would be limited to: transfer agent fees as identified by the transfer
agent as attributable to holders of shares; printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; registration fees paid to the
Securities and Exchange Commission and registration fees paid to state
securities commissions; expenses related to administrative personnel and
services as required to support holders of shares; legal fees relating solely to
shares; and Trustees' fees incurred as a result of issues relating solely to
shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 1:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Government Obligations Tax-Managed Fund--Institutional Shares; Fund Number
(this number can be found on the account statement or by contacting the Fund);
Group Number or Order Number; Nominee or Institution Name; and ABA Number
011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Tax-Managed Fund--Institutional Shares to: Federated Services
Company, Government Obligations Tax-Managed Fund, P.O. Box 8600, Boston, MA
02266-8600. Orders by mail are considered received when payment by check is
converted into federal funds. This is normally the next business day after the
check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
accounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Tax-Managed Fund, Federated Services Company, P.O. Box 8600, Boston, MA
02266-8600. The written request should state: Government Obligations Tax-Managed
Fund--Institutional Shares; shareholder's name; the account number; and the
share or dollar amount requested. Sign the request exactly as the shares are
registered. Shareholders should call the Fund for assistance in redeeming by
mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by insured mail with the written request to Federated Services
Company, 500 Victory Road--2nd Floor, North Quincy, MA 02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 1:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 1:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Citizens Trust Co., Providence, RI, owned approximately 38,117,429 shares
(84.29%) of the voting securities of the Fund's Institutional Shares; and
Anderson & Co., Philadelphia, PA, owned approximately 76,759,107 shares (100%)
of the voting securities of the Fund's Institutional Service Shares and,
therefore, may, for certain purposes, be deemed to control the Fund and be able
to affect the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. To the extent permissible by federal and state
law, the Fund is structured to provide shareholders with income that is exempt
or excluded from taxation at the state and local level. Substantially all
dividends paid to shareholders residing in certain states will be exempt or
excluded from state income tax. Many states, by statute, judicial decision or
administrative action, have taken the position that dividends of a regulated
investment company such as the Fund that are attributable to interest on
obligations of the U.S. Treasury and certain U.S. government agencies and
instrumentalities are the functional equivalent of interest from such
obligations and are, therefore, exempt from state and local income taxes.
Shareholders should be aware of the application of their state and local tax
laws to investments in the Fund. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary
capacity, and 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 Service Shares are distributed with no 12b-1 fees, but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and total
return for shares. The performance figures will be calculated separately for
each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--100.2%
- --------------------------------------------------------------------------------------------------
$ 20,000,000 (a)Federal Farm Credit Bank Discount Note, 5.750%, 8/1/1995 $ 20,000,000
-----------------------------------------------------------------------------------
59,400,000 (b)Student Loan Marketing Association, 5.790%, 8/1/1995 59,400,000
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES 79,400,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 79,400,000
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) This issue shows the rate of discount at the time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($79,235,107) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements.)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 79,400,000
- ---------------------------------------------------------------------------------------------------
Cash 20,148
- ---------------------------------------------------------------------------------------------------
Income receivable 211,661
- ---------------------------------------------------------------------------------------------------
Deferred expenses 28,667
- --------------------------------------------------------------------------------------------------- -------------
Total assets 79,660,476
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Income distribution payable $ 367,554
- ---------------------------------------------------------------------------------------
Accrued expenses 57,815
- --------------------------------------------------------------------------------------- ----------
Total liabilities 425,369
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 79,235,107 shares outstanding $ 79,235,107
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------
Institutional Shares:
($3,070,142 / 3,070,142 shares outstanding) $1.00
- --------------------------------------------------------------------------------------------------- -------------
Institutional Service Shares:
($76,164,965 / 76,164,965 shares outstanding) $1.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF OPERATIONS
PERIOD ENDED JULY 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Interest $ 734,661
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------------
Investment advisory fee $ 24,484
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 26,329
- ------------------------------------------------------------------------------------------
Custodian fees 4,500
- ------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 1,988
- ------------------------------------------------------------------------------------------
Legal fees 248
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 12,750
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 952
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 29,653
- ------------------------------------------------------------------------------------------
Share registration costs 1,833
- ------------------------------------------------------------------------------------------
Printing and postage 496
- ------------------------------------------------------------------------------------------
Miscellaneous 390
- ------------------------------------------------------------------------------------------ ----------
Total expenses 103,623
- ------------------------------------------------------------------------------------------
Deduct--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $ 24,484
- -------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 952
- -------------------------------------------------------------------------------
Reimbursement of other operating expenses 23,511 48,947
- ------------------------------------------------------------------------------- --------- ----------
Net expenses 54,676
- ------------------------------------------------------------------------------------------------------ ----------
Net investment income $ 679,985
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
* For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------------------------
Net investment income $ 679,985
- ------------------------------------------------------------------------------------------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------------------------
Distributions from net investment income:
- ------------------------------------------------------------------------------------------------
Institutional Shares (22,005)
- ------------------------------------------------------------------------------------------------
Institutional Service Shares (657,980)
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets resulting from distributions to shareholders (679,985)
- ------------------------------------------------------------------------------------------------ ----------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------------------------------------
Proceeds from sale of Shares 95,754,802
- ------------------------------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 304,922
- ------------------------------------------------------------------------------------------------
Cost of Shares redeemed (16,824,617)
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets resulting from share transactions 79,235,107
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets 79,235,107
- ------------------------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------------------------
Beginning of period 0
- ------------------------------------------------------------------------------------------------ ----------------
End of period $ 79,235,107
- ------------------------------------------------------------------------------------------------ ----------------
</TABLE>
* For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end management investment
company. The Trust consists of six diversified portfolios. The financial
statements included herein present only those of Government Obligations
Tax-Managed Fund (the "Fund"). The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $79,235,107.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
--------------
<S> <C>
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------------------------
Shares sold 4,997,518
- -----------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 2
- -----------------------------------------------------------------------------------------------
Shares redeemed (1,927,378)
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from Institutional Shares transactions 3,070,142
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
* For the period from June 2, 1995 (date of initial public investment) to July
31, 1995.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995**
--------------
<S> <C>
INSTITUTIONAL SERVICE SHARES
- -----------------------------------------------------------------------------------------------
Shares sold 90,757,284
- -----------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 304,920
- -----------------------------------------------------------------------------------------------
Shares redeemed (14,897,239)
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from Institutional Service Shares transactions 76,164,965
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from share transactions 79,235,107
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
** For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Administrative Services ("FAS"), the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to .20 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--FAS, under the Administrative Services Agreement, provides
the Fund with administrative personnel and services. The FAS fee is based on the
level of average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors for the period. The administrative fee received during
the period of the Administrative Services Agreement shall be at least $125,000
per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a portion of this fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $26,061 were initially borne
by the Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses during the five year period following May 7, 1995 (the
date the Fund first became effective). For the period ended July 31, 1995, the
Fund paid $290 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Tax-Managed Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Tax-Managed Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of July 31, 1995, the related statement of operations,
the statement of changes in net assets, and the financial highlights for the
period from May 30, 1995 (date of initial public investment) to July 31, 1995.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of July 31, 1995, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Tax-Managed Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the period from May
30, 1995 (date of initial public investment) to July 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Government Obligations Tax-Managed Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Administrative Services Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent & Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N856
G01140-01 (3/96)
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 diversified
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in short-term
U.S. government securities to achieve current income consistent with stability
of principal and liquidity. The Fund's investment strategy is intended to enable
the Fund to provide shareholders with dividends that are exempt from state and
local income taxation to the extent permissible by federal and state law. Unless
otherwise exempt, shareholders are required to pay federal income tax on any
dividends.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations
Regulatory Compliance 5
TRUST INFORMATION 5
- ------------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund
Expenses of the Fund and Institutional
Service Shares 7
NET ASSET VALUE 8
- ------------------------------------------------------
INVESTING IN THE FUND 8
- ------------------------------------------------------
Share Purchases 8
Minimum Investment Required 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9
REDEEMING SHARES 9
- ------------------------------------------------------
By Mail 9
Telephone Redemption 10
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 11
- ------------------------------------------------------
Voting Rights 11
Massachusetts Partnership Law 11
TAX INFORMATION 11
- ------------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and
Personal Property Taxes 12
OTHER CLASSES OF SHARES 12
- ------------------------------------------------------
PERFORMANCE INFORMATION 12
- ------------------------------------------------------
FINANCIAL STATEMENTS 14
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 21
- ------------------------------------------------------
ADDRESSES 22
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.00%
12b-1 Fee............................................................................................... None
Total Other Expenses (after expense reimbursement)...................................................... 0.45%
Shareholder Services Fee................................................................ 0.25%
Total Operating Expenses (2).................................................................. 0.45%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of the
management fee. The adviser can terminate this voluntary waiver at any time
at its sole discretion. The maximum management fee is 0.20%.
(2) The total operating expenses would have been 0.85% absent the voluntary
waiver of the management fee and the voluntary reimbursement of certain
other operating expenses.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $5 $14 $25 $57
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 21.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995(A)
<S> <C>
-------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------------
Net investment income 0.01
- ----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------
Distributions from net investment income (0.01)
- ---------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ---------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 0.95%
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses 0.45%(c)
- ----------------------------------------------------------------------------------------------
Net investment income 5.55%(c)
- ----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.40%(c)
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $76,165
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from May 30, 1995 (date of initial
public investment) to July 31, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Service Shares and
Institutional Shares. This prospectus relates only to Institutional Service
Shares of the Fund, which are designed primarily for financial institutions,
financial intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
investing in short-term U.S. government securities. A minimum initial investment
of $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 current income consistent with stability
of principal and liquidity. This investment objective cannot be changed without
shareholder approval. The Fund's investment strategy is intended to enable the
Fund to provide shareholders with dividends that are exempt from state and local
income taxation to the extent permissible by federal and state law. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. government
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, the investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned directly, pay
interest exempt from state personal income tax. Therefore, dividends paid by the
Fund may be exempt from state personal income tax.
ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities. These
instruments are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. These securities include, but are not limited
to:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These instrumentalities are supported by:
the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
the credit of the agency or instrumentality.
AGENCY MASTER DEMAND NOTES. The Fund may enter into master demand notes
with various federal agencies and instrumentalities. Under a master demand
note, the Fund has the right to increase or decrease the amount of the note
on a daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon seven
or more days notice by either the Fund or the borrower and bear interest at
a variable rate. The Fund relies on master demand notes, in part, to
provide daily liquidity. To the extent that the Fund cannot obtain
liquidity through master demand notes, it may be required to maintain a
larger cash position, invest more assets in securities with current
maturities or dispose of assets at a gain or loss to maintain sufficient
liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings.
The above investment limitation cannot be changed without shareholder approval.
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 may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid securities.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7.
The Fund may change these operational policies to reflect changes in the laws
and regulations without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Administrative Services, the Fund's investment adviser, subject to direction by
the Trustees. The adviser continually conducts investment research and
supervision for the Fund and is responsible for the purchase and sale of
portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Administrative Services, a Delaware
business trust, organized on June 14, 1990, is a registered investment
adviser under the Investment Advisers Act of 1940. It is a subsidiary of
Federated Investors. All of the Class A (voting) shares of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue,
Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and Mr.
Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment companies
and private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. 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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of Fund shares, computed at an annual rate, to obtain
certain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services. Financial institutions will
receive fees based upon shares owned by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
EXPENSES OF THE FUND AND INSTITUTIONAL SERVICE SHARES
Holders of shares pay their allocable portion of Fund and Trust expenses.
The Trust expenses for which holders of shares pay their allocable portion
include, but are not limited to: the cost of organizing the Trust and continuing
its existence; registering the Trust with federal and state securities
authorities; Trustees' fees; auditors' fees; the cost of meetings of Trustees;
legal fees of the Trust; association membership dues; and such non-recurring and
extraordinary items as may arise.
The Fund expenses for which holders of shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund;
investment advisory services; taxes and commissions; custodian fees; insurance
premiums; auditors' fees; and such non-recurring and extraordinary items as may
arise.
At present, the only expenses which are allocated specifically to Institutional
Service Shares as a class are shareholder services fees. However, the Trustees
reserve the right to allocate certain other expenses to holders of shares as it
deems appropriate ("class expenses"). In any case, class expenses would be
limited to: transfer agent fees as identified by the transfer agent as
attributable to holders of shares; printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders; registration fees paid to the Securities
and Exchange Commission and registration fees paid to state securities
commissions; expenses related to administrative personnel and services as
required to support holders of shares; legal fees relating solely to shares; and
Trustees' fees incurred as a result of issues relating solely to shares.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 1:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Government Obligations Tax-Managed Fund--Institutional Service Shares; Fund
Number (this number can be found on the account statement or by contacting the
Fund); Group Number or Order Number; Nominee or Institution Name; and ABA Number
011000028.
BY MAIL. To purchase by mail, send a check made payable to Government
Obligations Tax-Managed Fund--Institutional Service Shares to: Federated
Services Company, Government Obligations Tax-Managed Fund, P.O. Box 8600,
Boston, MA 02266-8600. Orders by mail are considered received when payment by
check is converted into federal funds. This is normally the next business day
after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
accounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Government Obligations
Tax-Managed Fund, Federated Services Company, P.O. Box 8600, Boston, MA
02266-8600. The written request should state: Government Obligations Tax-Managed
Fund--Institutional Service Shares; shareholder's name; the account number; and
the share or dollar amount requested. Sign the request exactly as the shares are
registered. Shareholders should call the Fund for assistance in redeeming by
mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by insured mail with the written request to Federated Services
Company, 500 Victory Road-2nd Floor, North Quincy, MA 02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 1:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 1:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Citizens Trust Co., Providence, RI, owned approximately 38,117,429 shares
(84.29%) of the voting securities of the Fund's Institutional Shares; and
Anderson & Co., Philadelphia, PA, owned approximately 76,759,107 shares (100%)
of the voting securities of the Fund's Institutional Service Shares and,
therefore, may for certain purposes, be deemed to control the Fund and be able
to affect the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. To the extent permissible by federal and state
law, the Fund is structured to provide shareholders with income that is exempt
or excluded from taxation at the state and local level. Substantially all
dividends paid to shareholders residing in certain states will be exempt or
excluded from state income tax. Many states, by statute, judicial decision or
administrative action, have taken the position that dividends of a regulated
investment company such as the Fund that are attributable to interest on
obligations of the U.S. Treasury and certain U.S. government agencies and
instrumentalities are the functional equivalent of interest from such
obligations and are, therefore, exempt from state and local income taxes.
Shareholders should be aware of the application of their state and local tax
laws to investments in the Fund. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity, and 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 Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are not accruing shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and total
return for shares. The performance figures will be calculated separately for
each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--100.2%
- --------------------------------------------------------------------------------------------------
$ 20,000,000 (a)Federal Farm Credit Bank Discount Note, 5.750%, 8/1/1995 $ 20,000,000
-----------------------------------------------------------------------------------
59,400,000 (b)Student Loan Marketing Association, 5.790%, 8/1/1995 59,400,000
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES 79,400,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 79,400,000
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) This issue shows the rate of discount at the time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($79,235,107) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements.)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 79,400,000
- ---------------------------------------------------------------------------------------------------
Cash 20,148
- ---------------------------------------------------------------------------------------------------
Income receivable 211,661
- ---------------------------------------------------------------------------------------------------
Deferred expenses 28,667
- --------------------------------------------------------------------------------------------------- -------------
Total assets 79,660,476
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Income distribution payable $ 367,554
- ---------------------------------------------------------------------------------------
Accrued expenses 57,815
- --------------------------------------------------------------------------------------- ----------
Total liabilities 425,369
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 79,235,107 shares outstanding $ 79,235,107
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------
Institutional Shares:
($3,070,142 / 3,070,142 shares outstanding) $1.00
- --------------------------------------------------------------------------------------------------- -------------
Institutional Service Shares:
($76,164,965 / 76,164,965 shares outstanding) $1.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF OPERATIONS
PERIOD ENDED JULY 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Interest $ 734,661
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------------
Investment advisory fee $ 24,484
- ------------------------------------------------------------------------------------------
Administrative personnel and services fee 26,329
- ------------------------------------------------------------------------------------------
Custodian fees 4,500
- ------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 1,988
- ------------------------------------------------------------------------------------------
Legal fees 248
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 12,750
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 952
- ------------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 29,653
- ------------------------------------------------------------------------------------------
Share registration costs 1,833
- ------------------------------------------------------------------------------------------
Printing and postage 496
- ------------------------------------------------------------------------------------------
Miscellaneous 390
- ------------------------------------------------------------------------------------------ ----------
Total expenses 103,623
- ------------------------------------------------------------------------------------------
Deduct--
- -------------------------------------------------------------------------------
Waiver of investment advisory fee $ 24,484
- -------------------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 952
- -------------------------------------------------------------------------------
Reimbursement of other operating expenses 23,511 48,947
- ------------------------------------------------------------------------------- --------- ----------
Net expenses 54,676
- ------------------------------------------------------------------------------------------------------ ----------
Net investment income $ 679,985
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
* For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------------------------
Net investment income $ 679,985
- ------------------------------------------------------------------------------------------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------------------------------------------
Distributions from net investment income:
- ------------------------------------------------------------------------------------------------
Institutional Shares (22,005)
- ------------------------------------------------------------------------------------------------
Institutional Service Shares (657,980)
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets resulting from distributions to shareholders (679,985)
- ------------------------------------------------------------------------------------------------ ----------------
SHARE TRANSACTIONS--
- ------------------------------------------------------------------------------------------------
Proceeds from sale of Shares 95,754,802
- ------------------------------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 304,922
- ------------------------------------------------------------------------------------------------
Cost of Shares redeemed (16,824,617)
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets resulting from share transactions 79,235,107
- ------------------------------------------------------------------------------------------------ ----------------
Change in net assets 79,235,107
- ------------------------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------------------------
Beginning of period 0
- ------------------------------------------------------------------------------------------------ ----------------
End of period $ 79,235,107
- ------------------------------------------------------------------------------------------------ ----------------
</TABLE>
* For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(See Notes which are an integral part of the Financial Statements)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end management investment
company. The Trust consists of six diversified portfolios. The financial
statements included herein present only those of Government Obligations
Tax-Managed Fund (the "Fund"). The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $79,235,107.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995*
-------------
<S> <C>
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------------------------
Shares sold 4,997,518
- -----------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 2
- -----------------------------------------------------------------------------------------------
Shares redeemed (1,927,378)
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from Institutional Shares transactions 3,070,142
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
* For the period from June 2, 1995 (date of initial public investment) to July
31, 1995.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31, 1995**
-------------
<S> <C>
INSTITUTIONAL SERVICE SHARES
- -----------------------------------------------------------------------------------------------
Shares sold 90,757,284
- -----------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 304,920
- -----------------------------------------------------------------------------------------------
Shares redeemed (14,897,239)
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from Institutional Service Shares transactions 76,164,965
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from share transactions 79,235,107
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
** For the period from May 30, 1995 (date of initial public investment) to July
31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Administrative Services ("FAS"), the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to .20 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--FAS, under the Administrative Services Agreement, provides
the Fund with administrative personnel and services. The FAS fee is based on the
level of average aggregate daily net assets of all funds advised by subsidiaries
of Federated Investors for the period. The administrative fee received during
the period of the Administrative Services Agreement shall be at least $125,000
per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a portion of this fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $26,061 were initially borne
by the Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses during the five year period following May 7, 1995 (the
date the Fund first became effective). For the period ended July 31, 1995, the
Fund paid $290 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Tax-Managed Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Tax-Managed Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule of
portfolio investments, as of July 31, 1995, the related statement of operations,
the statement of changes in net assets, and the financial highlights for the
period from May 30, 1995 (date of initial public investment) to July 31, 1995.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of July 31, 1995, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Government Obligations Tax-Managed Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the period from May
30, 1995 (date of initial public investment) to July 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Government Obligations Tax-Managed Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Administrative Services Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- -------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N849
G01140-02 (3/96)
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Prime Obligations Fund (the "Fund") offered by this
prospectus represent interests in a diversified portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in money market securities to provide current
income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Risks 7
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 8
- ------------------------------------------------------
Management of the Trust 8
Distribution of Shares 9
Administration of the Fund 9
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required
11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
- ------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 15
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 30
- ------------------------------------------------------
ADDRESSES 31
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)..................
None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)........................................................................ 0.07%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.13%
Shareholder Services Fee(2)............................................................. 0.00%
Total Operating Expenses(3)............................................................................. 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.58% absent the voluntary
waiver of a portion of the management fee and the shareholder services fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN INSTITUTIONAL SHARES" AND "TRUST INFORMATION".
WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL
FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT ASSUMING
(1) 5% ANNUAL RETURN AND (2) REDEMPTION AT THE END OF EACH TIME
PERIOD................................................................ $2 $6 $11 $26
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
PRIME OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 30.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.06 0.03 0.03 0.05 0.07 0.03
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.06) (0.03) (0.03) (0.05) (0.07) (0.03)
- ---------------------------------------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 5.65% 3.47% 3.25% 4.74% 7.30% 2.89%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- ----------------------------------------
Net investment income 5.60% 3.47% 3.20% 4.53% 6.54% 8.21%(c)
- ----------------------------------------
Expense waiver/reimbursement (d) 0.38% 0.14% 0.09% 0.10% 0.24% 0.68%(c)
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period (000
omitted) $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593 $34,777
- ----------------------------------------
</TABLE>
(a) Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions,
financial intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
investing primarily in short-term money market securities. A minimum initial
investment of $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 following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing primarily in a portfolio
of money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Unless indicated otherwise, investment policies may be
changed by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:
domestic issues of corporate debt obligations, including variable rate
demand notes;
commercial paper (including Canadian Commercial Paper and Europaper);
certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
short-term credit facilities;
asset-backed securities;
obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
other money market instruments.
The Fund invests only in instruments denominated and payable in U.S. dollars.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the Fund
with the right to tender the security for repurchase at its stated principal
amount plus accrued interest. Such securities typically bear interest at a rate
that is intended to cause the securities to trade at par. The interest rate may
float or be adjusted at regular intervals (ranging from daily to annually), and
is normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit the
Fund to tender the security at the time of each interest rate adjustment or at
other fixed intervals. See "Demand Features." The Fund treats variable rate
demand notes as maturing on the later of the date of the next interest rate
adjustment or the date on which the Fund may next tender the security for
repurchase.
BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued by an
institution having capital, surplus and undivided profits over $100 million, or
insured by the Bank Insurance Fund ("BIF") or the Savings Association Insurance
Fund ("SAIF"). Bank Instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"). The Fund will treat securities credit enhanced with a bank's
letter of credit as Bank Instruments.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial interests in
special purpose trusts, limited partnership interests, or commercial paper or
other debt securities issued by a special purpose corporation. Although the
securities often have some form of credit or liquidity enhancement, payments on
the securities depend predominantly upon collections of the loans and
receivables held by the issuer.
SHORT-TERM CREDIT FACILITIES. The Fund may enter into, or acquire
participations in, short-term borrowing arrangements with corporations,
consisting of either a short-term revolving credit facility or a master note
agreement payable upon demand. Under these arrangements, the borrower may
reborrow funds during the term of the facility. The Fund treats any commitments
to provide such advances as a standby commitment to purchase the borrower's
notes.
RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), D-1 (+ or -) by Duff & Phelps, or F-1 (+ or -) by Fitch
-
Investors Service, Inc. ("Fitch") are all considered rated in the highest
short-term rating category. The Fund will follow applicable regulations in
determining whether a security rated by more than one NRSRO can be treated as
being in the highest short-term rating category; currently, such securities must
be rated by two NRSROs in their highest rating category. See "Regulatory
Compliance."
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund typically
evaluates the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, the Fund
will treat credit-enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under many circumstances
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/ dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law, and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees of the Fund are quite liquid. The Fund
intends, therefore, to treat the restricted securities which meet the criteria
for liquidity established by the Trustees, including Section 4(2) commercial
paper, as determined by the Fund's investment adviser, as liquid and not subject
to the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not subject
such paper to the limitation applicable to restricted securities.
CONCENTRATION OF INVESTMENTS. The Fund may invest 25% or more of its total
assets in commercial paper issued by finance companies. The finance companies in
which the Fund intends to invest can be divided into two categories, commercial
finance companies and consumer finance companies. Commercial finance companies
are principally engaged in lending to corporations or other businesses. Consumer
finance companies are primarily engaged in lending to individuals. Captive
finance companies or finance subsidiaries which exist to facilitate the
marketing and financial activities of their parent will, for purposes of
industry concentration, be classified in the industry of their parent's
corporation. Concentrating investments in any one industry may subject the Fund
to more risk than if it did not concentrate investments.
In addition, the Fund may invest 25% or more of the value of its total assets in
instruments issued by a U.S. branch of a domestic bank or savings and loan
having capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject to
different risks than domestic obligations of domestic banks or corporations.
Examples of these risks include international economic and political
developments, foreign governmental restrictions that may adversely affect the
payment of principal or interest, foreign withholding or other taxes on interest
income, difficulties in obtaining or enforcing a judgment against the issuing
entity, and the possible impact of interruptions in the flow of international
currency transactions. Risks may also exist for ECDs, ETDs, and Yankee CDs
because the banks issuing these instruments, or their domestic or foreign
branches, are not necessarily subject to the same regulatory requirements that
apply to domestic banks, such as reserve requirements, loan limitations,
examinations, accounting, auditing, recordkeeping, and the public availability
of information. These factors will be carefully considered by the Fund's adviser
in selecting investments for the Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings. This investment limitation cannot be changed without shareholder
approval. 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7 which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of the Institutional Shares, computed at an annual rate,
to obtain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Prime Obligations Fund-Institutional Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028. The Fund reserves
the right to wire redemption proceeds within seven days of a redemption request
if, in the judgment of the adviser, an earlier payment could adversely affect
the Fund. This procedure may be modified or terminated by the transfer agent or
the Fund.
BY MAIL. To purchase by mail, send a check made payable to Prime Obligations
Fund-Institutional Shares to: Federated Services Company, Prime Obligations
Fund, P.O. Box 8600, Boston, MA 02266-8600. Orders by mail are considered
received when payment by check is converted into federal funds. This is normally
the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirements for master
acccounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. The amount of dividends declared
by the Fund is based on estimates of net interest income for the Fund. Actual
income may differ from estimates; these differences, if any, will be included in
the calculation of subsequent dividends. Dividends are automatically reinvested
on payment dates in additional shares of the Fund unless cash payments are
requested by writing to the Fund. Shares purchased by wire before 5:00 p.m.
(Eastern time) begin earning dividends that day. Shares purchased by check begin
earning dividends the day after the check is converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Prime Obligations Fund,
Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The written
request should state: Prime Obligations Fund-Institutional Shares; shareholder's
name; the account number; and the share or dollar amount requested. Sign the
request exactly as the shares are registered. Shareholders should call the Fund
for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road-2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 5:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 5:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day. The Fund reserves the right to wire redemption proceeds within
seven days of a redemption request if, in the judgment of the adviser, an
earlier payment could adversely affect the Fund. This procedure may be modified
or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Peoples Bank, Bridgeport, CT, owned approximately 149,257,858 shares (36.34%) of
the voting securities of the Fund's Institutional Service Shares and, therefore,
may, for certain purposes, be deemed to control the Fund and be able to affect
the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary
capacity, 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 Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
PRIME OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
BANK NOTES--2.9%
- ----------------------------------------------------------------------------------------------
BANKING--2.9%
-----------------------------------------------------------------------------
$ 15,000,000 Bank One, Milwaukee, WI N.A., 5.960%, 9/11/1995 $ 15,000,989
-----------------------------------------------------------------------------
72,000,000 Mellon Bank NA, Pittsburgh, 6.000%-6.240%,
10/20/1995-11/28/1995 72,000,000
----------------------------------------------------------------------------- ----------------
TOTAL BANK NOTES 87,000,989
----------------------------------------------------------------------------- ----------------
(A)COMMERCIAL PAPER--62.2%
- ----------------------------------------------------------------------------------------------
BANKING--19.0%
-----------------------------------------------------------------------------
15,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank N.V., Amsterdam),
5.809%, 12/27/1995 14,651,583
-----------------------------------------------------------------------------
140,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank PLC, London),
5.709%-6.348%, 8/9/1995-1/22/1996 138,243,523
-----------------------------------------------------------------------------
108,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian Imperial Bank of
Commerce, Toronto), 5.754%-6.452%,
8/16/1995-10/23/1995 107,135,856
-----------------------------------------------------------------------------
24,700,000 City of Cleveland, (Union Bank of Switzerland, Zurich LOC), 5.950%, 10/4/1995 24,700,000
-----------------------------------------------------------------------------
79,100,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank AG, Frankfurt),
5.749%-5.841%, 10/25/1995-1/22/1996 77,608,628
-----------------------------------------------------------------------------
45,000,000 Dresdner US Finance, 5.936%-5.984%, 9/5/1995-12/21/1995 44,486,209
-----------------------------------------------------------------------------
24,000,000 J.P. Morgan & Co., Inc., 5.756%, 1/22/1996 23,351,560
-----------------------------------------------------------------------------
70,547,000 Queensland Alumina Ltd., (Credit Suisse, Zurich LOC), 5.940%-6.101%,
8/1/1995-9/14/1995 70,285,776
-----------------------------------------------------------------------------
19,800,000 Royal Bank of Canada, Montreal, 5.636%, 1/11/1996 19,308,718
-----------------------------------------------------------------------------
1,000,000 Societe Generale North America, Inc., (Guaranteed by Societe Generale,
Paris), 5.724%, 1/23/1996 972,972
-----------------------------------------------------------------------------
40,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by Toronto-Dominion Bank),
5.870%-6.390%, 9/7/1995-12/8/1995 39,464,261
----------------------------------------------------------------------------- ----------------
Total 560,209,086
----------------------------------------------------------------------------- ----------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(A)COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------------------
DIVERSIFIED--0.7%
-----------------------------------------------------------------------------
$ 20,000,000 Rockwell International Corp., 6.336%, 9/13/1995 $ 19,853,322
----------------------------------------------------------------------------- ----------------
ELECTRONICS--0.3%
-----------------------------------------------------------------------------
10,000,000 Hewlett-Packard Co., 5.918%, 9/28/1995 9,906,072
----------------------------------------------------------------------------- ----------------
FINANCE-COMMERCIAL--23.6%
-----------------------------------------------------------------------------
90,400,000 Asset Securitization Cooperative Corp., 5.740%-5.969%,
8/30/1995-10/20/1995 89,658,264
-----------------------------------------------------------------------------
122,700,000 Beta Finance, Inc., 5.630%-6.450%, 8/14/1995-1/29/1996 121,182,697
-----------------------------------------------------------------------------
80,700,000 CIESCO, Inc., 5.687%-6.356%, 8/25/1995-10/27/1995 79,963,340
-----------------------------------------------------------------------------
116,000,000 CIT Group Holdings, Inc., 5.760%-6.217%, 8/29/1995-12/22/1995 114,015,734
-----------------------------------------------------------------------------
31,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.843%-6.271%,
9/15/1995-11/7/1995 30,721,169
-----------------------------------------------------------------------------
24,620,000 Falcon Asset Securitization Corp., 5.752%-5.815%,
10/26/1995-1/22/1996 24,135,125
-----------------------------------------------------------------------------
135,000,000 General Electric Capital Corp., 5.750%-6.317%, 9/5/1995-1/23/1996 133,106,685
-----------------------------------------------------------------------------
81,575,000 PREFCO-Preferred Receivables Funding Co., 5.868%-6.113%,
8/9/1995-11/15/1995 80,720,284
-----------------------------------------------------------------------------
26,300,000 Sheffield Receivables Corp., 6.100%-6.101%, 8/9/1995-8/10/1995 26,263,600
----------------------------------------------------------------------------- ----------------
Total 699,766,898
----------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--10.7%
-----------------------------------------------------------------------------
109,000,000 Associates Corp. of North America, 5.699%-6.163%,
8/4/1995-10/31/1995 108,314,529
-----------------------------------------------------------------------------
118,700,000 Ford Credit Receivables Funding, Inc., 5.720%-6.207%,
8/24/1995-10/23/1995 117,685,863
-----------------------------------------------------------------------------
67,000,000 New Center Asset Trust, A1+/P1 Series, 6.214%-6.314%,
10/10/1995-10/20/1995 66,164,109
-----------------------------------------------------------------------------
25,000,000 Norwest Financial, Inc., 5.833%, 10/2/1995 24,752,431
----------------------------------------------------------------------------- ----------------
Total 316,916,932
----------------------------------------------------------------------------- ----------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(A)COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------------------
INSURANCE--1.6%
-----------------------------------------------------------------------------
$ 15,000,000 City of New York G.O. 1995-B, (FGIC-SPI Gtd.), 6.241%, 8/22/1995 $ 15,000,000
-----------------------------------------------------------------------------
10,175,000 Marsh & McLennan Cos., Inc., 5.944%-6.453%,
9/25/1995-12/1/1995 10,027,975
-----------------------------------------------------------------------------
22,783,000 Prospect Street Senior Portfolio, L.P., (Guaranteed by Financial Security
Assurance, Inc.), 5.805%-6.273%, 9/6/1995-11/10/1995 22,506,070
----------------------------------------------------------------------------- ----------------
Total 47,534,045
----------------------------------------------------------------------------- ----------------
MISCELLANEOUS--0.5%
-----------------------------------------------------------------------------
15,000,000 Procter & Gamble Co., 5.845%, 10/16/1995 14,817,917
----------------------------------------------------------------------------- ----------------
OIL & OIL FINANCE--1.1%
-----------------------------------------------------------------------------
33,000,000 Koch Industries, Inc., 5.851%, 8/1/1995 33,000,000
----------------------------------------------------------------------------- ----------------
TELECOMMUNICATIONS--4.7%
-----------------------------------------------------------------------------
139,620,000 AT&T Corp., 5.739%-6.373%, 8/11/1995-12/1/1995 138,331,098
----------------------------------------------------------------------------- ----------------
TOTAL COMMERCIAL PAPER 1,840,335,370
----------------------------------------------------------------------------- ----------------
CORPORATE NOTES--1.2%
- ----------------------------------------------------------------------------------------------
BANKING--1.2%
-----------------------------------------------------------------------------
33,787,467 Banc One Corp., 6.363%, 4/15/1996 33,787,468
----------------------------------------------------------------------------- ----------------
TOTAL CORPORATE NOTES 33,787,468
----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--18.3%
- ----------------------------------------------------------------------------------------------
BANKING--13.1%
-----------------------------------------------------------------------------
4,045,000 500 South Front St. L.P., Series A, (Huntington National Bank, Columbus, OH
LOC), 5.890%, 8/3/1995 4,045,000
-----------------------------------------------------------------------------
6,500,000 500 South Front St. L.P., Series B, (Huntington National Bank, Columbus, OH
LOC), 5.890%, 8/3/1995 6,500,000
-----------------------------------------------------------------------------
10,927,000 Adesa Funding Corp., (Bank One, Indianapolis, IN LOC),
5.840%, 8/3/1995 10,927,000
-----------------------------------------------------------------------------
8,455,000 Alexandria Executive Club L.P., (Huntington National Bank, Columbus, OH LOC),
5.890%, 8/3/1995 8,455,000
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------------------
$ 9,000,000 Arrow N.A., Inc., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 $ 9,000,000
-----------------------------------------------------------------------------
16,900,000 Beverly California Corp., (PNC Bank, N.A. LOC),
5.869%, 8/7/1995 16,900,000
-----------------------------------------------------------------------------
1,642,790 Bowling Green Manor L.P., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,642,790
-----------------------------------------------------------------------------
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH LOC), 6.060%, 1/3/1996 17,400,000
-----------------------------------------------------------------------------
21,558,000 Capital One Funding Corp. 1994-C, Series 1994-C, (Bank One, Cleveland, N.A.
LOC), 6.069%, 8/3/1995 21,558,000
-----------------------------------------------------------------------------
26,300,000 Capital One Funding Corp. 1995-A, (Bank One, Indianapolis, IN LOC), 5.885%,
8/3/1995 26,300,000
-----------------------------------------------------------------------------
17,446,000 Capital One Funding Corp. 1995-B, (Liberty National Bank & Trust Co. LOC),
5.840%, 8/3/1995 17,446,000
-----------------------------------------------------------------------------
1,062,337 Clyde Manor L.P., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 1,062,337
-----------------------------------------------------------------------------
2,500,000 Crystal Enterprises, Inc., Series 1995, (NBD Bank, N.A., Detroit, MI LOC),
5.900%, 8/3/1995 2,500,000
-----------------------------------------------------------------------------
4,020,000 Eastwinds Investment, Ltd., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 4,020,000
-----------------------------------------------------------------------------
5,000,000 G.M.H. Enterprises, Inc., Series 1995, (National City Bank,
Cleveland, OH LOC), 5.950%, 8/3/1995 5,000,000
-----------------------------------------------------------------------------
2,420,000 Grote Family L.P., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 2,420,000
-----------------------------------------------------------------------------
12,300,000 Hunt Club Apartments, Inc., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/2/1995 12,300,000
-----------------------------------------------------------------------------
1,700,000 Jade Sterling Steel Co., Inc., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,700,000
-----------------------------------------------------------------------------
4,200,000 Kokosing Construction Co., Inc., (National City Bank, Cleveland, OH LOC),
5.950%, 8/2/1995 4,200,000
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------------------
$ 8,600,000 Mississippi Business Finance Corp., (Comerica Bank, Detroit, MI LOC), 5.885%,
8/3/1995 $ 8,600,000
-----------------------------------------------------------------------------
2,000,000 Mississippi Business Finance Corp., Series 1995 Plantation Pointe, LP
Project, (Amsouth Bank N.A., Birmingham LOC), 5.885%,
8/3/1995 2,000,000
-----------------------------------------------------------------------------
4,885,000 Olen Corp., (National City Bank, Cleveland, OH LOC), 5.950%,
8/2/1995 4,885,000
-----------------------------------------------------------------------------
1,800,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC),
5.850%, 8/3/1995 1,800,000
-----------------------------------------------------------------------------
7,730,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC),
5.890%, 8/3/1995 7,730,000
-----------------------------------------------------------------------------
13,450,000 Rooker, J.W., (Wachovia Bank of Georgia NA, Atlanta LOC), 5.896%, 8/2/1995 13,450,000
-----------------------------------------------------------------------------
6,100,000 S.I.D.A. (Alabama) Miltope Project, Series 1994, (First Alabama Bank,
Birmingham LOC), 6.135%, 8/3/1995 6,100,000
-----------------------------------------------------------------------------
11,100,000 S.I.D.A. (Alabama),TRB (Wellborn Cabinet, Inc.), (Amsouth Bank N.A.,
Birmingham LOC), 5.930%, 8/2/1995 11,100,000
-----------------------------------------------------------------------------
20,000,000 (c)SMM Trust, Series 1994-B, (Guaranteed by Morgan Guaranty Trust Co., New
York), 6.205%, 8/11/1995 19,999,686
-----------------------------------------------------------------------------
101,000,000 (c)SMM Trust, Series 1995-I, (Guaranteed by Morgan Guaranty Trust Co., New
York), 5.895%, 8/1/1995 100,975,741
-----------------------------------------------------------------------------
7,040,000 Shenandoah Partners L.P., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 7,040,000
-----------------------------------------------------------------------------
3,418,000 Vista Funding Corp., (Bank One, Akron, N.A. LOC), 5.840%,
8/3/1995 3,418,000
-----------------------------------------------------------------------------
6,569,000 Vista Funding Corp., (Fifth Third Bank of Northwestern OH LOC), 5.885%,
8/3/1995 6,569,000
-----------------------------------------------------------------------------
11,500,000 Vista Funding Corp., 1995-B, (Fifth Third Bank of Northwestern OH LOC),
5.885%, 8/3/1995 11,500,000
-----------------------------------------------------------------------------
1,011,431 Wauseon Manor II L.P., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 1,011,431
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------------------
$ 3,775,000 Wexner Heritage House, (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 $ 3,775,000
-----------------------------------------------------------------------------
2,445,000 YMCA of Central, OH, (Huntington National Bank, Columbus, OH LOC), 5.890%,
8/3/1995 2,445,000
----------------------------------------------------------------------------- ----------------
Total 385,774,985
----------------------------------------------------------------------------- ----------------
ELECTRICAL EQUIPMENT--1.2%
-----------------------------------------------------------------------------
8,840,838 GS Funding Corp., (Guaranteed by General Electric Co.), 5.869%, 7/31/1995 8,840,838
-----------------------------------------------------------------------------
6,000,000 Lauda Air, Luftfahrt, (Guaranteed by General Electric Co.), 5.881%, 8/1/1995 6,000,000
-----------------------------------------------------------------------------
19,918,165 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.897%,
7/31/1995 19,918,165
----------------------------------------------------------------------------- ----------------
Total 34,759,003
----------------------------------------------------------------------------- ----------------
FINANCE-COMMERCIAL--1.2%
-----------------------------------------------------------------------------
36,000,000 Money Market Auto Loan Trust, (Guaranteed by Cap MAC), 6.015%, 8/15/1995 36,000,000
----------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--1.1%
-----------------------------------------------------------------------------
31,825,493 Carco Auto Loan Master Trust, Series 1993-2, Class A1, 5.785%, 8/15/1995 31,825,493
----------------------------------------------------------------------------- ----------------
INSURANCE--0.8%
-----------------------------------------------------------------------------
25,000,000 (c)Peoples Security Life Insurance, 6.300%, 8/1/1995 25,000,000
----------------------------------------------------------------------------- ----------------
MUNICIPAL--0.9%
-----------------------------------------------------------------------------
26,700,000 (c)Columbus, OH, 6.135%, 8/3/1995 26,700,000
----------------------------------------------------------------------------- ----------------
TOTAL VARIABLE RATE INSTRUMENTS 540,059,481
----------------------------------------------------------------------------- ----------------
(D)REPURCHASE AGREEMENTS--15.6%
- ----------------------------------------------------------------------------------------------
700,000 Bear, Stearns & Co., Inc., 5.81%, dated 7/31/1995, due 8/1/1995 700,000
-----------------------------------------------------------------------------
135,748,000 First Chicago Capital Markets, Inc., 5.82%, dated 7/31/1995, due 8/1/1995 135,748,000
-----------------------------------------------------------------------------
147,451,000 Fuji Securities, Inc., 5.82%, dated 7/31/1995, due 8/1/1995 147,451,000
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(D)REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
$ 10,516,000 PaineWebber, Inc., 5.85%, dated 7/31/1995, due 8/1/1995 $ 10,516,000
-----------------------------------------------------------------------------
211,000 State Street Bank and Trust Co., 5.82%, dated 7/31/1995, due
8/1/1995 211,000
-----------------------------------------------------------------------------
167,090,000 UBS Securities, Inc., 5.80%, dated 7/31/1995, due 8/1/1995 167,090,000
----------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 461,716,000
----------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $ 2,962,899,308
----------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) Restricted Securities--Investment in securities not registered under the
Securities Act of 1933. At the end of the period, these amounted to 6.0% of
net assets.
(d) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,958,751,318) at July 31, 1995.
The following acronyms are used throughout this portfolio:
LOC -- Letter of Credit
LP -- Limited Partnership
PLC -- Public Limited Company
TRB -- Taxable Revenue Bond
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 461,716,000
- -----------------------------------------------------------------------------
Investments in securities 2,501,183,308
- ----------------------------------------------------------------------------- ----------------
Total investments, at amortized cost and value $ 2,962,899,308
- -----------------------------------------------------------------------------------------------
Income receivable 5,325,668
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 8,182,417
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 2,976,407,393
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------
Payable for shares redeemed 3,166,500
- -----------------------------------------------------------------------------
Income distribution payable 10,170,581
- -----------------------------------------------------------------------------
Accrued expenses 707,730
- -----------------------------------------------------------------------------
Payable to Bank 3,611,264
- ----------------------------------------------------------------------------- ----------------
Total liabilities 17,656,075
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 2,958,751,318 shares outstanding $ 2,958,751,318
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
($2,457,797,173 / 2,457,797,173 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
($500,954,145 / 500,954,145 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------
Interest $ 127,412,842
- -------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------
Investment advisory fee $ 4,370,903
- ----------------------------------------------------------------------------------
Administrative personnel and services fee 1,654,387
- ----------------------------------------------------------------------------------
Custodian fees 244,453
- ----------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 67,443
- ----------------------------------------------------------------------------------
Directors'/Trustees' fees 8,283
- ----------------------------------------------------------------------------------
Auditing fees 12,951
- ----------------------------------------------------------------------------------
Legal fees 28,075
- ----------------------------------------------------------------------------------
Portfolio accounting fees 190,089
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 4,908,345
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 554,723
- ----------------------------------------------------------------------------------
Share registration costs 503,411
- ----------------------------------------------------------------------------------
Printing and postage 25,638
- ----------------------------------------------------------------------------------
Insurance premiums 49,287
- ----------------------------------------------------------------------------------
Taxes 38,556
- ----------------------------------------------------------------------------------
Miscellaneous 27,683
- ---------------------------------------------------------------------------------- -------------
Total expenses 12,684,227
- ----------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------
Waiver of investment advisory fee $ 2,828,160
- --------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 4,908,345 7,736,505
- -------------------------------------------------------------------- ------------ -------------
Net expenses 4,947,722
- ------------------------------------------------------------------------------------------------- --------------
Net investment income $ 122,465,120
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------
Net investment income $ 122,465,120 $ 41,204,591
- -------------------------------------------------------------------------- ------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------
Distributions from net investment income:
- --------------------------------------------------------------------------
Institutional Shares (109,911,005) (41,183,125)
- --------------------------------------------------------------------------
Institutional Service Shares (12,554,115) (21,466)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from distributions to shareholders (122,465,120) (41,204,591)
- -------------------------------------------------------------------------- ------------------ -----------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------
Proceeds from sale of Shares 28,128,464,929 8,598,402,134
- --------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 34,127,138 6,605,494
- --------------------------------------------------------------------------
Cost of Shares redeemed (26,464,207,220) (8,442,800,343)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from share transactions 1,698,384,847 162,207,285
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets 1,698,384,847 162,207,285
- -------------------------------------------------------------------------- ------------------ -----------------
NET ASSETS:
- --------------------------------------------------------------------------
Beginning of period 1,260,366,471 1,098,159,186
- -------------------------------------------------------------------------- ------------------ -----------------
End of period $ 2,958,751,318 $ 1,260,366,471
- -------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust consists of six, diversified portfolios. The
financial statements presented herein present only those of Prime Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
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.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,958,751,318.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
<S> <C> <C>
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------
Shares Sold 23,850,176,668 8,582,784,664
- --------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 27,352,248 6,585,754
- --------------------------------------------------------------------------
Shares redeemed (22,670,711,004) (8,436,550,343)
- -------------------------------------------------------------------------- ------------------ -----------------
Net change resulting from Institutional share transactions 1,206,817,912 152,820,075
- -------------------------------------------------------------------------- ------------------ -----------------
<CAPTION>
YEAR ENDED JULY 31,
1995 1994*
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------
Shares Sold 4,278,288,261 15,617,470
- --------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 6,774,890 19,740
- --------------------------------------------------------------------------
Shares redeemed (3,793,496,216) (6,250,000)
- -------------------------------------------------------------------------- ------------------ -----------------
Net change resulting from Institutional Service share transactions 491,566,935 9,387,210
- -------------------------------------------------------------------------- ------------------ -----------------
Net change resulting from share transactions 1,698,384,847 162,207,285
- -------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
* Reflects operations for the period from July 5, 1994, (date of initial public
offering) to July 31, 1994.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") under the
Administrative Services Agreement provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a portion of this fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
RESTRICTED SECURITIES--Restricted securities are securities that may only be
resold upon registration under federal securities laws or in transactions exempt
from such registration. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. In some cases, the
restricted securities may be resold without registration upon exercise of a
demand feature. Such restricted securities may be determined to be liquid under
criteria established by the Trustees. The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Investment Company Act of 1940. Additional
information on each restricted security held at July 31, 1995 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
SMM Trust Series 1995-I 01/06/95 $ 100,970,760
SMM Trust Series 1994-B 05/31/95 20,144,056
Peoples Security Life Insurance, 6.300%, 8/1/1995 07/06/95 25,000,000
Columbus, OH, 6.135%, 8/3/1995 01/30/95 26,700,000
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Prime Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust) as
of July 31, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Prime Obligations Fund
Institutional Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- --------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N203
601352-01 (3/96)
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 diversified portfolio of Money
Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in money market securities to provide
current income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Risks 7
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 8
- ------------------------------------------------------
Management of the Trust 8
Distribution of Shares 9
Administration of the Trust 9
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 13
SHAREHOLDER INFORMATION 13
- ------------------------------------------------------
Voting Rights 13
Massachusetts Partnership Law 13
TAX INFORMATION 14
- ------------------------------------------------------
Federal Income Tax 14
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 15
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 30
- ------------------------------------------------------
ADDRESSES 31
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.07%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.38%
Shareholder Services Fee................................................................ 0.25%
Total Operating Expenses (2)............................................................................ 0.45%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The total operating expenses would have been 0.58% absent the voluntary
waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION". WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and
(2) redemption at the end of each time period......................... $5 $14 $25 $57
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
PRIME OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of the Independent Public Accountants on page
30.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
-----------------
1995 1994(A)
---- -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------
Net investment income 0.05 0.003
- ----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------
Distributions from net investment income (0.05) (0.003)
- ---------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (B) 5.38% 0.30%
- ----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------
Expenses 0.45% 0.34%(c)
- ----------------------------------------------------------------------------------------
Net investment income 5.66% 4.68%(c)
- ----------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.13% 0.14%(c)
- ----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $500,954 $9,387
- ----------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 5, 1994 (date of initial
public offering) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Service Shares of the Fund, which are designed primarily for financial
institutions, financial intermediaries, and institutional investors as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio primarily investing in short-term money market securities.
A minimum initial investment of $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 following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing primarily in a portfolio
of money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Unless indicated otherwise, investment policies may be
changed by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:
domestic issues of corporate debt obligations, including variable rate
demand notes;
commercial paper (including Canadian Commercial Paper and Europaper);
certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
short-term credit facilities;
asset-backed securities;
obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
other money market instruments.
The Fund invests only in instruments denominated and payable in U.S. dollars.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security
at the time of each interest rate adjustment or at other fixed intervals.
See "Demand Features." The Fund treats variable rate demand notes as
maturing on the later of the date of the next interest rate adjustment or
the date on which the Fund may next tender the security for repurchase.
BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million, or insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"). Bank Instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Fund will treat
securities credit enhanced with a bank's letter of credit as Bank
Instruments.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial
interests in special purpose trusts, limited partnership interests, or
commercial paper or other debt securities issued by a special purpose
corporation. Although the securities often have some form of credit or
liquidity enhancement, payments on the securities depend predominantly upon
collections of the loans and receivables held by the issuer.
SHORT-TERM CREDIT FACILITIES. The Fund may enter into, or acquire
participations in, short-term borrowing arrangements with corporations,
consisting of either a short-term revolving credit facility or a master
note agreement payable upon demand. Under these arrangements, the borrower
may reborrow funds during the term of the facility. The Fund treats any
commitments to provide such advances as a standby commitment to purchase
the borrower's notes.
RATINGS. An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), D-1 (+ or -) by Duffs, or F-1 (+ or -) by Fitch Investors
-
Service, Inc. ("Fitch") are all considered rated in the highest short-term
rating category. The Fund will follow applicable regulations in determining
whether a security rated by more than one NRSRO can be treated as being in the
highest short-term rating category; currently, such securities must be rated by
two NRSROs in their highest rating category. See "Regulatory Compliance."
REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund typically
evaluates the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, the Fund
will treat credit-enhanced securities as having been issued by the credit
enhancer for diversification purposes. However, under many circumstances
applicable regulations may require the Fund to treat the securities as having
been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/dealers, banks, or
other institutions which the adviser has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law, and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees of the Fund are quite liquid. The Fund
intends, therefore, to treat the restricted securities which meet the criteria
for liquidity established by the Trustees, including Section 4(2) commercial
paper, as determined by the Fund's investment adviser, as liquid and not subject
to the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not subject
such paper to the limitation applicable to restricted securities.
CONCENTRATION OF INVESTMENTS. The Fund may invest 25% or more of its total
assets in commercial paper issued by finance companies. The finance companies in
which the Fund intends to invest can be divided into two categories, commercial
finance companies and consumer finance companies. Commercial finance companies
are principally engaged in lending to corporations or other businesses. Consumer
finance companies are primarily engaged in lending to individuals. Captive
finance companies or finance subsidiaries which exist to facilitate the
marketing and financial activities of their parent will, for purposes of
industry concentration, be classified in the industry of their parent's
corporation. Concentrating investments in any one industry may subject the Fund
to more risk than if it did not concentrate investments.
In addition, the Fund may invest 25% or more of the value of its total assets in
instruments issued by a U.S. branch of a domestic bank or savings and loan
having capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject to
different risks than domestic obligations of domestic banks or corporations.
Examples of these risks include international economic and political
developments, foreign governmental restrictions that may adversely affect the
payment of principal or interest, foreign withholding or other taxes on interest
income, difficulties in obtaining or enforcing a judgment against the issuing
entity, and the possible impact of interruptions in the flow of international
currency transactions. Risks may also exist for ECDs, ETDs, and Yankee CDs
because the banks issuing these instruments, or their domestic or foreign
branches, are not necessarily subject to the same regulatory requirements that
apply to domestic banks, such as reserve requirements, loan limitations,
examinations, accounting, auditing, recordkeeping, and the public availability
of information. These factors will be carefully considered by the Fund's adviser
in selecting investments for the Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a percentage
of its cash value with an agreement to buy it back on a set date) or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge assets to secure such
borrowings. This investment limitation cannot be changed without shareholder
approval. 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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7 which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under the circumstances permitted
by Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Board of Trustees,
and could result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of the Institutional Service Shares, computed at an annual
rate, to obtain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Prime Obligations Fund-Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.
The Fund reserves the right to wire redemption proceeds within seven days of a
redemption request if, in the judgment of the adviser, an earlier payment could
adversely affect the Fund. This procedure may be modified or terminated by the
transfer agent or the Fund.
BY MAIL. To purchase by mail, send a check made payable to Prime Obligations
Fund-Institutional Service Shares to: Federated Services Company, Prime
Obligations Fund, P.O. Box 8600, Boston, MA 02266-8600. Orders by mail are
considered received when payment by check is converted into federal funds. This
is normally the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
accounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. The amount of dividends declared
by the Fund is based on estimates of net interest income for the Fund. Actual
income may differ from estimates; these differences, if any, will be included in
the calculation of subsequent dividends. Dividends are automatically reinvested
on payment dates in additional shares of the Fund unless cash payments are
requested by writing to the Fund. Shares purchased by wire before 5:00 p.m.
(Eastern time) begin earning dividends that day. Shares purchased by check begin
earning dividends the day after the check is converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Prime Obligations Fund,
Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The written
request should state: Prime Obligations Fund-Institutional Service Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road-2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 5:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 5:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day. The Fund reserves the right to wire redemption proceeds within
seven days of a redemption request if, in the judgment of the adviser, an
earlier payment could adversely affect the Fund. This procedure may be modified
or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of September 6, 1995,
Peoples Bank, Bridgeport, CT, owned approximately 149,257,858 shares (36.34%) of
the voting securities of the Fund's Institutional Service Shares and, therefore,
may, for certain purposes, be deemed to control the Fund and be able to affect
the outcome of certain matters presented for a vote of shareholders.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity, and 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 Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
PRIME OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
BANK NOTES--2.9%
- ----------------------------------------------------------------------------------------------
BANKING--2.9%
-----------------------------------------------------------------------------
$ 15,000,000 Bank One, Milwaukee, WI N.A., 5.960%, 9/11/1995 $ 15,000,989
-----------------------------------------------------------------------------
72,000,000 Mellon Bank NA, Pittsburgh, 6.000%-6.240%,
10/20/1995-11/28/1995 72,000,000
----------------------------------------------------------------------------- ----------------
TOTAL BANK NOTES 87,000,989
----------------------------------------------------------------------------- ----------------
(A)COMMERCIAL PAPER--62.2%
- ----------------------------------------------------------------------------------------------
BANKING--19.0%
-----------------------------------------------------------------------------
15,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank N.V., Amsterdam),
5.809%, 12/27/1995 14,651,583
-----------------------------------------------------------------------------
140,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank PLC, London),
5.709%-6.348%, 8/9/1995-1/22/1996 138,243,523
-----------------------------------------------------------------------------
108,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian Imperial Bank of
Commerce, Toronto), 5.754%-6.452%,
8/16/1995-10/23/1995 107,135,856
-----------------------------------------------------------------------------
24,700,000 City of Cleveland, (Union Bank of Switzerland, Zurich LOC), 5.950%, 10/4/1995 24,700,000
-----------------------------------------------------------------------------
79,100,000 Commerzbank U.S. Finance, Inc., (Guaranteed by Commerzbank AG, Frankfurt),
5.749%-5.841%, 10/25/1995-1/22/1996 77,608,628
-----------------------------------------------------------------------------
45,000,000 Dresdner US Finance, 5.936%-5.984%, 9/5/1995-12/21/1995 44,486,209
-----------------------------------------------------------------------------
24,000,000 J.P. Morgan & Co., Inc., 5.756%, 1/22/1996 23,351,560
-----------------------------------------------------------------------------
70,547,000 Queensland Alumina Ltd., (Credit Suisse, Zurich LOC), 5.940%-6.101%,
8/1/1995-9/14/1995 70,285,776
-----------------------------------------------------------------------------
19,800,000 Royal Bank of Canada, Montreal, 5.636%, 1/11/1996 19,308,718
-----------------------------------------------------------------------------
1,000,000 Societe Generale North America, Inc., (Guaranteed by Societe Generale,
Paris), 5.724%, 1/23/1996 972,972
-----------------------------------------------------------------------------
40,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by Toronto-Dominion Bank),
5.870%-6.390%, 9/7/1995-12/8/1995 39,464,261
----------------------------------------------------------------------------- ----------------
Total 560,209,086
----------------------------------------------------------------------------- ----------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(A)COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------------------
DIVERSIFIED--0.7%
-----------------------------------------------------------------------------
$ 20,000,000 Rockwell International Corp., 6.336%, 9/13/1995 $ 19,853,322
----------------------------------------------------------------------------- ----------------
ELECTRONICS--0.3%
-----------------------------------------------------------------------------
10,000,000 Hewlett-Packard Co., 5.918%, 9/28/1995 9,906,072
----------------------------------------------------------------------------- ----------------
FINANCE-COMMERCIAL--23.6%
-----------------------------------------------------------------------------
90,400,000 Asset Securitization Cooperative Corp., 5.740%-5.969%,
8/30/1995-10/20/1995 89,658,264
-----------------------------------------------------------------------------
122,700,000 Beta Finance, Inc., 5.630%-6.450%, 8/14/1995-1/29/1996 121,182,697
-----------------------------------------------------------------------------
80,700,000 CIESCO, Inc., 5.687%-6.356%, 8/25/1995-10/27/1995 79,963,340
-----------------------------------------------------------------------------
116,000,000 CIT Group Holdings, Inc., 5.760%-6.217%, 8/29/1995-12/22/1995 114,015,734
-----------------------------------------------------------------------------
31,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.843%-6.271%,
9/15/1995-11/7/1995 30,721,169
-----------------------------------------------------------------------------
24,620,000 Falcon Asset Securitization Corp., 5.752%-5.815%,
10/26/1995-1/22/1996 24,135,125
-----------------------------------------------------------------------------
135,000,000 General Electric Capital Corp., 5.750%-6.317%, 9/5/1995-1/23/1996 133,106,685
-----------------------------------------------------------------------------
81,575,000 PREFCO-Preferred Receivables Funding Co., 5.868%-6.113%,
8/9/1995-11/15/1995 80,720,284
-----------------------------------------------------------------------------
26,300,000 Sheffield Receivables Corp., 6.100%-6.101%, 8/9/1995-8/10/1995 26,263,600
----------------------------------------------------------------------------- ----------------
Total 699,766,898
----------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--10.7%
-----------------------------------------------------------------------------
109,000,000 Associates Corp. of North America, 5.699%-6.163%,
8/4/1995-10/31/1995 108,314,529
-----------------------------------------------------------------------------
118,700,000 Ford Credit Receivables Funding, Inc., 5.720%-6.207%,
8/24/1995-10/23/1995 117,685,863
-----------------------------------------------------------------------------
67,000,000 New Center Asset Trust, A1+/P1 Series, 6.214%-6.314%,
10/10/1995-10/20/1995 66,164,109
-----------------------------------------------------------------------------
25,000,000 Norwest Financial, Inc., 5.833%, 10/2/1995 24,752,431
----------------------------------------------------------------------------- ----------------
Total 316,916,932
----------------------------------------------------------------------------- ----------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(A)COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------------------
INSURANCE--1.6%
-----------------------------------------------------------------------------
$ 15,000,000 City of New York G.O. 1995-B, (FGIC-SPI Gtd.), 6.241%, 8/22/1995 $ 15,000,000
-----------------------------------------------------------------------------
10,175,000 Marsh & McLennan Cos., Inc., 5.944%-6.453%,
9/25/1995-12/1/1995 10,027,975
-----------------------------------------------------------------------------
22,783,000 Prospect Street Senior Portfolio, L.P., (Guaranteed by Financial Security
Assurance, Inc.), 5.805%-6.273%, 9/6/1995-11/10/1995 22,506,070
----------------------------------------------------------------------------- ----------------
Total 47,534,045
----------------------------------------------------------------------------- ----------------
MISCELLANEOUS--0.5%
-----------------------------------------------------------------------------
15,000,000 Procter & Gamble Co., 5.845%, 10/16/1995 14,817,917
----------------------------------------------------------------------------- ----------------
OIL & OIL FINANCE--1.1%
-----------------------------------------------------------------------------
33,000,000 Koch Industries, Inc., 5.851%, 8/1/1995 33,000,000
----------------------------------------------------------------------------- ----------------
TELECOMMUNICATIONS--4.7%
-----------------------------------------------------------------------------
139,620,000 AT&T Corp., 5.739%-6.373%, 8/11/1995-12/1/1995 138,331,098
----------------------------------------------------------------------------- ----------------
TOTAL COMMERCIAL PAPER 1,840,335,370
----------------------------------------------------------------------------- ----------------
CORPORATE NOTES--1.2%
- ----------------------------------------------------------------------------------------------
BANKING--1.2%
-----------------------------------------------------------------------------
33,787,467 Banc One Corp., 6.363%, 4/15/1996 33,787,468
----------------------------------------------------------------------------- ----------------
TOTAL CORPORATE NOTES 33,787,468
----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--18.3%
- ----------------------------------------------------------------------------------------------
BANKING--13.1%
-----------------------------------------------------------------------------
4,045,000 500 South Front St. L.P., Series A, (Huntington National Bank, Columbus, OH
LOC), 5.890%, 8/3/1995 4,045,000
-----------------------------------------------------------------------------
6,500,000 500 South Front St. L.P., Series B, (Huntington National Bank, Columbus, OH
LOC), 5.890%, 8/3/1995 6,500,000
-----------------------------------------------------------------------------
10,927,000 Adesa Funding Corp., (Bank One, Indianapolis, IN LOC),
5.840%, 8/3/1995 10,927,000
-----------------------------------------------------------------------------
8,455,000 Alexandria Executive Club L.P., (Huntington National Bank, Columbus, OH LOC),
5.890%, 8/3/1995 8,455,000
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------------------
$ 9,000,000 Arrow N.A., Inc., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 $ 9,000,000
-----------------------------------------------------------------------------
16,900,000 Beverly California Corp., (PNC Bank, N.A. LOC),
5.869%, 8/7/1995 16,900,000
-----------------------------------------------------------------------------
1,642,790 Bowling Green Manor L.P., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,642,790
-----------------------------------------------------------------------------
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH LOC), 6.060%, 1/3/1996 17,400,000
-----------------------------------------------------------------------------
21,558,000 Capital One Funding Corp. 1994-C, Series 1994-C, (Bank One, Cleveland, N.A.
LOC), 6.069%, 8/3/1995 21,558,000
-----------------------------------------------------------------------------
26,300,000 Capital One Funding Corp. 1995-A, (Bank One, Indianapolis, IN LOC), 5.885%,
8/3/1995 26,300,000
-----------------------------------------------------------------------------
17,446,000 Capital One Funding Corp. 1995-B, (Liberty National Bank & Trust Co. LOC),
5.840%, 8/3/1995 17,446,000
-----------------------------------------------------------------------------
1,062,337 Clyde Manor L.P., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 1,062,337
-----------------------------------------------------------------------------
2,500,000 Crystal Enterprises, Inc., Series 1995, (NBD Bank, N.A., Detroit, MI LOC),
5.900%, 8/3/1995 2,500,000
-----------------------------------------------------------------------------
4,020,000 Eastwinds Investment, Ltd., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 4,020,000
-----------------------------------------------------------------------------
5,000,000 G.M.H. Enterprises, Inc., Series 1995, (National City Bank,
Cleveland, OH LOC), 5.950%, 8/3/1995 5,000,000
-----------------------------------------------------------------------------
2,420,000 Grote Family L.P., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 2,420,000
-----------------------------------------------------------------------------
12,300,000 Hunt Club Apartments, Inc., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/2/1995 12,300,000
-----------------------------------------------------------------------------
1,700,000 Jade Sterling Steel Co., Inc., (Huntington National Bank,
Columbus, OH LOC), 5.885%, 8/3/1995 1,700,000
-----------------------------------------------------------------------------
4,200,000 Kokosing Construction Co., Inc., (National City Bank, Cleveland, OH LOC),
5.950%, 8/2/1995 4,200,000
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------------------
$ 8,600,000 Mississippi Business Finance Corp., (Comerica Bank, Detroit, MI LOC), 5.885%,
8/3/1995 $ 8,600,000
-----------------------------------------------------------------------------
2,000,000 Mississippi Business Finance Corp., Series 1995 Plantation Pointe, LP
Project, (Amsouth Bank N.A., Birmingham LOC), 5.885%,
8/3/1995 2,000,000
-----------------------------------------------------------------------------
4,885,000 Olen Corp., (National City Bank, Cleveland, OH LOC), 5.950%,
8/2/1995 4,885,000
-----------------------------------------------------------------------------
1,800,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC),
5.850%, 8/3/1995 1,800,000
-----------------------------------------------------------------------------
7,730,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC),
5.890%, 8/3/1995 7,730,000
-----------------------------------------------------------------------------
13,450,000 Rooker, J.W., (Wachovia Bank of Georgia NA, Atlanta LOC), 5.896%, 8/2/1995 13,450,000
-----------------------------------------------------------------------------
6,100,000 S.I.D.A. (Alabama) Miltope Project, Series 1994, (First Alabama Bank,
Birmingham LOC), 6.135%, 8/3/1995 6,100,000
-----------------------------------------------------------------------------
11,100,000 S.I.D.A. (Alabama),TRB (Wellborn Cabinet, Inc.), (Amsouth Bank N.A.,
Birmingham LOC), 5.930%, 8/2/1995 11,100,000
-----------------------------------------------------------------------------
20,000,000 (c)SMM Trust, Series 1994-B, (Guaranteed by Morgan Guaranty Trust Co., New
York), 6.205%, 8/11/1995 19,999,686
-----------------------------------------------------------------------------
101,000,000 (c)SMM Trust, Series 1995-I, (Guaranteed by Morgan Guaranty Trust Co., New
York), 5.895%, 8/1/1995 100,975,741
-----------------------------------------------------------------------------
7,040,000 Shenandoah Partners L.P., (Huntington National Bank,
Columbus, OH LOC), 5.890%, 8/3/1995 7,040,000
-----------------------------------------------------------------------------
3,418,000 Vista Funding Corp., (Bank One, Akron, N.A. LOC), 5.840%,
8/3/1995 3,418,000
-----------------------------------------------------------------------------
6,569,000 Vista Funding Corp., (Fifth Third Bank of Northwestern OH LOC), 5.885%,
8/3/1995 6,569,000
-----------------------------------------------------------------------------
11,500,000 Vista Funding Corp., 1995-B, (Fifth Third Bank of Northwestern OH LOC),
5.885%, 8/3/1995 11,500,000
-----------------------------------------------------------------------------
1,011,431 Wauseon Manor II L.P., (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 1,011,431
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
BANKING--CONTINUED
-----------------------------------------------------------------------------
$ 3,775,000 Wexner Heritage House, (Huntington National Bank, Columbus, OH LOC), 5.885%,
8/3/1995 $ 3,775,000
-----------------------------------------------------------------------------
2,445,000 YMCA of Central, OH, (Huntington National Bank, Columbus, OH LOC), 5.890%,
8/3/1995 2,445,000
----------------------------------------------------------------------------- ----------------
Total 385,774,985
----------------------------------------------------------------------------- ----------------
ELECTRICAL EQUIPMENT--1.2%
-----------------------------------------------------------------------------
8,840,838 GS Funding Corp., (Guaranteed by General Electric Co.), 5.869%, 7/31/1995 8,840,838
-----------------------------------------------------------------------------
6,000,000 Lauda Air, Luftfahrt, (Guaranteed by General Electric Co.), 5.881%, 8/1/1995 6,000,000
-----------------------------------------------------------------------------
19,918,165 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.897%,
7/31/1995 19,918,165
----------------------------------------------------------------------------- ----------------
Total 34,759,003
----------------------------------------------------------------------------- ----------------
FINANCE-COMMERCIAL--1.2%
-----------------------------------------------------------------------------
36,000,000 Money Market Auto Loan Trust, (Guaranteed by Cap MAC), 6.015%, 8/15/1995 36,000,000
----------------------------------------------------------------------------- ----------------
FINANCE-RETAIL--1.1%
-----------------------------------------------------------------------------
31,825,493 Carco Auto Loan Master Trust, Series 1993-2, Class A1, 5.785%, 8/15/1995 31,825,493
----------------------------------------------------------------------------- ----------------
INSURANCE--0.8%
-----------------------------------------------------------------------------
25,000,000 (c)Peoples Security Life Insurance, 6.300%, 8/1/1995 25,000,000
----------------------------------------------------------------------------- ----------------
MUNICIPAL--0.9%
-----------------------------------------------------------------------------
26,700,000 (c)Columbus, OH, 6.135%, 8/3/1995 26,700,000
----------------------------------------------------------------------------- ----------------
TOTAL VARIABLE RATE INSTRUMENTS 540,059,481
----------------------------------------------------------------------------- ----------------
(D)REPURCHASE AGREEMENTS--15.6%
- ----------------------------------------------------------------------------------------------
700,000 Bear, Stearns & Co., Inc., 5.81%, dated 7/31/1995, due 8/1/1995 700,000
-----------------------------------------------------------------------------
135,748,000 First Chicago Capital Markets, Inc., 5.82%, dated 7/31/1995, due 8/1/1995 135,748,000
-----------------------------------------------------------------------------
147,451,000 Fuji Securities, Inc., 5.82%, dated 7/31/1995, due 8/1/1995 147,451,000
-----------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- ----------------
(D)REPURCHASE AGREEMENTS--CONTINUED
- ----------------------------------------------------------------------------------------------
$ 10,516,000 PaineWebber, Inc., 5.85%, dated 7/31/1995, due 8/1/1995 $ 10,516,000
-----------------------------------------------------------------------------
211,000 State Street Bank and Trust Co., 5.82%, dated 7/31/1995, due
8/1/1995 211,000
-----------------------------------------------------------------------------
167,090,000 UBS Securities, Inc., 5.80%, dated 7/31/1995, due 8/1/1995 167,090,000
----------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 461,716,000
----------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (E) $ 2,962,899,308
----------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) Restricted Securities--Investment in securities not registered under the
Securities Act of 1933. At the end of the period, these amounted to 6.0% of
net assets.
(d) Repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
accounts with other Federated funds.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,958,751,318) at July 31, 1995.
The following acronyms are used throughout this portfolio:
LOC -- Letter of Credit
LP -- Limited Partnership
PLC -- Public Limited Company
TRB -- Taxable Revenue Bond
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 461,716,000
- -----------------------------------------------------------------------------
Investments in securities 2,501,183,308
- ----------------------------------------------------------------------------- ----------------
Total investments, at amortized cost and value $ 2,962,899,308
- -----------------------------------------------------------------------------------------------
Income receivable 5,325,668
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 8,182,417
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 2,976,407,393
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------
Payable for shares redeemed 3,166,500
- -----------------------------------------------------------------------------
Income distribution payable 10,170,581
- -----------------------------------------------------------------------------
Accrued expenses 707,730
- -----------------------------------------------------------------------------
Payable to Bank 3,611,264
- ----------------------------------------------------------------------------- ----------------
Total liabilities 17,656,075
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 2,958,751,318 shares outstanding $ 2,958,751,318
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
($2,457,797,173 / 2,457,797,173 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
($500,954,145 / 500,954,145 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------
Interest $ 127,412,842
- -------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------
Investment advisory fee $ 4,370,903
- ----------------------------------------------------------------------------------
Administrative personnel and services fee 1,654,387
- ----------------------------------------------------------------------------------
Custodian fees 244,453
- ----------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 67,443
- ----------------------------------------------------------------------------------
Directors'/Trustees' fees 8,283
- ----------------------------------------------------------------------------------
Auditing fees 12,951
- ----------------------------------------------------------------------------------
Legal fees 28,075
- ----------------------------------------------------------------------------------
Portfolio accounting fees 190,089
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 4,908,345
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 554,723
- ----------------------------------------------------------------------------------
Share registration costs 503,411
- ----------------------------------------------------------------------------------
Printing and postage 25,638
- ----------------------------------------------------------------------------------
Insurance premiums 49,287
- ----------------------------------------------------------------------------------
Taxes 38,556
- ----------------------------------------------------------------------------------
Miscellaneous 27,683
- ---------------------------------------------------------------------------------- -------------
Total expenses 12,684,227
- ----------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------
Waiver of investment advisory fee $ 2,828,160
- --------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 4,908,345 7,736,505
- -------------------------------------------------------------------- ------------ -------------
Net expenses 4,947,722
- ------------------------------------------------------------------------------------------------- --------------
Net investment income $ 122,465,120
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C>
1995 1994
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------
Net investment income $ 122,465,120 $ 41,204,591
- -------------------------------------------------------------------------- ------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------
Distributions from net investment income:
- --------------------------------------------------------------------------
Institutional Shares (109,911,005) (41,183,125)
- --------------------------------------------------------------------------
Institutional Service Shares (12,554,115) (21,466)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from distributions to shareholders (122,465,120) (41,204,591)
- -------------------------------------------------------------------------- ------------------ -----------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------
Proceeds from sale of Shares 28,128,464,929 8,598,402,134
- --------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 34,127,138 6,605,494
- --------------------------------------------------------------------------
Cost of Shares redeemed (26,464,207,220) (8,442,800,343)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from share transactions 1,698,384,847 162,207,285
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets 1,698,384,847 162,207,285
- -------------------------------------------------------------------------- ------------------ -----------------
NET ASSETS:
- --------------------------------------------------------------------------
Beginning of period 1,260,366,471 1,098,159,186
- -------------------------------------------------------------------------- ------------------ -----------------
End of period $ 2,958,751,318 $ 1,260,366,471
- -------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PRIME OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
1. ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust consists of six, diversified portfolios. The
financial statements presented herein present only those of Prime Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
Fund offers two classes of shares; Institutional Shares and Institutional
Service Shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
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.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $2,958,751,318.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------
1995 1994
----------------- -----------------
<S> <C> <C>
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------
Shares Sold 23,850,176,668 8,582,784,664
- --------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 27,352,248 6,585,754
- --------------------------------------------------------------------------
Shares redeemed (22,670,711,004) (8,436,550,343)
- -------------------------------------------------------------------------- ------------------ -----------------
Net change resulting from Institutional share transactions 1,206,817,912 152,820,075
- -------------------------------------------------------------------------- ------------------ -----------------
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------
1995 1994*
----------------- -----------------
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------
Shares Sold 4,278,288,261 15,617,470
- --------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 6,774,890 19,740
- --------------------------------------------------------------------------
Shares redeemed (3,793,496,216) (6,250,000)
- -------------------------------------------------------------------------- ------------------ -----------------
Net change resulting from Institutional Service share transactions 491,566,935 9,387,210
- -------------------------------------------------------------------------- ------------------ -----------------
Net change resulting from share transactions 1,698,384,847 162,207,285
- -------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
* Reflects operations for the period from July 5, 1994, (date of initial public
offering) to July 31, 1994.
PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") under the
Administrative Services Agreement provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to .25 of
1% of average daily net assets of the Fund for the period. This fee is to obtain
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive a portion of this fee. FSS can modify or terminate
this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
RESTRICTED SECURITIES--Restricted securities are securities that may only be
resold upon registration under federal securities laws or in transactions exempt
from such registration. Many restricted securities may be resold in the
secondary market in transactions exempt from registration. In some cases, the
restricted securities may be resold without registration upon exercise of a
demand feature. Such restricted securities may be determined to be liquid under
criteria established by the Trustees. The Fund will not incur any registration
costs upon such resales. Restricted securities are valued at amortized cost in
accordance with Rule 2a-7 under the Investment Company Act of 1940. Additional
information on each restricted security held at July 31, 1995 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
SMM Trust Series 1995-I 01/06/95 $ 100,970,760
SMM Trust Series 1994-B 05/31/95 20,144,056
Peoples Security Life Insurance, 6.300%, 8/1/1995 07/06/95 25,000,000
Columbus, OH, 6.135%, 8/3/1995 01/30/95 26,700,000
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Prime Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust) as
of July 31, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Prime Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- -------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N708
601352-02 (3/96)
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Tax-Free Obligations Fund (the "Fund") offered by
this prospectus represent interests in a diversified portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in municipal securities to provide dividend
income exempt from federal regular income tax consistent with stability of
principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Municipal Securities 6
Investment Risks 6
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Distribution of Shares 8
Administration of the Fund 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
Certificates and Confirmations 10
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
- ------------------------------------------------------
Voting Rights 12
Massachusetts Partnership Law 13
TAX INFORMATION 13
- ------------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 14
- ------------------------------------------------------
FINANCIAL STATEMENTS 16
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 45
- ------------------------------------------------------
ADDRESSES 46
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)........................................................................ 0.06%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.14%
Shareholder Services Fee (after waiver)(2).............................................. 0.00%
Total Operating Expenses(3)................................................................... 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.59% absent the voluntary
waiver of a portion of the management fee and the shareholder services fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND" AND "TRUST INFORMATION". WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $2 $6 $11 $26
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
TAX-FREE OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 45.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------
Net investment income 0.04 0.02 0.03 0.04 0.05 0.04
- -----------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------
Distributions from net
investment income (0.04) (0.02) (0.03) (0.04) (0.05) (0.04)
- ----------------------------------------------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 3.64% 2.45% 2.54% 3.73% 5.13% 3.70%
- -----------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- -----------------------------------------------
Net investment income 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%(c)
- -----------------------------------------------
Expense waiver/reimbursement (d) 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%(c)
- -----------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------
Net assets, end of period (000 omitted) $1,295,458 $789,755 $454,119 $308,855 $165,669 $145,552
- -----------------------------------------------
</TABLE>
(a) Reflects operations for the period from December 12, 1989 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to the Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Shares of the Fund, which are designed primarily for financial institutions,
financial intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
investing primarily in short-term municipal securities. The Fund may not be a
suitable investment for retirement plans since it invests in municipal
securities. A minimum initial investment of $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 dividend income exempt from
federal regular income tax consistent with stability of principal. This
investment objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities (as defined below) maturing in 13 months or less. As a
matter of investment policy, which cannot be changed without shareholder
approval, at least 80% of the Fund's annual interest income will be exempt from
federal regular income tax. (Federal regular income tax does not include the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations.) The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued
by or on behalf of states, territories, and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of qualified
legal counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:
tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
municipal commercial paper and other short-term notes;
variable rate demand notes;
municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases; and
participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Fund to tender the security
at the time of each interest rate adjustment or at other fixed intervals.
See "Demand Features." The Fund treats variable rate demand notes as
maturing on the later of the date of the next interest rate adjustment or
the date on which the Fund may next tender the security for repurchase.
PARTICIPATION INTERESTS. The Fund may purchase interests in Municipal
Securities from financial institutions such as commercial and investment
banks, savings and loan associations, and insurance companies. These
interests may take the form of participations, beneficial interests in a
trust, partnership interests or any other form of indirect ownership that
allows the Fund to treat the income from the investment as exempt from
federal income tax. The Fund invests in these participation interests in
order to obtain credit enhancement or demand features that would not be
available through direct ownership of the underlying Municipal Securities.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities. They may take the form of a lease, an installment purchase
contract, a conditional sales contract, or a participation interest in any
of the above.
RATINGS. The securities in which the Fund invests must be rated in the highest
short-term rating category by one or more nationally recognized statistical
rating organizations ("NRSROs") or be of comparable quality to securities having
such ratings. An NRSRO's highest rating category is 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 FIN-1+ or FIN-1 by Fitch Investors Service, Inc. ("Fitch")
are all considered rated in the highest short-term rating category. The Fund
will follow applicable regulations in determining whether a security rated by
more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."
Further, the Fund has the ability but no present intention of investing in:
securities that are rated MIG-2 or VMIG-2 by Moody's, SP-2 by S&P, FIN-2 by
Fitch; tax-exempt commercial paper that is rated P-2 by Moody's, A-2 by S&P, or
F-2 by Fitch; and securities that are not rated but are deemed to be of
comparable quality. Shareholders will be notified should the Fund decide to
invest in these securities.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund typically
evaluates the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. However,
credit-enhanced securities will not be treated as having been issued by the
credit enhancer for diversification purposes, unless the Fund has invested more
than 10% of its assets in securities issued, guaranteed or otherwise credit
enhanced by the credit enhancer, in which case the securities will be treated as
having been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities, to 10% of its total assets.
TEMPORARY INVESTMENTS. From time to time, when the investment adviser
determines that market conditions call for a temporary defensive posture, the
Fund may invest in tax-exempt or taxable securities such as: obligations issued
by or on behalf of municipal or corporate issuers having the same quality
characteristics as described above; obligations issued or guaranteed by the U.S.
government, its agencies, or instrumentalities; instruments issued by a U.S.
branch of a domestic bank or other deposit institution having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment; and
repurchase agreements (arrangements in which the organization selling the Fund a
temporary investment agrees at the time of sale to repurchase it at a mutually
agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention to do so. However, the interest from certain Municipal
Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Fund to achieve its
investment objective also depends on the continuing ability of the issuers of
Municipal Securities and participation interests, or the credit enhancers of
either, to meet their obligations for the payment of interest and principal when
due. In addition, from time to time, the supply of Municipal Securities
acceptable for purchase by the Fund could become limited.
The Fund may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or whose
issuers are located in the same state. Sizable investments in these Municipal
Securities could involve an increased risk to the Fund should any of these
related projects or facilities experience financial difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings. This investment limitation
cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 1% of the
average daily net asset value of the Institutional Shares, computed at an
annual rate, to obtain personal services for shareholders and provide
maintenance of shareholder accounts ("shareholder services"). From time to time
and for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Tax-Free Obligations Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Tax-Free Obligations
Fund-- Institutional Shares to: Federated Services Company, Tax-Free Obligations
Fund, P.O. Box 8600, Boston, MA 02266-8600. Orders by mail are considered
received when payment by check is converted into federal funds. This is normally
the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
accounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Tax-Free Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Tax-Free Obligations Fund--Institutional Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road--2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to
institutions that are members of the signature guarantee program. The Fund and
its transfer agent reserve the right to amend these standards at any time
without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
- --------------------------------------------------------------------------------
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 12:00 noon (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after
12:00 noon (Eastern time). However, the proceeds are not wired until the
following business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest earned on certain "private activity" bonds issued
after August 7, 1986, may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The Fund may purchase all types of municipal bonds, including private activity
bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Because interest received by the Fund may not be
exempt from all state and local income taxes, shareholders may be required to
pay state and local taxes on dividends received from the Fund. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary
capacity, 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 Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield, effective yield, and
tax-equivalent yield for shares. The performance figures will be calculated
separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that would have to be earned to equal
the tax-exempt yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
TAX-FREE OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--100.4%
- ------------------------------------------------------------------------------------
ALABAMA--2.8%
---------------------------------------------------------------------
$ 9,010,000 Alabama Special Care Facilities Finance Authority Weekly VRDNs
(Providence Hospital)/(Daughters of Charity GTD) VMIG1 $ 9,010,000
---------------------------------------------------------------------
2,000,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly VRDNs (S.P. Hotel
Company)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 2,000,000
---------------------------------------------------------------------
3,140,000 Birmingham, AL Special Care Facilities Financing Authority, Capital
Improvement Revenue Bonds (Series 1995) Weekly VRDNs (Methodist Home
for the Aging, AL)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 3,140,000
---------------------------------------------------------------------
2,850,000 Birmingham, AL, GO (Series 1995-A), 5.625% BANs,
1/5/1996 NR(2) 2,852,538
---------------------------------------------------------------------
4,600,000 Birmingham, AL, GO (Series 1992-A) Weekly VRDNs (First Alabama Bank,
Birmingham LOC) A-1+ 4,600,000
---------------------------------------------------------------------
1,000,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills, Inc.)/ (Trust Company
Bank, Atlanta LOC) A-1+ 1,000,000
---------------------------------------------------------------------
3,000,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn (Homewood
AL))/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 3,000,000
---------------------------------------------------------------------
8,500,000 Huntsville, AL Health Care Authority/Health Care Facilities (Series
1994-A) Weekly VRDNs (MBIA INS)/ (Amsouth Bank N.A., Birmingham LIQ) A-1 8,500,000
---------------------------------------------------------------------
1,700,000 Huntsville, AL Health Care Authority/Health Care Facilities, Health
Care Facilities Revenue Bonds (Series 1994-B) Weekly VRDNs (MBIA
INS)/(Amsouth Bank N.A., Birmingham LIQ) A-1 1,700,000
---------------------------------------------------------------------
300,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project (Huntsville,
AL))/(First Alabama Bank, Birmingham LOC) A-1+ 300,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
ALABAMA--CONTINUED
---------------------------------------------------------------------
$ 1,500,000 Marshall County, AL, Special Obligation School Refunding Warrant
(Series 1994) Weekly VRDNs (Marshall County, AL Board of
Education)/(First Alabama Bank, Birmingham LOC) A-1+ $ 1,500,000
---------------------------------------------------------------------
3,000,000 Mobile, AL IDB, PCR (Series 1993-B) Weekly VRDNs (Alabama Power Co.) A-1 3,000,000
---------------------------------------------------------------------
995,000 Tuscaloosa County, AL Port Authority (Series 1989-A) Weekly VRDNs
(Capstone Hotel Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 995,000
---------------------------------------------------------------------
1,630,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) Weekly
VRDNs (Harco, Inc.)/(Amsouth Bank N.A., Birmingham LOC) P-1 1,630,000
--------------------------------------------------------------------- ----------------
Total 43,227,538
--------------------------------------------------------------------- ----------------
ARIZONA--1.9%
---------------------------------------------------------------------
15,000,000 Apache County, AZ IDA (Series 1983-A) Weekly VRDNs (Tucson Electric
Power Co.)/(Barclays Bank PLC, London LOC) A-1+ 15,000,000
---------------------------------------------------------------------
4,000,000 Arizona Health Facilities Authority, Variable Rate Demand Bond Weekly
VRDNs (University Physicians, Inc.)/(Bank One, Arizona N.A. LOC) P-1 4,000,000
---------------------------------------------------------------------
4,400,000 Maricopa County, AZ (Series 1994-F) Daily VRDNs (Arizona Public
Service Corp.)/(Bank of America NT and SA, San Francisco LOC) A-1 4,400,000
---------------------------------------------------------------------
6,000,000 Pima County, AZ IDA, Floating Rate Notes (Series A) Weekly VRDNs
(Tucson Electric Power Co.)/(Barclays Bank PLC, London LOC) P-1 6,000,000
--------------------------------------------------------------------- ----------------
Total 29,400,000
--------------------------------------------------------------------- ----------------
ARKANSAS--0.1%
---------------------------------------------------------------------
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson Co.)/ (PNC Bank, N.A.
LOC) VMIG1 1,000,000
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
CALIFORNIA--16.6%
---------------------------------------------------------------------
$ 27,350,000 California School Cash Reserve Program Authority, (Series 1995-A),
4.75% TRANs (MBIA Insured), 7/3/1996 SP-1+ $ 27,577,341
---------------------------------------------------------------------
35,000,000 California State, Revenue Anticipation Warrants (Series C), 5.75%
RANs (Bank of America NT and SA, San Francisco, Bank of Nova Scotia,
Toronto, Banque Nationale de Paris, Canadian Imperial Bank of
Commerce, Toronto, Chemical Bank, New York, Citibank, N.A., Credit
Suisse, Zurich, Morgan Guaranty Trust Co., New York, National
Westminster Bank, PLC, London, Societe Generale North America, Inc.,
Sumitomo Bank Ltd., Osaka, Swiss Bank Corp., Westdeusche Landesbank
Girozentrale & Toronto Dominion Bank LOCs) SP-1 35,274,544
---------------------------------------------------------------------
16,100,000 California State, Revenue Anticipation Warrants (Series C), 5.75%
RANs (FGIC INS), 4/25/1996 SP-1 16,355,231
---------------------------------------------------------------------
40,350,000 California Student Loan, Revenue Bonds (Series A) Weekly VRDNs
(Student Loan Marketing Association LOC) P-1 40,350,000
---------------------------------------------------------------------
10,000,000 Clipper CAL Tax-Exempt Trust, (94-2) Weekly VRDNs (California
State)/(State Street Bank and Trust Co. LIQ)/ (Bank of America NT and
SA, San Francisco, Bank of Nova Scotia, Toronto, Banque Nationale de
Paris, Canadian Imperial Bank of Commerce, Toronto, Chemical Bank,
Citibank N.A. and Credit Suisse LOCs) VMIG1 10,000,000
---------------------------------------------------------------------
12,995,000 Kern County, CA Board of Education, 4.50% TRANs,
6/28/1996 SP-1+ 13,057,372
---------------------------------------------------------------------
10,000,000 Los Angeles County, CA Unified School District, 4.50% TRANs, 7/3/1996 SP-1+ 10,071,011
---------------------------------------------------------------------
41,000,000 Los Angeles County, CA, 4.50% TRANs (Bank of America NT and SA, San
Francisco, Credit Suisse, Zurich, Morgan Guaranty Trust Co., New
York, Swiss Bank Corp., New York, NY, Union Bank of Switzerland,
Zurich and Westdeutsche Landesbank Girozentrale LOCs), 7/1/1996 SP-1 41,266,907
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
CALIFORNIA--CONTINUED
---------------------------------------------------------------------
$ 23,500,000 Los Angeles, CA Wastewater System, Tender Option Certificates (Series
1995-H) Weekly VRDNs (MBIA INS)/ (Swiss Bank Corp., New York, NY LIQ) A-1+ $ 23,500,000
---------------------------------------------------------------------
10,000,000 Orange County, CA IDA, (Series 1991-A) Weekly VRDNs (The
Lakes)/(Citibank, N.A. LOC) A-1 10,000,000
---------------------------------------------------------------------
6,000,000 Orange County, CA Local Transportation Authority, Sales Tax Revenue
Notes, 4.00% CP (Industrial Bank of Japan Ltd., Tokyo LOC), Mandatory
Tender 9/13/1995 A-1 6,000,000
---------------------------------------------------------------------
5,000,000 San Francisco, CA Unified School District (Series 1994), 4.75% TRANs,
8/24/1995 SP-1+ 5,001,722
---------------------------------------------------------------------
7,000,000 Temecula Valley Unified School District, CA, 4.50% TRANs, 7/5/1996 SP-1+ 7,031,142
---------------------------------------------------------------------
10,800,000 Ventura County, CA Community College District, 4.50% TRANs, 6/28/1996 SP-1+ 10,851,836
--------------------------------------------------------------------- ----------------
Total 256,337,106
--------------------------------------------------------------------- ----------------
COLORADO--1.8%
---------------------------------------------------------------------
25,000,000 Arapahoe County, CO Improvement Authority, (Series G), 4.45% TOBs
(Swiss Bank Corp., New York, NY LOC), Optional Tender 8/31/1995 SP-1+ 25,000,000
---------------------------------------------------------------------
2,625,000 Denver (City & County), CO, 5.20% TOBs (Blake Street
Compendium)/(Norwest Bank Minnesota, Minneapolis LOC), Optional
Tender 12/15/1995 A-1+ 2,625,000
--------------------------------------------------------------------- ----------------
Total 27,625,000
--------------------------------------------------------------------- ----------------
CONNECTICUT--2.6%
---------------------------------------------------------------------
39,780,000 Connecticut State Transportation Infrastructure Authority Weekly
VRDNs (Connecticut State)/(Industrial Bank of Japan Ltd., Tokyo LOC) A-1 39,780,000
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
DELAWARE--0.3%
---------------------------------------------------------------------
$ 5,100,000 Delaware Health Facilities Authority, (Series 1985-BTP-19A) Weekly
VRDNs (Medical Center of Delaware)/(MBIA INS)/(Bankers Trust Co., New
York LIQ) NR(1) $ 5,100,000
--------------------------------------------------------------------- ----------------
FLORIDA--13.7%
---------------------------------------------------------------------
3,000,000 Alachua County, FL Health Facilities Authority, Health Facility
Revenue Bonds (Series 1991) Weekly VRDNs (North Florida Retirement
Village)/(Kredietbank N.V., Brussels LOC) A-1 3,000,000
---------------------------------------------------------------------
3,000,000 Broward County, FL Health Facility Authority, Revenue Bonds Weekly
VRDNs (John Knox Village of Florida)/ (First Union National Bank,
Charlotte, N.C. LOC) P-1 3,000,000
---------------------------------------------------------------------
4,470,000 Dade County, FL IDA Weekly VRDNs (Futernick Associates, Inc.)/(First
Union National Bank, Charlotte, N.C. LOC) P-1 4,470,000
---------------------------------------------------------------------
1,200,000 Dade County, FL IDA, Industrial Development Revenue Refunding Bonds
Weekly VRDNs (Continental Farms, Inc.)/(Nationsbank of North Carolina
N.A. LOC) P-1 1,200,000
---------------------------------------------------------------------
2,000,000 Dade County, FL Water & Sewer System Weekly VRDNs (FGIC
INS)/(Industrial Bank of Japan Ltd., Tokyo LIQ) A-1 2,000,000
---------------------------------------------------------------------
12,490,000 Florida HFA Weekly VRDNs (Cornerstone)/(PNC Bank, N.A. LOC) A-1 12,490,000
---------------------------------------------------------------------
1,400,000 Florida HFA, Multi-Family Housing Revenue Refunding Bonds (Series
1985-D) Weekly VRDNs (Park Colony Project, FL)/(Mellon Bank NA,
Pittsburgh LOC) A-1 1,400,000
---------------------------------------------------------------------
3,285,000 Florida State Board of Education Administration, (CR49)/ (Series
1989-A), 4.00% TOBs (Citibank, N.A. LIQ), Optional Tender 12/1/1995 NR(2) 3,285,000
---------------------------------------------------------------------
4,235,000 Florida State Board of Education Administration, (CR49D), 4.00% TOBs
(Citibank, N.A. LIQ), Optional Tender
12/1/1995 NR(2) 4,235,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$ 1,210,000 Florida State Board of Education Administration, (CR55), (Series
1989-A), 4.00% TOBs (Citibank, N.A. LIQ), Optional Tender 12/1/1995 NR(2) $ 1,210,000
---------------------------------------------------------------------
17,975,000 Hillsborough County, FL IDA, PCR Refunding Bonds (Series 1994) Weekly
VRDNs (Tampa Electric Company)/ (MBIA INS) NR(2) 17,975,000
---------------------------------------------------------------------
22,000,000 Jacksonville Electric Authority, FL, Tender Option Certificates
(Series 1995-C) Weekly VRDNs (Bayerische Hypotheken-Und Wechsel-Bank
Ag LOC) A-1+ 22,000,000
---------------------------------------------------------------------
9,200,000 Jacksonville, FL PCR, (Series 1994), 4.10% CP (Florida Power & Light
Co.), Mandatory Tender 12/14/1995 VMIG1 9,200,000
---------------------------------------------------------------------
6,100,000 Jacksonville, FL, Hospital Revenue Bonds (Series 1989) Weekly VRDNs
(Baptist Medical Center, AL)/(First Union National Bank, Charlotte,
N.C. LOC) VMIG1 6,100,000
---------------------------------------------------------------------
4,200,000 Key West, FL Community Redevelopment Authority Weekly VRDNs (Pier
House Joint Venture)/(PNC Bank, N.A. LOC) P-1 4,200,000
---------------------------------------------------------------------
4,000,000 Lake Shore, FL Hospital Authority, Health Facilities Revenue Bonds
(Series 1991) Weekly VRDNs (Lake Shore Hospital)/(Kredietbank N.V.,
Brussels LOC) P-1 4,000,000
---------------------------------------------------------------------
2,925,000 Lee County, FL IDA, Health Care Facilities Revenue Bonds Weekly VRDNs
(Hope Hospice Project)/(Sun Bank N.A., Orlando LOC) VMIG1 2,925,000
---------------------------------------------------------------------
5,000,000 Lee County, FL, (PA-104) Weekly VRDNs (MBIA INS)/ (Merrill Lynch
Capital Services, Inc. LIQ) VMIG1 5,000,000
---------------------------------------------------------------------
5,410,000 Manatee County, FL HFA Weekly VRDNs (Carriage Club)/(Mellon Bank
N.A., Pittsburgh LOC) VMIG1 5,410,000
---------------------------------------------------------------------
1,900,000 Manatee County, FL HFA, Multi-Family Mortgage Revenue Refunding Bonds
(Series 1989-A) Weekly VRDNs (Hampton/McGuire L.P.)/(Nationsbank of
North Carolina N.A. LOC) A-1 1,900,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$ 6,230,000 Orange County, FL HFA, Multifamily Housing Revenue Bonds Weekly VRDNs
(Sutton Place. Ltd. Project)/ (Nationsbank of Maryland, N.A. LOC) A-1+ $ 6,230,000
---------------------------------------------------------------------
1,715,000 Palm Beach County, FL IDA Weekly VRDNs (Palm Beach Jewish Community
Campus)/(Sun Bank N.A., Orlando LOC) A-1+ 1,715,000
---------------------------------------------------------------------
5,500,000 Pinellas County, FL Health Facility Authority Daily VRDNs (Chemical
Bank, New York LOC) A-1 5,500,000
---------------------------------------------------------------------
10,870,000 Pinellas County, FL Health Facility Authority, (Series 1987) Weekly
VRDNs (St. Mark Village Project)/ (Nationsbank of Florida, N.A. LOC) A-1 10,870,000
---------------------------------------------------------------------
1,000,000 Pinellas County, FL Health Facility Authority, Multi-Family Mortage
Revenue Refunding Bonds (Series 1989-A) Weekly VRDNs (McGregor Place
Project)/ (Nationsbank of North Carolina N.A. LOC) A-1 1,000,000
---------------------------------------------------------------------
4,325,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs (IMC
Fertilizer, Inc. Project)/(Rabobank Nederland, Utrecht LOC) P-1 4,325,000
---------------------------------------------------------------------
9,300,000 Sarasota County, FL Public Hospital District, 4.15% CP (Sarasota
Memorial Hospital), Mandatory Tender
8/23/1995 A-1 9,300,000
---------------------------------------------------------------------
9,100,000 Sarasota County, FL Public Hospital District, 4.15% CP (Sarasota
Memorial Hospital), Mandatory Tender
8/29/1995 A-1 9,100,000
---------------------------------------------------------------------
1,800,000 Seminole County, FL Health Facility Authority IDA, (Series 1991)
Weekly VRDNs (Florida Living Nursing Center)/(Barnett Bank of Central
Florida, Orlando LOC) VMIG1 1,800,000
---------------------------------------------------------------------
10,900,000 Southeast Volusia Hospital District, Revenue Bonds (Series 1995)
Weekly VRDNs (Bert Fish Medical Center, FL)/(SouthTrust Bank of
Alabama, Birmingham LOC) A-1 10,900,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$ 7,000,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs (Savannahs
Hospital)/(Nationsbank of Georgia, N.A. LOC) P-1 $ 7,000,000
---------------------------------------------------------------------
4,800,000 Sunshine State Governmental Finance Commission, FL, 3.90% CP (Morgan
Guaranty Trust Co., New York, National Westminster Bank, PLC, London
and Union Bank of Switzerland, Zurich LOCs), Mandatory Tender
10/27/1995 VMIG1 4,800,000
---------------------------------------------------------------------
9,750,000 Suwannee County, FL, (Series 1989) Weekly VRDNs (Advent Christian
Village Project)/(Barnett Bank of Jacksonville LOC) VMIG1 9,750,000
---------------------------------------------------------------------
6,400,000 Titusville, FL, Multi-Purpose Revenue Bonds, Installment 1995A Weekly
VRDNs (Banque Paribas, Paris LOC) VMIG1 6,400,000
---------------------------------------------------------------------
6,065,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/(Mellon
Bank N.A., Pittsburgh LOC) P-1 6,065,000
---------------------------------------------------------------------
1,675,000 Volusia County, FL IDA Weekly VRDNs (Crane Cams)/ (First Interstate
Bank of Arizona, N.A. LOC) P-1 1,675,000
--------------------------------------------------------------------- ----------------
Total 211,430,000
--------------------------------------------------------------------- ----------------
GEORGIA--1.5%
---------------------------------------------------------------------
4,000,000 Atlanta, GA, Urban Residential Finance Authority, Residential
Construction Revenue Bonds, Summerhill Neighborhood Bond Program
(Series 1995) Weekly VRDNs (First Union National Bank, Charlotte,
N.C. LOC) A-1 4,000,000
---------------------------------------------------------------------
1,500,000 Coweta County, GA IDA Daily VRDNs (Eckerds Warehouse)/(Union Bank of
Switzerland, Zurich LOC) A-1 1,500,000
---------------------------------------------------------------------
1,600,000 DeKalb County, GA, (Series 1992) Weekly VRDNs (American Cancer
Society, GA)/(Trust Company Bank, Atlanta LOC) P-1 1,600,000
---------------------------------------------------------------------
3,395,000 Georgia State, HFA, Single Family Mortgage Revenue, 3.90% TOBs
(Citibank, N.A. LIQ), Optional Tender
9/1/1995 NR(2) 3,395,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
GEORGIA--CONTINUED
---------------------------------------------------------------------
$ 12,000,000 Municipal Electric Authority of Georgia, (Series B), 4.25% TOBs,
Optional Tender 6/1/1996 VMIG1 $ 12,014,500
---------------------------------------------------------------------
1,000,000 Rockdale County, GA Hospital Authority, Revenue Anticipation
Certificates (Series 1994) Weekly VRDNs (Trust Company Bank, Atlanta
LOC) VMIG1 1,000,000
--------------------------------------------------------------------- ----------------
Total 23,509,500
--------------------------------------------------------------------- ----------------
HAWAII--0.4%
---------------------------------------------------------------------
6,400,000 Hawaii State, Puttable Tax Exempt Receipts (Series 31) Weekly VRDNs
(Morgan Guaranty Trust Co., New York LIQ) VMIG1 6,400,000
--------------------------------------------------------------------- ----------------
ILLINOIS--8.1%
---------------------------------------------------------------------
13,000,000 Chicago O'Hare International Airport, Second Lien Revenue Bonds,
(Series 1984-B), 3.80% TOBs (Westpac Banking, Corp., Sydney LOC),
Optional Tender 1/1/1996 A-1 13,000,000
---------------------------------------------------------------------
3,000,000 Illinois Development Finance Authority Weekly VRDNs (Newlywed
Food)/(Mellon Bank N.A., Pittsburgh LOC) A-1 3,000,000
---------------------------------------------------------------------
5,000,000 Illinois Development Finance Authority, (Series 1993-A) Weekly VRDNs
(Loyola Academy)/(Northern Trust Co., Chicago, IL LOC) A-1+ 5,000,000
---------------------------------------------------------------------
3,000,000 Illinois Educational Facilities Authority (Series 1992) Weekly VRDNs
(Depaul University)/(Sanwa Bank Ltd, Osaka LOC) VMIG1 3,000,000
---------------------------------------------------------------------
7,500,000 Illinois Educational Facilities Authority, 4.25% CP (Field Museum of
Natural History)/(Sanwa Bank Ltd, Osaka LOC), Mandatory Tender
9/7/1995 VMIG1 7,500,000
---------------------------------------------------------------------
11,500,000 Illinois Educational Facilities Authority, Adjustable Demand Revenue
Bonds (Series 1995) Weekly VRDNs (Ravinia Festival Association,
IL)/(NBD Bank, N.A., Detroit, MI LOC) A-1+ 11,500,000
---------------------------------------------------------------------
5,000,000 Illinois Health Facilities Authority Weekly VRDNs (OSF Health Care
Systems) VMIG1 5,000,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
ILLINOIS--CONTINUED
---------------------------------------------------------------------
$ 14,000,000 Illinois Health Facilities Authority (Series 1989A) Weekly VRDNs
(Methodist Health Services Corp.)/(Fuji Bank, Ltd., Tokyo LOC) A-1 $ 14,000,000
---------------------------------------------------------------------
14,940,000 Illinois Health Facilities Authority, 4.00% CP (Rush-
Presbyterian St. Luke's Medical)/(Northern Trust Co., Chicago, IL
LIQ), Mandatory Tender 10/19/1995 A-1+ 14,940,000
---------------------------------------------------------------------
35,000,000 Illinois Health Facilities Authority (Series 1985-B) Weekly VRDNs
(OSF Health Care Systems)/(Bank of America Illinois LIQ) VMIG1 35,000,000
---------------------------------------------------------------------
13,900,000 Illinois State Toll Highway Authority, (Series 1993-B) Weekly VRDNs
(MBIA INS)/(Societe Generale, Paris LIQ) VMIG1 13,900,000
--------------------------------------------------------------------- ----------------
Total 125,840,000
--------------------------------------------------------------------- ----------------
INDIANA--1.3%
---------------------------------------------------------------------
1,115,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/ (National City Bank,
Kentucky LOC) P-1 1,115,000
---------------------------------------------------------------------
17,000,000 Indiana Bond Bank, Advance Funding Program Notes (Series 1995-A3)
VRNs, 1/10/1996 SP-1+ 17,000,000
---------------------------------------------------------------------
2,445,000 Indiana Health Facilities Finance Authority Rehabilitation Center
Weekly VRDNs (Crossroads Rehabilitation Center)/(Bank One,
Indianapolis, IN LOC) A-1 2,445,000
--------------------------------------------------------------------- ----------------
Total 20,560,000
--------------------------------------------------------------------- ----------------
KENTUCKY--0.1%
---------------------------------------------------------------------
1,530,000 Boone County, KY, Adjustable Rate Revenue Refunding Bonds Weekly
VRDNs (Spring Meadow Associates)/ (Huntington National Bank,
Columbus, OH LOC) P-1 1,530,000
--------------------------------------------------------------------- ----------------
LOUISIANA--1.9%
---------------------------------------------------------------------
10,000,000 Louisiana PFA, 3.80% CP (Our Lady of Lake)/(FSA INS), Mandatory
Tender 8/21/1995 A-1 10,000,000
---------------------------------------------------------------------
9,865,000 Louisiana PFA, Advance Funding Notes (Series 1994-B), 4.60% TANs
(Orleans Parish, LA School Board), 8/31/1995 SP-1+ 9,868,120
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------------------
$ 9,130,000 St. James Parish, LA, PCR Refunding Bonds (Series 1988-B), 4.20% CP
(Texaco, Inc.), Mandatory Tender
8/8/1995 A-1 $ 9,130,000
--------------------------------------------------------------------- ----------------
Total 28,998,120
--------------------------------------------------------------------- ----------------
MARYLAND--3.6%
---------------------------------------------------------------------
24,200,000 Maryland Health & Higher Educational Facilities Authority (Series
1985-B) Weekly VRDNs (First National Bank of Chicago LOC) VMIG1 24,200,000
---------------------------------------------------------------------
4,000,000 Maryland Health & Higher Educational Facilities Authority, Revenue
Bonds (Series 1985-A) Weekly VRDNs (Dai-Ichi Kangyo Bank Ltd., Tokyo
LOC) VMIG1 4,000,000
---------------------------------------------------------------------
10,110,000 Maryland State Community Development Administration (Series 1987-2),
4.35% TOBs (First National Bank of Chicago LIQ), Optional Tender
10/1/1995 NR(3) 10,110,000
---------------------------------------------------------------------
300,000 Maryland State IDFA Kelly Springfield Tire, Economic Development
Revenue Refunding Bonds (Series 1994) Weekly VRDNs (Johnson Controls,
Inc.) VMIG1 300,000
---------------------------------------------------------------------
2,000,000 Montgomery County, MD EDA Weekly VRDNs (Howard Hughes Medical Center) A-1+ 2,000,000
---------------------------------------------------------------------
9,300,000 Montgomery County, MD EDA Weekly VRDNs (U.S. Pharmacopeial Convention
Facility)/(Chemical Bank, New York LOC) VMIG1 9,300,000
---------------------------------------------------------------------
6,000,000 Montgomery County, MD Housing Opportunities Commission, Single Family
Mortgage Revenue Bonds (Series 1994-C), 4.35% TOBs, Optional Tender
10/25/1995 VMIG1 6,000,000
--------------------------------------------------------------------- ----------------
Total 55,910,000
--------------------------------------------------------------------- ----------------
MASSACHUSETTS--0.9%
---------------------------------------------------------------------
13,300,000 Massachusetts HEFA (Series I) Weekly VRDNs (Harvard University) A-1+ 13,300,000
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
MICHIGAN--1.3%
---------------------------------------------------------------------
$ 4,350,000 Dearborn, MI Economic Development Corp. (Series 1991) Weekly VRDNs
(Oakbrook Common Project)/(Mellon Bank N.A., Pittsburgh LOC) A-1 $ 4,350,000
---------------------------------------------------------------------
2,000,000 Michigan Municipal Bond Authority, 4.50% RANs,
7/3/1996 SP-1+ 2,012,412
---------------------------------------------------------------------
1,700,000 Michigan State Hospital Finance Authority, Hospital Equipment Loan
Program Bonds (Series A) Weekly VRDNs (First of America Bank Corp.
LOC) VMIG1 1,700,000
---------------------------------------------------------------------
9,500,000 Michigan State, GO Notes, 5.00% TRANs, 9/29/1995 SP-1+ 9,511,856
---------------------------------------------------------------------
2,695,000 Ottawa County, MI Economic Development Corp., Limited Obligation
Revenue Bonds (Series 1995-B) Weekly VRDNs (Sunset Manor, Inc.
Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) A-1 2,695,000
--------------------------------------------------------------------- ----------------
Total 20,269,268
--------------------------------------------------------------------- ----------------
MINNESOTA--3.4%
---------------------------------------------------------------------
2,065,000 Dakota County, MN Housing & Redevelopment Authority, Multifamily
Rental Housing Revenue Bonds (Series 1994-B) Weekly VRDNs (Westwood
Ridge Senior Residence Project)/(First Bank N.A., Minneapolis LOC) A-1 2,065,000
---------------------------------------------------------------------
5,040,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) Weekly VRDNs
(Walker Methodist Health Center, Inc. Project)/(First Bank N.A.,
Minneapolis LOC) A+ 5,040,000
---------------------------------------------------------------------
10,000,000 Minneapolis, MN (Series 1993) Weekly VRDNs (Market Square Real
Estate, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 10,000,000
---------------------------------------------------------------------
4,105,000 Minnesota State HFA, Single Family Mortgage Bonds (Series 1993-T),
4.85% TOBs (Bayerische Landesbank Girozentrale LOC), Mandatory Tender
12/14/1995 A-1+ 4,105,000
---------------------------------------------------------------------
7,400,000 Minnesota State Higher Education Coordinating Board, Supplemental
Student Loan Program Variable Rate Refunding Revenue Bonds (Series
1994-A) Weekly VRDNs (Norwest Bank Minnesota, Minneapolis LIQ) VMIG1 7,400,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
MINNESOTA--CONTINUED
---------------------------------------------------------------------
$ 19,500,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo
Foundation) VMIG1 $ 19,500,000
---------------------------------------------------------------------
800,000 St. Paul, MN Port Authority (Series 1991) Weekly VRDNs (West Gate
Office)/(First Bank N.A., Minneapolis LOC) A-1 800,000
---------------------------------------------------------------------
4,200,000 University of Minnesota (Series G), 4.50% TOBs (Regents of University
of Minnesota), Optional Tender 8/1/1995 VMIG1 4,200,000
--------------------------------------------------------------------- ----------------
Total 53,110,000
--------------------------------------------------------------------- ----------------
MISSISSIPPI--1.2%
---------------------------------------------------------------------
1,770,000 Hinds County, MS (Series 1991) Weekly VRDNs (North State St.
Project)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 1,770,000
---------------------------------------------------------------------
16,600,000 Jackson County, MS Port Facility Daily VRDNs (Chevron U.S.A., Inc.) P-1 16,600,000
--------------------------------------------------------------------- ----------------
Total 18,370,000
--------------------------------------------------------------------- ----------------
MISSOURI--0.3%
---------------------------------------------------------------------
4,200,000 Poplar Bluff, MO IDA (Series 1987) Weekly VRDNs (Gates Rubber
Co.)/(NBD Bank, N.A., Detroit, MI LOC) A-1+ 4,200,000
--------------------------------------------------------------------- ----------------
NEW JERSEY--1.1%
---------------------------------------------------------------------
11,600,000 Essex County, NJ, (Series 1995-B), 5.00% TANs (Chemical Bank, New
York LOC), 8/22/1995 MIG1 11,605,114
---------------------------------------------------------------------
5,000,000 Mercer County, NJ, 5.50% BANs, 9/20/1995 NR(2) 5,003,952
--------------------------------------------------------------------- ----------------
Total 16,609,066
--------------------------------------------------------------------- ----------------
NEW YORK--8.9%
---------------------------------------------------------------------
16,600,000 New York City Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds (Series 1995-A) Daily VRDNs (FGIC INS)/(FGIC
Securities Purchase, Inc. LIQ) A-1+ 16,600,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NEW YORK--CONTINUED
---------------------------------------------------------------------
$ 29,800,000 New York Metropolitan Transportation Authority Weekly VRDNs (Bank of
Tokyo Ltd., Tokyo, Industrial Bank of Japan Ltd., Tokyo, J.P. Morgan
Wilmington, Delaware, Mitsubishi Bank Ltd, Tokyo, Morgan Guaranty
Trust Co., New York, National Westminster Bank, PLC, London and
Sumitomo Bank Ltd., Osaka LOCs) A-1 $ 29,800,000
---------------------------------------------------------------------
29,900,000 New York State Local Government Assistance Corp. (Series D), 3.20%
TOBs (Societe Generale, Paris LOC), Mandatory Tender 8/2/1995 A-1+ 29,900,000
---------------------------------------------------------------------
21,600,000 New York State Local Government Assistance Corp. (Series E), 3.20%
TOBs (Canadian Imperial Bank of Commerce, Toronto LOC), Mandatory
Tender 8/2/1995 A-1+ 21,600,000
---------------------------------------------------------------------
23,110,000 Niagara County, NY IDA, Solid Waste Disposal Facility Revenue Bonds
(Series 1994-A) Weekly VRDNs (American Ref-Fuel Company)/(Air
Products & Chemicals, Inc. and Browning-Ferris Industries, Inc. GTDs) A-1 23,110,000
---------------------------------------------------------------------
14,000,000 Suffolk County, NY, 1995 (RA Series I), 5.25% TANs (Westdeutsche
Landesbank Girozentrale LOC), 8/15/1995 SP-1+ 14,002,354
---------------------------------------------------------------------
3,800,000 Syracuse, NY IDA Syracuse, Multi Modal Civic Facility Revenue Bonds
(Series 1993) Daily VRDNs (Syracuse University Eggers Halls
Project)/(Morgan Guaranty Trust Co., New York LOC) A-1+ 3,800,000
--------------------------------------------------------------------- ----------------
Total 138,812,354
--------------------------------------------------------------------- ----------------
NORTH CAROLINA--4.4%
---------------------------------------------------------------------
30,000,000 Charlotte-Mecklenburg Hospital Authority, NC, Loan Participation
Certificates (1995) VRNs (The Charlotte-
Mecklenburg Hospital Authority), 5/22/1996 NR(2) 30,000,000
---------------------------------------------------------------------
4,320,000 Fayetteville, NC Public Works Commission, Revenue Refunding Bonds
Weekly VRDNs (FGIC INS)/(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 4,320,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
---------------------------------------------------------------------
$ 4,000,000 Greensboro, NC, Certificates of Participation 1994 Equipment Project
Weekly VRDNs (Greensboro, NC Center City Corp.)/(Wachovia Bank of
Georgia N.A., Atlanta LIQ) A-1+ $ 4,000,000
---------------------------------------------------------------------
15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs (Weyerhaeuser Co.) A-1 15,000,000
---------------------------------------------------------------------
745,000 NCNB Pooled Tax-Exempt Trust (Series 1990-A) Weekly VRDNs (NCNB Tax
Exempt Trust 1990a)/(Nationsbank of North Carolina N.A. LOC) P-1 745,000
---------------------------------------------------------------------
4,700,000 North Carolina Medical Care Commission Hospital, Revenue Bonds
(Series 1994) Weekly VRDNs (Hugh Chatam Memorial/Rutherford
Hospitals)/(First Union National Bank, Charlotte, N.C. LOC) VMIG1 4,700,000
---------------------------------------------------------------------
10,000,000 North Carolina Municipal Power Agency No 1, 3.50% CP (Bank of America
NT and SA, San Francisco, Canadian Imperial Bank of Commerce,
Toronto, First Union National Bank, Charlotte, N.C., Industrial Bank
of Japan Ltd., Tokyo, Morgan Guaranty Trust Co., New York and
Nationsbank of North Carolina N.A. LIQs), Mandatory Tender 10/26/1995 P-1 10,000,000
--------------------------------------------------------------------- ----------------
Total 68,765,000
--------------------------------------------------------------------- ----------------
OHIO--5.7%
---------------------------------------------------------------------
2,700,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs (Visiting
Nurses)/(National City Bank, Cleveland, OH LOC) A-1 2,700,000
---------------------------------------------------------------------
2,585,000 Ashland County, OH Health Care Weekly VRDNs (Brethren Care,
Inc.)/(National City Bank, Cleveland, OH LOC) P-1 2,585,000
---------------------------------------------------------------------
8,850,000 Cincinnati City School District, OH, 5.80% TANs,
12/29/1995 NR(3) 8,863,842
---------------------------------------------------------------------
1,100,000 Cuyahoga County, OH Hospital Authority Weekly VRDNs (St. Lukes
Hospital)/(First National Bank of Chicago LOC) VMIG1 1,100,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OHIO--CONTINUED
---------------------------------------------------------------------
$ 2,650,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking Co.)/(Society
National Bank, Cleveland, OH LOC) P-1 $ 2,650,000
---------------------------------------------------------------------
2,000,000 Dayton, OH, Revenue Refunding Bonds (Series 1993-E) Weekly VRDNs
(Emery Air Freight Corp.)/(Mellon Bank N.A., Pittsburgh LOC) VMIG1 2,000,000
---------------------------------------------------------------------
6,100,000 Franklin County, OH Hospital Facility Authority Weekly VRDNs
(Riverside United Methodist Hospital)/(National City Bank, Cleveland,
OH LOC) VMIG1 6,100,000
---------------------------------------------------------------------
12,400,000 Hamilton County, OH Hospital Facilities Authority, Revenue Bonds
(Series 1986-A) Weekly VRDNs (Good Samaritan Hospital) A-1 12,400,000
---------------------------------------------------------------------
2,500,000 Kettering, OH IDA Weekly VRDNs (Center-Plex Venture)/(Society
National Bank, Cleveland, OH LOC) P-1 2,500,000
---------------------------------------------------------------------
2,885,000 Lorain County, OH, Health Facilities Revenue Bonds (Series 1992-A)
Weekly VRDNs (Elyria United Methodist Home)/(Fifth Third Bancorp LOC) P-1 2,885,000
---------------------------------------------------------------------
2,000,000 Lucas County, OH IDA (Series 1991) Weekly VRDNs (Ohio Citizens
Bank)/(National City Bank, Cleveland, OH LOC) P-1 2,000,000
---------------------------------------------------------------------
295,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs (Sunshine
Children's Home)/(National City Bank, Cleveland, OH LOC) P-1 295,000
---------------------------------------------------------------------
4,300,000 Lucas County, OH, Hospital Refunding Revenue Bonds Weekly VRDNs
(Riverside Hospital, OH)/(Huntington National Bank, Columbus, OH LOC) P-1 4,300,000
---------------------------------------------------------------------
6,900,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995) Weekly VRDNs
(Copeland Oaks Project)/(Bank One, Akron, N.A. LOC) A-1+ 6,900,000
---------------------------------------------------------------------
2,210,000 Marion County, OH Hospital Authority (Series 1991), 4.25% TOBs
(Marion County, OH Pooled Hospital Program)/(Bank One, Columbus, N.A.
LOC) Optional Tender 11/1/1995 A-1+ 2,210,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OHIO--CONTINUED
---------------------------------------------------------------------
$ 4,250,000 Mayfield Village, OH IDA Weekly VRDNs (Beta Campus Co.)/(First Union
National Bank, Charlotte, N.C. LOC) P-1 $ 4,250,000
---------------------------------------------------------------------
5,400,000 Medina County, OH, Solid Waste Disposal Revenue Bonds (Series 1995)
Weekly VRDNs (Valley City Steel Company Project)/(Society National
Bank, Cleveland, OH LOC) P-1 5,400,000
---------------------------------------------------------------------
800,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex Venture)/(Society
National Bank, Cleveland, OH LOC) P-1 800,000
---------------------------------------------------------------------
1,700,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited
Partnership)/(Huntington National Bank, Columbus, OH LOC) A-1 1,700,000
---------------------------------------------------------------------
4,700,000 Muskingham County, OH Hospital Facilities Authority Weekly VRDNs
(Bethesda Care System)/(National City Bank, Columbus, OH LOC) VMIG1 4,700,000
---------------------------------------------------------------------
1,800,000 Ohio State Air Quality Development Authority (Series 1998-A) Weekly
VRDNs (PPG Industries, Inc.) P-1 1,800,000
---------------------------------------------------------------------
4,080,000 Ohio State Water Development Authority, Pure Water Refunding &
Improvement Bonds (Series PA-56) Weekly VRDNs (AMBAC INS)/(Merrill
Lynch Capital Services, Inc. LIQ) VMIG1 4,080,000
---------------------------------------------------------------------
1,800,000 Rickenbacker, OH Port Authority (Series 1992) Weekly VRDNs
(Rickenbacker Holdings, Inc.)/(Bank One, Columbus, N.A. LOC) P-1 1,800,000
---------------------------------------------------------------------
1,900,000 Seneca County, OH Hospital Facility Authority Weekly VRDNs (St.
Francis Home)/(National City Bank, Cleveland, OH LOC) VMIG1 1,900,000
---------------------------------------------------------------------
800,000 Solon, OH, IDA Weekly VRDNs (Solon Industries)/ (Society National
Bank, Cleveland, OH LOC) P-1 800,000
---------------------------------------------------------------------
1,100,000 Twinsburg, OH IDA Weekly VRDNs (Care of Massara)/ (Society National
Bank, Cleveland, OH LOC) P-1 1,100,000
--------------------------------------------------------------------- ----------------
Total 87,818,842
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OKLAHOMA--0.6%
---------------------------------------------------------------------
$ 10,000,000 Holdenville, OK Industrial Authority, Correctional Facility Revenue
Bonds (Series 1995) Weekly VRDNs (Holdenville, OK Correctional
Facility)/(First Union National Bank, Charlotte, N.C. LOC) VMIG1 $ 10,000,000
--------------------------------------------------------------------- ----------------
OREGON--0.1%
---------------------------------------------------------------------
2,000,000 Oregon Health, Housing & Cultural Facilities Authority, Adjustable
Rate Revenue Bonds (Series 1995-A) Weekly VRDNs (Guide Dogs for the
Blind, Inc. Project)/(Banque Nationale de Paris LOC) MIG1 2,000,000
--------------------------------------------------------------------- ----------------
PENNSYLVANIA--2.5%
---------------------------------------------------------------------
5,000,000 Allegheny County, PA IDA, PCR (Series 1992-A), 4.80% TOBs (Duquesne
Light Power Co.)/(Canadian Imperial Bank of Commerce, Toronto LOC),
Mandatory Tender
10/17/1995 P-1 5,000,000
---------------------------------------------------------------------
4,000,000 Beaver County, PA IDA, PCR Refunding Bonds (1994 Series), 4.50% CP
(Duquesne Light Power Co.)/(Swiss Bank Corp., New York, NY LOC),
Mandatory Tender
10/10/1995 A-1+ 4,000,000
---------------------------------------------------------------------
6,300,000 Delaware County, PA PCR (Series C), 4.00% CP (Philadelphia Electric
Co.)/(FGIC INS), Mandatory Tender 10/6/1995 A-1+ 6,300,000
---------------------------------------------------------------------
4,200,000 Delaware County, PA Weekly VRDNs (American College)/(PNC Bank, N.A.
LOC) P-1 4,200,000
---------------------------------------------------------------------
5,600,000 Erie County, PA Hospital Authority Weekly VRDNs (St. Vincent Health
System)/(Fuji Bank, Ltd., Tokyo LOC) A-1 5,600,000
---------------------------------------------------------------------
1,300,000 Pennsylvania State Higher Education Facilities Authority Weekly VRDNs
(Carnegie-Mellon University) A-1 1,300,000
---------------------------------------------------------------------
6,000,000 Philadelphia, PA, GO (Series 1990), 3.90% CP (Fuji Bank, Ltd., Tokyo
LOC), Mandatory Tender 8/23/1995 A-1 6,000,000
---------------------------------------------------------------------
3,690,000 Pittsburgh, PA, GO Unlimited Bonds (Series B), 4.10% BONDs (AMBAC
INS), 9/1/1995 NR(1) 3,690,300
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
---------------------------------------------------------------------
$ 500,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of
Pennsylvania)/(AMBAC INS)/(First National Bank of Chicago LIQ) A-1 $ 500,000
---------------------------------------------------------------------
2,000,000 Washington County, PA Hospital Authority Weekly VRDNs (Keystone
Diversified Management Corp.)/ (Mellon Bank N.A., Pittsburgh LOC) A-1 2,000,000
--------------------------------------------------------------------- ----------------
Total 38,590,300
--------------------------------------------------------------------- ----------------
PUERTO RICO--0.6%
---------------------------------------------------------------------
10,000,000 Puerto Rico Government Development Bank Weekly VRDNs (Credit Suisse,
Zurich LOC) A-1+ 10,000,000
--------------------------------------------------------------------- ----------------
SOUTH CAROLINA--0.5%
---------------------------------------------------------------------
3,000,000 Greenville, SC Hospital System Board of Trustees, (Series 1993-B)
Weekly VRDNs (Greenville County, SC Hospital Authority) A-1+ 3,000,000
---------------------------------------------------------------------
5,000,000 University of South Carolina, Athletic Facilities (Series 1995),
5.25% BANs, 3/1/1996 NR(3) 5,031,756
--------------------------------------------------------------------- ----------------
Total 8,031,756
--------------------------------------------------------------------- ----------------
TENNESSEE--3.1%
---------------------------------------------------------------------
10,000,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie School)/ (Trust Company
Bank, Atlanta LOC) A-1+ 10,000,000
---------------------------------------------------------------------
22,400,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/ (Sumitomo Bank
Ltd., Osaka LOC) A-1 22,400,000
---------------------------------------------------------------------
2,200,000 Metropolitan Nashville Tennessee AA, (Series 1993) Weekly VRDNs (FGIC
INS)/(Societe Generale, Paris LIQ) A-1+ 2,200,000
---------------------------------------------------------------------
7,330,000 Nashville and Davidson County, NC IDB, Metropolitan Government
Revenue Bonds (Series 1995) Weekly VRDNs (YMCA Projects)/(Nationsbank
of Tennessee LOC) P-1 7,330,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
TENNESSEE--CONTINUED
---------------------------------------------------------------------
$ 6,200,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil Fibers, Inc.
Project)/(ABN AMRO Bank N.V., Amsterdam LOC) A-1+ $ 6,200,000
--------------------------------------------------------------------- ----------------
Total 48,130,000
--------------------------------------------------------------------- ----------------
TEXAS--2.0%
---------------------------------------------------------------------
4,325,000 Dallas, TX (Series C), 3.90% TOBs, Optional Tender
6/15/1996 NR(1) 4,325,000
---------------------------------------------------------------------
11,050,000 Harris County, TX HFDC (Series B), 3.90% TOBs (San Jacinto Methodist
Hospital)/(Morgan Guaranty Trust Co., New York LOC), Mandatory Tender
9/1/1995 A-1+ 11,050,000
---------------------------------------------------------------------
7,000,000 Harris County, TX, Toll Road Unlimited Tax & Sub Lien Revenue (Series
1994-G) Weekly VRDNs A-1+ 7,000,000
---------------------------------------------------------------------
2,000,000 Montgomery County, TX IDC, IDRB Weekly VRDNs (Houston Area Research
Center)/(Morgan Guaranty Trust Co., New York LOC) A-1+ 2,000,000
---------------------------------------------------------------------
1,920,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/(Nationsbank
of North Carolina N.A. LOC) P-1 1,920,000
---------------------------------------------------------------------
5,000,000 Texas State Department of Housing & Community Affairs, Multifamily
Housing Revenue Refunding Bonds (Remington Hill Series B) Weekly
VRDNs (Trust Company Bank, Atlanta LOC) A-1+ 5,000,000
--------------------------------------------------------------------- ----------------
Total 31,295,000
--------------------------------------------------------------------- ----------------
UTAH--1.3%
---------------------------------------------------------------------
19,670,000 Utah State HFA, Single Family Mortgage Bonds (Series 1995-1) Weekly
VRDNs (Westdeutsche Landesbank Girozentrale LIQ) A-1+ 19,670,000
--------------------------------------------------------------------- ----------------
VIRGINIA--0.8%
---------------------------------------------------------------------
1,500,000 Arlington County, VA Weekly VRDNs (Ballston Public
Parking)/(Citibank, NA LOC) A-1+ 1,500,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
VIRGINIA--CONTINUED
---------------------------------------------------------------------
$ 6,200,000 Henrico County, VA IDA, (Series 1994) Daily VRDNs (Virginia United
Methodist Homes, Inc.)/(Nationsbank of Virginia, N.A. LOC) VMIG1 $ 6,200,000
---------------------------------------------------------------------
5,000,000 Virginia State Housing Development Authority, (Series 1993-A), 3.45%
TOBs, Mandatory Tender 9/12/1995 A-1+ 5,000,000
--------------------------------------------------------------------- ----------------
Total 12,700,000
--------------------------------------------------------------------- ----------------
WASHINGTON--0.4%
---------------------------------------------------------------------
5,535,000 Pierce County, WA (Series 1995), 4.50% TANs, 12/27/1995 NR(3) 5,537,682
--------------------------------------------------------------------- ----------------
WEST VIRGINIA--0.5%
---------------------------------------------------------------------
7,960,000 Cabell County Commission, WV, Life Care Facilities Multi-Option
Adjustable Rate Revenue Bonds (Series 1995) Weekly VRDNs (Foster
Foundation)/(Huntington National Bank, Columbus, OH LOC) A-1 7,960,000
--------------------------------------------------------------------- ----------------
WISCONSIN--2.3%
---------------------------------------------------------------------
1,100,000 Seymour, WI IDA Weekly VRDNs (Beatrice Cheese, Inc.)/ (Bank of New
York, New York LOC) P-1 1,100,000
---------------------------------------------------------------------
34,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical Center)/(Sumitomo
Bank Ltd., Osaka LOC) VMIG1 34,000,000
--------------------------------------------------------------------- ----------------
Total 35,100,000
--------------------------------------------------------------------- ----------------
WYOMING--0.4%
---------------------------------------------------------------------
1,125,000 Natrona County, WY, Hospital Revenue, 5.85% TOBs (Grainger W.W.,
Inc.), Optional Tender 12/1/1995 P-1 1,125,000
---------------------------------------------------------------------
4,400,000 Sweetwater County, WY IDA, PCR Refunding Bonds (Series 1990-A) Weekly
VRDNs (Pacificorp)/(Credit Suisse, Zurich LOC) VMIG1 4,400,000
--------------------------------------------------------------------- ----------------
Total 5,525,000
--------------------------------------------------------------------- ----------------
NO STATE--1.4%
---------------------------------------------------------------------
10,000,000 Clipper Tax Exempt Trust (Series 1993-1) Weekly VRDNs (State Street
Bank and Trust Co. LIQ) A-1+ 10,000,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NO STATE--CONTINUED
---------------------------------------------------------------------
$ 6,440,583 LaSalle National Bank Leasetops Trust (Series 1994-B) Weekly VRDNs
(Lasalle National Bank, Chicago LIQ)/ (Lasalle National Bank, Chicago
LOC) A-1+ $ 6,440,583
---------------------------------------------------------------------
1,934,628 LaSalle National Bank Tax-Exempt Trust (Series 1993-A) Weekly VRDNs
(Lasalle National Bank, Chicago LIQ)/ (Lasalle National Bank, Chicago
LOC) A-1+ 1,934,628
---------------------------------------------------------------------
3,040,000 Merrill Lynch Puttable FLOATs/RITES Trust (Series PP2) Weekly VRDNs VMIG1 3,040,000
--------------------------------------------------------------------- ----------------
Total 21,415,211
--------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST(A) $ 1,553,856,743
--------------------------------------------------------------------- ----------------
</TABLE>
(a) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($1,547,473,496) at July 31, 1995.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
BANs--Bond Anticipation Notes
CDA--Community Development Administration
CP--Commercial Paper
EDA--Economic Development Authority
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance
GO--General Obligation
GTDs--Guarantees
HEFA--Health and Education Facilities Authority
HFA--Housing Finance Authority
HFDC--Health Facility Development Corporation
IDA--Industrial Development Authority
IDB--Industrial Development Bond
IDC--Industrial Development Corporation
IDR--Industrial Development Revenue
IDRB--Industrial Development Revenue Bonds
IDFA--Industrial Development Finance Authority
IFA--Industrial Finance Authority
INS--Insurance
LIQ--Liquidity Agreement
LOCs--Letter(s) of Credit
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance
PCR--Pollution Control Revenue
PFA--Public Facility Authority
PLC--Public Limited Company
RANs--Revenue Anticipation Notes
TANs--Tax Anticipation Notes
TOBs--Tender Option Bonds
TRANs--Tax and Revenue Anticipation Notes
VHA--Veterans Housing Administration
VRDNs--Variable Rate Demand Notes
VRNs--Variable Rate Notes
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 1,553,856,743
- -----------------------------------------------------------------------------------------------
Cash 933,463
- -----------------------------------------------------------------------------------------------
Income receivable 9,103,589
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 1,563,893,795
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $ 11,518,668
- --------------------------------------------------------------------------------
Income distribution payable 4,394,007
- --------------------------------------------------------------------------------
Accrued expenses 507,624
- -------------------------------------------------------------------------------- -------------
Total liabilities 16,420,299
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 1,547,494,731 shares outstanding $ 1,547,473,496
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------
Paid in capital 1,547,494,731
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (21,235)
- ----------------------------------------------------------------------------------------------- ----------------
Total Net Assets $ 1,547,473,496
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
($1,295,457,878 / 1,295,478,935 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
($252,015,618 / 252,015,796 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 44,477,152
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,318,805
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 877,668
- ------------------------------------------------------------------------------------
Custodian fees 110,650
- ------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 43,928
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 5,202
- ------------------------------------------------------------------------------------
Auditing fees 12,951
- ------------------------------------------------------------------------------------
Legal fees 16,729
- ------------------------------------------------------------------------------------
Portfolio accounting fees 128,996
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 2,520,292
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 378,074
- ------------------------------------------------------------------------------------
Share registration costs 337,930
- ------------------------------------------------------------------------------------
Printing and postage 28,823
- ------------------------------------------------------------------------------------
Insurance premiums 15,420
- ------------------------------------------------------------------------------------
Taxes 22
- ------------------------------------------------------------------------------------
Miscellaneous 14,033
- ------------------------------------------------------------------------------------ ------------
Total expenses 6,809,523
- ------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $ 1,581,210
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 2,520,292 4,101,502
- ---------------------------------------------------------------------- ------------ ------------
Net expenses 2,708,021
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 41,769,131
- -------------------------------------------------------------------------------------------------- -------------
Net realized gain (loss) on investments (1,395)
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 41,767,736
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 41,769,131 $ 16,807,122
- ----------------------------------------------------------------------------
Net realized gain/loss on investments ($40 net gain and $19,220 net loss,
respectively, as computed for federal income tax purposes) (1,395) 3,986
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in assets resulting from operations 41,767,736 16,811,108
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (36,508,581) (16,783,291)
- ----------------------------------------------------------------------------
Institutional Service Shares (5,260,550) (23,831)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from distributions to shareholders (41,769,131) (16,807,122)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of Shares 7,385,500,551 3,346,441,976
- ----------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of distributions
declared 2,286,899 460,949
- ----------------------------------------------------------------------------
Cost of Shares redeemed (6,655,215,610) (2,986,122,657)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 732,571,840 360,780,268
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 732,570,445 360,784,254
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 814,903,051 454,118,797
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 1,547,473,496 $ 814,903,051
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of six diversified portfolios. The
financial statements included herein are only those of Tax-Free Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At July 31, 1995, the Fund, for federal tax purposes, had a capital loss
carryforward of $19,800, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2001 $580
2002 $19,220
</TABLE>
Additionally, net capital losses of $1,435 attributable to security
transactions incurred after October 31, 1994 are treated as arising on
August 1, 1995, the first day of the Fund's next taxable year.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $1,547,494,731.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1995 1994
- ------------------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Shares sold 6,466,015,512 3,312,845,513
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 1,609,289 460,949
- ------------------------------------------------------------------------------
Shares redeemed (5,961,920,320) (2,977,674,630)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional Share transactions 505,704,481 335,631,832
- ------------------------------------------------------------------------------ ---------------- ----------------
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1995 1994*
- ------------------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Shares sold 919,485,039 33,596,463
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 677,610 --
- ------------------------------------------------------------------------------
Shares redeemed (693,295,290) (8,448,027)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional Service Share transactions 226,867,359 25,148,436
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from share transactions 732,571,840 360,780,268
- ------------------------------------------------------------------------------ ---------------- ----------------
</TABLE>
*For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
The Adviser may voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services (FSS), the Fund will pay FSS up to 0.25 of
1% of daily average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
FSS may voluntarily choose to waive a portion of this fee. FSS can modify or
terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
INTERFUND TRANSACTIONS--During the year ended July 31, 1995, the Fund engaged in
purchase and sale transactions with funds that have a common investment adviser
(or affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $2,395,054,229 and $2,346,849,715,
respectively.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST:
(Tax-Free Obligations Fund)
We have audited the accompanying statement of assets and liabilities of Tax-Free
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Tax-Free Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Tax-Free Obligations Fund
Institutional Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
TAX-FREE
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- -------------------------
Distributor
A Subsidiary of Federatd Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N401
9110207A-IS (3/96)
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 diversified portfolio of
Money Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in municipal securities to provide
dividend income exempt from federal regular income tax consistent with stability
of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--
INSTITUTIONAL SERVICE SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Municipal Securities 6
Investment Risks 6
Investment Limitations 7
Regulatory Compliance 7
TRUST INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Distribution of Shares 8
Administration of the Fund 9
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN THE FUND 10
- ------------------------------------------------------
Share Purchases 10
Minimum Investment Required 10
Certificates and Confirmations 10
Dividends 11
Capital Gains 11
REDEEMING SHARES 11
- ------------------------------------------------------
By Mail 11
Telephone Redemption 12
Accounts with Low Balances 12
SHAREHOLDER INFORMATION 12
- ------------------------------------------------------
Voting Rights 12
Massachusetts Partnership Law 13
TAX INFORMATION 13
- ------------------------------------------------------
Federal Income Tax 13
Pennsylvania Corporate and
Personal Property Taxes 14
OTHER CLASSES OF SHARES 14
- ------------------------------------------------------
PERFORMANCE INFORMATION 14
- ------------------------------------------------------
FINANCIAL STATEMENTS 15
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 44
- ------------------------------------------------------
ADDRESSES Inside Back Cover
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................. None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)........................................................................ 0.06%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.39%
Shareholder Services Fee................................................................ 0.25%
Total Operating Expenses(2)................................................................... 0.45%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The total operating expenses would have been 0.59% absent the voluntary
waiver of a portion of the management fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF INSTITUTIONAL SERVICE SHARES OF
THE FUND WILL BEAR, EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE
DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES, SEE "INVESTING IN THE FUND" AND
"TRUST INFORMATION." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $5 $14 $25 $57
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
TAX-FREE OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants, on page 44.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------
Net investment income 0.03 0.002
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------
Distributions from net investment income (0.03) (0.002)
- ------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (B) 3.39% 0.18%
- -------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------
Expenses 0.45% 0.39%(c)
- -------------------------------------------------------------------------------------
Net investment income 3.48% 3.04%(c)
- -------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.14% 0.15%(c)
- -------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $252,016 $25,148
- -------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 5, 1994 (date of initial
public investment) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to the Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Shares and
Institutional Service Shares. This prospectus relates only to Institutional
Service Shares of the Fund, which are designed primarily for financial
institutions, financial intermediaries, and institutional investors as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing primarily in short-term municipal securities.
The Fund may not be a suitable investment for retirement plans since it invests
in municipal securities. A minimum initial investment of $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 dividend income exempt from
federal regular income tax consistent with stability of principal. This
investment objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities (as defined below) maturing in 13 months or less. As a
matter of investment policy, which cannot be changed without shareholder
approval, at least 80% of the Fund's annual interest income will be exempt from
federal regular income tax. (Federal regular income tax does not include the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations.) The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in debt obligations issued
by or on behalf of states, territories, and possessions of the United States,
including the District of Columbia, and any political subdivision or financing
authority of any of these, the income from which is, in the opinion of qualified
legal counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:
tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
municipal commercial paper and other short-term notes;
variable rate demand notes;
municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases; and
participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term debt
instruments that have variable or floating interest rates and provide the Fund
with the right to tender the security for repurchase at its stated principal
amount plus accrued interest. Such securities typically bear interest at a rate
that is intended to cause the securities to trade at par. The interest rate may
float or be adjusted at regular intervals (ranging from daily to annually), and
is normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit the
Fund to tender the security at the time of each interest rate adjustment or at
other fixed intervals. See "Demand Features." The Fund treats variable rate
demand notes as maturing on the later of the date of the next interest rate
adjustment or the date on which the Fund may next tender the security for
repurchase.
PARTICIPATION INTERESTS. The Fund may purchase interests in Municipal
Securities from financial institutions such as commercial and investment banks,
savings and loan associations, and insurance companies. These interests may take
the form of participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows the Fund to treat
the income from the investment as exempt from federal income tax. The Fund
invests in these participation interests in order to obtain credit enhancement
or demand features that would not be available through direct ownership of the
underlying Municipal Securities.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities. They may take the form of a lease, an installment purchase contract,
a conditional sales contract, or a participation interest in any of the above.
RATINGS. The securities in which the Fund invests must be rated in the highest
short-term rating category by one or more nationally recognized statistical
rating organizations ("NRSROs") or be of comparable quality to securities having
such ratings. An NRSRO's highest rating category is 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 FIN-1+ or FIN-1 by Fitch Investors Service, Inc. ("Fitch")
are all considered rated in the highest short-term rating category. The Fund
will follow applicable regulations in determining whether a security rated by
more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."
Further, the Fund has the ability but no present intention of investing in:
securities that are rated MIG-2 or VMIG-2 by Moody's, SP-2 by S&P, FIN-2 by
Fitch; tax-exempt commercial paper that is rated P-2 by Moody's, A-2 by S&P, or
F-2 by Fitch; and securities that are not rated but are deemed to be of
comparable quality. Shareholders will be notified should the Fund decide to
invest in these securities.
CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, or insurance. The Fund typically
evaluates the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. However,
credit-enhanced securities will not be treated as having been issued by the
credit enhancer for diversification purposes, unless the Fund has invested more
than 10% of its assets in securities issued, guaranteed or otherwise credit
enhanced by the credit enhancer, in which case the securities will be treated as
having been issued by both the issuer and the credit enhancer. The bankruptcy,
receivership, or default of the credit enhancer will adversely affect the
quality and marketability of the underlying security.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are determined to be
liquid. To the extent that restricted securities are not determined to be
liquid, the Fund will limit their purchase, together with other illiquid
securities, to 10% of its total assets.
TEMPORARY INVESTMENTS. From time to time, when the investment adviser
determines that market conditions call for a temporary defensive posture, the
Fund may invest in tax-exempt or taxable securities such as: obligations issued
by or on behalf of municipal or corporate issuers having the same quality
characteristics as described above; obligations issued or guaranteed by the U.S.
government, its agencies, or instrumentalities; instruments issued by a U.S.
branch of a domestic bank or other deposit institution having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment; and
repurchase agreements (arrangements in which the organization selling the Fund a
temporary investment agrees at the time of sale to repurchase it at a mutually
agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments, there is
no current intention to do so. However, the interest from certain Municipal
Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Fund to achieve its
investment objective also depends on the continuing ability of the issuers of
Municipal Securities and participation interests, or the credit enhancers of
either, to meet their obligations for the payment of interest and principal when
due. In addition, from time to time, the supply of Municipal Securities
acceptable for purchase by the Fund could become limited.
The Fund may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or whose
issuers are located in the same state. Sizable investments in these Municipal
Securities could involve an increased risk to the Fund should any of these
related projects or facilities experience financial difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.
INVESTMENT LIMITATIONS
The Fund will not borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge assets to secure such borrowings. This investment limitation
cannot be changed without shareholder approval.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
TRUST INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of the Institutional Service Shares, computed at an annual
rate, to obtain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
<S> <C>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
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The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through
Friday, except on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
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SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 3:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 3:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Tax-Free Obligations Fund-Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.
BY MAIL. To purchase by mail, send a check made payable to Tax-Free Obligations
Fund-- Institutional Service Shares to: Federated Services Company, Tax-Free
Obligations Fund, P.O. Box 8600, Boston, MA 02266-8600. Orders by mail are
considered received when payment by check is converted into federal funds. This
is normally the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
accounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
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Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Tax-Free Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Tax-Free Obligations Fund--Institutional Service
Shares; shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road--2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 12:00 noon (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after
12:00 noon (Eastern time). However, the proceeds are not wired until the
following business day.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
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VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
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FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Shareholders are not required to pay the federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest earned on certain "private activity" bonds issued
after August 7, 1986, may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The Fund may purchase all types of municipal bonds, including private activity
bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Because interest received by the Fund may not be
exempt from all state and local income taxes, shareholders may be required to
pay state and local taxes on dividends received from the Fund. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local tax laws.
OTHER CLASSES OF SHARES
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The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity, and 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 Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
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From time to time, the Fund advertises its yield, effective yield, and
tax-equivalent yield for shares. The performance figures will be calculated
separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that would have to be earned to equal
the tax-exempt yield, assuming a specific tax rate.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
TAX-FREE OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--100.4%
- ------------------------------------------------------------------------------------
ALABAMA--2.8%
---------------------------------------------------------------------
$ 9,010,000 Alabama Special Care Facilities Finance Authority Weekly VRDNs
(Providence Hospital)/(Daughters of Charity GTD) VMIG1 $ 9,010,000
---------------------------------------------------------------------
2,000,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly VRDNs (S.P. Hotel
Company)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 2,000,000
---------------------------------------------------------------------
3,140,000 Birmingham, AL Special Care Facilities Financing Authority, Capital
Improvement Revenue Bonds (Series 1995) Weekly VRDNs (Methodist Home
for the Aging, AL)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 3,140,000
---------------------------------------------------------------------
2,850,000 Birmingham, AL, GO (Series 1995-A), 5.625% BANs,
1/5/1996 NR(2) 2,852,538
---------------------------------------------------------------------
4,600,000 Birmingham, AL, GO (Series 1992-A) Weekly VRDNs (First Alabama Bank,
Birmingham LOC) A-1+ 4,600,000
---------------------------------------------------------------------
1,000,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills, Inc.)/ (Trust Company
Bank, Atlanta LOC) A-1+ 1,000,000
---------------------------------------------------------------------
3,000,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn (Homewood
AL))/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 3,000,000
---------------------------------------------------------------------
8,500,000 Huntsville, AL Health Care Authority/Health Care Facilities (Series
1994-A) Weekly VRDNs (MBIA INS)/ (Amsouth Bank N.A., Birmingham LIQ) A-1 8,500,000
---------------------------------------------------------------------
1,700,000 Huntsville, AL Health Care Authority/Health Care Facilities, Health
Care Facilities Revenue Bonds (Series 1994-B) Weekly VRDNs (MBIA
INS)/(Amsouth Bank N.A., Birmingham LIQ) A-1 1,700,000
---------------------------------------------------------------------
300,000 Huntsville, AL IDA Weekly VRDNs (Parkway Project (Huntsville,
AL))/(First Alabama Bank, Birmingham LOC) A-1+ 300,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
ALABAMA--CONTINUED
---------------------------------------------------------------------
$ 1,500,000 Marshall County, AL, Special Obligation School Refunding Warrant
(Series 1994) Weekly VRDNs (Marshall County, AL Board of
Education)/(First Alabama Bank, Birmingham LOC) A-1+ $ 1,500,000
---------------------------------------------------------------------
3,000,000 Mobile, AL IDB, PCR (Series 1993-B) Weekly VRDNs (Alabama Power Co.) A-1 3,000,000
---------------------------------------------------------------------
995,000 Tuscaloosa County, AL Port Authority (Series 1989-A) Weekly VRDNs
(Capstone Hotel Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) P-1 995,000
---------------------------------------------------------------------
1,630,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) Weekly
VRDNs (Harco, Inc.)/(Amsouth Bank N.A., Birmingham LOC) P-1 1,630,000
--------------------------------------------------------------------- ----------------
Total 43,227,538
--------------------------------------------------------------------- ----------------
ARIZONA--1.9%
---------------------------------------------------------------------
15,000,000 Apache County, AZ IDA (Series 1983-A) Weekly VRDNs (Tucson Electric
Power Co.)/(Barclays Bank PLC, London LOC) A-1+ 15,000,000
---------------------------------------------------------------------
4,000,000 Arizona Health Facilities Authority, Variable Rate Demand Bond Weekly
VRDNs (University Physicians, Inc.)/(Bank One, Arizona N.A. LOC) P-1 4,000,000
---------------------------------------------------------------------
4,400,000 Maricopa County, AZ (Series 1994-F) Daily VRDNs (Arizona Public
Service Corp.)/(Bank of America NT and SA, San Francisco LOC) A-1 4,400,000
---------------------------------------------------------------------
6,000,000 Pima County, AZ IDA, Floating Rate Notes (Series A) Weekly VRDNs
(Tucson Electric Power Co.)/(Barclays Bank PLC, London LOC) P-1 6,000,000
--------------------------------------------------------------------- ----------------
Total 29,400,000
--------------------------------------------------------------------- ----------------
ARKANSAS--0.1%
---------------------------------------------------------------------
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson Co.)/ (PNC Bank, N.A.
LOC) VMIG1 1,000,000
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
CALIFORNIA--16.6%
---------------------------------------------------------------------
$ 27,350,000 California School Cash Reserve Program Authority, (Series 1995-A),
4.75% TRANs (MBIA Insured), 7/3/1996 SP-1+ $ 27,577,341
---------------------------------------------------------------------
35,000,000 California State, Revenue Anticipation Warrants (Series C), 5.75%
RANs (Bank of America NT and SA, San Francisco, Bank of Nova Scotia,
Toronto, Banque Nationale de Paris, Canadian Imperial Bank of
Commerce, Toronto, Chemical Bank, New York, Citibank, N.A., Credit
Suisse, Zurich, Morgan Guaranty Trust Co., New York, National
Westminster Bank, PLC, London, Societe Generale North America, Inc.,
Sumitomo Bank Ltd., Osaka, Swiss Bank Corp., Westdeusche Landesbank
Girozentrale & Toronto Dominion Bank LOCs) SP-1 35,274,544
---------------------------------------------------------------------
16,100,000 California State, Revenue Anticipation Warrants (Series C), 5.75%
RANs (FGIC INS), 4/25/1996 SP-1 16,355,231
---------------------------------------------------------------------
40,350,000 California Student Loan, Revenue Bonds (Series A) Weekly VRDNs
(Student Loan Marketing Association LOC) P-1 40,350,000
---------------------------------------------------------------------
10,000,000 Clipper CAL Tax-Exempt Trust, (94-2) Weekly VRDNs (California
State)/(State Street Bank and Trust Co. LIQ)/ (Bank of America NT and
SA, San Francisco, Bank of Nova Scotia, Toronto, Banque Nationale de
Paris, Canadian Imperial Bank of Commerce, Toronto, Chemical Bank,
Citibank N.A. and Credit Suisse LOCs) VMIG1 10,000,000
---------------------------------------------------------------------
12,995,000 Kern County, CA Board of Education, 4.50% TRANs,
6/28/1996 SP-1+ 13,057,372
---------------------------------------------------------------------
10,000,000 Los Angeles County, CA Unified School District, 4.50% TRANs, 7/3/1996 SP-1+ 10,071,011
---------------------------------------------------------------------
41,000,000 Los Angeles County, CA, 4.50% TRANs (Bank of America NT and SA, San
Francisco, Credit Suisse, Zurich, Morgan Guaranty Trust Co., New
York, Swiss Bank Corp., New York, NY, Union Bank of Switzerland,
Zurich and Westdeutsche Landesbank Girozentrale LOCs), 7/1/1996 SP-1 41,266,907
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
CALIFORNIA--CONTINUED
---------------------------------------------------------------------
$ 23,500,000 Los Angeles, CA Wastewater System, Tender Option Certificates (Series
1995-H) Weekly VRDNs (MBIA INS)/ (Swiss Bank Corp., New York, NY LIQ) A-1+ $ 23,500,000
---------------------------------------------------------------------
10,000,000 Orange County, CA IDA, (Series 1991-A) Weekly VRDNs (The
Lakes)/(Citibank, N.A. LOC) A-1 10,000,000
---------------------------------------------------------------------
6,000,000 Orange County, CA Local Transportation Authority, Sales Tax Revenue
Notes, 4.00% CP (Industrial Bank of Japan Ltd., Tokyo LOC), Mandatory
Tender 9/13/1995 A-1 6,000,000
---------------------------------------------------------------------
5,000,000 San Francisco, CA Unified School District (Series 1994), 4.75% TRANs,
8/24/1995 SP-1+ 5,001,722
---------------------------------------------------------------------
7,000,000 Temecula Valley Unified School District, CA, 4.50% TRANs, 7/5/1996 SP-1+ 7,031,142
---------------------------------------------------------------------
10,800,000 Ventura County, CA Community College District, 4.50% TRANs, 6/28/1996 SP-1+ 10,851,836
--------------------------------------------------------------------- ----------------
Total 256,337,106
--------------------------------------------------------------------- ----------------
COLORADO--1.8%
---------------------------------------------------------------------
25,000,000 Arapahoe County, CO Improvement Authority, (Series G), 4.45% TOBs
(Swiss Bank Corp., New York, NY LOC), Optional Tender 8/31/1995 SP-1+ 25,000,000
---------------------------------------------------------------------
2,625,000 Denver (City & County), CO, 5.20% TOBs (Blake Street
Compendium)/(Norwest Bank Minnesota, Minneapolis LOC), Optional
Tender 12/15/1995 A-1+ 2,625,000
--------------------------------------------------------------------- ----------------
Total 27,625,000
--------------------------------------------------------------------- ----------------
CONNECTICUT--2.6%
---------------------------------------------------------------------
39,780,000 Connecticut State Transportation Infrastructure Authority Weekly
VRDNs (Connecticut State)/(Industrial Bank of Japan Ltd., Tokyo LOC) A-1 39,780,000
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
DELAWARE--0.3%
---------------------------------------------------------------------
$ 5,100,000 Delaware Health Facilities Authority, (Series 1985-BTP-19A) Weekly
VRDNs (Medical Center of Delaware)/(MBIA INS)/(Bankers Trust Co., New
York LIQ) NR(1) $ 5,100,000
--------------------------------------------------------------------- ----------------
FLORIDA--13.7%
---------------------------------------------------------------------
3,000,000 Alachua County, FL Health Facilities Authority, Health Facility
Revenue Bonds (Series 1991) Weekly VRDNs (North Florida Retirement
Village)/(Kredietbank N.V., Brussels LOC) A-1 3,000,000
---------------------------------------------------------------------
3,000,000 Broward County, FL Health Facility Authority, Revenue Bonds Weekly
VRDNs (John Knox Village of Florida)/ (First Union National Bank,
Charlotte, N.C. LOC) P-1 3,000,000
---------------------------------------------------------------------
4,470,000 Dade County, FL IDA Weekly VRDNs (Futernick Associates, Inc.)/(First
Union National Bank, Charlotte, N.C. LOC) P-1 4,470,000
---------------------------------------------------------------------
1,200,000 Dade County, FL IDA, Industrial Development Revenue Refunding Bonds
Weekly VRDNs (Continental Farms, Inc.)/(Nationsbank of North Carolina
N.A. LOC) P-1 1,200,000
---------------------------------------------------------------------
2,000,000 Dade County, FL Water & Sewer System Weekly VRDNs (FGIC
INS)/(Industrial Bank of Japan Ltd., Tokyo LIQ) A-1 2,000,000
---------------------------------------------------------------------
12,490,000 Florida HFA Weekly VRDNs (Cornerstone)/(PNC Bank, N.A. LOC) A-1 12,490,000
---------------------------------------------------------------------
1,400,000 Florida HFA, Multi-Family Housing Revenue Refunding Bonds (Series
1985-D) Weekly VRDNs (Park Colony Project, FL)/(Mellon Bank NA,
Pittsburgh LOC) A-1 1,400,000
---------------------------------------------------------------------
3,285,000 Florida State Board of Education Administration, (CR49)/ (Series
1989-A), 4.00% TOBs (Citibank, N.A. LIQ), Optional Tender 12/1/1995 NR(2) 3,285,000
---------------------------------------------------------------------
4,235,000 Florida State Board of Education Administration, (CR49D), 4.00% TOBs
(Citibank, N.A. LIQ), Optional Tender
12/1/1995 NR(2) 4,235,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$ 1,210,000 Florida State Board of Education Administration, (CR55), (Series
1989-A), 4.00% TOBs (Citibank, N.A. LIQ), Optional Tender 12/1/1995 NR(2) $ 1,210,000
---------------------------------------------------------------------
17,975,000 Hillsborough County, FL IDA, PCR Refunding Bonds (Series 1994) Weekly
VRDNs (Tampa Electric Company)/ (MBIA INS) NR(2) 17,975,000
---------------------------------------------------------------------
22,000,000 Jacksonville Electric Authority, FL, Tender Option Certificates
(Series 1995-C) Weekly VRDNs (Bayerische Hypotheken-Und Wechsel-Bank
Ag LOC) A-1+ 22,000,000
---------------------------------------------------------------------
9,200,000 Jacksonville, FL PCR, (Series 1994), 4.10% CP (Florida Power & Light
Co.), Mandatory Tender 12/14/1995 VMIG1 9,200,000
---------------------------------------------------------------------
6,100,000 Jacksonville, FL, Hospital Revenue Bonds (Series 1989) Weekly VRDNs
(Baptist Medical Center, AL)/(First Union National Bank, Charlotte,
N.C. LOC) VMIG1 6,100,000
---------------------------------------------------------------------
4,200,000 Key West, FL Community Redevelopment Authority Weekly VRDNs (Pier
House Joint Venture)/(PNC Bank, N.A. LOC) P-1 4,200,000
---------------------------------------------------------------------
4,000,000 Lake Shore, FL Hospital Authority, Health Facilities Revenue Bonds
(Series 1991) Weekly VRDNs (Lake Shore Hospital)/(Kredietbank N.V.,
Brussels LOC) P-1 4,000,000
---------------------------------------------------------------------
2,925,000 Lee County, FL IDA, Health Care Facilities Revenue Bonds Weekly VRDNs
(Hope Hospice Project)/(Sun Bank N.A., Orlando LOC) VMIG1 2,925,000
---------------------------------------------------------------------
5,000,000 Lee County, FL, (PA-104) Weekly VRDNs (MBIA INS)/ (Merrill Lynch
Capital Services, Inc. LIQ) VMIG1 5,000,000
---------------------------------------------------------------------
5,410,000 Manatee County, FL HFA Weekly VRDNs (Carriage Club)/(Mellon Bank
N.A., Pittsburgh LOC) VMIG1 5,410,000
---------------------------------------------------------------------
1,900,000 Manatee County, FL HFA, Multi-Family Mortgage Revenue Refunding Bonds
(Series 1989-A) Weekly VRDNs (Hampton/McGuire L.P.)/(Nationsbank of
North Carolina N.A. LOC) A-1 1,900,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$ 6,230,000 Orange County, FL HFA, Multifamily Housing Revenue Bonds Weekly VRDNs
(Sutton Place. Ltd. Project)/ (Nationsbank of Maryland, N.A. LOC) A-1+ $ 6,230,000
---------------------------------------------------------------------
1,715,000 Palm Beach County, FL IDA Weekly VRDNs (Palm Beach Jewish Community
Campus)/(Sun Bank N.A., Orlando LOC) A-1+ 1,715,000
---------------------------------------------------------------------
5,500,000 Pinellas County, FL Health Facility Authority Daily VRDNs (Chemical
Bank, New York LOC) A-1 5,500,000
---------------------------------------------------------------------
10,870,000 Pinellas County, FL Health Facility Authority, (Series 1987) Weekly
VRDNs (St. Mark Village Project)/ (Nationsbank of Florida, N.A. LOC) A-1 10,870,000
---------------------------------------------------------------------
1,000,000 Pinellas County, FL Health Facility Authority, Multi-Family Mortage
Revenue Refunding Bonds (Series 1989-A) Weekly VRDNs (McGregor Place
Project)/ (Nationsbank of North Carolina N.A. LOC) A-1 1,000,000
---------------------------------------------------------------------
4,325,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs (IMC
Fertilizer, Inc. Project)/(Rabobank Nederland, Utrecht LOC) P-1 4,325,000
---------------------------------------------------------------------
9,300,000 Sarasota County, FL Public Hospital District, 4.15% CP (Sarasota
Memorial Hospital), Mandatory Tender
8/23/1995 A-1 9,300,000
---------------------------------------------------------------------
9,100,000 Sarasota County, FL Public Hospital District, 4.15% CP (Sarasota
Memorial Hospital), Mandatory Tender
8/29/1995 A-1 9,100,000
---------------------------------------------------------------------
1,800,000 Seminole County, FL Health Facility Authority IDA, (Series 1991)
Weekly VRDNs (Florida Living Nursing Center)/(Barnett Bank of Central
Florida, Orlando LOC) VMIG1 1,800,000
---------------------------------------------------------------------
10,900,000 Southeast Volusia Hospital District, Revenue Bonds (Series 1995)
Weekly VRDNs (Bert Fish Medical Center, FL)/(SouthTrust Bank of
Alabama, Birmingham LOC) A-1 10,900,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
FLORIDA--CONTINUED
---------------------------------------------------------------------
$ 7,000,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs (Savannahs
Hospital)/(Nationsbank of Georgia, N.A. LOC) P-1 $ 7,000,000
---------------------------------------------------------------------
4,800,000 Sunshine State Governmental Finance Commission, FL, 3.90% CP (Morgan
Guaranty Trust Co., New York, National Westminster Bank, PLC, London
and Union Bank of Switzerland, Zurich LOCs), Mandatory Tender
10/27/1995 VMIG1 4,800,000
---------------------------------------------------------------------
9,750,000 Suwannee County, FL, (Series 1989) Weekly VRDNs (Advent Christian
Village Project)/(Barnett Bank of Jacksonville LOC) VMIG1 9,750,000
---------------------------------------------------------------------
6,400,000 Titusville, FL, Multi-Purpose Revenue Bonds, Installment 1995A Weekly
VRDNs (Banque Paribas, Paris LOC) VMIG1 6,400,000
---------------------------------------------------------------------
6,065,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/(Mellon
Bank N.A., Pittsburgh LOC) P-1 6,065,000
---------------------------------------------------------------------
1,675,000 Volusia County, FL IDA Weekly VRDNs (Crane Cams)/ (First Interstate
Bank of Arizona, N.A. LOC) P-1 1,675,000
--------------------------------------------------------------------- ----------------
Total 211,430,000
--------------------------------------------------------------------- ----------------
GEORGIA--1.5%
---------------------------------------------------------------------
4,000,000 Atlanta, GA, Urban Residential Finance Authority, Residential
Construction Revenue Bonds, Summerhill Neighborhood Bond Program
(Series 1995) Weekly VRDNs (First Union National Bank, Charlotte,
N.C. LOC) A-1 4,000,000
---------------------------------------------------------------------
1,500,000 Coweta County, GA IDA Daily VRDNs (Eckerds Warehouse)/(Union Bank of
Switzerland, Zurich LOC) A-1 1,500,000
---------------------------------------------------------------------
1,600,000 DeKalb County, GA, (Series 1992) Weekly VRDNs (American Cancer
Society, GA)/(Trust Company Bank, Atlanta LOC) P-1 1,600,000
---------------------------------------------------------------------
3,395,000 Georgia State, HFA, Single Family Mortgage Revenue, 3.90% TOBs
(Citibank, N.A. LIQ), Optional Tender
9/1/1995 NR(2) 3,395,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
GEORGIA--CONTINUED
---------------------------------------------------------------------
$ 12,000,000 Municipal Electric Authority of Georgia, (Series B), 4.25% TOBs,
Optional Tender 6/1/1996 VMIG1 $ 12,014,500
---------------------------------------------------------------------
1,000,000 Rockdale County, GA Hospital Authority, Revenue Anticipation
Certificates (Series 1994) Weekly VRDNs (Trust Company Bank, Atlanta
LOC) VMIG1 1,000,000
--------------------------------------------------------------------- ----------------
Total 23,509,500
--------------------------------------------------------------------- ----------------
HAWAII--0.4%
---------------------------------------------------------------------
6,400,000 Hawaii State, Puttable Tax Exempt Receipts (Series 31) Weekly VRDNs
(Morgan Guaranty Trust Co., New York LIQ) VMIG1 6,400,000
--------------------------------------------------------------------- ----------------
ILLINOIS--8.1%
---------------------------------------------------------------------
13,000,000 Chicago O'Hare International Airport, Second Lien Revenue Bonds,
(Series 1984-B), 3.80% TOBs (Westpac Banking, Corp., Sydney LOC),
Optional Tender 1/1/1996 A-1 13,000,000
---------------------------------------------------------------------
3,000,000 Illinois Development Finance Authority Weekly VRDNs (Newlywed
Food)/(Mellon Bank N.A., Pittsburgh LOC) A-1 3,000,000
---------------------------------------------------------------------
5,000,000 Illinois Development Finance Authority, (Series 1993-A) Weekly VRDNs
(Loyola Academy)/(Northern Trust Co., Chicago, IL LOC) A-1+ 5,000,000
---------------------------------------------------------------------
3,000,000 Illinois Educational Facilities Authority (Series 1992) Weekly VRDNs
(Depaul University)/(Sanwa Bank Ltd, Osaka LOC) VMIG1 3,000,000
---------------------------------------------------------------------
7,500,000 Illinois Educational Facilities Authority, 4.25% CP (Field Museum of
Natural History)/(Sanwa Bank Ltd, Osaka LOC), Mandatory Tender
9/7/1995 VMIG1 7,500,000
---------------------------------------------------------------------
11,500,000 Illinois Educational Facilities Authority, Adjustable Demand Revenue
Bonds (Series 1995) Weekly VRDNs (Ravinia Festival Association,
IL)/(NBD Bank, N.A., Detroit, MI LOC) A-1+ 11,500,000
---------------------------------------------------------------------
5,000,000 Illinois Health Facilities Authority Weekly VRDNs (OSF Health Care
Systems) VMIG1 5,000,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
ILLINOIS--CONTINUED
---------------------------------------------------------------------
$ 14,000,000 Illinois Health Facilities Authority (Series 1989A) Weekly VRDNs
(Methodist Health Services Corp.)/(Fuji Bank, Ltd., Tokyo LOC) A-1 $ 14,000,000
---------------------------------------------------------------------
14,940,000 Illinois Health Facilities Authority, 4.00% CP (Rush-
Presbyterian St. Luke's Medical)/(Northern Trust Co., Chicago, IL
LIQ), Mandatory Tender 10/19/1995 A-1+ 14,940,000
---------------------------------------------------------------------
35,000,000 Illinois Health Facilities Authority (Series 1985-B) Weekly VRDNs
(OSF Health Care Systems)/(Bank of America Illinois LIQ) VMIG1 35,000,000
---------------------------------------------------------------------
13,900,000 Illinois State Toll Highway Authority, (Series 1993-B) Weekly VRDNs
(MBIA INS)/(Societe Generale, Paris LIQ) VMIG1 13,900,000
--------------------------------------------------------------------- ----------------
Total 125,840,000
--------------------------------------------------------------------- ----------------
INDIANA--1.3%
---------------------------------------------------------------------
1,115,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/ (National City Bank,
Kentucky LOC) P-1 1,115,000
---------------------------------------------------------------------
17,000,000 Indiana Bond Bank, Advance Funding Program Notes (Series 1995-A3)
VRNs, 1/10/1996 SP-1+ 17,000,000
---------------------------------------------------------------------
2,445,000 Indiana Health Facilities Finance Authority Rehabilitation Center
Weekly VRDNs (Crossroads Rehabilitation Center)/(Bank One,
Indianapolis, IN LOC) A-1 2,445,000
--------------------------------------------------------------------- ----------------
Total 20,560,000
--------------------------------------------------------------------- ----------------
KENTUCKY--0.1%
---------------------------------------------------------------------
1,530,000 Boone County, KY, Adjustable Rate Revenue Refunding Bonds Weekly
VRDNs (Spring Meadow Associates)/ (Huntington National Bank,
Columbus, OH LOC) P-1 1,530,000
--------------------------------------------------------------------- ----------------
LOUISIANA--1.9%
---------------------------------------------------------------------
10,000,000 Louisiana PFA, 3.80% CP (Our Lady of Lake)/(FSA INS), Mandatory
Tender 8/21/1995 A-1 10,000,000
---------------------------------------------------------------------
9,865,000 Louisiana PFA, Advance Funding Notes (Series 1994-B), 4.60% TANs
(Orleans Parish, LA School Board), 8/31/1995 SP-1+ 9,868,120
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------------------
$ 9,130,000 St. James Parish, LA, PCR Refunding Bonds (Series 1988-B), 4.20% CP
(Texaco, Inc.), Mandatory Tender
8/8/1995 A-1 $ 9,130,000
--------------------------------------------------------------------- ----------------
Total 28,998,120
--------------------------------------------------------------------- ----------------
MARYLAND--3.6%
---------------------------------------------------------------------
24,200,000 Maryland Health & Higher Educational Facilities Authority (Series
1985-B) Weekly VRDNs (First National Bank of Chicago LOC) VMIG1 24,200,000
---------------------------------------------------------------------
4,000,000 Maryland Health & Higher Educational Facilities Authority, Revenue
Bonds (Series 1985-A) Weekly VRDNs (Dai-Ichi Kangyo Bank Ltd., Tokyo
LOC) VMIG1 4,000,000
---------------------------------------------------------------------
10,110,000 Maryland State Community Development Administration (Series 1987-2),
4.35% TOBs (First National Bank of Chicago LIQ), Optional Tender
10/1/1995 NR(3) 10,110,000
---------------------------------------------------------------------
300,000 Maryland State IDFA Kelly Springfield Tire, Economic Development
Revenue Refunding Bonds (Series 1994) Weekly VRDNs (Johnson Controls,
Inc.) VMIG1 300,000
---------------------------------------------------------------------
2,000,000 Montgomery County, MD EDA Weekly VRDNs (Howard Hughes Medical Center) A-1+ 2,000,000
---------------------------------------------------------------------
9,300,000 Montgomery County, MD EDA Weekly VRDNs (U.S. Pharmacopeial Convention
Facility)/(Chemical Bank, New York LOC) VMIG1 9,300,000
---------------------------------------------------------------------
6,000,000 Montgomery County, MD Housing Opportunities Commission, Single Family
Mortgage Revenue Bonds (Series 1994-C), 4.35% TOBs, Optional Tender
10/25/1995 VMIG1 6,000,000
--------------------------------------------------------------------- ----------------
Total 55,910,000
--------------------------------------------------------------------- ----------------
MASSACHUSETTS--0.9%
---------------------------------------------------------------------
13,300,000 Massachusetts HEFA (Series I) Weekly VRDNs (Harvard University) A-1+ 13,300,000
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
MICHIGAN--1.3%
---------------------------------------------------------------------
$ 4,350,000 Dearborn, MI Economic Development Corp. (Series 1991) Weekly VRDNs
(Oakbrook Common Project)/(Mellon Bank N.A., Pittsburgh LOC) A-1 $ 4,350,000
---------------------------------------------------------------------
2,000,000 Michigan Municipal Bond Authority, 4.50% RANs,
7/3/1996 SP-1+ 2,012,412
---------------------------------------------------------------------
1,700,000 Michigan State Hospital Finance Authority, Hospital Equipment Loan
Program Bonds (Series A) Weekly VRDNs (First of America Bank Corp.
LOC) VMIG1 1,700,000
---------------------------------------------------------------------
9,500,000 Michigan State, GO Notes, 5.00% TRANs, 9/29/1995 SP-1+ 9,511,856
---------------------------------------------------------------------
2,695,000 Ottawa County, MI Economic Development Corp., Limited Obligation
Revenue Bonds (Series 1995-B) Weekly VRDNs (Sunset Manor, Inc.
Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC) A-1 2,695,000
--------------------------------------------------------------------- ----------------
Total 20,269,268
--------------------------------------------------------------------- ----------------
MINNESOTA--3.4%
---------------------------------------------------------------------
2,065,000 Dakota County, MN Housing & Redevelopment Authority, Multifamily
Rental Housing Revenue Bonds (Series 1994-B) Weekly VRDNs (Westwood
Ridge Senior Residence Project)/(First Bank N.A., Minneapolis LOC) A-1 2,065,000
---------------------------------------------------------------------
5,040,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) Weekly VRDNs
(Walker Methodist Health Center, Inc. Project)/(First Bank N.A.,
Minneapolis LOC) A+ 5,040,000
---------------------------------------------------------------------
10,000,000 Minneapolis, MN (Series 1993) Weekly VRDNs (Market Square Real
Estate, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) A-1+ 10,000,000
---------------------------------------------------------------------
4,105,000 Minnesota State HFA, Single Family Mortgage Bonds (Series 1993-T),
4.85% TOBs (Bayerische Landesbank Girozentrale LOC), Mandatory Tender
12/14/1995 A-1+ 4,105,000
---------------------------------------------------------------------
7,400,000 Minnesota State Higher Education Coordinating Board, Supplemental
Student Loan Program Variable Rate Refunding Revenue Bonds (Series
1994-A) Weekly VRDNs (Norwest Bank Minnesota, Minneapolis LIQ) VMIG1 7,400,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
MINNESOTA--CONTINUED
---------------------------------------------------------------------
$ 19,500,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo
Foundation) VMIG1 $ 19,500,000
---------------------------------------------------------------------
800,000 St. Paul, MN Port Authority (Series 1991) Weekly VRDNs (West Gate
Office)/(First Bank N.A., Minneapolis LOC) A-1 800,000
---------------------------------------------------------------------
4,200,000 University of Minnesota (Series G), 4.50% TOBs (Regents of University
of Minnesota), Optional Tender 8/1/1995 VMIG1 4,200,000
--------------------------------------------------------------------- ----------------
Total 53,110,000
--------------------------------------------------------------------- ----------------
MISSISSIPPI--1.2%
---------------------------------------------------------------------
1,770,000 Hinds County, MS (Series 1991) Weekly VRDNs (North State St.
Project)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 1,770,000
---------------------------------------------------------------------
16,600,000 Jackson County, MS Port Facility Daily VRDNs (Chevron U.S.A., Inc.) P-1 16,600,000
--------------------------------------------------------------------- ----------------
Total 18,370,000
--------------------------------------------------------------------- ----------------
MISSOURI--0.3%
---------------------------------------------------------------------
4,200,000 Poplar Bluff, MO IDA (Series 1987) Weekly VRDNs (Gates Rubber
Co.)/(NBD Bank, N.A., Detroit, MI LOC) A-1+ 4,200,000
--------------------------------------------------------------------- ----------------
NEW JERSEY--1.1%
---------------------------------------------------------------------
11,600,000 Essex County, NJ, (Series 1995-B), 5.00% TANs (Chemical Bank, New
York LOC), 8/22/1995 MIG1 11,605,114
---------------------------------------------------------------------
5,000,000 Mercer County, NJ, 5.50% BANs, 9/20/1995 NR(2) 5,003,952
--------------------------------------------------------------------- ----------------
Total 16,609,066
--------------------------------------------------------------------- ----------------
NEW YORK--8.9%
---------------------------------------------------------------------
16,600,000 New York City Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds (Series 1995-A) Daily VRDNs (FGIC INS)/(FGIC
Securities Purchase, Inc. LIQ) A-1+ 16,600,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NEW YORK--CONTINUED
---------------------------------------------------------------------
$ 29,800,000 New York Metropolitan Transportation Authority Weekly VRDNs (Bank of
Tokyo Ltd., Tokyo, Industrial Bank of Japan Ltd., Tokyo, J.P. Morgan
Wilmington, Delaware, Mitsubishi Bank Ltd, Tokyo, Morgan Guaranty
Trust Co., New York, National Westminster Bank, PLC, London and
Sumitomo Bank Ltd., Osaka LOCs) A-1 $ 29,800,000
---------------------------------------------------------------------
29,900,000 New York State Local Government Assistance Corp. (Series D), 3.20%
TOBs (Societe Generale, Paris LOC), Mandatory Tender 8/2/1995 A-1+ 29,900,000
---------------------------------------------------------------------
21,600,000 New York State Local Government Assistance Corp. (Series E), 3.20%
TOBs (Canadian Imperial Bank of Commerce, Toronto LOC), Mandatory
Tender 8/2/1995 A-1+ 21,600,000
---------------------------------------------------------------------
23,110,000 Niagara County, NY IDA, Solid Waste Disposal Facility Revenue Bonds
(Series 1994-A) Weekly VRDNs (American Ref-Fuel Company)/(Air
Products & Chemicals, Inc. and Browning-Ferris Industries, Inc. GTDs) A-1 23,110,000
---------------------------------------------------------------------
14,000,000 Suffolk County, NY, 1995 (RA Series I), 5.25% TANs (Westdeutsche
Landesbank Girozentrale LOC), 8/15/1995 SP-1+ 14,002,354
---------------------------------------------------------------------
3,800,000 Syracuse, NY IDA Syracuse, Multi Modal Civic Facility Revenue Bonds
(Series 1993) Daily VRDNs (Syracuse University Eggers Halls
Project)/(Morgan Guaranty Trust Co., New York LOC) A-1+ 3,800,000
--------------------------------------------------------------------- ----------------
Total 138,812,354
--------------------------------------------------------------------- ----------------
NORTH CAROLINA--4.4%
---------------------------------------------------------------------
30,000,000 Charlotte-Mecklenburg Hospital Authority, NC, Loan Participation
Certificates (1995) VRNs (The Charlotte-
Mecklenburg Hospital Authority), 5/22/1996 NR(2) 30,000,000
---------------------------------------------------------------------
4,320,000 Fayetteville, NC Public Works Commission, Revenue Refunding Bonds
Weekly VRDNs (FGIC INS)/(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 4,320,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
---------------------------------------------------------------------
$ 4,000,000 Greensboro, NC, Certificates of Participation 1994 Equipment Project
Weekly VRDNs (Greensboro, NC Center City Corp.)/(Wachovia Bank of
Georgia N.A., Atlanta LIQ) A-1+ $ 4,000,000
---------------------------------------------------------------------
15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs (Weyerhaeuser Co.) A-1 15,000,000
---------------------------------------------------------------------
745,000 NCNB Pooled Tax-Exempt Trust (Series 1990-A) Weekly VRDNs (NCNB Tax
Exempt Trust 1990a)/(Nationsbank of North Carolina N.A. LOC) P-1 745,000
---------------------------------------------------------------------
4,700,000 North Carolina Medical Care Commission Hospital, Revenue Bonds
(Series 1994) Weekly VRDNs (Hugh Chatam Memorial/Rutherford
Hospitals)/(First Union National Bank, Charlotte, N.C. LOC) VMIG1 4,700,000
---------------------------------------------------------------------
10,000,000 North Carolina Municipal Power Agency No 1, 3.50% CP (Bank of America
NT and SA, San Francisco, Canadian Imperial Bank of Commerce,
Toronto, First Union National Bank, Charlotte, N.C., Industrial Bank
of Japan Ltd., Tokyo, Morgan Guaranty Trust Co., New York and
Nationsbank of North Carolina N.A. LIQs), Mandatory Tender 10/26/1995 P-1 10,000,000
--------------------------------------------------------------------- ----------------
Total 68,765,000
--------------------------------------------------------------------- ----------------
OHIO--5.7%
---------------------------------------------------------------------
2,700,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs (Visiting
Nurses)/(National City Bank, Cleveland, OH LOC) A-1 2,700,000
---------------------------------------------------------------------
2,585,000 Ashland County, OH Health Care Weekly VRDNs (Brethren Care,
Inc.)/(National City Bank, Cleveland, OH LOC) P-1 2,585,000
---------------------------------------------------------------------
8,850,000 Cincinnati City School District, OH, 5.80% TANs,
12/29/1995 NR(3) 8,863,842
---------------------------------------------------------------------
1,100,000 Cuyahoga County, OH Hospital Authority Weekly VRDNs (St. Lukes
Hospital)/(First National Bank of Chicago LOC) VMIG1 1,100,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OHIO--CONTINUED
---------------------------------------------------------------------
$ 2,650,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking Co.)/(Society
National Bank, Cleveland, OH LOC) P-1 $ 2,650,000
---------------------------------------------------------------------
2,000,000 Dayton, OH, Revenue Refunding Bonds (Series 1993-E) Weekly VRDNs
(Emery Air Freight Corp.)/(Mellon Bank N.A., Pittsburgh LOC) VMIG1 2,000,000
---------------------------------------------------------------------
6,100,000 Franklin County, OH Hospital Facility Authority Weekly VRDNs
(Riverside United Methodist Hospital)/(National City Bank, Cleveland,
OH LOC) VMIG1 6,100,000
---------------------------------------------------------------------
12,400,000 Hamilton County, OH Hospital Facilities Authority, Revenue Bonds
(Series 1986-A) Weekly VRDNs (Good Samaritan Hospital) A-1 12,400,000
---------------------------------------------------------------------
2,500,000 Kettering, OH IDA Weekly VRDNs (Center-Plex Venture)/(Society
National Bank, Cleveland, OH LOC) P-1 2,500,000
---------------------------------------------------------------------
2,885,000 Lorain County, OH, Health Facilities Revenue Bonds (Series 1992-A)
Weekly VRDNs (Elyria United Methodist Home)/(Fifth Third Bancorp LOC) P-1 2,885,000
---------------------------------------------------------------------
2,000,000 Lucas County, OH IDA (Series 1991) Weekly VRDNs (Ohio Citizens
Bank)/(National City Bank, Cleveland, OH LOC) P-1 2,000,000
---------------------------------------------------------------------
295,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs (Sunshine
Children's Home)/(National City Bank, Cleveland, OH LOC) P-1 295,000
---------------------------------------------------------------------
4,300,000 Lucas County, OH, Hospital Refunding Revenue Bonds Weekly VRDNs
(Riverside Hospital, OH)/(Huntington National Bank, Columbus, OH LOC) P-1 4,300,000
---------------------------------------------------------------------
6,900,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995) Weekly VRDNs
(Copeland Oaks Project)/(Bank One, Akron, N.A. LOC) A-1+ 6,900,000
---------------------------------------------------------------------
2,210,000 Marion County, OH Hospital Authority (Series 1991), 4.25% TOBs
(Marion County, OH Pooled Hospital Program)/(Bank One, Columbus, N.A.
LOC) Optional Tender 11/1/1995 A-1+ 2,210,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OHIO--CONTINUED
---------------------------------------------------------------------
$ 4,250,000 Mayfield Village, OH IDA Weekly VRDNs (Beta Campus Co.)/(First Union
National Bank, Charlotte, N.C. LOC) P-1 $ 4,250,000
---------------------------------------------------------------------
5,400,000 Medina County, OH, Solid Waste Disposal Revenue Bonds (Series 1995)
Weekly VRDNs (Valley City Steel Company Project)/(Society National
Bank, Cleveland, OH LOC) P-1 5,400,000
---------------------------------------------------------------------
800,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex Venture)/(Society
National Bank, Cleveland, OH LOC) P-1 800,000
---------------------------------------------------------------------
1,700,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited
Partnership)/(Huntington National Bank, Columbus, OH LOC) A-1 1,700,000
---------------------------------------------------------------------
4,700,000 Muskingham County, OH Hospital Facilities Authority Weekly VRDNs
(Bethesda Care System)/(National City Bank, Columbus, OH LOC) VMIG1 4,700,000
---------------------------------------------------------------------
1,800,000 Ohio State Air Quality Development Authority (Series 1998-A) Weekly
VRDNs (PPG Industries, Inc.) P-1 1,800,000
---------------------------------------------------------------------
4,080,000 Ohio State Water Development Authority, Pure Water Refunding &
Improvement Bonds (Series PA-56) Weekly VRDNs (AMBAC INS)/(Merrill
Lynch Capital Services, Inc. LIQ) VMIG1 4,080,000
---------------------------------------------------------------------
1,800,000 Rickenbacker, OH Port Authority (Series 1992) Weekly VRDNs
(Rickenbacker Holdings, Inc.)/(Bank One, Columbus, N.A. LOC) P-1 1,800,000
---------------------------------------------------------------------
1,900,000 Seneca County, OH Hospital Facility Authority Weekly VRDNs (St.
Francis Home)/(National City Bank, Cleveland, OH LOC) VMIG1 1,900,000
---------------------------------------------------------------------
800,000 Solon, OH, IDA Weekly VRDNs (Solon Industries)/ (Society National
Bank, Cleveland, OH LOC) P-1 800,000
---------------------------------------------------------------------
1,100,000 Twinsburg, OH IDA Weekly VRDNs (Care of Massara)/ (Society National
Bank, Cleveland, OH LOC) P-1 1,100,000
--------------------------------------------------------------------- ----------------
Total 87,818,842
--------------------------------------------------------------------- ----------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OKLAHOMA--0.6%
---------------------------------------------------------------------
$ 10,000,000 Holdenville, OK Industrial Authority, Correctional Facility Revenue
Bonds (Series 1995) Weekly VRDNs (Holdenville, OK Correctional
Facility)/(First Union National Bank, Charlotte, N.C. LOC) VMIG1 $ 10,000,000
--------------------------------------------------------------------- ----------------
OREGON--0.1%
---------------------------------------------------------------------
2,000,000 Oregon Health, Housing & Cultural Facilities Authority, Adjustable
Rate Revenue Bonds (Series 1995-A) Weekly VRDNs (Guide Dogs for the
Blind, Inc. Project)/(Banque Nationale de Paris LOC) MIG1 2,000,000
--------------------------------------------------------------------- ----------------
PENNSYLVANIA--2.5%
---------------------------------------------------------------------
5,000,000 Allegheny County, PA IDA, PCR (Series 1992-A), 4.80% TOBs (Duquesne
Light Power Co.)/(Canadian Imperial Bank of Commerce, Toronto LOC),
Mandatory Tender
10/17/1995 P-1 5,000,000
---------------------------------------------------------------------
4,000,000 Beaver County, PA IDA, PCR Refunding Bonds (1994 Series), 4.50% CP
(Duquesne Light Power Co.)/(Swiss Bank Corp., New York, NY LOC),
Mandatory Tender
10/10/1995 A-1+ 4,000,000
---------------------------------------------------------------------
6,300,000 Delaware County, PA PCR (Series C), 4.00% CP (Philadelphia Electric
Co.)/(FGIC INS), Mandatory Tender 10/6/1995 A-1+ 6,300,000
---------------------------------------------------------------------
4,200,000 Delaware County, PA Weekly VRDNs (American College)/(PNC Bank, N.A.
LOC) P-1 4,200,000
---------------------------------------------------------------------
5,600,000 Erie County, PA Hospital Authority Weekly VRDNs (St. Vincent Health
System)/(Fuji Bank, Ltd., Tokyo LOC) A-1 5,600,000
---------------------------------------------------------------------
1,300,000 Pennsylvania State Higher Education Facilities Authority Weekly VRDNs
(Carnegie-Mellon University) A-1 1,300,000
---------------------------------------------------------------------
6,000,000 Philadelphia, PA, GO (Series 1990), 3.90% CP (Fuji Bank, Ltd., Tokyo
LOC), Mandatory Tender 8/23/1995 A-1 6,000,000
---------------------------------------------------------------------
3,690,000 Pittsburgh, PA, GO Unlimited Bonds (Series B), 4.10% BONDs (AMBAC
INS), 9/1/1995 NR(1) 3,690,300
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
---------------------------------------------------------------------
$ 500,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of
Pennsylvania)/(AMBAC INS)/(First National Bank of Chicago LIQ) A-1 $ 500,000
---------------------------------------------------------------------
2,000,000 Washington County, PA Hospital Authority Weekly VRDNs (Keystone
Diversified Management Corp.)/ (Mellon Bank N.A., Pittsburgh LOC) A-1 2,000,000
--------------------------------------------------------------------- ----------------
Total 38,590,300
--------------------------------------------------------------------- ----------------
PUERTO RICO--0.6%
---------------------------------------------------------------------
10,000,000 Puerto Rico Government Development Bank Weekly VRDNs (Credit Suisse,
Zurich LOC) A-1+ 10,000,000
--------------------------------------------------------------------- ----------------
SOUTH CAROLINA--0.5%
---------------------------------------------------------------------
3,000,000 Greenville, SC Hospital System Board of Trustees, (Series 1993-B)
Weekly VRDNs (Greenville County, SC Hospital Authority) A-1+ 3,000,000
---------------------------------------------------------------------
5,000,000 University of South Carolina, Athletic Facilities (Series 1995),
5.25% BANs, 3/1/1996 NR(3) 5,031,756
--------------------------------------------------------------------- ----------------
Total 8,031,756
--------------------------------------------------------------------- ----------------
TENNESSEE--3.1%
---------------------------------------------------------------------
10,000,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie School)/ (Trust Company
Bank, Atlanta LOC) A-1+ 10,000,000
---------------------------------------------------------------------
22,400,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/ (Sumitomo Bank
Ltd., Osaka LOC) A-1 22,400,000
---------------------------------------------------------------------
2,200,000 Metropolitan Nashville Tennessee AA, (Series 1993) Weekly VRDNs (FGIC
INS)/(Societe Generale, Paris LIQ) A-1+ 2,200,000
---------------------------------------------------------------------
7,330,000 Nashville and Davidson County, NC IDB, Metropolitan Government
Revenue Bonds (Series 1995) Weekly VRDNs (YMCA Projects)/(Nationsbank
of Tennessee LOC) P-1 7,330,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
TENNESSEE--CONTINUED
---------------------------------------------------------------------
$ 6,200,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil Fibers, Inc.
Project)/(ABN AMRO Bank N.V., Amsterdam LOC) A-1+ $ 6,200,000
--------------------------------------------------------------------- ----------------
Total 48,130,000
--------------------------------------------------------------------- ----------------
TEXAS--2.0%
---------------------------------------------------------------------
4,325,000 Dallas, TX (Series C), 3.90% TOBs, Optional Tender
6/15/1996 NR(1) 4,325,000
---------------------------------------------------------------------
11,050,000 Harris County, TX HFDC (Series B), 3.90% TOBs (San Jacinto Methodist
Hospital)/(Morgan Guaranty Trust Co., New York LOC), Mandatory Tender
9/1/1995 A-1+ 11,050,000
---------------------------------------------------------------------
7,000,000 Harris County, TX, Toll Road Unlimited Tax & Sub Lien Revenue (Series
1994-G) Weekly VRDNs A-1+ 7,000,000
---------------------------------------------------------------------
2,000,000 Montgomery County, TX IDC, IDRB Weekly VRDNs (Houston Area Research
Center)/(Morgan Guaranty Trust Co., New York LOC) A-1+ 2,000,000
---------------------------------------------------------------------
1,920,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/(Nationsbank
of North Carolina N.A. LOC) P-1 1,920,000
---------------------------------------------------------------------
5,000,000 Texas State Department of Housing & Community Affairs, Multifamily
Housing Revenue Refunding Bonds (Remington Hill Series B) Weekly
VRDNs (Trust Company Bank, Atlanta LOC) A-1+ 5,000,000
--------------------------------------------------------------------- ----------------
Total 31,295,000
--------------------------------------------------------------------- ----------------
UTAH--1.3%
---------------------------------------------------------------------
19,670,000 Utah State HFA, Single Family Mortgage Bonds (Series 1995-1) Weekly
VRDNs (Westdeutsche Landesbank Girozentrale LIQ) A-1+ 19,670,000
--------------------------------------------------------------------- ----------------
VIRGINIA--0.8%
---------------------------------------------------------------------
1,500,000 Arlington County, VA Weekly VRDNs (Ballston Public
Parking)/(Citibank, NA LOC) A-1+ 1,500,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
VIRGINIA--CONTINUED
---------------------------------------------------------------------
$ 6,200,000 Henrico County, VA IDA, (Series 1994) Daily VRDNs (Virginia United
Methodist Homes, Inc.)/(Nationsbank of Virginia, N.A. LOC) VMIG1 $ 6,200,000
---------------------------------------------------------------------
5,000,000 Virginia State Housing Development Authority, (Series 1993-A), 3.45%
TOBs, Mandatory Tender 9/12/1995 A-1+ 5,000,000
--------------------------------------------------------------------- ----------------
Total 12,700,000
--------------------------------------------------------------------- ----------------
WASHINGTON--0.4%
---------------------------------------------------------------------
5,535,000 Pierce County, WA (Series 1995), 4.50% TANs, 12/27/1995 NR(3) 5,537,682
--------------------------------------------------------------------- ----------------
WEST VIRGINIA--0.5%
---------------------------------------------------------------------
7,960,000 Cabell County Commission, WV, Life Care Facilities Multi-Option
Adjustable Rate Revenue Bonds (Series 1995) Weekly VRDNs (Foster
Foundation)/(Huntington National Bank, Columbus, OH LOC) A-1 7,960,000
--------------------------------------------------------------------- ----------------
WISCONSIN--2.3%
---------------------------------------------------------------------
1,100,000 Seymour, WI IDA Weekly VRDNs (Beatrice Cheese, Inc.)/ (Bank of New
York, New York LOC) P-1 1,100,000
---------------------------------------------------------------------
34,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical Center)/(Sumitomo
Bank Ltd., Osaka LOC) VMIG1 34,000,000
--------------------------------------------------------------------- ----------------
Total 35,100,000
--------------------------------------------------------------------- ----------------
WYOMING--0.4%
---------------------------------------------------------------------
1,125,000 Natrona County, WY, Hospital Revenue, 5.85% TOBs (Grainger W.W.,
Inc.), Optional Tender 12/1/1995 P-1 1,125,000
---------------------------------------------------------------------
4,400,000 Sweetwater County, WY IDA, PCR Refunding Bonds (Series 1990-A) Weekly
VRDNs (Pacificorp)/(Credit Suisse, Zurich LOC) VMIG1 4,400,000
--------------------------------------------------------------------- ----------------
Total 5,525,000
--------------------------------------------------------------------- ----------------
NO STATE--1.4%
---------------------------------------------------------------------
10,000,000 Clipper Tax Exempt Trust (Series 1993-1) Weekly VRDNs (State Street
Bank and Trust Co. LIQ) A-1+ 10,000,000
---------------------------------------------------------------------
</TABLE>
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- --------- ----------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
NO STATE--CONTINUED
---------------------------------------------------------------------
$ 6,440,583 LaSalle National Bank Leasetops Trust (Series 1994-B) Weekly VRDNs
(Lasalle National Bank, Chicago LIQ)/ (Lasalle National Bank, Chicago
LOC) A-1+ $ 6,440,583
---------------------------------------------------------------------
1,934,628 LaSalle National Bank Tax-Exempt Trust (Series 1993-A) Weekly VRDNs
(Lasalle National Bank, Chicago LIQ)/ (Lasalle National Bank, Chicago
LOC) A-1+ 1,934,628
---------------------------------------------------------------------
3,040,000 Merrill Lynch Puttable FLOATs/RITES Trust (Series PP2) Weekly VRDNs VMIG1 3,040,000
--------------------------------------------------------------------- ----------------
Total 21,415,211
--------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST(A) $ 1,553,856,743
--------------------------------------------------------------------- ----------------
</TABLE>
(a) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($1,547,473,496) at July 31, 1995.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
BANs--Bond Anticipation Notes
CDA--Community Development Administration
CP--Commercial Paper
EDA--Economic Development Authority
FGIC--Financial Guaranty Insurance Company
FSA--Financial Security Assurance
GO--General Obligation
GTDs--Guarantees
HEFA--Health and Education Facilities Authority
HFA--Housing Finance Authority
HFDC--Health Facility Development Corporation
IDA--Industrial Development Authority
IDB--Industrial Development Bond
IDC--Industrial Development Corporation
IDR--Industrial Development Revenue
IDRB--Industrial Development Revenue Bonds
IDFA--Industrial Development Finance Authority
IFA--Industrial Finance Authority
INS--Insurance
LIQ--Liquidity Agreement
LOCs--Letter(s) of Credit
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance
PCR--Pollution Control Revenue
PFA--Public Facility Authority
PLC--Public Limited Company
RANs--Revenue Anticipation Notes
TANs--Tax Anticipation Notes
TOBs--Tender Option Bonds
TRANs--Tax and Revenue Anticipation Notes
VHA--Veterans Housing Administration
VRDNs--Variable Rate Demand Notes
VRNs--Variable Rate Notes
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 1,553,856,743
- -----------------------------------------------------------------------------------------------
Cash 933,463
- -----------------------------------------------------------------------------------------------
Income receivable 9,103,589
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 1,563,893,795
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $ 11,518,668
- --------------------------------------------------------------------------------
Income distribution payable 4,394,007
- --------------------------------------------------------------------------------
Accrued expenses 507,624
- -------------------------------------------------------------------------------- -------------
Total liabilities 16,420,299
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 1,547,494,731 shares outstanding $ 1,547,473,496
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------
Paid in capital 1,547,494,731
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (21,235)
- ----------------------------------------------------------------------------------------------- ----------------
Total Net Assets $ 1,547,473,496
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
($1,295,457,878 / 1,295,478,935 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
($252,015,618 / 252,015,796 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 44,477,152
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee $ 2,318,805
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 877,668
- ------------------------------------------------------------------------------------
Custodian fees 110,650
- ------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 43,928
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 5,202
- ------------------------------------------------------------------------------------
Auditing fees 12,951
- ------------------------------------------------------------------------------------
Legal fees 16,729
- ------------------------------------------------------------------------------------
Portfolio accounting fees 128,996
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 2,520,292
- ------------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 378,074
- ------------------------------------------------------------------------------------
Share registration costs 337,930
- ------------------------------------------------------------------------------------
Printing and postage 28,823
- ------------------------------------------------------------------------------------
Insurance premiums 15,420
- ------------------------------------------------------------------------------------
Taxes 22
- ------------------------------------------------------------------------------------
Miscellaneous 14,033
- ------------------------------------------------------------------------------------ ------------
Total expenses 6,809,523
- ------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $ 1,581,210
- ----------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 2,520,292 4,101,502
- ---------------------------------------------------------------------- ------------ ------------
Net expenses 2,708,021
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 41,769,131
- -------------------------------------------------------------------------------------------------- -------------
Net realized gain (loss) on investments (1,395)
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 41,767,736
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 41,769,131 $ 16,807,122
- ----------------------------------------------------------------------------
Net realized gain/loss on investments ($40 net gain and $19,220 net loss,
respectively, as computed for federal income tax purposes) (1,395) 3,986
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in assets resulting from operations 41,767,736 16,811,108
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (36,508,581) (16,783,291)
- ----------------------------------------------------------------------------
Institutional Service Shares (5,260,550) (23,831)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from distributions to shareholders (41,769,131) (16,807,122)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of Shares 7,385,500,551 3,346,441,976
- ----------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of distributions
declared 2,286,899 460,949
- ----------------------------------------------------------------------------
Cost of Shares redeemed (6,655,215,610) (2,986,122,657)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 732,571,840 360,780,268
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 732,570,445 360,784,254
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 814,903,051 454,118,797
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 1,547,473,496 $ 814,903,051
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of six diversified portfolios. The
financial statements included herein are only those of Tax-Free Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At July 31, 1995, the Fund, for federal tax purposes, had a capital loss
carryforward of $19,800, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2001 $580
2002 $19,220
</TABLE>
Additionally, net capital losses of $1,435 attributable to security
transactions incurred after October 31, 1994 are treated as arising on
August 1, 1995, the first day of the Fund's next taxable year.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $1,547,494,731.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1995 1994
<S> <C> <C>
- ------------------------------------------------------------------------------ ---------------- ----------------
Shares sold 6,466,015,512 3,312,845,513
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 1,609,289 460,949
- ------------------------------------------------------------------------------
Shares redeemed (5,961,920,320) (2,977,674,630)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional Share transactions 505,704,481 335,631,832
- ------------------------------------------------------------------------------ ---------------- ----------------
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1995 1994*
- ------------------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
Shares sold 919,485,039 33,596,463
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 677,610 --
- ------------------------------------------------------------------------------
Shares redeemed (693,295,290) (8,448,027)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Institutional Service Share transactions 226,867,359 25,148,436
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from share transactions 732,571,840 360,780,268
- ------------------------------------------------------------------------------ ---------------- ----------------
</TABLE>
*For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets.
TAX-FREE OBLIGATIONS FUND
- --------------------------------------------------------------------------------
The Adviser may voluntarily choose to waive a portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. This fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services (FSS), the Fund will pay FSS up to 0.25 of
1% of daily average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
FSS may voluntarily choose to waive a portion of this fee. FSS can modify or
terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
INTERFUND TRANSACTIONS--During the year ended July 31, 1995, the Fund engaged in
purchase and sale transactions with funds that have a common investment adviser
(or affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $2,395,054,229 and $2,346,849,715,
respectively.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST:
(Tax-Free Obligations Fund)
We have audited the accompanying statement of assets and liabilities of Tax-Free
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Tax-Free Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Tax-Free Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, Massachusetts 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
TAX-FREE
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- --------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N880
9110207A-SS (3/96)
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
The Institutional Shares of Treasury Obligations Fund (the "Fund") offered by
this prospectus represent interests in a diversified portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in U.S. Treasury securities to provide current
income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 1996)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES 2
- ------------------------------------------------------
GENERAL INFORMATION 3
- ------------------------------------------------------
INVESTMENT INFORMATION 3
- ------------------------------------------------------
Investment Objective 3
Investment Policies 3
Investment Limitations 4
Regulatory Compliance 4
TRUST INFORMATION 5
- ------------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 6
NET ASSET VALUE 7
- ------------------------------------------------------
INVESTING IN THE FUND 7
- ------------------------------------------------------
Share Purchases 7
Minimum Investment Required 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
REDEEMING SHARES 8
- ------------------------------------------------------
By Mail 8
Telephone Redemption 9
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
- ------------------------------------------------------
Voting Rights 10
Massachusetts Partnership Law 10
TAX INFORMATION 11
- ------------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and
Personal Property Taxes 11
OTHER CLASSES OF SHARES 11
- ------------------------------------------------------
PERFORMANCE INFORMATION 12
- ------------------------------------------------------
FINANCIAL STATEMENTS 13
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 21
- ------------------------------------------------------
ADDRESSES 22
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)..................
None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)........................................................................ 0.08%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.12%
Shareholder Services Fee (after waiver) (2)............................................. 0.00%
Total Operating Expenses (3).................................................................. 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.56% absent the voluntary
waivers of a portion of the management fee and the shareholder services fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND" AND "TRUST INFORMATION." WIRE-TRANSFERRED
REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $2 $6 $11 $26
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
TREASURY OBLIGATIONS FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 21.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991 1990(A)
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------
Net investment income 0.05 0.03 0.03 0.05 0.07 0.04
- --------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------
Distributions from net investment income (0.05) (0.03) (0.03) (0.05) (0.07) (0.04)
- -------------------------------------------------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 5.50% 3.35% 3.15% 4.61% 7.11% 5.09%
- --------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%(c)
- --------------------------------------------------
Net investment income 5.42% 3.29% 3.11% 4.49% 6.65% 8.16%(c)
- --------------------------------------------------
Expense waiver/reimbursement (d) 0.36% 0.10% 0.07% 0.08% 0.09% 0.15%(c)
- --------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------
Net assets, end of period (000 omitted) $3,441,068 $2,582,975 $2,532,482 $2,432,037 $1,678,880 $576,048
- --------------------------------------------------
</TABLE>
(a) Reflects operations for the period from February 23, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Service Shares and
Institutional Shares. This prospectus relates only to Institutional 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 in short-term U.S. Treasury 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 following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. Treasury
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United States.
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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number of
investment companies. With over $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 interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional Shares
of the Fund. It is a Pennsylvania corporation organized on November 14, 1969,
and is the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of the Institutional Shares, computed at an annual rate,
to obtain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
----------- ----------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Treasury Obligations Fund--Institutional Shares; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Order Number; Nominee or Institution Name; and ABA Number 011000028. The Fund
reserves the right to wire redemption proceeds within seven days of a redemption
request if, in the judgment of the adviser, an earlier payment could adversely
affect the Fund. This procedure may be modified or terminated by the transfer
agent or the Fund.
BY MAIL. To purchase by mail, send a check made payable to Treasury Obligations
Fund-- Institutional Shares to: Federated Services Company, Treasury Obligations
Fund, P.O. Box 8600, Boston, MA 02266-8600. Orders by mail are considered
received when payment by check is converted into federal funds. This is normally
the next business day after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirements for master
acccounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. The amount of dividends declared
by the Fund is based on estimates of net interest income for the Fund. Actual
income may differ from estimates; these differences, if any, will be included in
the calculation of subsequent dividends. Dividends are automatically reinvested
on payment dates in additional shares of the Fund unless cash payments are
requested by writing to the Fund. Shares purchased by wire before 5:00 p.m.
(Eastern time) begin earning dividends that day. Shares purchased by check begin
earning dividends the day after the check is converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Treasury Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Treasury Obligations Fund-Institutional Shares;
shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road-2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 5:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 5:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day. The Fund reserves the right to wire redemption proceeds within
seven days of a redemption request if, in the judgment of the adviser, an
earlier payment could adversely affect the Fund. This procedure may be modified
or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered. If at any time
the Fund shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
accounts for which financial institutions act in an agency or fiduciary
capacity, and 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 Service Shares are distributed with no 12b-1 fees but are subject
to shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class, investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- ----------------
SHORT-TERM U.S. TREASURY OBLIGATIONS--25.5%
- -----------------------------------------------------------------------------------------------
(A) U.S. TREASURY BILLS--16.7%
-------------------------------------------------------------------------------
$ 681,000,000 6.830%-5.550%, 8/17/1995--5/30/1996 $ 666,042,514
------------------------------------------------------------------------------- ----------------
U.S. TREASURY NOTES--8.8%
-------------------------------------------------------------------------------
350,500,000 3.875%-9.375%, 8/31/1995--5/15/1996 351,865,208
------------------------------------------------------------------------------- ----------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,017,907,722
------------------------------------------------------------------------------- ----------------
(B) REPURCHASE AGREEMENTS--74.9%
- -----------------------------------------------------------------------------------------------
50,000,000 Aubrey G. Lanston and Company, Inc., 5.850%, dated 7/31/1995, due 8/1/1995 50,000,000
-------------------------------------------------------------------------------
150,000,000 BA Securities, Inc., 5.810%, dated 7/31/1995, due 8/1/1995 150,000,000
-------------------------------------------------------------------------------
155,000,000 B.T. Securities Corporation, 5.840%, dated 7/31/1995, due 8/1/1995 155,000,000
-------------------------------------------------------------------------------
170,000,000 BOT Securites, Inc., Tokyo, 5.800%, dated 7/31/1995, due 8/1/1995 170,000,000
-------------------------------------------------------------------------------
54,800,000 Barclays de Zoete Wedd Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 54,800,000
-------------------------------------------------------------------------------
195,000,000 Bear, Stearns and Co., 5.810%, dated 7/31/1995, due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
195,000,000 Chemical Banking Corp., 5.820%, dated 7/31/1995, due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
195,000,000 Daiwa Securities America, Inc., 5.800%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
80,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 80,000,000
-------------------------------------------------------------------------------
100,000,000 Dresdner Securities (USA), Inc., 5.820%, dated 7/31/1995,
due 8/1/1995 100,000,000
-------------------------------------------------------------------------------
195,000,000 First Chicago Capital Markets, Inc., 5.820%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
170,000,000 Fuji Securities, Inc., 5.820%, dated 7/31/1995, due 8/7/1995 170,000,000
-------------------------------------------------------------------------------
40,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1995, due 8/1/1995 40,000,000
-------------------------------------------------------------------------------
40,000,000 Harris, Nesbitt Thomson, 5.840%, dated 7/31/1995, due 8/1/1995 40,000,000
-------------------------------------------------------------------------------
30,000,000 J.P. Morgan Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 30,000,000
-------------------------------------------------------------------------------
</TABLE>
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- ----------------
(B) REPURCHASE AGREEMENTS--CONTINUED
- -----------------------------------------------------------------------------------------------
$ 195,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 $ 195,000,000
-------------------------------------------------------------------------------
93,000,000 (c)Merrill Lynch, Pierce, Fenner and Smith, 5.700%, dated 7/7/1995, due
9/5/1995 93,000,000
-------------------------------------------------------------------------------
195,000,000 National Westminster Bank USA, NY, 5.820%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
195,000,000 Nations Bank of North Carolina, 5.800%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
120,000,000 Nikko Securities, 5.820%, dated 7/31/1995, due 8/1/1995 120,000,000
-------------------------------------------------------------------------------
50,000,000 State Street Bank and Trust Co., 5.820%, dated 7/31/1995,
due 8/1/1995 50,000,000
-------------------------------------------------------------------------------
195,000,000 SBC Capital Markets, 5.820%, dated 7/31/1995, due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
120,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 120,000,000
------------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 2,982,800,000
------------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (D) $ 4,000,707,722
------------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Repurchase agreements are fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio. The investments in the
repurchase agreements are through participation in joint accounts with
other Federated funds.
(c) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($3,984,922,273) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 2,982,800,000
- -----------------------------------------------------------------------------
Investments in securities 1,017,907,722
- ----------------------------------------------------------------------------- ----------------
Total investments at amortized cost and value $ 4,000,707,722
- -----------------------------------------------------------------------------------------------
Cash 211,164
- -----------------------------------------------------------------------------------------------
Income receivable 6,723,593
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 256,869
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 4,007,899,348
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------
Payable for shares redeemed 5,235,807
- -----------------------------------------------------------------------------
Income distribution payable 17,005,739
- -----------------------------------------------------------------------------
Accrued expenses 735,529
- ----------------------------------------------------------------------------- ----------------
Total liabilities 22,977,075
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 3,984,922,273 shares outstanding $ 3,984,922,273
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
($3,441,067,673 / 3,441,067,673 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
($543,854,600 / 543,854,600 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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------
Interest $ 183,952,583
- -------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------
Investment advisory fee $ 6,522,177
- ----------------------------------------------------------------------------------
Administrative personnel and services fee 2,468,644
- ----------------------------------------------------------------------------------
Custodian fees 233,169
- ----------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 74,251
- ----------------------------------------------------------------------------------
Directors'/Trustees' fees 13,914
- ----------------------------------------------------------------------------------
Auditing fees 12,951
- ----------------------------------------------------------------------------------
Legal fees 4,583
- ----------------------------------------------------------------------------------
Portfolio accounting fees 239,767
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 7,734,539
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 418,181
- ----------------------------------------------------------------------------------
Share registration costs 626,125
- ----------------------------------------------------------------------------------
Printing and postage 19,858
- ----------------------------------------------------------------------------------
Insurance premiums 43,861
- ----------------------------------------------------------------------------------
Taxes 20,066
- ----------------------------------------------------------------------------------
Miscellaneous 15,591
- ---------------------------------------------------------------------------------- -------------
Total expenses 18,447,677
- ----------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------
Waiver of investment advisory fee $ 3,742,710
- --------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 7,734,539 11,477,249
- -------------------------------------------------------------------- ------------ -------------
Net expenses 6,970,428
- ------------------------------------------------------------------------------------------------- --------------
Net investment income $ 176,982,155
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR END JULY 31
-------------------------------------
1995 1994
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------
Net investment income $ 176,982,155 $ 81,337,110
- -------------------------------------------------------------------------- ------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------
Distributions from net investment income
- --------------------------------------------------------------------------
Institutional Shares (167,724,558) (81,325,025)
- --------------------------------------------------------------------------
Institutional Service Shares (9,257,597) (12,085)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from distributions to shareholders (176,982,155) (81,337,110)
- -------------------------------------------------------------------------- ------------------ -----------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------
Proceeds from sale of Shares 19,110,121,123 9,791,368,504
- --------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 22,269,297 4,797,827
- --------------------------------------------------------------------------
Cost of Shares redeemed (17,739,330,600) (9,736,785,420)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from share transactions 1,393,059,820 59,380,911
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets 1,393,059,820 59,380,911
- --------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------
Beginning of period 2,591,862,453 2,532,481,542
- -------------------------------------------------------------------------- ------------------ -----------------
End of period $ 3,984,922,273 $ 2,591,862,453
- -------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of six diversified portfolios. The
financial statements included herein are only those of Treasury Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement investment transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price paid under the repurchase
agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as brokers/dealers, which are
deemed by the Fund's adviser to be creditworthy pursuant to the guidelines
and/or standards reviewed or established by the Board of Trustees (the
"Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $3,984,922,273.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------
INSTITUTIONAL SHARES 1995 1994
- ----------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
- ----------------------------------------------------------------------------- ----------------- ----------------
Shares sold 17,554,361,142 9,782,493,254
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 18,926,732 4,785,818
- -----------------------------------------------------------------------------
Shares redeemed (16,715,195,395) (9,736,785,420)
- ----------------------------------------------------------------------------- ----------------- ----------------
Net change resulting from Institutional Shares transactions 858,092,479 50,493,652
- ----------------------------------------------------------------------------- ----------------- ----------------
</TABLE>
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------
INSTITUTIONAL SERVICE SHARES 1995 1994*
- ---------------------------------------------------------------------------------- ---------------- ------------
<S> <C> <C>
- ---------------------------------------------------------------------------------- ---------------- ------------
Shares sold 1,555,759,981 8,875,250
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,342,565 12,009
- ----------------------------------------------------------------------------------
Shares redeemed (1,024,135,205) --
- ---------------------------------------------------------------------------------- ---------------- ------------
Net change resulting from Institutional Service Shares transactions 534,967,341 8,887,259
- ---------------------------------------------------------------------------------- ---------------- ------------
Net change resulting from share transactions 1,393,059,820 59,380,911
- ---------------------------------------------------------------------------------- ---------------- ------------
</TABLE>
* For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.20 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund administrative personnel
and services. The FAS fee is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the Administrative
Services Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
FSS may voluntarily choose to waive a portion of this fee. FSS can modify or
terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Treasury
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Treasury Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Treasury Obligations Fund
Institutional Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
TREASURY
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- --------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N500
9110208A-IS (3/96)
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 diversified portfolio of
Money Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in U.S. Treasury securities to provide
current income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1995, with the Securities and Exchange Commission. The information contained
in the Statement of Additional Information is incorporated by reference into
this prospectus. You may request a copy of the Statement of Additional
Information, which is in paper form only, or a paper copy of this prospectus, if
you have received your prospectus electronically, free of charge by calling
1-800-235-4669. To obtain other information, or make inquiries about the Fund,
contact the Fund at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated September 30, 1995
(Revised March 31, 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 Limitations 4
Regulatory Compliance 4
TRUST INFORMATION 5
- ------------------------------------------------------
Management of the Trust 5
Distribution of Shares 6
Administration of the Fund 6
NET ASSET VALUE 7
- ------------------------------------------------------
INVESTING IN THE FUND 7
- ------------------------------------------------------
Share Purchases 7
Minimum Investment Required 8
Certificates and Confirmations 8
Dividends 8
Capital Gains 8
REDEEMING SHARES 8
- ------------------------------------------------------
By Mail 8
Telephone Redemption 9
Accounts with Low Balances 10
SHAREHOLDER INFORMATION 10
- ------------------------------------------------------
Voting Rights 10
Massachusetts Partnership Law 10
TAX INFORMATION 11
- ------------------------------------------------------
Federal Income Tax 11
Pennsylvania Corporate and Personal
Property Taxes 11
OTHER CLASSES OF SHARES 11
- ------------------------------------------------------
PERFORMANCE INFORMATION 12
- ------------------------------------------------------
FINANCIAL STATEMENTS 13
- ------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS 21
- ------------------------------------------------------
ADDRESSES 22
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)..................
None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................ None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)....................................................................... 0.08%
12b-1 Fee............................................................................................... None
Total Other Expenses.................................................................................... 0.37%
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 "INVESTING IN THE FUND" AND
"TRUST INFORMATION". WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE
SUBJECT TO ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and
(2) redemption at the end of each time period......................... $5 $14 $25 $57
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
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 21.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
----------------------
1995 1994(A)
- ------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------
Net investment income 0.05 0.003
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------
Distributions from net investment income (0.05) (0.003)
- ------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (B) 5.23% 0.29%
- -------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------
Expenses 0.45% 0.39%(c)
- -------------------------------------------------------------------------------------
Net investment income 5.53% 4.26%(c)
- -------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.11% 0.10%(c)
- -------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $543,855 $8,887
- -------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 5, 1994 (date of initial
public investment) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Trustees have
established two classes of shares known as Institutional Service Shares and
Institutional Shares. This prospectus relates only to Institutional Service
Shares of the Fund, which are designed primarily for financial institutions,
financial intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
investing in short-term U.S. Treasury securities. A minimum initial investment
of $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 following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in U.S. Treasury
securities maturing in 13 months or less. The average maturity of the securities
in the Fund's portfolio, computed on a dollar-weighted basis, will be 90 days or
less. Unless indicated otherwise, investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests only in U.S. Treasury securities,
which are fully guaranteed as to principal and interest by the United States.
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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
TRUST INFORMATION
- --------------------------------------------------------------------------------
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Trustees
are responsible for managing the Fund's business affairs and for exercising all
the Trust's powers except those reserved for the shareholders. An Executive
Committee of the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Investment decisions for the Fund are made by Federated
Management, the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES. The adviser receives an annual investment advisory fee
equal to .20 of 1% of the Fund's average daily net assets. The adviser has
undertaken to reimburse the Fund up to the amount of the advisory fee for
operating expenses in excess of limitations established by certain states.
The adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND. Federated Management, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under the
Investment Advisers Act of 1940. It is a subsidiary of Federated Investors.
All of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee of
Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services
to a number of investment companies. With over $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 1800 employees, Federated continues to be led by the management who
founded the company in 1955. Federated funds are presently at work in and
through 4,000 financial institutions nationwide. More than 100,000
investment professionals have selected Federated funds for their clients.
Both the Trust and the adviser have adopted strict codes of ethics governing the
conduct of all employees who manage the Fund and its portfolio securities. These
codes recognize that such persons owe a fiduciary duty to the Fund's
shareholders and must place the interests of shareholders ahead of the
employees' own interest. Among other things, the codes: require preclearance and
periodic reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being considered for
purchase or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less than sixty
days. Violations of the codes are subject to review by the Trustees, and could
result in severe penalties.
DISTRIBUTION OF SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated Investors.
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 1% of the average
daily net asset value of the Institutional Service Shares, computed at an annual
rate, to obtain personal services for shareholders and provide maintenance of
shareholder accounts ("shareholder services"). From time to time and for such
periods as deemed appropriate, the amount stated above may be reduced
voluntarily.
Under the Shareholder Services Agreement, Federated Shareholder Services will
either perform shareholder services directly or will select financial
institutions to perform shareholder services based upon shares owned by their
clients or customers. Financial institutions will receive fees based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
Fund and Federated Shareholder Services.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services (including
certain legal and financial reporting services) necessary to operate the Fund.
Federated Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM FEE AVERAGE AGGREGATE DAILY NET ASSETS
----------- ----------------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.
CUSTODIAN. State Street Bank and Trust Company, Boston, MA, is custodian for
the securities and cash of the Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, MA, is transfer agent for the shares of, and dividend disbursing agent
for, the Fund. Federated Services Company is a subsidiary of Federated
Investors.
INDEPENDENT PUBLIC ACCOUNTANTS. The independent public accountants for the Fund
are Arthur Andersen LLP, Pittsburgh, PA.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to shares from
the value of Fund assets attributable to shares, and dividing the remainder by
the number of shares outstanding. The Fund cannot guarantee that its net asset
value will always remain at $1.00 per share.
The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
INVESTING IN THE FUND
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange and the Federal Reserve Wire System are open for business. Shares may
be purchased either by wire or mail. The Fund reserves the right to reject any
purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.
BY WIRE. To purchase by Federal Reserve wire, call the Fund before 5:00 p.m.
(Eastern time) to place an order. The order is considered received immediately.
Payment by federal funds must be received before 5:00 p.m. (Eastern time) that
day. Federal funds should be wired as follows: Federated Services Company, c/o
State Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit
to: Treasury Obligations Fund--Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.
The Fund reserves the right to wire redemption proceeds within seven days of a
redemption request if, in the judgment of the adviser, an earlier payment could
adversely affect the Fund. This procedure may be modified or terminated by the
transfer agent or the Fund.
BY MAIL. To purchase by mail, send a check made payable to Treasury Obligations
Fund-- Institutional Service Shares to: Federated Services Company, Treasury
Obligations Fund, P.O. Box
8600, Boston, MA 02266-8600. Orders by mail are considered received when payment
by check is converted into federal funds. This is normally the next business day
after the check is received.
MINIMUM INVESTMENT REQUIRED
The minimum investment in the Fund is $1,000,000; ordinarily, this will be
achieved by the use of a master account established by the investor. Multiple
master accounts may be maintained by the same investor, but the minimum
investment for each master account will be $1,000,000. The management of the
Fund retains the right to waive the minimum investment requirement for master
accounts which the management reasonably believes will reach $1,000,000 at some
time within one year of the opening of the account.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Fund or Federated Services Company in writing.
Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. The amount of dividends declared
by the Fund is based on estimates of net interest income for the Fund. Actual
income may differ from estimates; these differences, if any, will be included in
the calculation of subsequent dividends. Dividends are automatically reinvested
on payment dates in additional shares of the Fund unless cash payments are
requested by writing to the Fund. Shares purchased by wire before 5:00 p.m.
(Eastern time) begin earning dividends that day. Shares purchased by check begin
earning dividends the day after the check is converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.
REDEEMING SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests must be
received in proper form and can be made as described below.
BY MAIL
Shares may be redeemed by sending a written request to: Treasury Obligations
Fund, Federated Services Company, P.O. Box 8600, Boston, MA 02266-8600. The
written request should state: Treasury Obligations Fund--Institutional Service
Shares; shareholder's name; the account number; and the share or dollar amount
requested. Sign the request exactly as the shares are registered. Shareholders
should call the Fund for assistance in redeeming by mail.
If share certificates have been issued, they must be properly endorsed and
should be sent by registered or overnight insured mail with the written request
to Federated Services Company, 500 Victory Road-2nd Floor, North Quincy, MA
02171.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by:
a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;
a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or
any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.
TELEPHONE REDEMPTION
Shares may be redeemed by telephoning the Fund. Telephone instructions may be
recorded and if reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions. An
authorization form permitting the Fund to accept telephone requests must first
be completed. Authorization forms and information on this service are available
from Federated Securities Corp.
If the redemption request is received before 5:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 5:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day. The Fund reserves the right to wire redemption proceeds within
seven days of a redemption request if, in the judgment of the adviser, an
earlier payment could adversely affect the Fund. . This procedure may be
modified or terminated by the transfer agent or the Fund.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By
Mail", should be considered. If at any time the Fund shall determine it
necessary to terminate or modify this method of redemption, shareholders would
be promptly notified.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $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.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code, as amended, applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.
PENNSYLVANIA CORPORATE AND PERSONAL PROPERTY TAXES
In the opinion of Houston, Houston, & Donnelly, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
OTHER STATE AND LOCAL TAXES. Shareholders are urged to consult their own tax
advisers regarding the status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
The Fund also offers another class of shares called Institutional Shares.
Institutional Shares are sold at net asset value primarily to accounts for which
financial institutions act in an agency or fiduciary capacity, and 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 Shares are distributed with no 12b-1 fees. Currently,
Institutional Shares are accruing no shareholder services fees.
Expense differences between classes may affect the performance of each class.
To obtain more information and a prospectus for any other class investors may
call 1-800-235-4669.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund advertises its yield and effective yield for shares.
Performance figures will be calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.
Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.
From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.
TREASURY OBLIGATIONS FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- ----------------
SHORT-TERM U.S. TREASURY OBLIGATIONS--25.5%
- -----------------------------------------------------------------------------------------------
(A) U.S. TREASURY BILLS--16.7%
-------------------------------------------------------------------------------
$ 681,000,000 6.830% - 5.550%, 8/17/1995 - 5/30/1996 $ 666,042,514
------------------------------------------------------------------------------- ----------------
U.S. TREASURY NOTES--8.8%
-------------------------------------------------------------------------------
350,500,000 3.875% - 9.375%, 8/31/1995 - 5/15/1996 351,865,208
------------------------------------------------------------------------------- ----------------
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,017,907,722
------------------------------------------------------------------------------- ----------------
(B) REPURCHASE AGREEMENTS--74.9%
- -----------------------------------------------------------------------------------------------
50,000,000 Aubrey G. Lanston and Company, Inc., 5.850%, dated 7/31/1995, due 8/1/1995 50,000,000
-------------------------------------------------------------------------------
150,000,000 BA Securities, Inc., 5.810%, dated 7/31/1995, due 8/1/1995 150,000,000
-------------------------------------------------------------------------------
155,000,000 B.T. Securities Corporation, 5.840%, dated 7/31/1995, due 8/1/1995 155,000,000
-------------------------------------------------------------------------------
170,000,000 BOT Securites, Inc., Tokyo, 5.800%, dated 7/31/1995, due 8/1/1995 170,000,000
-------------------------------------------------------------------------------
54,800,000 Barclays de Zoete Wedd Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 54,800,000
-------------------------------------------------------------------------------
195,000,000 Bear, Stearns and Co., 5.810%, dated 7/31/1995, due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
195,000,000 Chemical Banking Corp., 5.820%, dated 7/31/1995, due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
195,000,000 Daiwa Securities America, Inc., 5.800%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
80,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated
7/31/1995, due 8/1/1995 80,000,000
-------------------------------------------------------------------------------
100,000,000 Dresdner Securities (USA), Inc., 5.820%, dated 7/31/1995,
due 8/1/1995 100,000,000
-------------------------------------------------------------------------------
195,000,000 First Chicago Capital Markets, Inc., 5.820%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
170,000,000 Fuji Securities, Inc., 5.820%, dated 7/31/1995, due 8/7/1995 170,000,000
-------------------------------------------------------------------------------
40,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1995, due 8/1/1995 40,000,000
-------------------------------------------------------------------------------
40,000,000 Harris, Nesbitt Thomson, 5.840%, dated 7/31/1995, due 8/1/1995 40,000,000
-------------------------------------------------------------------------------
30,000,000 J.P. Morgan Securities, Inc., 5.840%, dated 7/31/1995, due 8/1/1995 30,000,000
-------------------------------------------------------------------------------
</TABLE>
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- ----------------
(B) REPURCHASE AGREEMENTS--CONTINUED
- -----------------------------------------------------------------------------------------------
$ 195,000,000 Lehman Government Securities, Inc., 5.850%, dated 7/31/1995,
due 8/1/1995 $ 195,000,000
-------------------------------------------------------------------------------
93,000,000 (c)Merrill Lynch, Pierce, Fenner and Smith, 5.700%, dated 7/7/1995, due
9/5/1995 93,000,000
-------------------------------------------------------------------------------
195,000,000 National Westminster Bank USA, NY, 5.820%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
195,000,000 Nations Bank of North Carolina, 5.800%, dated 7/31/1995,
due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
120,000,000 Nikko Securities, 5.820%, dated 7/31/1995, due 8/1/1995 120,000,000
-------------------------------------------------------------------------------
50,000,000 State Street Bank and Trust Co., 5.820%, dated 7/31/1995,
due 8/1/1995 50,000,000
-------------------------------------------------------------------------------
195,000,000 SBC Capital Markets, 5.820%, dated 7/31/1995, due 8/1/1995 195,000,000
-------------------------------------------------------------------------------
120,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1995, due 8/1/1995 120,000,000
------------------------------------------------------------------------------- ----------------
TOTAL REPURCHASE AGREEMENTS 2,982,800,000
------------------------------------------------------------------------------- ----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (D) $ 4,000,707,722
------------------------------------------------------------------------------- ----------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Repurchase agreements are fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio. The investments in the
repurchase agreements are through participation in joint accounts with
other Federated funds.
(c) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($3,984,922,273) at July 31, 1995.
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 2,982,800,000
- -----------------------------------------------------------------------------
Investments in securities 1,017,907,722
- ----------------------------------------------------------------------------- ----------------
Total investments at amortized cost and value $ 4,000,707,722
- -----------------------------------------------------------------------------------------------
Cash 211,164
- -----------------------------------------------------------------------------------------------
Income receivable 6,723,593
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 256,869
- ----------------------------------------------------------------------------------------------- ----------------
Total assets 4,007,899,348
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------
Payable for shares redeemed 5,235,807
- -----------------------------------------------------------------------------
Income distribution payable 17,005,739
- -----------------------------------------------------------------------------
Accrued expenses 735,529
- ----------------------------------------------------------------------------- ----------------
Total liabilities 22,977,075
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSETS for 3,984,922,273 shares outstanding $ 3,984,922,273
- ----------------------------------------------------------------------------------------------- ----------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- -----------------------------------------------------------------------------------------------
Institutional Shares:
($3,441,067,673 / 3,441,067,673 shares outstanding) $1.00
- ----------------------------------------------------------------------------------------------- ----------------
Institutional Service Shares:
($543,854,600 / 543,854,600 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, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------
Interest $ 183,952,583
- -------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------
Investment advisory fee $ 6,522,177
- ----------------------------------------------------------------------------------
Administrative personnel and services fee 2,468,644
- ----------------------------------------------------------------------------------
Custodian fees 233,169
- ----------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 74,251
- ----------------------------------------------------------------------------------
Directors'/Trustees' fees 13,914
- ----------------------------------------------------------------------------------
Auditing fees 12,951
- ----------------------------------------------------------------------------------
Legal fees 4,583
- ----------------------------------------------------------------------------------
Portfolio accounting fees 239,767
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Shares 7,734,539
- ----------------------------------------------------------------------------------
Shareholder services fee--Institutional Service Shares 418,181
- ----------------------------------------------------------------------------------
Share registration costs 626,125
- ----------------------------------------------------------------------------------
Printing and postage 19,858
- ----------------------------------------------------------------------------------
Insurance premiums 43,861
- ----------------------------------------------------------------------------------
Taxes 20,066
- ----------------------------------------------------------------------------------
Miscellaneous 15,591
- ---------------------------------------------------------------------------------- -------------
Total expenses 18,447,677
- ----------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------
Waiver of investment advisory fee $ 3,742,710
- --------------------------------------------------------------------
Waiver of shareholder services fee--Institutional Shares 7,734,539 11,477,249
- -------------------------------------------------------------------- ------------ -------------
Net expenses 6,970,428
- ------------------------------------------------------------------------------------------------- --------------
Net investment income $ 176,982,155
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------
1995 1994
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------
Net investment income $ 176,982,155 $ 81,337,110
- -------------------------------------------------------------------------- ------------------ -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------
Distributions from net investment income
- --------------------------------------------------------------------------
Institutional Shares (167,724,558) (81,325,025)
- --------------------------------------------------------------------------
Institutional Service Shares (9,257,597) (12,085)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from distributions to shareholders (176,982,155) (81,337,110)
- -------------------------------------------------------------------------- ------------------ -----------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------
Proceeds from sale of Shares 19,110,121,123 9,791,368,504
- --------------------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment of
distributions declared 22,269,297 4,797,827
- --------------------------------------------------------------------------
Cost of Shares redeemed (17,739,330,600) (9,736,785,420)
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets resulting from share transactions 1,393,059,820 59,380,911
- -------------------------------------------------------------------------- ------------------ -----------------
Change in net assets 1,393,059,820 59,380,911
- --------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------
Beginning of period 2,591,862,453 2,532,481,542
- -------------------------------------------------------------------------- ------------------ -----------------
End of period $ 3,984,922,273 $ 2,591,862,453
- -------------------------------------------------------------------------- ------------------ -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TREASURY OBLIGATIONS FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of six diversified portfolios. The
financial statements included herein are only those of Treasury Obligations Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The Fund offers
two classes of shares: Institutional Shares and Institutional Service Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement investment transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price paid under the repurchase
agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as brokers/dealers, which are
deemed by the Fund's adviser to be creditworthy pursuant to the guidelines
and/or standards reviewed or established by the Board of Trustees (the
"Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At July 31, 1995, capital paid-in aggregated $3,984,922,273.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------
INSTITUTIONAL SHARES 1995 1994
- ---------------------------------------------------------------------------------- ---------------- ------------
<S> <C> <C>
Shares sold 17,554,361,142 9,782,493,254
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 18,926,732 4,785,818
- -----------------------------------------------------------------------------
Shares redeemed (16,715,195,395) (9,736,785,420)
- ----------------------------------------------------------------------------- ----------------- ----------------
Net change resulting from Institutional Shares transactions 858,092,479 50,493,652
- ----------------------------------------------------------------------------- ----------------- ----------------
</TABLE>
TREASURY OBLIGATIONS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------
INSTITUTIONAL SERVICE SHARES 1995 1994*
- ---------------------------------------------------------------------------------- ---------------- ------------
<S> <C> <C>
- ---------------------------------------------------------------------------------- ---------------- ------------
Shares sold 1,555,759,981 8,875,250
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,342,565 12,009
- ----------------------------------------------------------------------------------
Shares redeemed (1,024,135,205) --
- ---------------------------------------------------------------------------------- ---------------- ------------
Net change resulting from Institutional Service Shares transactions 534,967,341 8,887,259
- ---------------------------------------------------------------------------------- ---------------- ------------
Net change resulting from share transactions 1,393,059,820 59,380,911
- ---------------------------------------------------------------------------------- ---------------- ------------
</TABLE>
* For the period from July 5, 1994 (date of initial public offering) to July 31,
1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.20 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund administrative personnel
and services. The FAS fee is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the Administrative
Services Agreement shall be at least $125,000 per portfolio and $30,000 per each
additional class of shares.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25 of
1% of average net assets of the Fund for the period. This fee is to obtain
certain personal services for shareholders and to maintain shareholder accounts.
FSS may voluntarily choose to waive a portion of this fee. FSS can modify or
terminate this voluntary waiver at any time at its sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Treasury
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1995, the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1995, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Treasury Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1995
ADDRESSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Treasury Obligations Fund
Institutional Service Shares Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Investment Adviser
Federated Management Federated Investors Tower
Pittsburgh, PA 15222-3779
- ---------------------------------------------------------------------------------------------------------------------
Custodian
State Street Bank and P.O. Box 8600
Trust Company Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Federated Services Company P.O. Box 8600
Boston, MA 02266-8600
- ---------------------------------------------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP 2100 One PPG Place
Pittsburgh, PA 15222
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
TREASURY
OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
PROSPECTUS
A Diversified Portfolio of Money Market
Obligations Trust, an Open-End Management
Investment Company
Prospectus dated September 30, 1995
(Revised March 31, 1996)
[LOGO]
FEDERATED SECURITIES CORP.
- -------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 60934N872
9110208A-SS (3/96)
