Government Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
The Institutional Shares of Government Obligations Fund (the "Fund") offered
by this prospectus represent interests in a portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company
(a mutual fund). The Fund invests in short-term U.S. government securities
to achieve 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, 1997, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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
Fund Information 4
Management of the Fund 4
Distribution of Institutional Shares 5
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 6
Purchasing Shares by Wire 6
Purchasing Shares by Check 6
Invest-by-Phone 6
How to Redeem Shares 6
Redeeming Shares by Telephone 6
Redeeming Shares by Mail 7
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 8
Federal Income Tax 8
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Financial Highlights-- Institutional Service Shares 9
Financial Statements 10
Report of Independent
Public Accountants Inside Back Cover
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1) 0.10%
12b-1 Fee None
Total Other Expenses 0.10%
Shareholder Services Fee (after waiver)(2) 0.00%
Total Operating Expenses(after waivers)(3) 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider
can terminate this voluntary waiver at any time at its sole discretion.
The maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.55% 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 Institutional Shares of
the Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Fund Information" and
"How to Purchase Shares." Wire-transferred redemptions of less than $5,000
may be subject to additional fees.
EXAMPLE
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.
1 Year $2
3 Years $6
5 Years $11
10 Years $26
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on the
inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994 1993 1992 1991
1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.05 0.03 0.03 0.05 0.07
0.03
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (0.05) (0.05) (0.03) (0.03) (0.05) (0.07)
(0.03)
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00
TOTAL RETURN(B) 5.43% 5.55% 5.57% 3.41% 3.22% 4.70% 7.20%
2.80%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
0.20%*
Net investment income 5.32% 5.41% 5.58% 3.38% 3.16% 4.55% 6.77%
8.24%*
Expense
waiver/reimbursement(c) 0.35% 0.36% 0.40% 0.15% 0.11% 0.12% 0.22%
0.34%*
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $3,293,392 $2,182,999 $1,926,516 $763,879 $707,146 $679,533 $331,454
$148,598
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 31, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust permits
the Trust to offer separate series of shares representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Trustees (the "Trustees") has established two
classes of shares known as Institutional Shares and Institutional Service
Shares. This prospectus relates only to Institutional Shares of the Fund,
which are designed primarily for entities holding shares in an agency or
fiduciary capacity, financial institutions, financial intermediaries, and
institutional investors as a convenient means of accumulating an interest in
a professionally managed portfolio investing only in short-term U.S.
government securities. A minimum initial investment of $1,000,000 is
required.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by complying with
the diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio
of U.S. government securities maturing in 13 months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise,
the investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
The Fund invests only in U.S. government securities. These instruments are
either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities include, but are not limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of the
United States;
* notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
* notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These instrumentalities are supported by:
* the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
* discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
* the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the seller does not
repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
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 those assets to secure such borrowings.
The above investment limitations cannot be changed without shareholder
approval. As a matter of non-fundamental policy, the Fund does not intend to
engage in reverse repurchase agreements. The Fund will notify shareholders
prior to any change in this policy. The following limitation, however, may
be changed by the Trustees without shareholder approval. Shareholders will
be notified before any material change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's
powers except those reserved for the shareholders. An Executive Committee of
the Board of Trustees handles the Board's responsibilities between meetings
of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management, the
Fund's investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20% of the
Fund's average daily net assets. The adviser may voluntarily choose to waive
a portion of its fee or reimburse other expenses of the Fund, but reserves
the right to terminate such waiver or reimbursement at any time at its sole
discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April 11,
1989, is a registered investment adviser under the Investment Advisers Act
of 1940. It is a subsidiary of Federated Investors. All of the Class A
(voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. With over $110 billion invested across
over 300 funds under management and/or administration by its subsidiaries,
as of December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,500
financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interests. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Shares of the Fund. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25% of the average daily net asset value of
its shares, computed at an annual rate, to obtain certain personal services
for shareholders and to maintain shareholder accounts. From time to time and
for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or
will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their
own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount
of shares the financial institution sells or may sell, and/or upon the type
and nature of sales or marketing support furnished by the financial
institution. Any payments made by the distributor may be reimbursed by the
Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund at an annual rate which
relates to the average aggregate daily net assets of all funds advised by
affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities attributable
to Institutional Shares from the value of Fund assets attributable to
Institutional Shares, and dividing the remainder by the number of
Institutional 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange is open for business. Shares may be purchased either by wire or by
check. The Fund reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Financial institutions may impose different minimum
investment requirements on their customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund before
5:00 p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 5:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Shareholder Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Government Obligations Fund
- -- Institutional Shares; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions
on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made
payable to: Government Obligations Fund -- Institutional Shares. Orders by
mail are considered received when payment by check is converted into federal
funds (normally the business day after the check is received), and shares
begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone for
investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the Fund.
Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send
a request for monies to the shareholder's commercial bank, savings bank, or
credit union ("bank") via the Automated Clearing House. The shareholder's
bank, which must be an Automated Clearing House member, will then forward
the monies to Federated Shareholder Services Company. The purchase is
normally entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund
has a properly completed authorization form. These forms can be obtained
from Federated Securities Corp. Proceeds from redemption requests received
before 5:00 p.m. (Eastern time) will be wired the same day to the
shareholder's account at a domestic commercial bank which is a member of the
Federal Reserve System, but will not include that day's dividend. Proceeds
from redemption requests on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares by Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
or any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934. The Fund does not accept signatures guaranteed by a
notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 5:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease
in dividends. The Fund will distribute in cash or additional shares any
realized net long-term capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends
paid. The Fund will not issue share certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account, except accounts maintained by retirement
plans, and pay the proceeds to the shareholder if the account balance falls
below a required minimum value of $1,000,000 due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional shares to meet the
minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder one
vote in Trustee elections and other matters submitted to shareholders for
vote. All shares of all classes of each portfolio in the Trust have equal
voting rights, except that in matters affecting only a particular portfolio
or class, only shareholders of that portfolio or class are entitled to vote.
The Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust's or the
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies. The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by the Trust's other portfolios will not be combined for tax
purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Service Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries, and 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 Plan but are
subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class, investors
may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and total
return. The performance figures will be calculated separately for each class
of shares.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on the
inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.16% 5.29% 5.31%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45%*
Net investment income 5.06% 5.14% 5.63%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $936,869 $702,274 $339,105
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995. For the period from the effective
date, July 5, 1994 to July 31, 1994, all net investment income was
distributed to the Fund's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS--38.0%
$ 67,000,000 (a)Federal Farm Credit Bank, Floating Rate Notes--1.7%
5.320%, 9/1/1997 $
66,957,994
94,500,000 (f)Federal Home Loan Bank Notes--2.2%
5.460% - 6.025%, 11/18/1997 - 8/12/1998
94,460,443
186,086,000 (b)Federal Home Loan Bank, Discount Notes--4.3%
5.570% - 5.821%, 8/21/1997 - 3/17/1998
182,119,453
65,500,000 (a)Federal Home Loan Bank, Floating Rate Notes--1.5%
5.571% - 5.623%, 8/20/1997 - 9/4/1997
65,476,038
72,295,000 Federal Home Loan Mortgage Corp. Notes--1.7%
5.640% - 5.840%, 8/28/1997 - 4/8/1998
72,286,448
18,000,000 (b)Federal Home Loan Mortgage Corp., Discount Note--0.4%
5.565%, 8/15/1997
17,962,060
79,000,000 (a)Federal Home Loan Mortgage Corp., Floating Rate Notes--1.9%
5.444% - 5.480%, 8/5/1997 - 8/20/1997
78,948,966
172,845,000 Federal National Mortgage Association Notes--4.1%
5.350% - 6.000%, 8/14/1997 - 6/23/1998
172,778,887
137,810,000 (b)Federal National Mortgage Association, Discount Notes--3.2%
5.747% - 5.876%, 10/6/1997 - 12/12/1997
135,702,353
106,000,000 (a)Federal National Mortgage Association, Floating Rate Notes--2.5%
5.460% - 5.800%, 8/4/1997 - 8/15/1997
105,989,143
362,095,000 (a)Housing and Urban Development, Floating Rate Note--8.6%
6.013%, 8/1/1997
362,095,000
135,125,000 (a)Student Loan Marketing Association, Floating Rate Notes--3.2%
5.450% - 5.510%, 8/5/1997
135,095,475
14,000,000 (b)U.S. Treasury Bill--0.3%
5.599%, 3/5/1998
13,554,800
102,000,000 U.S. Treasury Notes--2.4%
6.125%-7.875%, 11/15/1997-5/15/1998
102,576,462
TOTAL SHORT-TERM OBLIGATIONS
1,606,003,522
(C)REPURCHASE AGREEMENTS--62.8%
150,000,000 Bear, Stearns and Co., 5.870%, dated 7/31/1997, due 8/1/1997
150,000,000
100,000,000 CIBC Wood Gundy Securities Corp., 5.850%, dated 7/31/1997, due 8/1/1997
100,000,000
100,000,000 Chase Government Securities, Inc., 5.870%, dated 7/31/1997, due 8/1/1997
100,000,000
100,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997
100,000,000
460,000,000 Goldman Sachs Group, LP, 5.850%, dated 7/31/1997, due 8/1/1997
460,000,000
150,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997
150,000,000
</TABLE>
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS--CONTINUED
$200,000,000 J.P. Morgan & Co., Inc., 5.850%, dated 7/31/1997, due 8/1/1997 $
200,000,000
100,000,000 J.P. Morgan & Co., Inc., 5.950%, dated 7/31/1997, due 8/1/1997
100,000,000
200,000,000 Prudential Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997
200,000,000
50,000,000 Sanwa-BGK Securities Co., LP, 6.100%, dated 7/31/1997, due 8/1/1997
50,000,000
150,000,000 Smith Barney, Inc., 5.850%, dated 7/31/1997, due 8/1/1997
150,000,000
20,000,000 State Street Bank and Trust Co., 5.770%, dated 7/31/1997, due 8/1/1997
20,000,000
43,300,000 Swiss Bank Capital Markets, 5.780%, dated 7/31/1997, due 8/1/1997
43,300,000
150,000,000 Toronto Dominion Securities (USA) Inc., 5.850%, dated 7/31/1997, due 8/1/1997
150,000,000
170,000,000 UBS Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997
170,000,000
81,000,000 (d)Chase Government Securities, Inc., 5.550%, dated 7/7/1997, due 9/5/1997
81,000,000
82,000,000 (d)Chase Government Securities, Inc., 5.600%, dated 7/2/1997, due 9/30/1997
82,000,000
117,000,000 (d)Goldman Sachs Group, LP, 5.550%, dated 7/3/1997, due 8/20/1997
117,000,000
96,000,000 (d)Lehman Brothers, Inc., 5.510%, dated 7/9/1997, due 8/11/1997
96,000,000
103,000,000 (d)Swiss Bank Capital Markets, 5.520%, dated 7/29/1997, due 10/1/1997
103,000,000
35,000,000 (d)UBS Securities, Inc., 5.570%, dated 7/3/1997, due 8/20/1997
35,000,000
TOTAL REPURCHASE AGREEMENTS
2,657,300,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $
4,263,303,522
</TABLE>
(a) Floating rate note with current rate and next reset date shown.
(b) Each issue shows the rate of discount at time of purchase.
(c) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investments in the repurchase agreements are through
participation in joint accounts with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days.
(e) Also represents cost for federal tax purposes.
(f) Certain of these securities represent delayed delivery securities.
Note: The categories of investments are shown as a percentage of net assets
($4,230,260,373) at July 31, 1997.
The following acronym is used throughout this portfolio:
LP--Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 2,657,300,000
Investments in securities 1,606,003,522
Total investments in securities, at amortized cost and value $ 4,263,303,522
Cash 43,436
Income receivable 17,361,221
Receivable for shares sold 226,511
Total assets 4,280,934,690
LIABILITIES:
Payable for investments purchased 36,050,000
Payable for shares redeemed 1,360,091
Income distribution payable 12,666,533
Accrued expenses 597,693
Total liabilities 50,674,317
NET ASSETS for 4,230,260,373 shares outstanding $ 4,230,260,373
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,293,391,600 / 3,293,391,600 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$936,868,773 / 936,868,773 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
GOVERNMENT OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $186,966,832
EXPENSES:
Investment advisory fee $ 6,777,523
Administrative personnel and services fee 2,559,413
Custodian fees 256,653
Transfer and dividend disbursing agent fees and expenses 115,098
Directors'/Trustees' fees 28,483
Auditing fees 13,438
Legal fees 10,035
Portfolio accounting fees 277,279
Shareholder services fee--Institutional Shares 6,307,126
Shareholder services fee--Institutional Service Shares 2,164,778
Share registration costs 308,677
Printing and postage 22,986
Insurance premiums 26,026
Taxes 28,319
Miscellaneous 24,848
Total expenses 18,920,682
Waivers--
Waiver of investment advisory fee $(3,522,148)
Waiver of shareholder services fee--Institutional (6,307,126)
Shares
Total waivers (9,829,274)
Net expenses 9,091,408
Net investment income $177,875,424
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 177,875,424 $ 135,465,845
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (134,094,591) (108,299,075)
Institutional Service Shares (43,780,833) (27,166,770)
Change in net assets resulting from distributions (177,875,424) (135,465,845)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 22,256,668,113 14,537,344,438
Net asset value of shares issued to shareholders in 55,759,597 39,437,151
payment of distributions declared
Cost of shares redeemed (20,967,440,251) (13,957,129,903)
Change in net assets resulting from share 1,344,987,459 619,651,686
transactions
Change in net assets 1,344,987,459 619,651,686
NET ASSETS:
Beginning of period 2,885,272,914 2,265,621,228
End of period $ 4,230,260,373 $ 2,885,272,914
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios. The
financial statements included herein are only those of Government
Obligations Fund (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objective of the Fund is to provide current
income consistent with stability of principal.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/
dealers, which are deemed by the Fund's adviser to be creditworthy pursuant
to the guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code"). Distributions to shareholders are recorded on the
ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable
to regulated investment companies and to distribute to shareholders each
year substantially all of its income. Accordingly, no provisions for federal
tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The
Fund records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in aggregated
$4,230,260,373. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 17,018,052,623 11,676,332,015
Shares issued to shareholders in payment of
distributions declared 37,459,828 27,600,308
Shares redeemed (15,945,119,407) (11,447,449,600)
Net change resulting from Institutional Share
transactions 1,110,393,044 256,482,723
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 5,238,615,490 2,861,012,423
Shares issued to shareholders in payment of
distributions declared 18,299,769 11,836,843
Shares redeemed (5,022,320,844) (2,509,680,303)
Net change resulting from Institutional Service Share
transactions 234,594,415 363,168,963
Net change resulting from share transactions 1,344,987,459 619,651,686
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The
fee paid to FServ is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average
daily net assets of the Fund for the period. The fee paid to FSS is used to
finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS
can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the Fund. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule
of portfolio investments, as of July 31, 1997, 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, 1997, 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, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended, and its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
[Graphic]
Government Obligations Fund
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
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 Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N104
G01066-01 (9/97)
[Graphic]
Government Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
The Institutional Service Shares of Government Obligations Fund (the "Fund")
offered by this prospectus represent interests in a portfolio of Money
Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in short-term U.S. government
securities to achieve 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, 1997, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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
Fund Information 4
Management of the Fund 4
Distribution of Institutional Service Shares 5
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 6
Purchasing Shares by Wire 6
Purchasing Shares by Check 6
Invest-by-Phone 6
How to Redeem Shares 6
Redeeming Shares by Telephone 6
Redeeming Shares by Mail 7
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 8
Federal Income Tax 8
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Financial Highlights-- Institutional Shares 9
Financial Statements 10
Report of Independent
Public Accountants Inside Back Cover
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1) 0.10%
12b-1 Fee None
Total Other Expenses 0.35%
Shareholder Services Fee 0.25%
Total Operating Expenses(after waivers)(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 0.55% absent the voluntary
waiver of a portion of the management fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Institutional Service
Shares of the Fund will bear, either directly or indirectly. For more
complete descriptions of the various costs and expenses, see "Fund
Information" and "How to Purchase Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
EXAMPLE
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.
1 Year $ 5
3 Years $14
5 Years $25
10 Years $57
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on the
inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.16% 5.29% 5.31%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45%*
Net investment income 5.06% 5.14% 5.63%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $936,869 $702,274 $339,105
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to July 31, 1995. For the period from the effective
date, July 5, 1994 to July 31, 1994, all net investment income was
distributed to the Fund's adviser.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust permits
the Trust to offer separate series of shares representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Trustees (the "Trustees") has established two
classes of shares known as Institutional Service Shares and Institutional
Shares. This prospectus relates only to Institutional Service Shares of the
Fund, which are designed primarily for financial institutions, financial
intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed portfolio investing
only in short-term U.S. government securities. A minimum initial investment
of $1,000,000 is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by complying with
the diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a portfolio
of U.S. government securities maturing in 13 months or less. The average
maturity of the securities in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise,
the investment policies may be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in these
policies becomes effective.
ACCEPTABLE INVESTMENTS
The Fund invests only in U.S. government securities. These instruments are
either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities include, but are not limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of the
United States;
* notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
* notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These instrumentalities are supported by:
* the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
* discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
* the credit of the agency or instrumentality.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the seller does not
repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
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 those assets to secure such borrowings.
The above investment limitations cannot be changed without shareholder
approval. As a matter of non-fundamental policy, the Fund does not intend to
engage in reverse repurchase agreements. The Fund will notify shareholders
prior to any change in this policy. The following limitation, however, may
be changed by the Trustees without shareholder approval. Shareholders will
be notified before any material change in this limitation becomes effective.
The Fund will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's
powers except those reserved for the shareholders. An Executive Committee of
the Board of Trustees handles the Board's responsibilities between meetings
of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management, the
Fund's investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20% of the
Fund's average daily net assets. The adviser may voluntarily choose to waive
a portion of its fee or reimburse other expenses of the Fund, but reserves
the right to terminate such waiver or reimbursement at any time at its sole
discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April 11,
1989, is a registered investment adviser under the Investment Advisers Act
of 1940. It is a subsidiary of Federated Investors. All of the Class A
(voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. With over $110 billion invested across
over 300 funds under management and/or administration by its subsidiaries,
as of December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,500
financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interests. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25% of the average daily net asset value of
its shares, computed at an annual rate, to obtain certain personal services
for shareholders and to maintain shareholder accounts. From time to time and
for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or
will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their
own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount
of shares the financial institution sells or may sell, and/or upon the type
and nature of sales or marketing support furnished by the financial
institution. Any payments made by the distributor may be reimbursed by the
Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund at an annual rate which
relates to the average aggregate daily net assets of all funds advised by
affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities attributable
to Institutional Service Shares from the value of Fund assets attributable
to Institutional Service Shares, and dividing the remainder by the number of
Institutional Service 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange is open for business. Shares may be purchased either by wire or by
check. The Fund reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Financial institutions may impose different minimum
investment requirements on their customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund before
5:00 p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 5:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Shareholder Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Government Obligations Fund
- -- Institutional Service Shares; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot
be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made
payable to: Government Obligations Fund -- Institutional Service Shares.
Orders by mail are considered received when payment by check is converted
into federal funds (normally the business day after the check is received),
and shares begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone for
investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the Fund.
Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send
a request for monies to the shareholder's commercial bank, savings bank, or
credit union ("bank") via the Automated Clearing House. The shareholder's
bank, which must be an Automated Clearing House member, will then forward
the monies to Federated Shareholder Services Company. The purchase is
normally entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund
has a properly completed authorization form. These forms can be obtained
from Federated Securities Corp. Proceeds from redemption requests received
before 5:00 p.m. (Eastern time) will be wired the same day to the
shareholder's account at a domestic commercial bank which is a member of the
Federal Reserve System, but will not include that day's dividend. Proceeds
from redemption requests on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions
on days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares by Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
or any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934. The Fund does not accept signatures guaranteed by a
notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 5:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease
in dividends. The Fund will distribute in cash or additional shares any
realized net long-term capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends
paid. The Fund will not issue share certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account, except accounts maintained by retirement
plans, and pay the proceeds to the shareholder if the account balance falls
below a required minimum value of $1,000,000 due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional shares to meet the
minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder one
vote in Trustee elections and other matters submitted to shareholders for
vote. All shares of all classes of each portfolio in the Trust have equal
voting rights, except that in matters affecting only a particular portfolio
or class, only shareholders of that portfolio or class are entitled to vote.
The Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust's or the
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies. The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by the Trust's other portfolios will not be combined for tax
purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Shares are sold at net
asset value primarily to financial institutions, financial intermediaries,
institutional investors, and entities holding shares in an agency or
fiduciary capacity, and are subject to a minimum initial investment of
$1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class, investors
may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and total
return. The performance figures will be calculated separately for each class
of shares.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on the
inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994 1993 1992 1991
1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.05 0.03 0.03 0.05 0.07
0.03
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (0.05) (0.05) (0.03) (0.03) (0.05) (0.07)
(0.03)
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00
TOTAL RETURN(B) 5.43% 5.55% 5.57% 3.41% 3.22% 4.70% 7.20%
2.80%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
0.20%*
Net investment income 5.32% 5.41% 5.58% 3.38% 3.16% 4.55% 6.77%
8.24%*
Expense
waiver/reimbursement(c) 0.35% 0.36% 0.40% 0.15% 0.11% 0.12% 0.22%
0.34%*
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $3,293,392 $2,182,999 $1,926,516 $763,879 $707,146 $679,533 $331,454
$148,598
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 31, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <CAPTION>
SHORT-TERM OBLIGATIONS--38.0%
$ 67,000,000 (a)Federal Farm Credit Bank, Floating Rate Notes--1.7%
5.320%, 9/1/1997 $ 66,957,994
94,500,000 (f)Federal Home Loan Bank Notes--2.2%
5.460% - 6.025%, 11/18/1997 - 8/12/1998 94,460,443
186,086,000 (b)Federal Home Loan Bank, Discount Notes--4.3%
5.570% - 5.821%, 8/21/1997 - 3/17/1998 182,119,453
65,500,000 (a)Federal Home Loan Bank, Floating Rate Notes--1.5%
5.571% - 5.623%, 8/20/1997 - 9/4/1997 65,476,038
72,295,000 Federal Home Loan Mortgage Corp. Notes--1.7%
5.640% - 5.840%, 8/28/1997 - 4/8/1998 72,286,448
18,000,000 (b)Federal Home Loan Mortgage Corp., Discount Note--0.4%
5.565%, 8/15/1997 17,962,060
79,000,000 (a)Federal Home Loan Mortgage Corp., Floating Rate Notes--1.9%
5.444% - 5.480%, 8/5/1997 - 8/20/1997 78,948,966
172,845,000 Federal National Mortgage Association Notes--4.1%
5.350% - 6.000%, 8/14/1997 - 6/23/1998 172,778,887
137,810,000 (b)Federal National Mortgage Association, Discount Notes--3.2%
5.747% - 5.876%, 10/6/1997 - 12/12/1997 135,702,353
106,000,000 (a)Federal National Mortgage Association, Floating Rate Notes--2.5%
5.460% - 5.800%, 8/4/1997 - 8/15/1997 105,989,143
362,095,000 (a)Housing and Urban Development, Floating Rate Note--8.6%
6.013%, 8/1/1997 362,095,000
135,125,000 (a)Student Loan Marketing Association, Floating Rate Notes--3.2%
5.450% - 5.510%, 8/5/1997 135,095,475
14,000,000 (b)U.S. Treasury Bill--0.3%
5.599%, 3/5/1998 13,554,800
102,000,000 U.S. Treasury Notes--2.4%
6.125%-7.875%, 11/15/1997-5/15/1998 102,576,462
TOTAL SHORT-TERM OBLIGATIONS 1,606,003,522
(C)REPURCHASE AGREEMENTS--62.8%
150,000,000 Bear, Stearns and Co., 5.870%, dated 7/31/1997, due 8/1/1997 150,000,000
100,000,000 CIBC Wood Gundy Securities Corp., 5.850%, dated 7/31/1997, due 100,000,000
8/1/1997
100,000,000 Chase Government Securities, Inc., 5.870%, dated 7/31/1997, due 100,000,000
8/1/1997
100,000,000 Deutsche Bank Government Securities, Inc., 5.850%, dated 7/31/1997, 100,000,000
due 8/1/1997
460,000,000 Goldman Sachs Group, LP, 5.850%, dated 7/31/1997, due 8/1/1997 460,000,000
150,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997 150,000,000
</TABLE>
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <CAPTION>
(C)REPURCHASE AGREEMENTS--CONTINUED
$ 200,000,000 J.P. Morgan & Co., Inc., 5.850%, dated 7/31/1997, due 8/1/1997 $ 200,000,000
100,000,000 J.P. Morgan & Co., Inc., 5.950%, dated 7/31/1997, due 8/1/1997 100,000,000
200,000,000 Prudential Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997 200,000,000
50,000,000 Sanwa-BGK Securities Co., LP, 6.100%, dated 7/31/1997, due 8/1/1997 50,000,000
150,000,000 Smith Barney, Inc., 5.850%, dated 7/31/1997, due 8/1/1997 150,000,000
20,000,000 State Street Bank and Trust Co., 5.770%, dated 7/31/1997, due 20,000,000
8/1/1997
43,300,000 Swiss Bank Capital Markets, 5.780%, dated 7/31/1997, due 8/1/1997 43,300,000
150,000,000 Toronto Dominion Securities (USA) Inc., 5.850%, dated 7/31/1997, due 150,000,000
8/1/1997
170,000,000 UBS Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997 170,000,000
81,000,000 (d)Chase Government Securities, Inc., 5.550%, dated 7/7/1997, due 81,000,000
9/5/1997
82,000,000 (d)Chase Government Securities, Inc., 5.600%, dated 7/2/1997, due 82,000,000
9/30/1997
117,000,000 (d)Goldman Sachs Group, LP, 5.550%, dated 7/3/1997, due 8/20/1997 117,000,000
96,000,000 (d)Lehman Brothers, Inc., 5.510%, dated 7/9/1997, due 8/11/1997 96,000,000
103,000,000 (d)Swiss Bank Capital Markets, 5.520%, dated 7/29/1997, due 103,000,000
10/1/1997
35,000,000 (d)UBS Securities, Inc., 5.570%, dated 7/3/1997, due 8/20/1997 35,000,000
TOTAL REPURCHASE AGREEMENTS 2,657,300,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 4,263,303,522
</TABLE>
(a) Floating rate note with current rate and next reset date shown.
(b) Each issue shows the rate of discount at time of purchase.
(c) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investments in the repurchase agreements are through
participation in joint accounts with other Federated funds.
(d) Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase
agreement within seven days.
(e) Also represents cost for federal tax purposes.
(f) Certain of these securities represent delayed delivery securities.
Note: The categories of investments are shown as a percentage of net assets
($4,230,260,373) at July 31, 1997.
The following acronym is used throughout this portfolio:
LP--Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 2,657,300,000
Investments in securities 1,606,003,522
Total investments in securities, at amortized cost and value $ 4,263,303,522
Cash 43,436
Income receivable 17,361,221
Receivable for shares sold 226,511
Total assets 4,280,934,690
LIABILITIES:
Payable for investments purchased 36,050,000
Payable for shares redeemed 1,360,091
Income distribution payable 12,666,533
Accrued expenses 597,693
Total liabilities 50,674,317
NET ASSETS for 4,230,260,373 shares outstanding $ 4,230,260,373
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,293,391,600 / 3,293,391,600 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$936,868,773 / 936,868,773 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
GOVERNMENT OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $186,966,832
EXPENSES:
Investment advisory fee $ 6,777,523
Administrative personnel and services fee 2,559,413
Custodian fees 256,653
Transfer and dividend disbursing agent fees and expenses 115,098
Directors'/Trustees' fees 28,483
Auditing fees 13,438
Legal fees 10,035
Portfolio accounting fees 277,279
Shareholder services fee--Institutional Shares 6,307,126
Shareholder services fee--Institutional Service Shares 2,164,778
Share registration costs 308,677
Printing and postage 22,986
Insurance premiums 26,026
Taxes 28,319
Miscellaneous 24,848
Total expenses 18,920,682
Waivers--
Waiver of investment advisory fee $(3,522,148)
Waiver of shareholder services fee--Institutional (6,307,126)
Shares
Total waivers (9,829,274)
Net expenses 9,091,408
Net investment income $177,875,424
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 177,875,424 $ 135,465,845
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (134,094,591) (108,299,075)
Institutional Service Shares (43,780,833) (27,166,770)
Change in net assets resulting from distributions (177,875,424) (135,465,845)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 22,256,668,113 14,537,344,438
Net asset value of shares issued to shareholders in
payment of distributions declared 55,759,597 39,437,151
Cost of shares redeemed (20,967,440,251) (13,957,129,903)
Change in net assets resulting from share
transactions 1,344,987,459 619,651,686
Change in net assets 1,344,987,459 619,651,686
NET ASSETS:
Beginning of period 2,885,272,914 2,265,621,228
End of period $ 4,230,260,373 $ 2,885,272,914
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios. The
financial statements included herein are only those of Government
Obligations Fund (the "Fund"). The financial statements of the other
portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objective of the Fund is to provide current
income consistent with stability of principal.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/
dealers, which are deemed by the Fund's adviser to be creditworthy pursuant
to the guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Fund could receive less than the repurchase price on the sale of
collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code"). Distributions to shareholders are recorded on the
ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable
to regulated investment companies and to distribute to shareholders each
year substantially all of its income. Accordingly, no provisions for federal
tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The
Fund records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in aggregated
$4,230,260,373. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 17,018,052,623 11,676,332,015
Shares issued to shareholders in payment of 37,459,828 27,600,308
distributions declared
Shares redeemed (15,945,119,407) (11,447,449,600)
Net change resulting from Institutional Share 1,110,393,044 256,482,723
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 5,238,615,490 2,861,012,423
Shares issued to shareholders in payment of distributions 18,299,769 11,836,843
declared
Shares redeemed (5,022,320,844) (2,509,680,303)
Net change resulting from Institutional Service Share 234,594,415 363,168,963
transactions
Net change resulting from share transactions 1,344,987,459 619,651,686
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The
fee paid to FServ is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average
daily net assets of the Fund for the period. The fee paid to FSS is used to
finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS
can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the Fund. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Government Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Government Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule
of portfolio investments, as of July 31, 1997, 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, 1997, 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, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended, and its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
[Graphic]
Federated Investors
Government Obligations Fund
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
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 Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N807
G01066-02 (9/97)
[Graphic]
GOVERNMENT OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectuses of Government Obligations Fund (the "Fund"), a portfolio of
Money Market Obligations Trust (the "Trust") dated September 30, 1997. This
Statement is not a prospectus. You may request a copy of a prospectus or a
paper copy of this Statement, if you have received it electronically, free
of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1997
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 60934N104
Cusip 60934N807
G01066-03 (9/97)
TABLE OF CONTENTS
INVESTMENT POLICIES 1
Acceptable Investments 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 1
Selling Short and Buying on Margin 1
Issuing Senior Securities and Borrowing Money 2
Pledging Assets 2
Lending Cash or Securities 2
Investing in Commodities 2
Investing in Real Estate 2
Underwriting 2
Concentration of Investments 2
Diversification of Investments 2
Investing in Illiquid Securities 2
Investing in Securities of Other Investment Companies 3
Investing for Control 3
Investing in Options 3
Regulatory Compliance 3
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 4
Share Ownership 7
Trustee Compensation 8
Trustee Liability 8
INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9
Advisory Fees 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 9
Fund Administration 9
Custodian and Portfolio Accountant 9
Transfer Agent 10
Independent Public Accountants 10
Shareholder Services 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 10
MASSACHUSETTS PARTNERSHIP LAW 11
THE FUND'S TAX STATUS 11
PERFORMANCE INFORMATION 11
Yield 11
Effective Yield 11
Total Return 11
Performance Comparisons 12
Economic and Market Information 12
ABOUT FEDERATED INVESTORS 12
Mutual Fund Market 13
Institutional Clients 13
Bank Marketing 13
Broker/Dealers and Bank Broker/Dealer Subsidiaries 13
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be changed by
the Board of Trustees (the "Trustees") without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS
Some of the short-term U.S. government securities the Fund may purchase
carry variable interest rates. These securities have a rate of interest
subject to adjustment at least annually. This adjusted interest rate
ordinarily is tied to some objective standard, such as the 91-day U.S.
Treasury bill rate. Variable interest rates will reduce the changes in the
market value of such securities from their original purchase prices.
Accordingly, the potential for capital appreciation or capital depreciation
should not be greater than that of fixed-interest-rate U.S. government
securities having maturities equal to the interest rate adjustment dates of
the variable-rate U.S. government securities. The Fund may purchase
variable-rate U.S. government securities upon the determination by the
Trustees that the interest rate as adjusted will cause the instrument to
have a current market value that approximates its par value on the
adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund in a dollar amount sufficient to make payment for the securities to be
purchased are: segregated on the Fund's records at the trade date; marked to
market daily; and maintained until the transaction is settled. The Fund does
not intend to engage in when-issued and delayed delivery transactions to an
extent that would cause the segregation of more than 20% of the total value
of its assets.
REPURCHASE AGREEMENTS
The Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Fund's adviser
to be creditworthy pursuant to guidelines established by the Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in return
for a percentage of the instrument's market value in cash and agrees that on
a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an
agreed-upon rate. The use of reverse repurchase agreements may enable the
Fund to avoid selling portfolio instruments at a time when a sale may be
deemed to be disadvantageous, but does not ensure this result. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment for
the securities to be purchased, are: segregated on the Fund's records at the
trade date; marked to market daily; and maintained until the transaction is
settled.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends
or interest paid on such securities. Loans are subject to termination at the
option of the Fund or the borrower. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for clearance
of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of the value of
its total assets are outstanding. During the period any reverse repurchase
agreements are outstanding, the Fund will restrict the purchase of portfolio
securities to money market instruments maturing on or before the expiration
date of the reverse repurchase agreements, but only to the extent necessary
to assure completion of the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15%
of the value of total assets of the Fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities. This
shall not prevent the Fund from purchasing or holding bonds, debentures,
notes, certificates of indebtedness or other debt securities, entering into
repurchase agreements or engaging in other transactions where permitted by
its investment objective, policies, and limitations or the Trust's
Declaration of Trust.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests although it may invest in securities of issuers whose
business involves the purchase or sale of real estate or in securities which
are secured by real estate or interests in real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any
one industry. However, the Fund may invest 25% or more of the value of its
total assets in cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies, or instrumentalities and
repurchase agreements collateralized by such U.S. government securities. The
U.S. government is not considered to be an industry.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities) if as a result more than
5% of the value of its total assets would be invested in the securities of
that issuer, or if it would own more than 10% of the outstanding voting
securities of that issuer.
The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities including repurchase agreements providing for settlement
in more than seven days after notice.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits
in excess of $100,000,000 at the time of investment to be "cash items."
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of the
value of its net assets during the last fiscal year and has no present
intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply
with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the
Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund will determine the effective maturity of
its investments according to Rule 2a-7. The Fund may change these
operational policies to reflect changes in the laws and regulations without
the approval of its shareholders.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Money Market Obligations Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member
of Executive Committee, University of Pittsburgh; Director or Trustee of the
Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center--Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; Director or Trustee of
the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University, and U.S. Space Foundation;
President Emeritus, University of Pittsburgh; Founding Chairman, National
Advisory Council for Environmental Policy and Technology, Federal Emergency
Management Advisory Board, and Czech Management Center, Prague; Director or
Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Shareholder Services Company; Trustee or Director of some of the
Funds; President, Executive Vice President and Treasurer of some of the
Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and Secretary
of the Funds; Treasurer of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
@ Member of the Executive Committee. The Executive Committee of the Trustees
handles the responsibilities of the Board between meetings of the Board.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
As referred to in the list of Trustees and Officers, "Funds" includes the
following investment companies: 111 Corcoran Funds; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated
ARMs Fund; Federated Equity Funds; Federated Equity Income Fund, Inc.;
Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal Securities
Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust;
Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Investment Series Trust;
Liberty Term Trust, Inc.--1999; Liberty U.S. Government Money Market Trust;
Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree
Funds; RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments
Trust; The Planters Funds; The Starburst Funds; The Starburst Funds II; The
Virtus Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 4, 1997, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Fund: Mertru and
Company, Muncie, Indiana, owned approximately 217,114,421 shares (6.31%),
and Var & Co., St. Paul, Minnesota, owned approximately 394,259,295 shares
(11.46%).
As of September 4, 1997, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Fund: Lane &
Co., San Diego, California, owned approximately 68,065,094 shares (6.69%),
and Union Federal Savings Bank and Trust Company, Indianapolis, Indiana,
owned approximately 59,222,366 shares (5.82%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <S>
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies in the
Fund Complex
Thomas G. Bigley $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
John T. Conroy, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
William J. Copeland $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 18 other investment companies in the
Fund Complex
James E. Dowd $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Peter E. Madden $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Gregor F. Meyer $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
John E. Murray, Jr. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Wesley W. Posvar $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Marjorie P. Smuts $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1997.
# The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+ The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Management. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust, the Fund, or any shareholder
of the Fund for any losses that may be sustained in the purchase, holding,
or sale of any security or for anything done or omitted by it, except acts
or omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Fund.
ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. For the fiscal years
ended July 31, 1997, 1996, and 1995, the adviser earned $6,777,523,
$5,061,781, and $2,842,786, respectively, of which $3,522,148, $2,827,496,
and $2,063,842, respectively, were waived.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The adviser makes decisions on portfolio transactions and selects
brokers and dealers subject to guidelines established by the Trustees. The
adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
adviser and may include: advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry
studies; receipt of quotations for portfolio evaluations; and similar
services. Research services provided by brokers and dealers may be used by
the adviser or its affiliates in advising the Fund and other accounts. To
the extent that receipt of these services may supplant services for which
the adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in good faith
that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided. During the fiscal
years ended July 31, 1997, 1996, and 1995, the Fund paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those
of the other accounts managed by the adviser, investments of the type the
Fund may make may also be made by those other accounts. When the Fund and
one or more other accounts managed by the adviser are prepared to invest in,
or desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the
adviser to be equitable to each. In some cases, this procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtained or disposed of by the Fund. In other cases, however, it is believed
that coordination and the ability to participate in volume transactions will
be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994 to March 1, 1996, Federated
Administrative Services, a subsidiary of Federated Investors, served as the
Fund's Administrator. For purposes of this Statement of Additional
Information, Federated Services Company and Federated Administrative
Services may hereinafter collectively be referred to as the
"Administrators." For the fiscal years ended July 31, 1997, 1996, and 1995,
the Administrators earned $2,559,413, $1,914,143, and $1,075,995,
respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for
the securities and cash of the Fund. Federated Services Company, Pittsburgh,
Pennsylvania, provides certain accounting and recordkeeping services with
respect to the Fund's portfolio investments. The fee paid for this service
is based upon the level of the Fund's average net assets for the period plus
out-of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records.
For its services, the transfer agent receives a fee based on the size, type
and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, Pennsylvania.
SHAREHOLDER SERVICES
This arrangement permits the payment of fees to Federated Shareholder
Services to cause services to be provided which are necessary for the
maintenance of shareholder accounts and to encourage personal services to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include but are not limited to providing office space, equipment, telephone
facilities, and various clerical, supervisory, computer, and other personnel
as necessary or beneficial to establish and maintain shareholder accounts
and records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses.
By adopting the Shareholder Services Agreement, the Trustees expect that the
Fund will benefit by: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and administrative
detail; (3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended July 31, 1997, the Fund earned shareholder service
fees on behalf of Institutional Shares and Institutional Service Shares in
the amounts of $6,307,126 and $2,164,778, respectively, $0 and $2,164,778 of
which, respectively, was paid to financial institutions.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of
the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed
for purposes of distribution and redemption, at $1.00 per share, taking into
account current market conditions and the Fund's investment objective. The
procedures include monitoring the relationship between the amortized cost
value per share and the net asset value per share based upon available
indications of market value. The Trustees will decide what, if any, steps
should be taken if there is a difference of more than 0.5 of 1% between the
two values. The Trustees will take any steps they consider appropriate (such
as redemption in kind or shortening the average portfolio maturity) to
minimize any material dilution or other unfair results arising from
differences between the two methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is not
as liquid as a cash redemption. If redemption is made in kind, shareholders
who sell these securities could receive less than the redemption value and
could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against
them.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund must, among other requirements: derive at least 90% of
its gross income from dividends, interest, and gains from the sale of
securities; derive less than 30% of its gross income from the sale of
securities held less than three months; invest in securities within certain
statutory limits; and distribute to its shareholders at least 90% of its net
income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is invested;
changes in interest rates; changes in expenses; and the relative amount of
cash flow. To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in conjunction with an
investment in shares of the Fund, the performance will be reduced for those
shareholders paying those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of the
calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
shares purchased with dividends earned from the original one share and all
dividends declared on the original and any purchased shares; dividing the
net change in the account's value by the value of the account at the
beginning of the base period to determine the base period return; and
multiplying the base period return by 365/7.
For the seven-day period ended July 31, 1997, the yield for Institutional
Shares was 5.50%, and the yield for Institutional Service Shares was 5.25%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to the
365/7th power; and subtracting 1 from the result.
For the seven-day period ended July 31, 1997, the effective yield for
Institutional Shares was 5.65%, and the effective yield for Institutional
Service Shares was 5.38%
TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is computed
by multiplying the number of shares owned at the end of the period by the
net asset value per share at the end of the period. The number of shares
owned at the end of the period is based on the number of shares purchased at
the beginning of the period with $1,000, adjusted over the period by any
additional shares, assuming the monthly reinvestment of all dividends and
distributions.
For the one-year and five-year periods ended July 31, 1997, and for the
period from March 31, 1990 (date of initial public investment) through July
31, 1997, the average annual total returns were 5.43%, 4.63% and 5.16%,
respectively, for Institutional Shares. For the one-year period ended July
31, 1997, and for the period from August 1, 1994 (date of initial public
investment) to July 31, 1997, the average annual total returns were 5.16%
and 5.23%, respectively, for Institutional Service Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
* Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment of all
income dividends and capital gains distributions, if any.
* IBC/Donoghue's Money Fund Report publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the same
money funds.
* Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
* Salomon 30-Day CD Index compares rate levels of 30-day certificates of
deposit from the top ten prime representative banks.
* Salomon 30-Day Treasury Bill Index is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
* Discount Corporation of New York 30-Day Federal Agencies is a weekly
quote of the average daily offering price for selected federal agency
issues maturing in 30 days.
Advertising and other promotional literature may include charts, graphs, and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging, and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in which
it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial, and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by portfolio managers and their views and analysis on how such
developments could affect the funds. In addition, advertising and sales
literature may quote statistics and give general information about the
mutual fund industry, including the growth of the industry, from sources
such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making--structured, straightforward,
and consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts,
and traders dedicated to specific market sectors. These traders handle
trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in the
mutual fund industry in 1974 with the creation of the first institutional
money market fund. Simultaneously, the company pioneered the use of the
amortized cost method of accounting for valuing shares of money market
funds, a principal means used by money managers today to value money market
fund shares. Other innovations include the first institutional tax-free
money market fund. As of December 31, 1996, Federated Investors managed more
than $50.3 billion in assets across 50 money market funds, including 18
government, 11 prime, and 21 municipal with assets approximating $28.0
billion, $12.8 billion, and $9.5 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high-yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic
fixed-income management. Henry A. Frantzen, Executive Vice President,
oversees the management of Federated Investors' international and global
portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3.5 trillion to the more than 6,000 funds
available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for
a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional clients is
headed by John B. Fisher, President, Institutional Sales Division.
BANK MARKETING
Other institutional clients include close relationships with more than 1,600
banks and trust organizations. Virtually all of the trust divisions of the
top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Timothy C.
Pillion, Senior Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country--supported by more wholesalers than any
other mutual fund distributor. Federated's service to financial
professionals and institutions has earned it high ratings in several surveys
performed by DALBAR, Inc. DALBAR is recognized as the industry benchmark for
service quality measurement. The marketing effort to these firms is headed
by James F. Getz, President, Federated Securities Corp.
* Source: Investment Company Institute
Prime Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
The Institutional Shares of Prime Obligations Fund (the "Fund") offered by
this prospectus represent interests in a portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company
(a mutual fund). The Fund invests in short-term money market securities to
achieve 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, 1997, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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 5
Investment Limitations 5
Fund Information 5
Management of the Fund 5
Distribution of Institutional Shares 6
Administration of the Fund 7
Net Asset Value 7
How to Purchase Shares 7
Purchasing Shares by Wire 7
Purchasing Shares by Check 7
Invest-by-Phone 7
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Account and Share Information 8
Dividends 8
Capital Gains 8
Confirmations and Account Statements 9
Accounts with Low Balances 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 9
Other Classes of Shares 9
Performance Information 10
Financial Highlights --Institutional Services Shares 11
Financial Statements 12
Report of Independent Public Accountants 26
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering None
price)
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as None
applicable)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after 0.09%
waiver)(1)
12b-1 Fee None
Total Other Expenses 0.11%
Shareholder Services Fee (after 0.00%
waiver)(2)
Total Operating Expenses (after 0.20%
waivers)(3)
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider
can terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%
(3) The total operating expenses would have been 0.56% absent the voluntary
waiver of a portion of the management fee and the shareholder services fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Fund Information" and
"How to Purchase Shares." Wire-transferred redemptions of less than $5,000
may be subject to additional fees.
EXAMPLE
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
1 year $ 2
3 years $ 6
5 years $11
10 years $26
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
26.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.06 0.03 0.03 0.05 0.07 0.03
LESS DISTRIBUTIONS
Distributions from net (0.05) (0.05) (0.06) (0.03) (0.03) (0.05) (0.07) (0.03)
investment income
NET ASSET VALUE, END OF $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
PERIOD
TOTAL RETURN(B) 5.45% 5.58% 5.65% 3.47% 3.25% 4.74% 7.30% 2.89%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%*
Net investment income 5.35% 5.43% 5.60% 3.47% 3.20% 4.53% 6.54% 8.21%*
Expense 0.36% 0.36% 0.38% 0.14% 0.09% 0.10% 0.24% 0.68%*
waiver/reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of $3,588,082 $3,032,602 $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593 $34,777
period (000 omitted)
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust permits
the Trust to offer separate series of shares representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Trustees (the "Trustees") has established two
classes of shares known as Institutional Shares and Institutional Service
Shares. This prospectus relates only to Institutional Shares of the Fund,
which are designed primarily for entities holding shares in an agency or
fiduciary capacity, financial institutions, financial intermediaries and
institutional investors as a convenient means of accumulating an interest in
a professionally managed portfolio investing in short-term money market
securities. A minimum initial investment of $1,000,000 over a one-year
period is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by complying with
the diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS
The Fund invests in high quality money market instruments that are either
rated in the highest short-term rating category by one or more nationally
recognized statistical rating organizations ("NRSROs") or are of comparable
quality to securities having such ratings. Examples of these instruments
include, but are not limited to:
* domestic issues of corporate debt obligations, including variable rate
demand notes;
* commercial paper (including Canadian Commercial Paper and Europaper);
* certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
* short-term credit facilities;
* asset-backed securities;
* obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
* other money market instruments.
The Fund invests only in instruments denominated and payable in U.S.
dollars.
VARIABLE RATE DEMAND NOTES
Variable rate demand notes are long-term debt instruments that have variable
or floating interest rates and provide the Fund with the right to tender the
security for repurchase at its stated principal amount plus accrued
interest. Such securities typically bear interest at a rate that is intended
to cause the securities to trade at par. The interest rate may float or be
adjusted at regular intervals (ranging from daily to annually), and is
normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit
the Fund to tender the security at the time of each interest rate adjustment
or at other fixed intervals. See "Demand Features." The Fund treats variable
rate demand notes as maturing on the later of the date of the next interest
rate adjustment or the date on which the Fund may next tender the security
for repurchase.
BANK INSTRUMENTS
The Fund only invests in Bank Instruments either issued by an institution
having capital, surplus and undivided profits over $100 million, or insured
by the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"). Bank Instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"). The Fund will treat securities credit enhanced with a
bank's letter of credit as Bank Instruments.
ASSET-BACKED SECURITIES
Asset-backed securities are securities issued by special purpose entities
whose primary assets consist of a pool of loans or accounts receivable. The
securities may take the form of beneficial interests in special purpose
trusts, limited partnership interests, or commercial paper or other debt
securities issued by a special purpose corporation. Although the securities
often have some form of credit or liquidity enhancement, payments on the
securities depend predominantly upon collections of the loans and
receivables held by the issuer.
SHORT-TERM CREDIT FACILITIES
The Fund may enter into, or acquire participations in, short-term borrowing
arrangements with corporations, consisting of either a short-term revolving
credit facility or a master note agreement payable upon demand. Under these
arrangements, the borrower may reborrow funds during the term of the
facility. The Fund treats any commitments to provide such advances as a
standby commitment to purchase the borrower's notes.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the seller does not
repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities.
CREDIT ENHANCEMENT
Certain of the Fund's acceptable investments may be credit-enhanced by a
guaranty, letter of credit, or insurance. Any bankruptcy, receivership,
default, or change in the credit quality of the party providing the credit
enhancement will adversely affect the quality and marketability of the
underlying security and could cause losses to the Fund and affect its share
price.
DEMAND FEATURES
The Fund may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or default
by the issuer of the demand feature, or a default on the underlying security
or other event that terminates the demand feature before its exercise, will
adversely affect the liquidity of the underlying security. Demand features
that are exercisable even after a payment default on the underlying security
may be treated as a form of credit enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
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, and, as a matter of
fundamental investment policy which cannot be changed without shareholder
approval, will limit such investments to 10% of its net assets. This
restriction is not applicable to commercial paper issued under Section 4(2)
of the Securities Act of 1933. Restricted securities are any securities in
which the Fund may invest pursuant to its investment objective and policies
but which are subject to restrictions on resale under federal securities
law. Under criteria established by the Trustees, certain restricted
securities are determined to be liquid. As a matter of non-fundamental
investment policy, to the extent that restricted securities are not
determined to be liquid, the Fund will limit their purchase, together with
other illiquid securities, including non-negotiable time deposits, and
repurchase agreements providing for settlement in more than seven days after
notice, to 10% of its net assets.
CONCENTRATION OF INVESTMENTS
As a matter of policy which cannot be changed without shareholder approval,
the Fund will generally invest 25% or more of its total assets in commercial
paper issued by finance companies. The finance companies in which the Fund
intends to invest can be divided into two categories, commercial finance
companies and consumer finance companies. Commercial finance companies are
principally engaged in lending to corporations or other businesses. Consumer
finance companies are primarily engaged in lending to individuals. Captive
finance companies or finance subsidiaries which exist to facilitate the
marketing and financial activities of their parent will, for purposes of
industry concentration, be classified in the industry of their parent's
corporation. In addition, the Fund may invest 25% or more of the value of
its total assets in instruments issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment. Concentrating investments
in one industry may subject the Fund to more risk than if it did not
concentrate.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject
to different risks than domestic obligations of domestic banks or
corporations. Examples of these risks include international economic and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholding or other
taxes on interest income, difficulties in obtaining or enforcing a judgment
against the issuing entity, and the possible impact of interruptions in the
flow of international currency transactions. Risks may also exist for ECDs,
ETDs, and Yankee CDs because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, and the public availability of information. These factors
will be carefully considered by the Fund's adviser in selecting investments
for the Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument
for a percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund may
borrow up to one-third of the value of its total assets and pledge up to 15%
of the value of those assets to secure such borrowings. These investment
limitations cannot be changed without shareholder approval.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's
powers except those reserved for the shareholders. An Executive Committee of
the Board of Trustees handles the Board's responsibilities between meetings
of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management, the
Fund's investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20% of the
Fund's average daily net assets. The adviser may voluntarily choose to waive
a portion of its fee or reimburse other expenses of the Fund, but reserves
the right to terminate such waiver or reimbursement at any time at its sole
discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April 11,
1989, is a registered investment adviser under the Investment Advisers Act
of 1940. It is a subsidiary of Federated Investors. All of the Class A
(voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. With over $110 billion invested across
over 300 funds under management and/or administration by its subsidiaries,
as of December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,500
financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interests. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Shares of the Fund. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25% of the average daily net asset value of
its shares, computed at an annual rate, to obtain certain personal services
for shareholders and to maintain shareholder accounts. From time to time and
for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or
will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their
own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount
of shares the financial institution sells or may sell, and/or upon the type
and nature of sales or marketing support furnished by the financial
institution. Any payments made by the distributor may be reimbursed by the
Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund at an annual rate which
relates to the average aggregate daily net assets of all funds advised by
affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities attributable
to Institutional Shares from the value of Fund assets attributable to
Institutional Shares, and dividing the remainder by the number of
Institutional 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 5:00 p.m. (Eastern time) Monday through
Friday, except on New Year's Day, Martin Luther King Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange is open for business. Shares may be purchased either by wire or by
check. The Fund reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Financial institutions may impose different minimum
investment requirements on their customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund before
5:00 p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 5:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Shareholder Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Prime Obligations Fund --
Institutional Shares; Fund Number (this number can be found on the account
statement or by contacting the Fund); Group Number or Order Number; Nominee
or Institution Name; and ABA Number 011000028. Shares cannot be purchased by
wire on holidays when wire transfers are restricted. Questions on wire
purchases should be directed to your shareholder services representative at
the telephone number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made
payable to: Prime Obligations Fund -- Institutional Shares. Orders by mail
are considered received when payment by check is converted into federal
funds (normally the business day after the check is received), and shares
begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone for
investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the Fund.
Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send
a request for monies to the shareholder's commercial bank, savings bank, or
credit union ("bank") via the Automated Clearing House. The shareholder's
bank, which must be an Automated Clearing House member, will then forward
the monies to Federated Shareholder Services Company. The purchase is
normally entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund
has a properly completed authorization form. These forms can be obtained
from Federated Securities Corp. Proceeds from redemption requests received
before 5:00 p.m. (Eastern time) will be wired the same day to the
shareholder's account at a domestic commercial bank which is a member of the
Federal Reserve System, but will not include that day's dividend. Proceeds
from redemption requests on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions
on days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares by Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
or any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934. The Fund does not accept signatures guaranteed by a
notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 5:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease
in dividends. The Fund will distribute in cash or additional shares any
realized net long-term capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all activity, including dividends paid. The
Fund will not issue share certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account, except accounts maintained by retirement
plans, and pay the proceeds to the shareholder if the account balance falls
below a required minimum value of $1,000,000 due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional shares to meet the
minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder one
vote in Trustee elections and other matters submitted to shareholders for
vote. All shares of all classes of each portfolio in the Trust have equal
voting rights, except that in matters affecting only a particular portfolio
or class, only shareholders of that portfolio or class are entitled to vote.
The Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust's or the
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies. The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by the Trust's other portfolios will not be combined for tax
purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Service Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries and institutional investors and are subject to a minimum
initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan but are
subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class, investors
may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and total
return. The performance figures will be calculated separately for each class
of shares.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
26.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) 0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.19% 5.32% 5.38% 0.30%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.34%*
Net investment income 5.11% 5.13% 5.66% 4.68%*
Expense waiver/reimbursement(c) 0.11% 0.11% 0.13% 0.14%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $2,236,997 $1,297,019 $500,954 $9,387
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 5, 1994 (date of initial
public offering) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
PRIME OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CERTIFICATES OF DEPOSIT--3.4%
BANKING--3.4%
$ 5,000,000 Mellon Bank N.A., Pittsburgh, 5.875%, 10/8/1997 $ 5,000,000
7,500,000 Republic National Bank of New York, 6.100%, 1/15/1998 7,501,352
185,000,000 Societe Generale, Paris, 5.430% - 6.140%, 8/11/1997 - 7/23/1998 184,978,158
TOTAL CERTFICATES OF DEPOSIT 197,479,510
(A)COMMERCIAL PAPER--43.6%
BANKING--12.5%
20,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank N.V., Amsterdam),
5.921%, 10/15/1997 19,760,417
268,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank PLC, London),
5.413% - 5.869%, 8/12/1997 - 10/10/1997 266,507,674
25,000,000 Australia & New Zealand ANZ (Delaware), Inc., (Guaranteed by Australia & New
Zealand Banking Group, Melbourne), 5.841%, 12/2/1997 24,515,260
21,265,000 Benedictine Health System, (Lasalle National Bank, Chicago LOC), 5.750% - 5.835%, 21,065,649
9/29/1997
110,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian Imperial Bank of
Commerce, Toronto), 5.424% - 5.435%, 8/25/1997 - 8/27/1997 109,594,767
70,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal de Belgique,
Brussles), 5.686% - 5.690%, 9/2/1997 - 9/4/1997 69,635,350
21,000,000 National Australia Funding, Inc., (Guaranteed by National Australia Bank, Ltd.,
Melbourne), 5.613%, 9/16/1997 20,853,490
35,000,000 Societe Generale North America, Inc., (Guaranteed by Societe Generale, Paris),
5.580% - 5.604%, 9/5/1997 - 9/10/1997 34,808,431
134,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska Handelsbanken, Stockholm),
5.761% - 5.867%, 9/25/1997 - 11/13/1997 132,632,698
29,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by Toronto-Dominion Bank),
5.816%, 10/6/1997 28,699,608
Total 728,073,344
BROKERAGE--3.9%
225,000,000 Merrill Lynch & Co., Inc., 5.578% - 5.660%, 9/2/1997 - 10/14/1997 223,213,244
FINANCE - AUTOMOTIVE--1.8%
108,000,000 Ford Motor Credit Corp., 5.442% - 5.689%, 8/7/1997 - 2/2/1998 106,523,333
FINANCE - COMMERCIAL--20.0%
20,000,000 Alpha Finance Corp., Ltd., 5.612%, 10/14/1997 19,772,656
155,000,000 Asset Securitization Cooperative Corp., 5.572% - 5.711%, 8/12/1997 - 9/9/1997 154,239,794
153,500,000 Beta Finance, Inc., 5.413% - 5.888%, 8/19/1997 - 11/14/1997 152,725,674
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - COMMERCIAL--CONTINUED
$ 70,000,000 CIT Group Holdings, Inc., 5.680%, 9/29/1997 - 9/30/1997 $ 69,352,889
153,000,000 CXC, Inc., 5.586% - 5.697%, 8/13/1997 - 10/15/1997 152,022,313
62,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.594% - 5.596%, 10/8/1997 - 61,349,867
10/10/1997
48,475,000 Falcon Asset Securitization Corp., 5.413% - 5.599%, 8/19/1997 - 10/16/1997 48,090,471
70,000,000 General Electric Capital Corp., 5.571% - 6.096%, 9/8/1997 - 1/23/1998 68,836,556
273,446,000 Greenwich Funding Corp., 5.562% - 5.779%, 8/6/1997 - 9/22/1997 272,647,215
40,150,000 Preferred Receivables Funding Co. (PREFCO), 5.478% - 5.608%, 8/14/1997 - 39,882,456
10/14/1997
82,062,000 Receivables Capital Corp., 5.551% - 5.575%, 8/25/1997 - 9/12/1997 81,678,829
45,000,000 Sheffield Receivables Corp., 5.555%, 8/7/1997 44,958,525
Total 1,165,557,245
FINANCE - RETAIL--4.7%
52,000,000 American Express Credit Corp., 5.592% - 5.593%, 10/20/1997 - 10/21/1997 51,359,156
90,000,000 Associates Corp. of North America, 5.596% - 5.704%, 8/15/1997 - 10/28/1997 89,350,989
133,000,000 New Center Asset Trust, A1+/P1 Series, 5.465% - 5.939%, 8/4/1997 - 10/24/1997 132,131,877
Total 272,842,022
INSURANCE--0.7%
22,520,000 AIG Funding, Inc., (Guaranteed by AIG), 5.851%, 8/1/1997 22,520,000
20,000,000 CommoLoCo, (Guaranteed by American General Corp.), 5.964%, 10/27/1997 19,720,150
Total 42,240,150
TOTAL COMMERCIAL PAPER 2,538,449,338
SHORT-TERM NOTES--9.2%
BANKING--3.6%
10,000,000 Abbey National Treasury Services, PLC, 6.050%, 6/8/1998 9,993,241
10,000,000 BankBoston, N.A., 6.040%, 7/17/1998 10,000,000
1,500,000 Bayerische Landesbank- NY, 6.250%, 4/15/1998 1,499,693
131,500,000 (b)SALTS II Cayman Islands Corp., (Bankers Trust International Swap Agreement),
5.863%, 9/18/1997 131,500,000
45,000,000 (b)SALTS III Cayman Island Corp., (Bankers Trust International, PLC Swap
Agreement), 5.944%, 1/23/1998 45,000,000
11,000,000 (b)SALTS III Cayman Island Corp., (Bankers Trust International Swap Agreement),
6.065%, 12/18/1997 11,000,000
Total 208,992,934
BROKERAGE--1.6%
95,000,000 (b)Goldman Sachs & Co., 5.670%, 10/28/1997 95,000,000
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
FINANCE - AUTOMOTIVE--1.2%
$ 24,535,190 Chase Manhattan Auto Owner Trust 1997-A, 5.545%, 4/10/1998 $ 24,535,190
39,322,170 Chase Manhattan Auto Owner Trust 1997-B, 5.744%, 7/10/1998 39,322,170
3,191,420 Ford Credit Auto Lease Trust 1996-1, 5.451%, 11/15/1997 3,191,327
Total 67,048,687
FINANCE - COMMERCIAL--1.4%
76,000,000 Beta Finance, Inc., 6.080% - 6.270%, 3/26/1998 - 5/12/1998 76,000,000
2,000,000 CIT Group Holdings, Inc., 6.125%, 9/1/1998 2,004,708
3,507,476 Cargill Lease Receivables Trust 1996-A, 5.613%, 12/20/1997 3,507,476
3,100,000 General Electric Capital Corp., 7.205%, 3/9/1998 3,118,526
Total 84,630,710
FINANCE - EQUIPMENT--0.9%
9,116,285 Capita Equipment Receivables Trust 1996-1, 5.600%, 10/15/1997 9,116,285
43,413,507 Copelco Capital Funding Corp. X 1997-A, 5.809%, 7/20/1998 43,413,507
Total 52,529,792
INSURANCE--0.5%
6,038,166 Olympic Automobile Receivables Trust 1997-A, (FSA GTD), 5.500%, 3/15/1998 6,038,166
21,065,251 WFS Financial Owner Trust 1997-A, (FSA GTD), 5.630%, 3/20/1998 21,065,251
Total 27,103,417
TOTAL CORPORATE NOTES 535,305,540
(C)VARIABLE RATE INSTRUMENTS--19.7%
BANKING--13.9%
5,880,000 Abbott Foods, Series 1996, (Huntington National Bank, Columbus, OH LOC), 5.650%, 5,880,000
8/7/1997
5,580,000 Alabama State IDA, Series 1994, Miltope Project, (Regions Bank, Alabama LOC),
5.650%, 8/7/1997 5,580,000
9,015,000 Alabama State IDA, (Wellborn Cabinet, Inc.), Tax Revenue Bonds, (Amsouth Bank
N.A., Birmingham LOC), 5.600%, 8/6/1997 9,015,000
8,105,000 Alexandria Executive Club L.P., (Huntington National Bank, Columbus, OH LOC), 8,105,000
5.650%, 8/7/1997
8,580,000 Arrow N.A., Inc., (Bank of America NT and SA, San Francisco LOC), 5.650%, 8,580,000
8/7/1997
7,000,000 Asset Holdings Corp. VII, (First Bank N.A., Minneapolis LOC), 5.640%, 8/7/1997 7,000,000
3,500,000 Asset Holdings V, (Bayerische Vereinsbank AG, Munich LOC), 5.640%, 8/7/1997 3,500,000
16,500,000 Association of American Medical Colleges, (Guaranteed by Chase Manhattan Bank
N.A., New York), 5.640%, 8/6/1997 16,500,000
3,800,000 Balboa Investment Group V, Series 1997, (Amsouth Bank N.A., Birmingham LOC),
5.700%, 8/7/1997 3,800,000
5,000,000 Bank One, Milwaukee, WI, N.A., 5.510%, 8/5/1997 4,999,319
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 4,000,000 Bardstown City, KY, Series 1995, (RJ Tower Project), (Comerica, Inc. LOC), $ 4,000,000
5.670%, 8/7/1997
1,627,790 Bowling Green Manor L.P., (Huntington National Bank, Columbus, OH LOC), 5.650%, 1,627,790
8/7/1997
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH LOC), 5.980%, 1/3/1998 17,400,000
6,592,000 Capital One Funding Corp., Series 1994-A, (Bank One, Ohio, N.A. LOC), 5.560%, 6,592,000
8/7/1997
19,387,000 Capital One Funding Corp., Series 1994-C, (Bank One, Ohio, N.A. LOC), 5.560%, 19,387,000
8/7/1997
9,045,000 Capital One Funding Corp., Series 1994-D, (Bank One, Kentucky LOC), 5.560%, 9,045,000
8/7/1997
21,213,000 Capital One Funding Corp., Series 1995-A, (Bank One, Indianapolis, IN LOC), 21,213,000
5.560%, 8/7/1997
20,054,000 Capital One Funding Corp., Series 1995-B, (Bank One, Kentucky LOC), 5.560%, 20,054,000
8/7/1997
21,771,000 Capital One Funding Corp., Series 1995-F, (Bank One, Ohio, N.A. LOC), 5.560%, 21,771,000
8/7/1997
1,000,000 Chestnut Hills Apartments, Ltd., (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/7/1997 1,000,000
10,100,000 Cloquet, MN, Series 1996-B, Potlach Corp., (Credit Suisse, Zurich LOC), 5.700%, 10,100,000
8/6/1997
1,042,337 Clyde Manor L.P., (Huntington National Bank, Columbus, OH LOC), 5.650%, 8/7/1997 1,042,337
3,025,000 Columbia County, GA Development Authority, Series 1993, (SunTrust Banks, Inc.
LOC), 5.600%, 8/6/1997 3,025,000
3,875,000 Eastwinds Investment, Ltd., (Huntington National Bank, Columbus, OH LOC), 5.650%, 3,875,000
8/7/1997
7,015,000 Fort Craig Limited Partnership, (Huntington National Bank, Columbus, OH LOC), 7,015,000
5.650%, 8/7/1997
4,300,000 G.M.H. Enterprises, Inc., Series 1995, (National City Bank, Cleveland, OH LOC), 4,300,000
5.650%, 8/7/1997
3,260,000 Gerken Materials, Inc., (Huntington National Bank, Columbus, OH LOC), 5.650%, 3,260,000
8/7/1997
9,900,000 Grand Aire Express, Inc., Series 1997, (National City Bank, Northwest LOC), 9,900,000
5.650%, 8/7/1997
1,200,000 Great Lakes Brewing Co., (Huntington National Bank, Columbus, OH LOC), 5.650%, 1,200,000
8/7/1997
2,275,000 Grote Family L.P., (Huntington National Bank, Columbus, OH LOC), 5.650%, 8/7/1997 2,275,000
12,020,000 Hunt Club Apartments, Inc., (Huntington National Bank, Columbus, OH LOC), 5.650%, 12,020,000
8/6/1997
900,000 Illinois Development Finance Authority, Series 1996B, Nimlok Co., Project, (Bank
One, Chicago LOC), 5.790%, 8/7/1997 900,000
245,000 Kenny, Donald R. and Cheryl A., (Huntington National Bank, Columbus, OH LOC),
5.650%, 8/7/1997 245,000
7,000,000 Kenny, Donald R. and Cheryl A., Series 1995-A, (National City Bank, Columbus, OH
LOC), 5.650%, 8/7/1997 7,000,000
7,960,000 Kenny, Donald R. and Cheryl A., Series 1995-B, (Huntington National Bank,
Columbus, OH LOC), 5.650%, 8/7/1997 7,960,000
157,000,000 Liquid Asset Backed Securities Trust, Series 1996-3, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.700%, 8/15/1997 157,000,000
58,000,000 Liquid Asset Backed Securities Trust, Series 1997-1, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.680%, 8/15/1997 58,000,000
3,322,000 Midwest Funding Corp., Series 1991 A, Class A-1, (Bank One, Ohio, N.A. LOC), 3,322,000
5.560%, 8/7/1997
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 2,508,000 Midwest Funding Corp., Series 1991 B, (Bank One, Ohio, N.A. LOC), 5.560%, $ 2,508,000
8/7/1997
3,481,000 Midwest Funding Corp., Series 1991-C, (Bank One, Ohio, N.A. LOC), 5.560%, 3,481,000
8/7/1997
2,307,000 Midwest Funding Corp., Series 1992-A, (Bank One, Ohio, N.A. LOC), 5.560%, 2,307,000
8/7/1997
1,518,000 Midwest Funding Corp., Series 1992-B, (Bank One, Ohio, N.A. LOC), 5.560%, 1,518,000
8/7/1997
3,605,000 Midwest Funding Corp., Series 1992-C, (Bank One, Ohio, N.A. LOC), 5.560%, 3,605,000
8/7/1997
12,200,000 Mississippi Business Finance Corp., Choctaw Foods,Inc., (Rabobank Nederland,
Utrecht LOC), 5.600%, 8/6/1997 12,200,000
6,960,000 Mississippi Business Finance Corp., Metalloy Project, (Comerica Bank, Detroit, MI
LOC), 5.650%, 8/7/1997 6,960,000
12,000,000 Mississippi Business Finance Corp., Series 1994, (Wachovia Bank of Georgia N.A.,
Atlanta LOC), 5.640%, 8/6/1997 12,000,000
2,000,000 Mississippi Business Finance Corp., Series 1995, Plantation Pointe, LP Project,
(Amsouth Bank N.A., Birmingham LOC), 5.650%, 8/7/1997 2,000,000
5,000,000 NUFUNDING, Inc., Series 1996, (Lasalle National Bank, Chicago LOC), 5.725%, 5,000,000
8/6/1997
3,000,000 Newbury Industrial Park, Series 1996, (Huntington National Bank, Columbus, OH
LOC), 5.650%, 8/7/1997 3,000,000
2,530,000 Nova University, Inc. Lease Revenue Bonds, Series 1993, Miami Dolphins Training
Facility, (SunTrust Bank, South Florida LOC), 5.600%, 8/6/1997 2,530,000
2,310,000 Orangeburg Convalescent Care Center, Inc., Series 1995A, (PNC Bank, Kentucky
LOC), 5.604%, 8/4/1997 2,310,000
4,000,000 REAL I Funding Corp., Casto Realty Investments, Series 1996, (Huntington National
Bank, Columbus, OH LOC), 5.650%, 8/7/1997 4,000,000
111,522,416 Rabobank Optional Redemption Trust, Series 1997-101, 5.750%, 8/15/1997 111,522,416
7,235,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC),
5.650%, 7/31/1997 7,235,000
2,945,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC),
5.650%, 8/7/1997 2,945,000
12,750,000 Rooker, J.W., (Wachovia Bank of Georgia N.A., Atlanta LOC), 5.640%, 8/6/1997 12,750,000
6,000,000 SMM Trust, Series 1996-B, (Morgan Guaranty Trust Co., New York Swap Agreement),
5.738%, 9/1/1997 6,000,000
200,000 Scranton Times, L.P., (PNC Bank, N.A. LOC), 5.690%, 8/4/1997 200,000
6,100,000 Shenandoah Partners L.P., (Huntington National Bank, Columbus, OH LOC), 5.650%, 6,100,000
8/7/1997
3,617,000 Spitzer Group, Series 1996A, (Bank One, Ohio, N.A. LOC), 5.640%, 8/7/1997 3,617,000
1,980,000 Spitzer Group, Series 1996B, (Bank One, Ohio, N.A. LOC), 5.640%, 8/7/1997 1,980,000
5,315,000 Springfield Limited Series A, (Union Bank of Switzerland, Zurich LOC), 5.560%, 5,315,000
8/7/1997
47,445,000 Terry Griffin Gate Partners, Ltd., Series 1995, (Bank One, Kentucky LOC), 5.640%, 47,445,000
8/6/1997
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 5,780,000 Van Dyne Crotty Co., Series 1996, (Huntington National Bank, Columbus, OH LOC),
5.650%, 8/7/1997 $ 5,780,000
4,179,000 Vista Funding Corp., Series 1994-A, (Fifth Third Bank of Northwestern OH LOC), 4,179,000
5.640%, 8/7/1997
11,114,000 Vista Funding Corp., Series 1995-B, (Fifth Third Bank of Northwestern OH LOC), 11,114,000
5.640%, 8/7/1997
9,990,000 Vista Funding Corp., Series 1995-D, (Fifth Third Bank of Northwestern OH LOC), 9,990,000
5.640%, 8/7/1997
8,784,000 Vista Funding Corp., Series 1995-E, (Bank One, Ohio, N.A. LOC), 5.640%, 8/7/1997 8,784,000
2,955,000 Vista Funding Corp., 5.56%, 8/7/1997 2,955,000
5,555,000 Vulcan, Inc., (Amsouth Bank N.A., Birmingham LOC), 5.700%, 8/7/1997 5,555,000
991,431 Wauseon Manor II L.P., (Huntington National Bank, Columbus, OH LOC), 5.650%, 991,431
8/7/1997
3,075,000 Wexner Heritage House, (Huntington National Bank, Columbus, OH LOC), 5.650%, 3,075,000
8/7/1997
2,320,000 YMCA of Central, OH, (Huntington National Bank, Columbus, OH LOC), 5.650%, 2,320,000
8/7/1997
Total 810,760,293
ELECTRICAL EQUIPMENT--0.9%
20,185,501 GE Engines RPP Trust - 1995-1, Series B, (Guaranteed by General Electric Co.), 20,185,501
5.620%, 8/4/1997
7,000,000 GE Engines RPP Trust - 1995-1, Series C, (Guaranteed by General Electric Co.), 7,000,000
5.692%, 8/4/1997
22,613,059 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.580%, 8/4/1997 22,613,059
Total 49,798,560
FINANCE - RETAIL--0.6%
37,000,000 Carco Auto Loan Master Trust 1993-2, Series 1993-2, Class A1, 5.695%, 8/15/1997 37,000,000
INSURANCE--3.9%
118,339,106 Liquid Asset Backed Securities Trust, Series 1997-3, Senior Notes, (Westdeutsche
Landesbank Girozentrale Swap Agreement, Guaranteed by AMBAC), 5.751%, 9/27/1997 118,339,106
30,000,000 (b)Peoples Security Life Insurance Company, 5.840%, 9/1/1997 30,000,000
10,000,000 (b)SunAmerica Life Insurance Company, 5.788%, 9/1/1997 10,000,000
25,000,000 Transamerica Life Insurance and Annuity Co., (Transamerica Life Insurance and
Annuity Co. LOC), 5.781%, 9/26/1997 25,000,000
44,000,000 (b)Travelers Insurance Company, 5.841%, 8/20/1997 44,000,000
Total 227,339,106
MUNICIPAL--0.4%
25,700,000 (b)Columbus, OH, 5.770%, 8/7/1997 25,700,000
TOTAL VARIABLE RATE OBLIGATIONS 1,150,597,959
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPAL SECURITIES--0.2%
BANKING--0.2%
$ 10,000,000 Colorado Health Facilities Authority, National Benevolent Association Series
1996C, (Kredietbank N.V., Brussels LOC), 5.720%, 11/1/1997 $ 9,998,693
3,000,000 White Bear Lake, MN City of, Series 1993, (Norwest Bank Minnesota, Minneapolis
LOC), 5.900%, 11/1/1997 3,000,000
TOTAL SHORT-TERM MUNICIPAL SECURITIES 12,998,693
TIME DEPOSITS--8.5%
BANKING--8.5%
170,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.813%, 8/1/1997 170,000,000
150,000,000 Chase Manhattan Bank (USA) N.A., Wilmington, 5.813%, 8/1/1997 150,000,000
100,000,000 Deutsche Bank, AG, 5.813%, 8/1/1997 100,000,000
75,000,000 Mellon Bank N.A., Pittsburgh, 5.813%, 8/1/1997 75,000,000
TOTAL TIME DEPOSITS 495,000,000
(D)REPURCHASE AGREEMENTS--15.6%
111,650,000 Bear, Stearns and Co., 5.770%, dated 7/31/1997, due 8/1/1997 111,650,000
69,500,000 Chase Government Securities, Inc., 5.870%, dated 7/31/1997, due 8/1/1997 69,500,000
140,118,000 Goldman Sachs Group, LP, 5.850%, dated 7/31/1997, due 8/1/1997 140,118,000
20,000,000 Goldman Sachs Group, LP, 5.880%, dated 7/31/1997, due 8/1/1997 20,000,000
37,000,000 Greenwich Capital Markets, Inc., 5.850%, dated 7/31/1997, due 8/1/1997 37,000,000
150,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1997, due 8/1/1997 150,000,000
25,000,000 State Street Bank and Trust Co., 5.770%, dated 7/31/1997, due 8/1/1997 25,000,000
187,500,000 Toronto Dominion Securities (USA) Inc., 5.850%, dated 7/31/1997, due 8/1/1997 187,500,000
165,600,000 UBS Securities, Inc., 5.770%, dated 7/31/1997, due 8/1/1997 165,600,000
TOTAL REPURCHASE AGREEMENTS 906,368,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 5,836,199,040
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for
discount issues, or the coupon for interest bearing issues.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1997, these securities amounted
to $392,200,000 which represents 6.7% of net assets.
(c) Current rate and next reset date shown.
(d) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investments in the repurchase agreements are through
participation in joint accounts with other Federated funds.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($5,825,079,379) at July 31, 1997.
Prime Obligations Fund
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FSA --Financial Security Assurance
GTD --Guaranty
IDA --Industrial Development Authority
LOC --Letter of Credit
LP --Limited Partnership
PLC --Public Limited Company
SA --Support Agreement
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
PRIME OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 906,368,000
Investments in securities 4,929,831,040
Total investments in securities, at amortized cost and value $ 5,836,199,040
Income receivable 11,938,578
Total assets 5,848,137,618
LIABILITIES:
Payable for shares redeemed 104,382
Income distribution payable 18,503,103
Payable to bank 3,301,811
Accrued expenses 1,148,943
Total liabilities 23,058,239
NET ASSETS for 5,825,079,379 shares outstanding $ 5,825,079,379
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,588,082,310 / 3,588,082,310 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$2,236,997,069 / 2,236,997,069 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
PRIME OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $278,842,332
EXPENSES:
Investment advisory fee $ 10,030,131
Administrative personnel and services fee 3,787,706
Custodian fees 391,374
Transfer and dividend disbursing agent fees and expenses 315,045
Directors'/Trustees' fees 41,064
Auditing fees 12,891
Legal fees 14,424
Portfolio accounting fees 379,781
Shareholder services fee--Institutional Shares 8,188,378
Shareholder services fee--Institutional Service Shares 4,349,287
Share registration costs 612,468
Printing and postage 34,483
Insurance premiums 36,663
Taxes 95,916
Miscellaneous 61,276
Total expenses 28,350,887
Waivers--
Waiver of investment advisory fee $(5,562,429)
Waiver of shareholder services fee--Institutional (8,188,378)
Shares
Total waivers (13,750,807)
Net expenses 14,600,080
Net investment income $264,242,252
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 264,242,252 $ 201,522,995
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (175,275,611) (161,912,538)
Institutional Service Shares (88,966,641) (39,610,457)
Change in net assets resulting from distributions (264,242,252) (201,522,995)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 57,987,041,825 39,825,611,659
Net asset value of shares issued to shareholders in 78,154,545 61,968,216
payment of distributions declared
Cost of shares redeemed (56,569,738,161) (38,516,710,023)
Change in net assets resulting from share 1,495,458,209 1,370,869,852
transactions
Change in net assets 1,495,458,209 1,370,869,852
NET ASSETS:
Beginning of period 4,329,621,170 2,958,751,318
End of period $ 5,825,079,379 $ 4,329,621,170
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
PRIME OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios. The
financial statements included herein are only those of Prime Obligations
Fund (the "Fund"), a diversified portfolio. The financial statements of the
other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objective of the Fund is to provide current
income consistent with stability of principal.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code"). Distributions to shareholders are recorded on the
ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable
to regulated investment companies and to distribute to shareholders each
year substantially all of its income. Accordingly, no provisions for federal
tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The
Fund records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
registration under federal securities laws or in transactions exempt from
such registration. Many restricted securities may be resold in the secondary
market in transactions exempt from registration. In some cases, the
restricted securities may be resold without registration upon exercise of a
demand feature. Such restricted securities may be determined to be liquid
under criteria established by the 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 Act.
Additional information on each restricted security held at July 31, 1997 is
as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Columbus, OH 1/30/1997 $ 25,700,000
Goldman Sachs & Co. 7/28/1997 95,000,000
Peoples Security Life Insurance Company 7/08/1997 30,000,000
SALTS II Cayman Islands Corp. 6/11/1997 131,500,000
SALTS III Cayman Islands Corp. 7/23/1997 45,000,000
SALTS III Cayman Islands Corp. 6/05/1997 11,000,000
SunAmerica Life Insurance Company 5/28/1997 10,000,000
Travelers Insurance Company 2/20/1997 44,000,000
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in aggregated
$5,825,079,379. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 41,776,217,888 29,766,228,647
Shares issued to shareholders in payment of 53,083,360 45,035,407
distributions declared
Shares redeemed (41,273,820,945) (29,236,459,220)
Net change resulting from Institutional Share 555,480,303 574,804,834
transactions
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 16,210,823,937 10,059,383,012
Shares issued to shareholders in payment of 25,071,185 16,932,809
distributions declared
Shares redeemed (15,295,917,216) (9,280,250,803)
Net change resulting from Institutional Service 939,977,906 796,065,018
Share transactions
Net change resulting from share transactions 1,495,458,209 1,370,869,852
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The
fee paid to FServ is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average
daily net assets of the Fund for the period. The fee paid to FSS is used to
finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS
can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Fund. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Board of Trustees of
MONEY MARKET OGLIBATIONS 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, 1997, 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, 1997, 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, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
NOTES
NOTES
[Graphic]Federated Investors
Prime Obligations Fund
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
PRIME OBLIGATIONS FUND
INSTITUTIONAL SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and
Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N203
601352-01 (9/97) [Graphic]
Prime Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
The Institutional Service Shares of Prime Obligations Fund (the "Fund")
offered by this prospectus represent interests in a portfolio of Money
Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in short-term money market
securities to achieve 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, 1997, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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 5
Investment Limitations 5
Fund Information 5
Management of the Fund 5
Distribution of Institutional Service Shares 6
Administration of the Fund 7
Net Asset Value 7
How to Purchase Shares 7
Purchasing Shares by Wire 7
Purchasing Shares by Check 7
Invest-by-Phone 7
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Account and Share Information 8
Dividends 8
Capital Gains 8
Confirmations and Account Statements 9
Accounts with Low Balances 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 9
Other Classes of Shares 9
Performance Information 10
Financial Highlights --Institutional Shares 11
Financial Statements 12
Report of Independent Public Accountants 26
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering None
price)
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as None
applicable)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee
</TABLE>
<TABLE> None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.09%
12b-1 Fee None
Total Other Expenses 0.36%
Shareholder Services Fee 0.25%
Total Operating Expenses (after 0.45%
waivers)(2)
</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 "Fund
Information" and "How to Purchase Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
EXAMPLE
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.
1 year $ 5
3 years $14
5 years $25
10 years $57
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
26.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.19% 5.32% 5.38% 0.30%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.34%*
Net investment income 5.11% 5.13% 5.66% 4.68%*
Expense waiver/reimbursement(c) 0.11% 0.11% 0.13% 0.14%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $2,236,997 $1,297,019 $500,954 $9,387
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 5, 1994 (date of initial
public offering) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust permits
the Trust to offer separate series of shares representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Trustees (the "Trustees") has established two
classes of shares known as Institutional Service Shares and Institutional
Shares. This prospectus relates only to Institutional Service Shares of the
Fund, which are designed primarily for financial institutions, financial
intermediaries and institutional investors as a convenient means of
accumulating an interest in a professionally managed portfolio investing in
short-term money market securities. A minimum initial investment of
$1,000,000 over a one-year period is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income consistent
with stability of principal. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by complying with
the diversification and other requirements of Rule 2a-7 under the Investment
Company Act of 1940 which regulates money market mutual funds and by
following the investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
money market securities maturing in 13 months or less. The average maturity
of the securities in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS
The Fund invests in high quality money market instruments that are either
rated in the highest short-term rating category by one or more nationally
recognized statistical rating organizations ("NRSROs") or are of comparable
quality to securities having such ratings. Examples of these instruments
include, but are not limited to:
* domestic issues of corporate debt obligations, including variable rate
demand notes;
* commercial paper (including Canadian Commercial Paper and Europaper);
* certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");
* short-term credit facilities;
* asset-backed securities;
* obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities; and
* other money market instruments.
The Fund invests only in instruments denominated and payable in U.S.
dollars.
VARIABLE RATE DEMAND NOTES
Variable rate demand notes are long-term debt instruments that have variable
or floating interest rates and provide the Fund with the right to tender the
security for repurchase at its stated principal amount plus accrued
interest. Such securities typically bear interest at a rate that is intended
to cause the securities to trade at par. The interest rate may float or be
adjusted at regular intervals (ranging from daily to annually), and is
normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit
the Fund to tender the security at the time of each interest rate adjustment
or at other fixed intervals. See "Demand Features." The Fund treats variable
rate demand notes as maturing on the later of the date of the next interest
rate adjustment or the date on which the Fund may next tender the security
for repurchase.
BANK INSTRUMENTS
The Fund only invests in Bank Instruments either issued by an institution
having capital, surplus and undivided profits over $100 million, or insured
by the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"). Bank Instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs") and Eurodollar Time
Deposits ("ETDs"). The Fund will treat securities credit enhanced with a
bank's letter of credit as Bank Instruments.
ASSET-BACKED SECURITIES
Asset-backed securities are securities issued by special purpose entities
whose primary assets consist of a pool of loans or accounts receivable. The
securities may take the form of beneficial interests in special purpose
trusts, limited partnership interests, or commercial paper or other debt
securities issued by a special purpose corporation. Although the securities
often have some form of credit or liquidity enhancement, payments on the
securities depend predominantly upon collections of the loans and
receivables held by the issuer.
SHORT-TERM CREDIT FACILITIES
The Fund may enter into, or acquire participations in, short-term borrowing
arrangements with corporations, consisting of either a short-term revolving
credit facility or a master note agreement payable upon demand. Under these
arrangements, the borrower may reborrow funds during the term of the
facility. The Fund treats any commitments to provide such advances as a
standby commitment to purchase the borrower's notes.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the seller does not
repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities.
CREDIT ENHANCEMENT
Certain of the Fund's acceptable investments may be credit-enhanced by a
guaranty, letter of credit, or insurance. Any bankruptcy, receivership,
default, or change in the credit quality of the party providing the credit
enhancement will adversely affect the quality and marketability of the
underlying security and could cause losses to the Fund and affect its share
price.
DEMAND FEATURES
The Fund may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or default
by the issuer of the demand feature, or a default on the underlying security
or other event that terminates the demand feature before its exercise, will
adversely affect the liquidity of the underlying security. Demand features
that are exercisable even after a payment default on the underlying security
may be treated as a form of credit enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
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, and, as a matter of
fundamental investment policy which cannot be changed without shareholder
approval, will limit such investments to 10% of its net assets. This
restriction is not applicable to commercial paper issued under Section 4(2)
of the Securities Act of 1933. Restricted securities are any securities in
which the Fund may invest pursuant to its investment objective and policies
but which are subject to restrictions on resale under federal securities
law. Under criteria established by the Trustees, certain restricted
securities are determined to be liquid. As a matter of non-fundamental
investment policy, to the extent that restricted securities are not
determined to be liquid, the Fund will limit their purchase, together with
other illiquid securities, including non-negotiable time deposits, and
repurchase agreements providing for settlement in more than seven days after
notice, to 10% of its net assets.
CONCENTRATION OF INVESTMENTS
As a matter of policy which cannot be changed without shareholder approval,
the Fund will generally invest 25% or more of its total assets in commercial
paper issued by finance companies. The finance companies in which the Fund
intends to invest can be divided into two categories, commercial finance
companies and consumer finance companies. Commercial finance companies are
principally engaged in lending to corporations or other businesses. Consumer
finance companies are primarily engaged in lending to individuals. Captive
finance companies or finance subsidiaries which exist to facilitate the
marketing and financial activities of their parent will, for purposes of
industry concentration, be classified in the industry of their parent's
corporation. In addition, the Fund may invest 25% or more of the value of
its total assets in instruments issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment. Concentrating investments
in one industry may subject the Fund to more risk than if it did not
concentrate.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject
to different risks than domestic obligations of domestic banks or
corporations. Examples of these risks include international economic and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholding or other
taxes on interest income, difficulties in obtaining or enforcing a judgment
against the issuing entity, and the possible impact of interruptions in the
flow of international currency transactions. Risks may also exist for ECDs,
ETDs, and Yankee CDs because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, and the public availability of information. These factors
will be carefully considered by the Fund's adviser in selecting investments
for the Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market instrument
for a percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund may
borrow up to one-third of the value of its total assets and pledge up to 15%
of the value of those assets to secure such borrowings. These investment
limitations cannot be changed without shareholder approval.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's
powers except those reserved for the shareholders. An Executive Committee of
the Board of Trustees handles the Board's responsibilities between meetings
of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management, the
Fund's investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20% of the
Fund's average daily net assets. The adviser may voluntarily choose to waive
a portion of its fee or reimburse other expenses of the Fund, but reserves
the right to terminate such waiver or reimbursement at any time at its sole
discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April 11,
1989, is a registered investment adviser under the Investment Advisers Act
of 1940. It is a subsidiary of Federated Investors. All of the Class A
(voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. With over $110 billion invested across
over 300 funds under management and/or administration by its subsidiaries,
as of December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,500
financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interests. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25% of the average daily net asset value of
its shares, computed at an annual rate, to obtain certain personal services
for shareholders and to maintain shareholder accounts. From time to time and
for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or
will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their
own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount
of shares the financial institution sells or may sell, and/or upon the type
and nature of sales or marketing support furnished by the financial
institution. Any payments made by the distributor may be reimbursed by the
Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund at an annual rate which
relates to the average aggregate daily net assets of all funds advised by
affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities attributable
to Institutional Service Shares from the value of Fund assets attributable
to Institutional Service Shares, and dividing the remainder by the number of
Institutional Service 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange is open for business. Shares may be purchased either by wire or by
check. The Fund reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Financial institutions may impose different minimum
investment requirements on their customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund before
5:00 p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 5:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Shareholder Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Prime Obligations
Fund--Institutional Service Shares; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028. Shares cannot
be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made
payable to: Prime Obligations Fund -- Institutional Service Shares. Orders
by mail are considered received when payment by check is converted into
federal funds (normally the business day after the check is received), and
shares begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone for
investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the Fund.
Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send
a request for monies to the shareholder's commercial bank, savings bank, or
credit union ("bank") via the Automated Clearing House. The shareholder's
bank, which must be an Automated Clearing House member, will then forward
the monies to Federated Shareholder Services Company. The purchase is
normally entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund
has a properly completed authorization form. These forms can be obtained
from Federated Securities Corp. Proceeds from redemption requests received
before 5:00 p.m. (Eastern time) will be wired the same day to the
shareholder's account at a domestic commercial bank which is a member of the
Federal Reserve System, but will not include that day's dividend. Proceeds
from redemption requests on holidays when wire transfers are restricted will
be wired the following business day. Questions about telephone redemptions
on days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares by Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
or any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934. The Fund does not accept signatures guaranteed by a
notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 5:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease
in dividends. The Fund will distribute in cash or additional shares any
realized net long-term capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends
paid. The Fund will not issue share certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account, except accounts maintained by retirement
plans, and pay the proceeds to the shareholder if the account balance falls
below a required minimum value of $1,000,000 due to shareholder redemptions.
Before shares are redeemed to close an account, the shareholder is notified
in writing and allowed 30 days to purchase additional shares to meet the
minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder one
vote in Trustee elections and other matters submitted to shareholders for
vote. All shares of all classes of each portfolio in the Trust have equal
voting rights, except that in matters affecting only a particular portfolio
or class, only shareholders of that portfolio or class are entitled to vote.
The Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust's or the
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies. The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses
realized by the Trust's other portfolios will not be combined for tax
purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income tax
on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Shares are sold at net
asset value primarily to entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries and institutional
investors and are subject to a minimum initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class, investors
may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and total
return. The performance figures will be calculated separately for each class
of shares.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
26.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.06 0.03 0.03 0.05 0.07 0.03
LESS DISTRIBUTIONS
Distributions from net (0.05) (0.05) (0.06) (0.03) (0.03) (0.05) (0.07) (0.03)
investment income
NET ASSET VALUE, END OF $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
PERIOD
TOTAL RETURN(B) 5.45% 5.58% 5.65% 3.47% 3.25% 4.74% 7.30% 2.89%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%*
Net investment income 5.35% 5.43% 5.60% 3.47% 3.20% 4.53% 6.54% 8.21%*
Expense 0.36% 0.36% 0.38% 0.14% 0.09% 0.10% 0.24% 0.68%*
waiver/reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of $3,588,082 $3,032,602 $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593 $34,777
period (000 omitted)
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
PRIME OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CERTIFICATES OF DEPOSIT--3.4%
BANKING--3.4%
$ 5,000,000 Mellon Bank N.A., Pittsburgh, 5.875%, 10/8/1997 $ 5,000,000
7,500,000 Republic National Bank of New York, 6.100%, 1/15/1998 7,501,352
185,000,000 Societe Generale, Paris, 5.430% - 6.140%, 8/11/1997 - 184,978,158
7/23/1998
TOTAL CERTFICATES OF DEPOSIT 197,479,510
(A)COMMERCIAL PAPER--43.6%
BANKING--12.5%
20,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO
Bank N.V., Amsterdam), 5.921%,
10/15/1997 19,760,417
268,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey
National Bank PLC, London), 5.413% -
5.869%, 8/12/1997 - 10/10/1997 266,507,674
25,000,000 Australia & New Zealand ANZ (Delaware), Inc.,
(Guaranteed by Australia & New Zealand
Banking Group, Melbourne), 5.841%, 12/2/1997 24,515,260
21,265,000 Benedictine Health System, (Lasalle National Bank, 21,065,649
Chicago LOC), 5.750% - 5.835%, 9/29/1997
110,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by
Canadian Imperial Bank of Commerce,
Toronto), 5.424% - 5.435%, 8/25/1997 - 8/27/1997 109,594,767
70,000,000 Cregem North America, Inc., (Guaranteed by Credit
Communal de Belgique, Brussles),
5.686% - 5.690%, 9/2/1997 - 9/4/1997 69,635,350
21,000,000 National Australia Funding, Inc., (Guaranteed by
National Australia Bank, Ltd., Melbourne),
5.613%, 9/16/1997 20,853,490
35,000,000 Societe Generale North America, Inc., (Guaranteed by
Societe Generale, Paris), 5.580% -
5.604%, 9/5/1997 - 9/10/1997 34,808,431
134,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska
Handelsbanken, Stockholm), 5.761% -
5.867%, 9/25/1997 - 11/13/1997 132,632,698
29,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by
Toronto-Dominion Bank), 5.816%,
10/6/1997 28,699,608
Total 728,073,344
BROKERAGE--3.9%
225,000,000 Merrill Lynch & Co., Inc., 5.578% - 5.660%, 9/2/1997 - 223,213,244
10/14/1997
FINANCE - AUTOMOTIVE--1.8%
108,000,000 Ford Motor Credit Corp., 5.442% - 5.689%, 8/7/1997 - 106,523,333
2/2/1998
FINANCE - COMMERCIAL--20.0%
20,000,000 Alpha Finance Corp., Ltd., 5.612%, 10/14/1997 19,772,656
155,000,000 Asset Securitization Cooperative Corp., 5.572% - 154,239,794
5.711%, 8/12/1997 - 9/9/1997
153,500,000 Beta Finance, Inc., 5.413% - 5.888%, 8/19/1997 - 152,725,674
11/14/1997
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - COMMERCIAL--CONTINUED
$ 70,000,000 CIT Group Holdings, Inc., 5.680%, 9/29/1997 - 9/30/1997 $ 69,352,889
153,000,000 CXC, Inc., 5.586% - 5.697%, 8/13/1997 - 10/15/1997 152,022,313
62,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.594% - 61,349,867
5.596%, 10/8/1997 - 10/10/1997
48,475,000 Falcon Asset Securitization Corp., 5.413% - 5.599%, 48,090,471
8/19/1997 - 10/16/1997
70,000,000 General Electric Capital Corp., 5.571% - 6.096%, 68,836,556
9/8/1997 - 1/23/1998
273,446,000 Greenwich Funding Corp., 5.562% - 5.779%, 8/6/1997 - 272,647,215
9/22/1997
40,150,000 Preferred Receivables Funding Co. (PREFCO), 5.478% - 39,882,456
5.608%, 8/14/1997 - 10/14/1997
82,062,000 Receivables Capital Corp., 5.551% - 5.575%, 8/25/1997 - 81,678,829
9/12/1997
45,000,000 Sheffield Receivables Corp., 5.555%, 8/7/1997 44,958,525
Total 1,165,557,245
FINANCE - RETAIL--4.7%
52,000,000 American Express Credit Corp., 5.592% - 5.593%, 51,359,156
10/20/1997 - 10/21/1997
90,000,000 Associates Corp. of North America, 5.596% - 5.704%, 89,350,989
8/15/1997 - 10/28/1997
133,000,000 New Center Asset Trust, A1+/P1 Series, 5.465% - 5.939%, 132,131,877
8/4/1997 - 10/24/1997
Total 272,842,022
INSURANCE--0.7%
22,520,000 AIG Funding, Inc., (Guaranteed by AIG), 5.851%, 22,520,000
8/1/1997
20,000,000 CommoLoCo, (Guaranteed by American General Corp.), 19,720,150
5.964%, 10/27/1997
Total 42,240,150
TOTAL COMMERCIAL PAPER 2,538,449,338
SHORT-TERM NOTES--9.2%
BANKING--3.6%
10,000,000 Abbey National Treasury Services, PLC, 6.050%, 6/8/1998 9,993,241
10,000,000 BankBoston, N.A., 6.040%, 7/17/1998 10,000,000
1,500,000 Bayerische Landesbank- NY, 6.250%, 4/15/1998 1,499,693
131,500,000 (b)SALTS II Cayman Islands Corp., (Bankers Trust
International Swap Agreement), 5.863%,
9/18/1997 131,500,000
45,000,000 (b)SALTS III Cayman Island Corp., (Bankers Trust
International, PLC Swap Agreement), 5.944%,
1/23/1998 45,000,000
11,000,000 (b)SALTS III Cayman Island Corp., (Bankers Trust
International Swap Agreement), 6.065%,
12/18/1997 11,000,000
Total 208,992,934
BROKERAGE--1.6%
95,000,000 (b)Goldman Sachs & Co., 5.670%, 10/28/1997 95,000,000
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
FINANCE - AUTOMOTIVE--1.2%
$ 24,535,190 Chase Manhattan Auto Owner Trust 1997-A, 5.545%, $ 24,535,190
4/10/1998
39,322,170 Chase Manhattan Auto Owner Trust 1997-B, 5.744%, 39,322,170
7/10/1998
3,191,420 Ford Credit Auto Lease Trust 1996-1, 5.451%, 11/15/1997 3,191,327
Total 67,048,687
FINANCE - COMMERCIAL--1.4%
76,000,000 Beta Finance, Inc., 6.080% - 6.270%, 3/26/1998 - 76,000,000
5/12/1998
2,000,000 CIT Group Holdings, Inc., 6.125%, 9/1/1998 2,004,708
3,507,476 Cargill Lease Receivables Trust 1996-A, 5.613%, 3,507,476
12/20/1997
3,100,000 General Electric Capital Corp., 7.205%, 3/9/1998 3,118,526
Total 84,630,710
FINANCE - EQUIPMENT--0.9%
9,116,285 Capita Equipment Receivables Trust 1996-1, 5.600%, 9,116,285
10/15/1997
43,413,507 Copelco Capital Funding Corp. X 1997-A, 5.809%, 43,413,507
7/20/1998
Total 52,529,792
INSURANCE--0.5%
6,038,166 Olympic Automobile Receivables Trust 1997-A, (FSA GTD), 6,038,166
5.500%, 3/15/1998
21,065,251 WFS Financial Owner Trust 1997-A, (FSA GTD), 5.630%, 21,065,251
3/20/1998
Total 27,103,417
TOTAL CORPORATE NOTES 535,305,540
(C)VARIABLE RATE INSTRUMENTS--19.7%
BANKING--13.9%
5,880,000 Abbott Foods, Series 1996, (Huntington National Bank, 5,880,000
Columbus, OH LOC), 5.650%, 8/7/1997
5,580,000 Alabama State IDA, Series 1994, Miltope Project,
(Regions Bank, Alabama LOC), 5.650%,
8/7/1997 5,580,000
9,015,000 Alabama State IDA, (Wellborn Cabinet, Inc.), Tax
Revenue Bonds, (Amsouth Bank N.A.,
Birmingham LOC), 5.600%, 8/6/1997 9,015,000
8,105,000 Alexandria Executive Club L.P., (Huntington National 8,105,000
Bank, Columbus, OH LOC), 5.650%, 8/7/1997
8,580,000 Arrow N.A., Inc., (Bank of America NT and SA, San 8,580,000
Francisco LOC), 5.650%, 8/7/1997
7,000,000 Asset Holdings Corp. VII, (First Bank N.A., Minneapolis 7,000,000
LOC), 5.640%, 8/7/1997
3,500,000 Asset Holdings V, (Bayerische Vereinsbank AG, Munich 3,500,000
LOC), 5.640%, 8/7/1997
16,500,000 Association of American Medical Colleges, (Guaranteed
by Chase Manhattan Bank N.A.,
New York), 5.640%, 8/6/1997 16,500,000
3,800,000 Balboa Investment Group V, Series 1997, (Amsouth Bank
N.A., Birmingham LOC), 5.700%,
8/7/1997 3,800,000
5,000,000 Bank One, Milwaukee, WI, N.A., 5.510%, 8/5/1997 4,999,319
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 4,000,000 Bardstown City, KY, Series 1995, (RJ Tower Project), $ 4,000,000
(Comerica, Inc. LOC), 5.670%, 8/7/1997
1,627,790 Bowling Green Manor L.P., (Huntington National Bank, 1,627,790
Columbus, OH LOC), 5.650%, 8/7/1997
17,400,000 CMH Funding, (Huntington National Bank, Columbus, OH 17,400,000
LOC), 5.980%, 1/3/1998
6,592,000 Capital One Funding Corp., Series 1994-A, (Bank One, 6,592,000
Ohio, N.A. LOC), 5.560%, 8/7/1997
19,387,000 Capital One Funding Corp., Series 1994-C, (Bank One, 19,387,000
Ohio, N.A. LOC), 5.560%, 8/7/1997
9,045,000 Capital One Funding Corp., Series 1994-D, (Bank One, 9,045,000
Kentucky LOC), 5.560%, 8/7/1997
21,213,000 Capital One Funding Corp., Series 1995-A, (Bank One, 21,213,000
Indianapolis, IN LOC), 5.560%, 8/7/1997
20,054,000 Capital One Funding Corp., Series 1995-B, (Bank One, 20,054,000
Kentucky LOC), 5.560%, 8/7/1997
21,771,000 Capital One Funding Corp., Series 1995-F, (Bank One, 21,771,000
Ohio, N.A. LOC), 5.560%, 8/7/1997
1,000,000 Chestnut Hills Apartments, Ltd., (Huntington National
Bank, Columbus, OH LOC), 5.670%,
8/7/1997 1,000,000
10,100,000 Cloquet, MN, Series 1996-B, Potlach Corp., (Credit 10,100,000
Suisse, Zurich LOC), 5.700%, 8/6/1997
1,042,337 Clyde Manor L.P., (Huntington National Bank, Columbus, 1,042,337
OH LOC), 5.650%, 8/7/1997
3,025,000 Columbia County, GA Development Authority, Series 1993,
(SunTrust Banks, Inc. LOC), 5.600%,
8/6/1997 3,025,000
3,875,000 Eastwinds Investment, Ltd., (Huntington National Bank, 3,875,000
Columbus, OH LOC), 5.650%, 8/7/1997
7,015,000 Fort Craig Limited Partnership, (Huntington National 7,015,000
Bank, Columbus, OH LOC), 5.650%, 8/7/1997
4,300,000 G.M.H. Enterprises, Inc., Series 1995, (National City 4,300,000
Bank, Cleveland, OH LOC), 5.650%, 8/7/1997
3,260,000 Gerken Materials, Inc., (Huntington National Bank, 3,260,000
Columbus, OH LOC), 5.650%, 8/7/1997
9,900,000 Grand Aire Express, Inc., Series 1997, (National City 9,900,000
Bank, Northwest LOC), 5.650%, 8/7/1997
1,200,000 Great Lakes Brewing Co., (Huntington National Bank, 1,200,000
Columbus, OH LOC), 5.650%, 8/7/1997
2,275,000 Grote Family L.P., (Huntington National Bank, Columbus, 2,275,000
OH LOC), 5.650%, 8/7/1997
12,020,000 Hunt Club Apartments, Inc., (Huntington National Bank, 12,020,000
Columbus, OH LOC), 5.650%, 8/6/1997
900,000 Illinois Development Finance Authority, Series 1996B,
Nimlok Co., Project, (Bank One, Chicago
LOC), 5.790%, 8/7/1997 900,000
245,000 Kenny, Donald R. and Cheryl A., (Huntington National
Bank, Columbus, OH LOC), 5.650%,
8/7/1997 245,000
7,000,000 Kenny, Donald R. and Cheryl A., Series 1995-A,
(National City Bank, Columbus, OH LOC),
5.650%, 8/7/1997 7,000,000
7,960,000 Kenny, Donald R. and Cheryl A., Series 1995-B,
(Huntington National Bank, Columbus, OH LOC),
5.650%, 8/7/1997 7,960,000
157,000,000 Liquid Asset Backed Securities Trust, Series 1996-3,
(Westdeutsche Landesbank Girozentrale
Swap Agreement), 5.700%, 8/15/1997 157,000,000
58,000,000 Liquid Asset Backed Securities Trust, Series 1997-1,
(Westdeutsche Landesbank Girozentrale
Swap Agreement), 5.680%, 8/15/1997 58,000,000
3,322,000 Midwest Funding Corp., Series 1991 A, Class A-1, (Bank 3,322,000
One, Ohio, N.A. LOC), 5.560%, 8/7/1997
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 2,508,000 Midwest Funding Corp., Series 1991 B, (Bank One, Ohio, $ 2,508,000
N.A. LOC), 5.560%, 8/7/1997
3,481,000 Midwest Funding Corp., Series 1991-C, (Bank One, Ohio, 3,481,000
N.A. LOC), 5.560%, 8/7/1997
2,307,000 Midwest Funding Corp., Series 1992-A, (Bank One, Ohio, 2,307,000
N.A. LOC), 5.560%, 8/7/1997
1,518,000 Midwest Funding Corp., Series 1992-B, (Bank One, Ohio, 1,518,000
N.A. LOC), 5.560%, 8/7/1997
3,605,000 Midwest Funding Corp., Series 1992-C, (Bank One, Ohio, 3,605,000
N.A. LOC), 5.560%, 8/7/1997
12,200,000 Mississippi Business Finance Corp., Choctaw Foods,Inc.,
(Rabobank Nederland, Utrecht
LOC), 5.600%, 8/6/1997 12,200,000
6,960,000 Mississippi Business Finance Corp., Metalloy Project,
(Comerica Bank, Detroit, MI LOC),
5.650%, 8/7/1997 6,960,000
12,000,000 Mississippi Business Finance Corp., Series 1994,
(Wachovia Bank of Georgia N.A., Atlanta
LOC), 5.640%, 8/6/1997 12,000,000
2,000,000 Mississippi Business Finance Corp., Series 1995,
Plantation Pointe, LP Project, (Amsouth
Bank N.A., Birmingham LOC), 5.650%, 8/7/1997 2,000,000
5,000,000 NUFUNDING, Inc., Series 1996, (Lasalle National Bank, 5,000,000
Chicago LOC), 5.725%, 8/6/1997
3,000,000 Newbury Industrial Park, Series 1996, (Huntington
National Bank, Columbus, OH LOC),
5.650%, 8/7/1997 3,000,000
2,530,000 Nova University, Inc. Lease Revenue Bonds, Series 1993,
Miami Dolphins Training Facility,
(SunTrust Bank, South Florida LOC), 5.600%, 8/6/1997 2,530,000
2,310,000 Orangeburg Convalescent Care Center, Inc., Series
1995A, (PNC Bank, Kentucky LOC),
5.604%, 8/4/1997 2,310,000
4,000,000 REAL I Funding Corp., Casto Realty Investments, Series
1996, (Huntington National Bank,
Columbus, OH LOC), 5.650%, 8/7/1997 4,000,000
111,522,416 Rabobank Optional Redemption Trust, Series 1997-101, 111,522,416
5.750%, 8/15/1997
7,235,000 Roby Company Ltd. Partnership, (Huntington National
Bank, Columbus, OH LOC), 5.650%,
7/31/1997 7,235,000
2,945,000 Roby Company Ltd. Partnership, (Huntington National
Bank, Columbus, OH LOC), 5.650%,
8/7/1997 2,945,000
12,750,000 Rooker, J.W., (Wachovia Bank of Georgia N.A., Atlanta 12,750,000
LOC), 5.640%, 8/6/1997
6,000,000 SMM Trust, Series 1996-B, (Morgan Guaranty Trust Co.,
New York Swap Agreement),
5.738%, 9/1/1997 6,000,000
200,000 Scranton Times, L.P., (PNC Bank, N.A. LOC), 5.690%, 200,000
8/4/1997
6,100,000 Shenandoah Partners L.P., (Huntington National Bank, 6,100,000
Columbus, OH LOC), 5.650%, 8/7/1997
3,617,000 Spitzer Group, Series 1996A, (Bank One, Ohio, N.A. 3,617,000
LOC), 5.640%, 8/7/1997
1,980,000 Spitzer Group, Series 1996B, (Bank One, Ohio, N.A. 1,980,000
LOC), 5.640%, 8/7/1997
5,315,000 Springfield Limited Series A, (Union Bank of 5,315,000
Switzerland, Zurich LOC), 5.560%, 8/7/1997
47,445,000 Terry Griffin Gate Partners, Ltd., Series 1995, (Bank 47,445,000
One, Kentucky LOC), 5.640%, 8/6/1997
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 5,780,000 Van Dyne Crotty Co., Series 1996, (Huntington National
Bank, Columbus, OH LOC), 5.650%,
8/7/1997 $ 5,780,000
4,179,000 Vista Funding Corp., Series 1994-A, (Fifth Third Bank 4,179,000
of Northwestern OH LOC), 5.640%, 8/7/1997
11,114,000 Vista Funding Corp., Series 1995-B, (Fifth Third Bank 11,114,000
of Northwestern OH LOC), 5.640%, 8/7/1997
9,990,000 Vista Funding Corp., Series 1995-D, (Fifth Third Bank 9,990,000
of Northwestern OH LOC), 5.640%, 8/7/1997
8,784,000 Vista Funding Corp., Series 1995-E, (Bank One, Ohio, 8,784,000
N.A. LOC), 5.640%, 8/7/1997
2,955,000 Vista Funding Corp., 5.56%, 8/7/1997 2,955,000
5,555,000 Vulcan, Inc., (Amsouth Bank N.A., Birmingham LOC), 5,555,000
5.700%, 8/7/1997
991,431 Wauseon Manor II L.P., (Huntington National Bank, 991,431
Columbus, OH LOC), 5.650%, 8/7/1997
3,075,000 Wexner Heritage House, (Huntington National Bank, 3,075,000
Columbus, OH LOC), 5.650%, 8/7/1997
2,320,000 YMCA of Central, OH, (Huntington National Bank, 2,320,000
Columbus, OH LOC), 5.650%, 8/7/1997
Total 810,760,293
ELECTRICAL EQUIPMENT--0.9%
20,185,501 GE Engines RPP Trust - 1995-1, Series B, (Guaranteed by 20,185,501
General Electric Co.), 5.620%, 8/4/1997
7,000,000 GE Engines RPP Trust - 1995-1, Series C, (Guaranteed by 7,000,000
General Electric Co.), 5.692%, 8/4/1997
22,613,059 Northwest Airlines, Inc., (Guaranteed by General 22,613,059
Electric Co.), 5.580%, 8/4/1997
Total 49,798,560
FINANCE - RETAIL--0.6%
37,000,000 Carco Auto Loan Master Trust 1993-2, Series 1993-2, 37,000,000
Class A1, 5.695%, 8/15/1997
INSURANCE--3.9%
118,339,106 Liquid Asset Backed Securities Trust, Series 1997-3,
Senior Notes, (Westdeutsche Landesbank
Girozentrale Swap Agreement, Guaranteed by AMBAC), 118,339,106
5.751%, 9/27/1997
30,000,000 (b)Peoples Security Life Insurance Company, 5.840%, 30,000,000
9/1/1997
10,000,000 (b)SunAmerica Life Insurance Company, 5.788%, 9/1/1997 10,000,000
25,000,000 Transamerica Life Insurance and Annuity Co.,
(Transamerica Life Insurance and Annuity Co.
LOC), 5.781%, 9/26/1997 25,000,000
44,000,000 (b)Travelers Insurance Company, 5.841%, 8/20/1997 44,000,000
Total 227,339,106
MUNICIPAL--0.4%
25,700,000 (b)Columbus, OH, 5.770%, 8/7/1997 25,700,000
TOTAL VARIABLE RATE OBLIGATIONS 1,150,597,959
</TABLE>
Prime Obligations Fund
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPAL SECURITIES--0.2%
BANKING--0.2%
$ 10,000,000 Colorado Health Facilities Authority, National
Benevolent Association Series 1996C,
(Kredietbank N.V., Brussels LOC), 5.720%, 11/1/1997 $ 9,998,693
3,000,000 White Bear Lake, MN City of, Series 1993, (Norwest Bank
Minnesota, Minneapolis LOC),
5.900%, 11/1/1997 3,000,000
TOTAL SHORT-TERM MUNICIPAL SECURITIES 12,998,693
TIME DEPOSITS--8.5%
BANKING--8.5%
170,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.813%, 8/1/1997 170,000,000
150,000,000 Chase Manhattan Bank (USA) N.A., Wilmington, 5.813%, 150,000,000
8/1/1997
100,000,000 Deutsche Bank, AG, 5.813%, 8/1/1997 100,000,000
75,000,000 Mellon Bank N.A., Pittsburgh, 5.813%, 8/1/1997 75,000,000
TOTAL TIME DEPOSITS 495,000,000
(D)REPURCHASE AGREEMENTS--15.6%
111,650,000 Bear, Stearns and Co., 5.770%, dated 7/31/1997, due 111,650,000
8/1/1997
69,500,000 Chase Government Securities, Inc., 5.870%, dated 69,500,000
7/31/1997, due 8/1/1997
140,118,000 Goldman Sachs Group, LP, 5.850%, dated 7/31/1997, due 140,118,000
8/1/1997
20,000,000 Goldman Sachs Group, LP, 5.880%, dated 7/31/1997, due 20,000,000
8/1/1997
37,000,000 Greenwich Capital Markets, Inc., 5.850%, dated 37,000,000
7/31/1997, due 8/1/1997
150,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1997, due 150,000,000
8/1/1997
25,000,000 State Street Bank and Trust Co., 5.770%, dated 25,000,000
7/31/1997, due 8/1/1997
187,500,000 Toronto Dominion Securities (USA) Inc., 5.850%, dated 187,500,000
7/31/1997, due 8/1/1997
165,600,000 UBS Securities, Inc., 5.770%, dated 7/31/1997, due 165,600,000
8/1/1997
TOTAL REPURCHASE AGREEMENTS 906,368,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 5,836,199,040
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for
discount issues, or the coupon for interest bearing issues.
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1997, these securities amounted
to $392,200,000 which represents 6.7% of net assets.
(c) Current rate and next reset date shown.
(d) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio. The investments in the repurchase agreements are through
participation in joint accounts with other Federated funds.
(e) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($5,825,079,379) at July 31, 1997.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FSA --Financial Security Assurance
GTD --Guaranty
IDA --Industrial Development Authority
LOC --Letter of Credit
LP --Limited Partnership
PLC --Public Limited Company
SA --Support Agreement
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
PRIME OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 906,368,000
Investments in securities 4,929,831,040
Total investments in securities, at amortized cost and value $ 5,836,199,040
Income receivable 11,938,578
Total assets 5,848,137,618
LIABILITIES:
Payable for shares redeemed 104,382
Income distribution payable 18,503,103
Payable to bank 3,301,811
Accrued expenses 1,148,943
Total liabilities 23,058,239
NET ASSETS for 5,825,079,379 shares outstanding $ 5,825,079,379
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,588,082,310 / 3,588,082,310 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$2,236,997,069 / 2,236,997,069 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
PRIME OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $278,842,332
EXPENSES:
Investment advisory fee $ 10,030,131
Administrative personnel and services fee 3,787,706
Custodian fees 391,374
Transfer and dividend disbursing agent fees and expenses 315,045
Directors'/Trustees' fees 41,064
Auditing fees 12,891
Legal fees 14,424
Portfolio accounting fees 379,781
Shareholder services fee--Institutional Shares 8,188,378
Shareholder services fee--Institutional Service Shares 4,349,287
Share registration costs 612,468
Printing and postage 34,483
Insurance premiums 36,663
Taxes 95,916
Miscellaneous 61,276
Total expenses 28,350,887
Waivers--
Waiver of investment advisory fee $(5,562,429)
Waiver of shareholder services fee--Institutional (8,188,378)
Shares
Total waivers (13,750,807)
Net expenses 14,600,080
Net investment income $264,242,252
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 264,242,252 $ 201,522,995
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (175,275,611) (161,912,538)
Institutional Service Shares (88,966,641) (39,610,457)
Change in net assets resulting from distributions (264,242,252) (201,522,995)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 57,987,041,825 39,825,611,659
Net asset value of shares issued to shareholders in 78,154,545 61,968,216
payment of distributions declared
Cost of shares redeemed (56,569,738,161) (38,516,710,023)
Change in net assets resulting from share 1,495,458,209 1,370,869,852
transactions
Change in net assets 1,495,458,209 1,370,869,852
NET ASSETS:
Beginning of period 4,329,621,170 2,958,751,318
End of period $ 5,825,079,379 $ 4,329,621,170
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
PRIME OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios. The
financial statements included herein are only those of Prime Obligations
Fund (the "Fund"), a diversified portfolio. The financial statements of the
other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objective of the Fund is to provide current
income consistent with stability of principal.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book Entry
System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code"). Distributions to shareholders are recorded on the
ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code applicable
to regulated investment companies and to distribute to shareholders each
year substantially all of its income. Accordingly, no provisions for federal
tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The
Fund records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
registration under federal securities laws or in transactions exempt from
such registration. Many restricted securities may be resold in the secondary
market in transactions exempt from registration. In some cases, the
restricted securities may be resold without registration upon exercise of a
demand feature. Such restricted securities may be determined to be liquid
under criteria established by the 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 Act.
Additional information on each restricted security held at July 31, 1997 is
as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Columbus, OH 1/30/1997 $ 25,700,000
Goldman Sachs & Co. 7/28/1997 95,000,000
Peoples Security Life Insurance Company 7/08/1997 30,000,000
SALTS II Cayman Islands Corp. 6/11/1997 131,500,000
SALTS III Cayman Islands Corp. 7/23/1997 45,000,000
SALTS III Cayman Islands Corp. 6/05/1997 11,000,000
SunAmerica Life Insurance Company 5/28/1997 10,000,000
Travelers Insurance Company 2/20/1997 44,000,000
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in aggregated
$5,825,079,379. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 41,776,217,888 29,766,228,647
Shares issued to shareholders in payment of 53,083,360 45,035,407
distributions declared
Shares redeemed (41,273,820,945) (29,236,459,220)
Net change resulting from Institutional Share 555,480,303 574,804,834
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 16,210,823,937 10,059,383,012
Shares issued to shareholders in payment of 25,071,185 16,932,809
distributions declared
Shares redeemed (15,295,917,216) (9,280,250,803)
Net change resulting from Institutional Service Share 939,977,906 796,065,018
transactions
Net change resulting from share transactions 1,495,458,209 1,370,869,852
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The
fee paid to FServ is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average
daily net assets of the Fund for the period. The fee paid to FSS is used to
finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS
can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Fund. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Board of Trustees of
MONEY MARKET OGLIBATIONS 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, 1997, 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, 1997, 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, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
NOTES
NOTES
[Graphic]Federated Investors
Prime Obligations Fund
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
PRIME OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and
Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N708
601352-02 (9/97)
[Graphic]
PRIME OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectuses of Prime Obligations Fund (the "Fund"), a portfolio of Money
Market Obligations Trust (the "Trust") dated September 30, 1997. This
Statement is not a prospectus. You may request a copy of a prospectus or a
paper copy of this Statement, if you have received it electronically, free
of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1997
Federated Investors
Federated Securities Corp., Distributor
[Graphic]
Cusip 60934N203
Cusip 60934N708
G01352-03 (9/97)
TABLE OF CONTENTS
INVESTMENT POLICIES 1
Acceptable Investments 1
U.S. Government Securities 1
Bank Instruments 1
Ratings 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Restricted and Illiquid Securities 2
Reverse Repurchase Agreements 2
Credit Enhancement 2
Lending of Portfolio Securities 2
INVESTMENT LIMITATIONS 2
Selling Short and Buying on Margin 2
Issuing Senior Securities and Borrowing Money 2
Pledging Assets 3
Lending Cash or Securities 3
Investing in Commodities 3
Investing in Real Estate 3
Underwriting 3
Concentration of Investments 3
Diversification of Investments 3
Restricted Securities 3
Investing in Illiquid Securities 3
Investing in Securities of Other Investment Companies 3
Investing for Control 3
Investing in Options 4
Regulatory Compliance 4
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 5
Share Ownership 8
Trustee Compensation 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 10
Investment Adviser 10
Advisory Fees 10
BROKERAGE TRANSACTIONS 10
OTHER SERVICES 10
Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 11
Independent Public Accountants 11
Shareholder Services 11
DETERMINING NET ASSET VALUE 11
REDEMPTION IN KIND 11
MASSACHUSETTS PARTNERSHIP LAW 12
THE FUND'S TAX STATUS 12
PERFORMANCE INFORMATION 12
Yield 12
Effective Yield 12
Total Return 12
Performance Comparisons 13
Economic and Market Information 13
ABOUT FEDERATED INVESTORS 13
Mutual Fund Market 14
Institutional Clients 14
Bank Marketing 14
Broker/Dealers and Bank Broker/Dealer Subsidiaries 14
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be changed by
the Board of Trustees (the "Trustees") without shareholder approval.
Shareholders will be notified before any material change in these policies
becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of the
security; the issuer of any demand feature applicable to the security; or
any guarantor of either the security or any demand feature.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are backed
by:
* the full faith and credit of the U.S. Treasury;
* the issuer's right to borrow from the U.S. Treasury;
* the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
* the credit of the agency or instrumentality issuing the obligations.
BANK INSTRUMENTS
The instruments of banks and savings associations whose deposits are insured
by the Bank Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"), such as certificates of deposit, demand and time deposits, savings
shares, and bankers' acceptances, are not necessarily guaranteed by those
organizations. In addition to domestic bank instruments, the Fund may invest
in: Eurodollar Certificates of Deposit issued by foreign branches of U.S. or
foreign banks; Eurodollar Time Deposits, which are U.S. dollar-denominated
deposits in foreign branches of U.S. or foreign banks; Canadian Time
Deposits, which are U.S. dollar-denominated deposits issued by branches of
major Canadian banks located in the United States; and Yankee Certificates
of Deposit, which are U.S. dollar-denominated certificates of deposit issued
by U.S. branches of foreign banks and held in the United States.
RATINGS
An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors
Service, Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc.
("Fitch") are all considered rated in the highest short-term rating
category. The Fund will follow applicable regulations in determining whether
a security rated by more than one NRSRO can be treated as being in the
highest short-term rating category; currently, such securities must be rated
by two NRSROs in their highest rating category. See "Regulatory Compliance."
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund in a dollar amount sufficient to make payment for the securities to be
purchased are: segregated on the Fund's records at the trade date; marked to
market daily; and maintained until the transaction is settled. The Fund does
not intend to engage in when-issued and delayed delivery transactions to an
extent that would cause the segregation of more than 20% of the total value
of its assets.
REPURCHASE AGREEMENTS
The Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Fund's adviser
to be creditworthy pursuant to guidelines established by the Trustees.
RESTRICTED AND ILLIQUID SECURITIES
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.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in return
for a percentage of the instrument's market value in cash and agrees that on
a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an
agreed-upon rate. The use of reverse repurchase agreements may enable the
Fund to avoid selling portfolio instruments at a time when a sale may be
deemed to be disadvantageous, but does not ensure this result. However,
liquid assets of the Fund, in a dollar amount sufficient to make payment for
the securities to be purchased, are: segregated on the Fund's records at the
trade date; marked to market daily; and maintained until the transaction is
settled.
CREDIT ENHANCEMENT
The Fund typically evaluates the credit quality and ratings of
credit-enhanced securities based upon the financial condition and ratings of
the party providing the credit enhancement (the "credit enhancer"), rather
than the issuer. Generally, the Fund will not treat credit-enhanced
securities as being issued by the credit enhancer for diversification
purposes. However, under certain circumstances applicable regulations may
require the Fund to treat securities as having been issued by both the
issuer and the credit enhancer.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends
or interest paid on such securities. Loans are subject to termination at the
option of the Fund or the borrower. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent
collateral to the borrower or placing broker.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as are necessary for clearance
of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of the value of
its total assets are outstanding. During the period any reverse repurchase
agreements are outstanding, the Fund will restrict the purchase of portfolio
securities to money market instruments maturing on or before the expiration
date of the reverse repurchase agreements, but only to the extent necessary
to assure completion of the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15%
of the value of total assets of the Fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any assets, except portfolio securities. This shall
not prevent the Fund from purchasing or holding bonds, debentures, notes,
certificates of indebtedness, or other debt securities; entering into
repurchase agreements; or engaging in other transactions permitted by its
investment objective, policies, and limitations, or the Trust's Declaration
of Trust.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, although it may invest in
securities of issuers whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or interests in
real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any
one industry except that the Fund will generally invest 25% or more of the
value of its total assets in commercial paper issued by finance companies.
The Fund may invest 25% or more of the value of its total assets in cash,
cash items, (including demand deposits issued by a U.S. branch of a domestic
bank or savings and loan having capital, surplus, and undivided profits in
excess of $100,000,000 at the time of investment), or securities issued or
guaranteed by the government of the United States or its agencies, or
instrumentalities or instruments secured by these money market instruments,
such as repurchase agreements.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities and repurchase agreements
collateralized by such U.S. government securities) if as a result more than
5% of the value of its total assets would be invested in the securities of
that issuer.
RESTRICTED SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
securities which are subject to legal or contractual restrictions on resale,
except for commercial paper issued under Section 4 (2) of the Securities Act
of 1933.
The above limitations cannot be changed without shareholder approval. The
following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including certain restricted securities not determined
to be liquid under criteria established by the Trustees, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than
seven days after notice.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies, except
as part of a merger, consolidation, or other acquisition.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic
bank or savings association having capital, surplus, and undivided profits
in excess of $100,000,000 at the time of investment to be "cash items."
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of the
value of its net assets during the last fiscal year and has no present
intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply
with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the
Fund will comply with the various requirements of Rule 2a-7, which regulates
money market mutual funds. The Fund also will determine the effective
maturity of its investments, as well as its ability to consider a security
as having received the requisite short-term ratings by NRSROs, according to
Rule 2a-7. The Fund may change these operational policies to reflect changes
in the laws and regulations without the approval of its shareholders.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Money Market Obligations Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Director, Member
of Executive Committee, University of Pittsburgh; Director or Trustee of the
Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center--Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; Director or Trustee of
the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica &
Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer Library
Center, Inc., National Defense University, and U.S. Space Foundation;
President Emeritus, University of Pittsburgh; Founding Chairman, National
Advisory Council for Environmental Policy and Technology, Federal Emergency
Management Advisory Board, and Czech Management Center, Prague; Director or
Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research, Ltd.;
Executive Vice President and Director, Federated Securities Corp.; Trustee,
Federated Shareholder Services Company; Trustee or Director of some of the
Funds; President, Executive Vice President and Treasurer of some of the
Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and Secretary
of the Funds; Treasurer of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
@ Member of the Executive Committee. The Executive Committee of the Board of
Trustees handles the responsibilities of the Board between meetings of the
Board.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
As referred to in the list of Trustees and Officers, "Funds" includes the
following investment companies: 111 Corcoran Funds; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.; Federated
ARMs Fund; Federated Equity Funds; Federated Equity Income Fund, Inc.;
Federated Fund for U.S. Government Securities, Inc.; Federated GNMA Trust;
Federated Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust; Federated
Income Securities Trust; Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal Securities
Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal Trust;
Federated Short-Term U.S. Government Trust; Federated Stock and Bond Fund,
Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income Securities,
Inc.; High Yield Cash Trust; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Investment Series Trust;
Liberty Term Trust, Inc.--1999; Liberty U.S. Government Money Market Trust;
Liquid Cash Trust; Managed Series Trust; Money Market Management, Inc.;
Money Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; RIMCO
Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust; The
Planters Funds; The Virtus Funds; Trust for Financial Institutions; Trust
for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Wesmark Funds; and World
Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 4, 1997, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Fund: Star Bank,
Cincinnati, Ohio, owned approximately 205,799,485 shares (5.33%); VAR and
Company, Saint Paul, Minnesota, owned approximately 425,758,229 shares
(11.03%).
As of September 4, 1997, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Fund: LABA and
Company, Chicago, Illinois, owned approximately 599,745,960 shares (24.78%);
Peoples Bank, Bridgeport, Connecticut, owned approximately 188,543,823
shares (7.79%); Morand and Company, Chicago, Illinois, owned approximately
152,286,774 shares (6.29%); VAR and Company, Saint Paul, Minnesota, owned
approximately 220,184,349 shares (9.10%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <C>
John F. Donahue $0 $0 for the Trust and Chairman and
Trustee 56 other investment companies in the Fund Complex
Thomas G. Bigley $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John T. Conroy, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
William J. Copeland $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
J. Christopher Donahue $0 $0 for the Trust and President and
Trustee 18 other investment companies in the Fund Complex
James E. Dowd $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Peter E. Madden $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Gregor F. Meyer $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John E. Murray, Jr. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Wesley W. Posvar $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Marjorie P. Smuts $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1997.
# The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+ The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Management. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife, and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust, the Fund, or any shareholder
of the Fund for any losses that may be sustained in the purchase, holding,
or sale of any security or for anything done or omitted by it, except acts
or omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. For the fiscal years
ended July 31, 1997, 1996, and 1995, the adviser earned $10,030,131,
$7,504,715, and $4,370,903, respectively, of which $5,562,429, $4,114,750,
and $2,828,160, respectively, were waived.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The adviser makes decisions on portfolio transactions and selects
brokers and dealers subject to guidelines established by the Trustees. The
adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
adviser and may include: advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry
studies; receipt of quotations for portfolio evaluations; and similar
services. Research services provided by brokers and dealers may be used by
the adviser or its affiliates in advising the Fund and other accounts. To
the extent that receipt of these services may supplant services for which
the adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in good faith
that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided. During the fiscal
years ended July 31, 1997, 1996, and 1995, the Fund paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those
of the other accounts managed by the adviser, investments of the type the
Fund may make may also be made by those other accounts. When the Fund and
one or more other accounts managed by the adviser are prepared to invest in,
or desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the
adviser to be equitable to each. In some cases, this procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtained or disposed of by the Fund. In other cases, however, it is believed
that coordination and the ability to participate in volume transactions will
be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus. From March 1, 1994, to March 1, 1996, Federated
Administrative Services, a subsidiary of Federated Investors, served as the
Fund's Administrator. For purposes of this Statement of Additional
Information, Federated Services Company and Federated Administrative
Services may hereinafter collectively be referred to as the
"Administrators." For the fiscal years ended July 31, 1997, 1996, and 1995,
the Administrators earned $3,787,706, $2,837,919, and $1,654,387,
respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for
the securities and cash of the Fund. Federated Services Company, Pittsburgh,
Pennsylvania, provides certain accounting and recordkeeping services with
respect to the Fund's portfolio investments. The fee paid for this service
is based upon the level of the Fund's average net assets for the period plus
out-of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent, Federated
Shareholder Services Company, maintains all necessary shareholder records.
For its services, the transfer agent receives a fee based on the size, type,
and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen LLP,
Pittsburgh, Pennsylvania.
SHAREHOLDER SERVICES
This arrangement permits the payment of fees to Federated Shareholder
Services to cause services to be provided which are necessary for the
maintenance of shareholder accounts and to encourage personal services to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include but are not limited to providing office space, equipment, telephone
facilities, and various clerical, supervisory, computer, and other personnel
as necessary or beneficial to establish and maintain shareholder accounts
and records; processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses.
By adopting the Shareholder Services Agreement, the Trustees expect that the
Fund will benefit by: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and administrative
detail; (3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their accounts.
For the fiscal year ended July 31, 1997, the Fund earned shareholder service
fees on behalf of Institutional Shares and Institutional Service Shares in
the amounts of $8,188,378 and $4,349,287, respectively, $0 and $4,349,287 of
which, respectively, was paid to financial institutions.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
Accordingly, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of
the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed
for purposes of distribution and redemption, at $1.00 per share, taking into
account current market conditions and the Fund's investment objective. The
procedures include monitoring the relationship between the amortized cost
value per share and the net asset value per share based upon available
indications of market value. The Trustees will decide what, if any, steps
should be taken if there is a difference of more than 0.5 of 1% between the
two values. The Trustees will take any steps they consider appropriate (such
as redemption in kind or shortening the average portfolio maturity) to
minimize any material dilution or other unfair results arising from
differences between the two methods of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000 or 1%
of the Fund's net asset value, whichever is less, for any one shareholder
within a 90-day period. Any redemption beyond this amount will also be in
cash unless the Trustees determine that further payments should be in kind.
In such cases, the Fund will pay all or a portion of the remainder of the
redemption in portfolio instruments valued in the same way as the Fund
determines net asset value. The portfolio instruments will be selected in a
manner that the Trustees deem fair and equitable. Redemption in kind is not
as liquid as a cash redemption. If redemption is made in kind, shareholders
who sell these securities could receive less than the redemption value and
could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against
them.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated investment
companies, the Fund must, among other requirements: derive at least 90% of
its gross income from dividends, interest, and gains from the sale of
securities; derive less than 30% of its gross income from the sale of
securities held less than three months; invest in securities within certain
statutory limits; and distribute to its shareholders at least 90% of its net
income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is invested;
changes in interest rates; changes in expenses; and the relative amount of
cash flow. To the extent that financial institutions and broker/dealers
charge fees in connection with services provided in conjunction with an
investment in shares of the Fund, the performance will be reduced for those
shareholders paying those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of the
calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
shares purchased with dividends earned from the original one share and all
dividends declared on the original and any purchased shares; dividing the
net change in the account's value by the value of the account at the
beginning of the base period to determine the base-period return; and
multiplying the base-period return by 365/7.
For the seven-day period ended July 31, 1997, the yield for Institutional
Shares and Institutional Service Shares was 5.49%, and 5.24%, respectively.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized
base-period return by: adding 1 to the base-period return; raising the sum
to the 365/7th power; and subtracting 1 from the result.
For the seven-day period ended July 31, 1997, the effective yield for
Institutional Shares and Institutional Service Shares was 5.64% and 5.38%,
respectively.
TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is computed
by multiplying the number of shares owned at the end of the period by the
net asset value per share at the end of the period. The number of shares
owned at the end of the period is based on the number of shares purchased at
the beginning of the period with $1,000, adjusted over the period by any
additional shares, assuming the monthly reinvestment of all dividends and
distributions.
Prior to the creation of separate classes of shares, for the one-year and
five-year periods ended July 31, 1997, and for the period from May 26, 1990,
(start of performance) to July 31, 1997, the average annual total returns
were 5.45%, 4.67%, and 5.22%, respectively, for Institutional Shares.
For the one-year period ended July 31, 1997, and for the period from July 5,
1994, (date of initial public offering) through July 31, 1997, the average
annual total returns were 5.19% and 5.27%, respectively, for Institutional
Service Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
* Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment of all
income dividends and capital gains distributions, if any.
* IBC/Donoghue's Money Fund Report publishes annualized yields of money
market funds weekly. Donoghue's Money Market Insight publication
reports monthly and 12-month-to-date investment results for the same
money funds.
* Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
* Bank Rate Monitor National Index, Miami Beach, Florida, published
weekly, is an average of the interest rates of personal money market
deposit accounts at ten of the largest banks and thrifts in each of the
five largest Standard Metropolitan Statistical Areas. If more than one
rate is offered, the lowest rate is used. Account minimums and
compounding methods may vary.
Advertising and other promotional literature may include charts, graphs, and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in which
it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial, and political developments and their effect on the
securities market. Such discussions may take the form of commentary on these
developments by portfolio managers and their views and analysis on how such
developments could affect the funds. In addition, advertising and sales
literature may quote statistics and give general information about the
mutual fund industry, including the growth of the industry, from sources
such as the Investment Company Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making --structured, straightforward,
and consistent. This has resulted in a history of competitive performance
with a range of competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is firmly rooted in
sound methodologies backed by fundamental and technical research. Investment
decisions are made and executed by teams of portfolio managers, analysts,
and traders dedicated to specific market sectors. These traders handle
trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in the
mutual fund industry in 1974 with the creation of the first institutional
money market fund. Simultaneously, the company pioneered the use of the
amortized cost method of accounting for valuing shares of money market
funds, a principal means used by money managers today to value money market
fund shares. Other innovations include the first institutional tax-free
money market fund. As of December 31, 1996, Federated Investors managed more
than $50.3 billion in assets across 50 money market funds, including 18
government, 11 prime, and 21 municipal with assets approximating $28.0
billion, $12.8 billion, and $9.5 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high-yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic
fixed-income management. Henry A. Frantzen, Executive Vice President,
oversees the management of Federated Investors' international and global
portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their financial
goals through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3.5 trillion to the more than 6,000 funds
available.*
Federated Investors, through its subsidiaries, distributes mutual funds for
a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional clients
nationwide by managing and servicing separate accounts and mutual funds for
a variety of applications, including defined benefit and defined
contribution programs, cash management, and asset/liability management.
Institutional clients include corporations, pension funds, tax-exempt
entities, foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional clients is
headed by John B. Fisher, President, Institutional Sales Division.
BANK MARKETING
Other institutional clients include close relationships with more than 1,600
banks and trust organizations. Virtually all of the trust divisions of the
top 100 bank holding companies use Federated funds in their clients'
portfolios. The marketing effort to trust clients is headed by Timothy C.
Pillion, Senior Vice President, Bank Marketing & Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage firms
nationwide--we have over 2,200 broker/dealer and bank broker/dealer
relationships across the country--supported by more wholesalers than any
other mutual fund distributor. Federated's service to financial
professionals and institutions has earned it high ratings in several surveys
performed by DALBAR, Inc. DALBAR is recognized as the industry benchmark for
service-quality measurement. The marketing effort to these firms is headed
by James F. Getz, President, Federated Securities Corp.
* Source: Investment Company Institute
Tax-Free Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
The Institutional Shares of Tax-Free Obligations Fund (the "Fund") offered
by this prospectus represent interests in a portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company
(a mutual fund). The Fund invests in short-term 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, 1997, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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 5
Investment Risks 5
Investment Limitations 5
Fund Information 5
Management of the Fund 5
Distribution of Institutional Shares 6
Administration of the Fund 7
Net Asset Value 7
How to Purchase Shares 7
Purchasing Shares by Wire 7
Purchasing Shares by Check 7
Invest-by-Phone 7
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Accounts and Share Information 8
Dividends 8
Capital Gains 8
Confirmations and Account Statements 9
Accounts with Low Balances 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 9
Other Classes of Shares 10
Performance Information 10
Financial Highlights--Institutional Service Shares 11
Financial Statements 12
Report of Independent Public Accountants 36
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.10%
12b-1 Fee None
Total Other Expenses 0.10%
Shareholder Services Fee (after waiver)(2) 0.00%
Total Operating Expenses (after waivers)(3) 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.20%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider can
terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.55% 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 Institutional Shares of the
Fund will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Fund Information" and
"How to Purchase Shares." Wire-transferred redemptions of less than $5,000
may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE
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.
<S> <C>
1 Year $2
3 Years $6
5 Years $11
10 Years $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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
36.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
Net investment 0.03 0.03 0.04 0.02 0.03 0.04 0.05 0.04
income
LESS DISTRIBUTIONS
Distributions from (0.03) (0.03) (0.04) (0.02) (0.03) (0.04) (0.05) (0.04)
net investment income
NET ASSET VALUE, END $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
OF PERIOD
TOTAL RETURN(B) 3.49% 3.55% 3.64% 2.45% 2.54% 3.73% 5.13% 3.70%
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%*
Net investment 3.43% 3.46% 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%*
income
Expense waiver/ 0.35% 0.36% 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%*
reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of $1,474,180 $1,514,979$1,295,458 $789,755 $454,119 $308,855$165,669 $145,552
period
(000 omitted)
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 12, 1989 (date of
initial public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust permits
the Trust to offer separate series of shares representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Trustees (the "Trustees") has established two
classes of shares known as Institutional Shares and Institutional Service
Shares. This prospectus relates only to Institutional Shares of the Fund,
which are designed primarily for entities holding shares in an agency or
fiduciary capacity, financial institutions, financial intermediaries and
institutional investors as a convenient means of accumulating an interest in
a professionally managed portfolio investing primarily in short-term
municipal securities. The Fund may not be a suitable investment for
retirement plans because it invests in municipal securities. A minimum
initial investment of $1,000,000 over a one-year period is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide dividend income exempt
from federal regular income tax consistent with stability of principal. This
investment objective cannot be changed without shareholder approval. While
there is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940 which
regulates money market mutual funds and by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities maturing in 13 months or less. The average maturity of
the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. As a matter of investment policy, which cannot be
changed without shareholder approval, at least 80% of the Fund's annual
interest income will be exempt from federal regular income tax. (Federal
regular income tax does not include the federal individual alternative
minimum tax or the federal alternative minimum tax for corporations.) Unless
indicated otherwise, the investment policies may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in debt obligations issued by or on behalf of
states, territories, and possessions of the United States, including the
District of Columbia, and any political subdivision or financing authority
of any of these, the income from which is, in the opinion of qualified legal
counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:
* tax and revenue anticipation notes issued to finance working capital
needs in anticipation of receiving taxes or other revenues;
* bond anticipation notes that are intended to be refinanced through a
later issuance of longer-term bonds;
* municipal commercial paper and other short-term notes;
* variable rate demand notes;
* municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases; and
* participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES
Variable rate demand notes are long-term debt instruments that have variable
or floating interest rates and provide the Fund with the right to tender the
security for repurchase at its stated principal amount plus accrued
interest. Such securities typically bear interest at a rate that is intended
to cause the securities to trade at par. The interest rate may float or be
adjusted at regular intervals (ranging from daily to annually), and is
normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit
the Fund to tender the security at the time of each interest rate adjustment
or at other fixed intervals. See "Demand Features." The Fund treats variable
rate demand notes as maturing on the later of the date of the next interest
rate adjustment or the date on which the Fund may next tender the security
for repurchase.
PARTICIPATION INTERESTS
The Fund may purchase interests in Municipal Securities from financial
institutions such as commercial and investment banks, savings associations,
and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests or
any other form of indirect ownership that allows the Fund to treat the
income from the investment as exempt from federal income tax. The Fund
invests in these participation interests in order to obtain credit
enhancement or demand features that would not be available through direct
ownership of the underlying Municipal Securities.
MUNICIPAL LEASES
Municipal leases are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities. They may
take the form of a lease, an installment purchase contract, a conditional
sales contract, or a participation interest in any of the above. Lease
obligations may be subject to periodic appropriation. Municipal leases are
subject to certain specific risks in the event of default or failure of
appropriation.
CREDIT ENHANCEMENT
Certain of the Fund's acceptable investments may be credit-enhanced by a
guaranty, letter of credit, or insurance. Any bankruptcy, receivership,
default, or change in the credit quality of the party providing the credit
enhancement will adversely affect the quality and marketability of the
underlying security and could cause losses to the Fund and affect its share
price. The Fund may have more than 25% of its total assets invested in
securities credit-enhanced by banks.
DEMAND FEATURES
The Fund may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or default
by the issuer of the demand feature, or a default on the underlying security
or other event that terminates the demand feature before its exercise, will
adversely affect the liquidity of the underlying security. Demand features
that are exercisable even after a payment default on the underlying security
may be treated as a form of credit enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
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, and, as a matter of
fundamental investment policy which cannot be changed without shareholder
approval, will limit such investments to 10% of its net assets. This
restriction is not applicable to restricted securities determined to be
liquid under criteria established by the Trustees. Restricted securities are
any securities in which the Fund may invest pursuant to its investment
objective and policies but which are subject to restrictions on resale under
federal securities law. As a matter of non-fundamental investment policy,
the Fund will limit investments in illiquid securities, including restricted
securities not determined to be liquid, and non-negotiable time deposits, to
10% of its net assets.
TEMPORARY INVESTMENTS
From time to time, when the investment adviser determines that market
conditions call for a temporary defensive posture, the Fund may invest in
tax-exempt or taxable securities, all of comparable quality to other
securities in which the Fund invests, such as: obligations issued by or on
behalf of municipal or corporate issuers; obligations issued or guaranteed
by the U.S. government, its agencies, or instrumentalities; instruments
issued by a U.S. branch of a domestic bank or other deposit institutions
having capital, surplus, and undivided profits in excess of $100,000,000 at
the time of investment; and repurchase agreements (arrangements in which the
organization selling the Fund a temporary investment agrees at the time of
sale to repurchase it at a mutually agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments, there
is no current intention to do so. However, the interest from certain
Municipal Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued
to repay outstanding obligations, to raise funds for general operating
expenses, and to make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on
behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations.
The availability of this financing encourages these corporations to locate
within the sponsoring communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. Interest on and principal of revenue
bonds, however, are payable only from the revenue generated by the facility
financed by the bond or other specified sources of revenue. Revenue bonds do
not represent a pledge of credit or create any debt of or charge against the
general revenues of a municipality or public authority. Industrial
development bonds are typically classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including:
the general conditions of the short-term municipal note market and of the
municipal bond market; the size of the particular offering; the maturity of
the obligations; and the rating of the issue. The ability of the Fund to
achieve its investment objective also depends on the continuing ability of
the issuers of Municipal Securities and participation interests, or the
credit enhancers of either, to meet their obligations for the payment of
interest and principal when due. In addition, from time to time, the supply
of Municipal Securities acceptable for purchase by the Fund could become
limited.
The Fund may invest in Municipal Securities which are repayable out of
revenue streams generated from economically related projects or facilities
and/or whose issuers are located in the same state. Sizable investments in
these Municipal Securities could involve an increased risk to the Fund
should any of these related projects or facilities experience financial
difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions
of bankruptcy, insolvency, and other laws affecting the rights and remedies
of creditors. In addition, the obligations of such issuers may become
subject to laws enacted in the future by Congress, state legislators, or
referenda extending the time for payment of principal and/or interest, or
imposing other constraints upon enforcement of such obligations or upon the
ability of states or municipalities to levy taxes. There is also the
possibility that, as a result of litigation or other conditions, the power
or ability of any issuer to pay, when due, the principal of and interest on
its municipal securities may be materially affected. The Fund's
concentration in Municipal Securities may entail a greater level of risk
than other types of money market funds.
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 up to 15% of the value of these assets to secure such
borrowings. These investment limitations cannot be changed without
shareholder approval.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's
powers except those reserved for the shareholders. An Executive Committee of
the Board of Trustees handles the Board's responsibilities between meetings
of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management, the
Fund's investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20% of the
Fund's average daily net assets. The adviser may voluntarily choose to waive
a portion of its fee or reimburse other expenses of the Fund, but reserves
the right to terminate such waiver or reimbursement at any time at its sole
discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April 11,
1989, is a registered investment adviser under the Investment Advisers Act
of 1940. It is a subsidiary of Federated Investors. All of the Class A
(voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. With over $110 billion invested across
over 300 funds under management and/or administration by its subsidiaries,
as of December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,500
financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interests. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Shares of the Fund. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25% of the average daily net asset value of
its shares, computed at an annual rate, to obtain certain personal services
for shareholders and to maintain shareholder accounts. From time to time and
for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or
will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their
own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount
of shares the financial institution sells or may sell, and/or upon the type
and nature of sales or marketing support furnished by the financial
institution. Any payments made by the distributor may be reimbursed by the
Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund at an annual rate which
relates to the average aggregate daily net assets of all funds advised by
affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities attributable
to Institutional Shares from the value of Fund assets attributable to
Institutional Shares, and dividing the remainder by the number of
Institutional 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, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange is open for business. Shares may be purchased either by wire or by
check. The Fund reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Financial institutions may impose different minimum
investment requirements on their customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund before
3:00 p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Shareholder Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Tax-Free Obligations
Fund--Institutional Shares; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions
on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made
payable to: Tax-Free Obligations Fund--Institutional Shares. Orders by mail
are considered received when payment by check is converted into federal
funds (normally the business day after the check is received), and shares
begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone for
investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the Fund.
Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send
a request for monies to the shareholder's commercial bank, savings bank, or
credit union ("bank") via the Automated Clearing House. The shareholder's
bank, which must be an Automated Clearing House member, will then forward
the monies to Federated Shareholder Services Company. The purchase is
normally entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund
has a properly completed authorization form. These forms can be obtained
from Federated Securities Corp. Proceeds from redemption requests received
before 12:00 noon (Eastern time) will be wired the same day to the
shareholder's account at a domestic commercial bank which is a member of the
Federal Reserve System, but will not include that day's dividend. Proceeds
from redemption requests received after that time include that day's
dividend but will be wired the following business day. Proceeds from
redemption requests on holidays when wire transfers are restricted will be
wired the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares by Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
or any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934. The Fund does not accept signatures guaranteed by a
notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 3:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease
in dividends. The Fund will distribute in cash or additional shares any
realized net long-term capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends
paid. The Fund will not issue share certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase
additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder one
vote in Trustee elections and other matters submitted to shareholders for
vote. All shares of all classes of each portfolio in the Trust have equal
voting rights, except that in matters affecting only a particular portfolio
or class, only shareholders of that portfolio or class are entitled to vote.
The Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust's or the
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies. 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, within the limits of its investment
policies, all types of municipal bonds, including private activity bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular
taxable income of the taxpayer increased by certain "tax preference" items
not included in regular taxable income and reduced by only a portion of the
deductions allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed as
ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
Because interest received by the Fund may not be exempt from all state and
local income taxes, shareholders may be required to pay state and local
taxes on dividends received from the Fund. Shareholders are urged to consult
their own tax advisers regarding the status of their accounts under state
and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Service Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries and institutional investors and are subject to a minimum
initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan but are
subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class, investors
may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield,
tax-equivalent yield, and total return. The performance figures will be
calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment. The tax-equivalent yield is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that
would have to be earned to equal the Fund's tax-exempt yield, assuming a
specific tax rate.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
36.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.002
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.03) (0.03) (0.002)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 3.24% 3.29% 3.39% 0.18%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.39%*
Net investment income 3.19% 3.22% 3.48% 3.04%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.14% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $587,983 $406,408 $252,016 $25,148
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 5, 1994 (date of initial
public investment) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
TAX-FREE OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--99.6%
ALABAMA--6.1%
$ 3,830,000 Alabama HFA, 1995 Series E Weekly VRDNs (Royal Gardens $ 3,830,000
Apartments Project)/ (SouthTrust Bank of Alabama,
Birmingham LOC)
6,500,000 Anniston, AL, IDB, (Series 1989-A) Weekly VRDNs (Union 6,500,000
Foundry Co.)/ (Amsouth Bank N.A., Birmingham LOC)
3,200,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly VRDNs 3,200,000
(S.P. Hotel Company)/ (Amsouth Bank N.A., Birmingham LOC)
6,000,000 Birmingham, AL Medical Clinic Board Daily VRDNs (University 6,000,000
of Alabama Health System)/ (Morgan Guaranty Trust Co., New
York LOC)
3,095,000 Birmingham, AL Special Care Facilities Financing Authority, 3,095,000
Capital Improvement Revenue Bonds (Series 1995) Weekly
VRDNs (Methodist Home for the Aging (AL))/(SouthTrust Bank
of Alabama, Birmingham LOC)
4,600,000 Birmingham, AL, GO (Series 1992A) Weekly VRDNs (Regions 4,600,000
Bank, Alabama LOC)
12,000,000 Birmingham, AL, GO Refunding Bonds (Series 1997-A) Weekly 12,000,000
VRDNs (AMBAC INS)/ (Societe Generale, Paris LIQ)
2,000,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills, 2,000,000
Inc.)/(SunTrust Bank, Atlanta LOC)
3,500,000 Cherokee, AL IDB, IDR Refunding Bonds (Series 1993) Weekly 3,500,000
VRDNs (BOC Group, Inc.)/ (Wachovia Bank of Georgia N.A.,
Atlanta LOC)
8,710,000 Columbia, AL IDB, CDC Municipal Products, Inc. (Series 8,710,000
1997I) Weekly VRDNs (Alabama Power Co.)/(AMBAC INS)/(CDC
Municipal Products, Inc. LIQ)
3,300,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn (Homewood 3,300,000
AL))/ (SouthTrust Bank of Alabama, Birmingham LOC)
6,900,000 Huntsville, AL Health Care Authority/Health Care 6,900,000
Facilities, Health Care Facilities Revenue Bonds (Series
1994-B) Weekly VRDNs (MBIA INS)/(Amsouth Bank N.A.,
Birmingham LIQ)
2,156,000 Irondale, AL IDB, Revenue Bonds (Series 1989) Weekly VRDNs 2,156,000
(Collateral Mortgage, Ltd.)/ (SouthTrust Bank of Alabama,
Birmingham LOC)
6,000,000 Jefferson County, AL, GO Warrants (Series 1996) Weekly 6,000,000
VRDNs (Bayerische Landesbank Girozentrale LOC)
2,540,000 Madison, AL IDA, (Series A) Weekly VRDNs (Executive 2,540,000
Inn)/(Amsouth Bank N.A., Birmingham LOC)
2,770,000 Marshall County, AL, Special Obligation School Refunding 2,770,000
Warrant (Series 1994) Weekly VRDNs (Marshall County, AL
Board of Education)/(Regions Bank, Alabama LOC)
2,500,000 Mobile, AL IDA Weekly VRDNs (McRae's Industries, 2,500,000
Inc.)/(Nationsbank, N.A., Charlotte LOC)
3,500,000 Mobile, AL IDB, PCR (Series 1993A) Weekly VRDNs (Alabama 3,500,000
Power Co.)/ (Alabama Power Co. GTD)
8,450,000 Mobile, AL IDB, PCR (Series 1993B) Weekly VRDNs (Alabama 8,450,000
Power Co.)/ (Alabama Power Co. GTD)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ALABAMA--CONTINUED
$ 2,000,000 Montgomery, AL BMC Special Care Facilities Finance $ 2,000,000
Authority, (Series 94A) Weekly VRDNs (Baptist Medical
Center, AL)/(Amsouth Bank N.A., Birmingham LOC)
22,800,000 The Board of Trustees of the University of Alabama, (Series 22,800,000
B) Weekly VRDNs (Bank of America NT and SA, San Francisco
LIQ)
3,500,000 Tuscaloosa County, AL Board of Education, Capital Outlay 3,500,000
Variable Rate Warants, (Series 1997-B) Weekly VRDNs (First
Alabama Bank, Montgomery LOC)
1,335,000 Tuscaloosa County, AL Port Authority, (Series 1989A) Weekly 1,335,000
VRDNs (Capstone Hotel Ltd.)/ (SouthTrust Bank of Alabama,
Birmingham LOC)
1,030,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) 1,030,000
Weekly VRDNs (Harco, Inc.)/ (Amsouth Bank N.A., Birmingham
LOC)
2,900,000 Winfield, AL, Variable/Fixed Rate Industrial Revenue Bonds 2,900,000
(Series 1984) Weekly VRDNs (Union Underwear Company,
Inc.)/(Bank of Nova Scotia, Toronto LOC)
TOTAL 125,116,000
ARIZONA--2.0%
3,000,000 Apache County, AZ IDA, 1983 (Series A) Weekly VRDNs (Tucson 3,000,000
Electric Power Co.)/ (Barclays Bank PLC, London LOC)
11,000,000 Apache County, AZ Weekly VRDNs (Tucson Electric Power 11,000,000
Co.)/(Chase Manhattan Bank N.A., New York LOC)
4,000,000 Arizona Health Facilities Authority Weekly VRDNs 4,000,000
(University Physicians, Inc.)/ (Bank One, Arizona N.A. LOC)
6,800,000 Arizona Health Facilities Authority, Pooled Loan Program 6,800,000
Revenue Bonds (Series 1985B) Weekly VRDNs (FGIC INS)/(Chase
Manhattan Bank N.A., New York LIQ)
1,000,000 Arizona Insured Municipal Securities Trust, (Series 1996A) 1,000,000
Weekly VRDNs (Chandler Street and Highway)/(MBIA
INS)/(Norwest Bank Minnesota, Minneapolis LIQ)
1,500,000 Arizona Insured Municipal Securities Trust, (Series 1996C) 1,500,000
Weekly VRDNs (Maricopa County, AZ Unified School District
No. 93)/(FGIC INS)/ (Norwest Bank Minnesota, Minneapolis
LIQ)
1,250,000 Arizona Insured Municipal Securities Trust, (Series 1996E) 1,250,000
Weekly VRDNs (Scottsdale (Memorial Hospitals))/(AMBAC
INS)/(Norwest Bank Minnesota, Minneapolis LIQ)
5,000,000 Chandler, AZ IDA, (SMP II Limited Partnership) Weekly VRDNs 5,000,000
(Bank One, Arizona N.A. LOC)
8,500,000 Coconino County, AZ Pollution Control Corporation, PCR 8,500,000
Refunding Bonds (Series 1995E) Weekly VRDNs (Nevada Power
Co.)/(Societe Generale, Paris LOC)
2,000,000 Pima County, AZ IDA Weekly VRDNs (Tucson Electric Power 2,000,000
Co.)/ (Barclays Bank PLC, London LOC)
TOTAL 44,050,000
ARKANSAS--0.0%
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson Co.)/(PNC 1,000,000
Bank, N.A. LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
CALIFORNIA--4.6%
$ 135,000 California Public Capital Improvements Financing Authority, $ 135,000
Trust Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA
INS)/(Bank of New York, New York LIQ)
5,000,000 California School Cash Reserve Program Authority, (Series 5,016,657
B), 4.50% TRANs (MBIA INS), 12/19/1997
35,000,000 California School Cash Reserve Program Authority, Pool 35,278,188
Bonds (Series 1997A), 4.75% TRANs (AMBAC INS)/(Trinity
Funding Company INV), 7/2/1998
30,000,000 Los Angeles County, CA, 4.50% TRANs, 6/30/1998 30,171,257
20,000,000 Riverside County, CA, 4.50% TRANs, 6/30/1998 20,096,424
5,000,000 Santa Clara County, CA, 4.50% TRANs, 8/1/1997 5,000,000
TOTAL 95,697,526
COLORADO--0.1%
2,825,000 Denver (City & County), CO, 4.10% TOBs (Blake Street 2,825,000
Compendium)/ (Norwest Bank Minnesota, Minneapolis LOC),
Optional Tender 12/15/1997
DISTRICT OF COLUMBIA--1.1%
2,070,000 District of Columbia Housing Finance Agency, Multifamily 2,070,000
Housing, 3.90% TOBs (Chastleton Project)/(Nationsbank,
N.A., Charlotte LOC), Optional Tender 7/1/1998
16,000,000 District of Columbia, (Series 1997A), 4.50% TRANs (National 16,013,440
Westminster Bank, PLC, London and Societe Generale, Paris
LOCs), 9/30/1997
3,575,000 District of Columbia, Revenue Bonds (Series 1997B) Weekly 3,575,000
VRDNs (Association of American Medical Colleges)/(AMBAC
INS)/(Chase Manhattan Bank N.A., New York LIQ)
TOTAL 21,658,440
FLORIDA--14.4%
3,400,000 Alachua County, FL Health Facilities Authority, Health 3,400,000
Facilities Revenue Bonds (Series 1996B) Weekly VRDNs
(Shands Teaching Hospital and Clinics, Inc.)/(MBIA
INS)/(SunTrust Bank, Central Florida LIQ)
6,500,000 Bradford County, FL Health Facilities Authority, Health 6,500,000
Facilities Revenue Bonds (Series 1996) Weekly VRDNs (Shands
Teaching Hospital and Clinics, Inc.)/(MBIA INS)/(SunTrust
Bank, Central Florida LIQ)
3,000,000 Citrus Park, FL Community Development District, Capital 3,000,000
Improvement Bonds (Series 1996) Weekly VRDNs (Hillsborough
County, FL IDA)/(Dresdner Bank AG, Frankfurt LOC)
4,300,000 Collier County, FL HFA, Multifamily Revenue Bonds (Series 4,300,000
1985) Weekly VRDNs (River Reach Project)/(Morgan Guaranty
Trust Co., New York LOC)
10,000,000 Dade County, FL HFA, Hospital Revenue Bonds (Series 1995) 10,000,000
Weekly VRDNs (Miami Children's Hospital Project)/(AMBAC
INS)/(SunTrust Bank, Atlanta LIQ)
5,610,000 Dade County, FL Solid Waste System, 4.00% Bonds (AMBAC 5,614,537
INS), 10/1/1997
4,000,000 Dade County, FL Water & Sewer System Weekly VRDNs (FGIC 4,000,000
INS)/ (Commerzbank AG, Frankfurt LIQ)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 11,070,000 Eustis Health Facilities Authority, FL, (Series 1985) $ 11,070,000
Weekly VRDNs (Waterman Medical Center)/ (SunTrust Bank,
Central Florida LOC)
8,000,000 Florida HFA Weekly VRDNs (Cornerstone Imaging, Inc.)/(PNC 8,000,000
Bank, N.A. LOC)
5,120,000 Florida State Board of Education Administration, (CR55), 5,120,000
(Series 1989A), 3.50% TOBs (Citibank N.A., New York LIQ),
Optional Tender 8/1/1997
7,570,000 Florida State, PA-146 Weekly VRDNs (Jacksonville 7,570,000
Transportation Authority)/ (Merrill Lynch Capital Services,
Inc. LIQ)
7,160,000 Fort Lauderdale, FL Performing Arts Center Authority Weekly 7,160,000
VRDNs (SunTrust Bank, Central Florida LOC)
7,000,000 Gulf Breeze, FL, Variable Rate Demand Revenue Bonds (Series 7,000,000
1995A) Weekly VRDNs (Florida Municipal Bond Fund)/(Barnett
Bank, N.A. LOC)
30,500,000 Highlands County, FL Health Facilities, (Series 1996A 30,500,000
Accounts Receivable) Weekly VRDNs (Adventist Health
System)/(Capital Markets Assurance Corp. INS)/ (First
National Bank of Chicago LIQ)
25,000,000 Highlands County, FL Health Facilities, (Series 1996B 25,000,000
Accounts Receivable) Weekly VRDNs (Adventist Health
System)/(Capital Markets Assurance Corp. INS)/ (Canadian
Imperial Bank of Commerce, Toronto LIQ)
8,000,000 Highlands County, FL Health Facilities, Variable Rate 8,000,000
Demand Revenue Bonds (Series 1996A) Weekly VRDNs (Adventist
Health System)/(SunTrust Bank, Central Florida LOC)
7,000,000 Indian River County, FL Hospital District, (Series 1985) 7,000,000
Weekly VRDNs (Kredietbank N.V., Brussels LOC)
4,300,000 Jacksonville, FL, Industrial Development Refunding Revenue 4,300,000
Bonds (Series 1996) Weekly VRDNs (Pavilion Associates,
Ltd.)/(Barnett Bank, N.A. LOC)
4,100,000 Key West, FL Community Redevelopment Authority Weekly VRDNs 4,100,000
(Pier House Joint Venture)/ (PNC Bank, N.A. LOC)
3,695,000 Manatee County, FL HFA, Multifamily Mortgage Revenue 3,695,000
Refunding Bonds (Series 1989- A) Weekly VRDNs
(Hampton/McGuire L.P.)/(Nationsbank, N.A., Charlotte LOC)
5,000,000 Miami, FL Health Facilities Authority, Health Facilities 5,000,000
Revenue Bonds (Series 1992) Weekly VRDNs (Miami Jewish Home
and Hospital for the Aged, Inc.)/ (SunTrust Bank, Miami
LOC)
8,000,000 Miami, FL Health Facilities Authority, Health Facilities 8,000,000
Revenue Bonds (Series 1996) Weekly VRDNs (Miami Jewish Home
and Hospital for the Aged, Inc.)/(SunTrust Bank, Central
Florida LOC)
4,000,000 Mount Dora, FL Health Facility Authority, (Series 1996A) 4,000,000
Weekly VRDNs (Waterman Village (Mount Dora, FL))/(Barnett
Bank of Central Florida, Orlando LOC)
4,000,000 Orange County, FL Educational Facilities Authority, Revenue 4,000,000
Bonds (Series 1997) Weekly VRDNs (Rollins College)/(Barnett
Bank, N.A. LOC)
9,000,000 Orange County, FL HFA, Multifamily Housing Revenue Bonds 9,000,000
Weekly VRDNs (Sutton Place Ltd. Project)/(Nationsbank,
N.A., Charlotte LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 16,500,000 Pasco County, FL School Board, Variable Rate Certificates $ 16,500,000
Weekly VRDNs (AMBAC INS)/ (Landesbank Hessen-Thueringen,
Frankfurt LIQ)
6,400,000 Pinellas County, FL Health Facility Authority Daily VRDNs 6,400,000
(Chase Manhattan Bank N.A., New York LOC)
4,065,000 Putnam County, FL Development Authority, PCR Bonds (Pooled 4,065,000
Series 1984S) Weekly VRDNs (Seminole Electric Cooperative,
Inc (FL))/(National Rural Utilities Cooperative Finance
Corp. LOC)
8,400,000 Sarasota County, FL Public Hospital District, Series 1993A, 8,400,000
3.85% CP (Sarasota Memorial Hospital), Mandatory Tender
9/19/1997
8,350,000 Sarasota County, FL Public Hospital District, Variable Rate 8,350,000
Demand Hospital Revenue Bonds (Series 1996A), 3.75% CP
(Sarasota Memorial Hospital)/(SunTrust Bank, Central
Florida LIQ), Mandatory Tender 8/13/1997
20,000,000 Sarasota County, FL Public Hospital District, Variable Rate 20,000,000
Demand Hospital Revenue Bonds (Series 1996A), 3.75% CP
(Sarasota Memorial Hospital)/(SunTrust Bank, Central
Florida LIQ), Mandatory Tender 9/26/1997
2,000,000 Sarasota, FL, Educational Facilities Revenue Bonds (Series 2,000,000
1996) Weekly VRDNs (Ringling School of Art and Design,
Inc.)/(SunTrust Bank, Central Florida LOC)
13,400,000 Southeast Volusia Hospital District, Revenue Bonds (Series 13,400,000
1995) Weekly VRDNs (Bert Fish Medical Center
(FL))/(SouthTrust Bank of Alabama, Birmingham LOC)
9,000,000 St. Johns County, FL HFA, (Series 1993) Weekly VRDNs 9,000,000
(Remington at Ponte Verda Project)/ (SunTrust Bank, Atlanta
LOC)
7,000,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs 7,000,000
(Savannahs Hospital)/ (Nationsbank, N.A., Charlotte LOC)
4,500,000 Suwannee County, FL, Health Facilities Revenue Bonds 4,500,000
(Series 1996) Weekly VRDNs (Shands Teaching Hospital and
Clinics, Inc.)/(MBIA INS)/(SunTrust Bank, Central Florida
LIQ)
2,855,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/ 2,855,000
(Mellon Bank N.A., Pittsburgh LOC)
TOTAL 297,799,537
GEORGIA--1.6%
2,000,000 Albany-Dougherty County, GA Hospital Authority, Refunding 2,000,000
Revenue Anticipation Certificates (Series 1991) Weekly
VRDNs (AMBAC INS)/(Credit Local de France LIQ)
2,600,000 Atlanta, GA, Urban Residential Finance Authority, 2,600,000
Residential Construction Revenue Bonds, (Series 1995)
Weekly VRDNs (Summerhill Neighborhood Bond Program)/(First
Union National Bank, Charlotte, N.C. LOC)
13,000,000 Cherokee County, GA School System, 4.10% TANs, 12/31/1997 13,010,582
5,000,000 Cobb-Marietta, GA Coliseum & Exhibit Hall Authority, Junior 5,000,000
Lien Revenue Bonds (Series 1996A) Weekly VRDNs (MBIA
INS)/(Canadian Imperial Bank of Commerce, Toronto LIQ)
4,405,000 Conyers-Rockdale-Big Haynes, GA Impoundment Authority, 4,405,882
(Series 1997), 3.75% BANs, 12/31/1997
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--CONTINUED
$ 1,600,000 De Kalb County, GA Development Authority, (Series 1992) $ 1,600,000
Weekly VRDNs (American Cancer Society, GA)/(SunTrust Bank,
Atlanta LOC)
4,470,000 Fulton County, GA Housing Authority, (Series 1994B) Weekly 4,470,000
VRDNs (Champions Green Apartments Project)/(SouthTrust Bank
of Alabama, Birmingham LOC)
TOTAL 33,086,464
IDAHO--0.6%
13,000,000 Idaho State, (Series 1997), 4.625% TANs, 6/30/1998 13,085,034
ILLINOIS--10.5%
12,000,000 Chicago, IL Board of Education, Merlots (Series 1997E) 12,000,000
Weekly VRDNs (Corestates Bank N.A., Philadelphia, PA LIQ)
20,000,000 Chicago, IL Board of Education, Variable Rate Certificates 20,000,000
(Series 1996BB) Weekly VRDNs (MBIA INS)/(Bank of America NT
and SA, San Francisco LIQ)
20,000,000 Chicago, IL, GO Tender Notes (Series 1997), 3.65% TOBs 20,000,000
(Morgan Guaranty Trust Co., New York LOC), Mandatory Tender
2/5/1998
350,000 Darien, IL IDA, (Series 1989C) Weekly VRDNs (KinderCare 350,000
Learning Centers, Inc.)/ (Toronto-Dominion Bank LOC)
7,000,000 Galesburg, IL, (Series 1996) Weekly VRDNs (Knox College 7,000,000
Project)/ (Lasalle National Bank, Chicago LOC)
3,000,000 Illinois Development Finance Authority Weekly VRDNs 3,000,000
(Newlywed Food)/ (Mellon Bank N.A., Pittsburgh LOC)
5,100,000 Illinois Development Finance Authority, (Series 1993A) 5,100,000
Weekly VRDNs (Loyola Academy)/ (Northern Trust Co.,
Chicago, IL LOC)
24,000,000 Illinois Development Finance Authority, PCR, (Series 1996A) 24,000,000
Weekly VRDNs (Commonwealth Edison Co.)/(AMBAC INS)/(Bank of
New York, New York LIQ)
15,000,000 Illinois Development Finance Authority, Variable/Fixed Rate 15,000,000
Demand Revenue Bonds, (Series 1996) Weekly VRDNs (Chicago
Symphony Orchestra Project)/ (Bank of America Illinois LOC)
7,500,000 Illinois Educational Facilities Authority, 3.90% CP (Field 7,500,000
Museum of Natural History)/ (Northern Trust Co., Chicago,
IL LOC), Mandatory Tender 11/19/1997
7,500,000 Illinois Educational Facilities Authority, Revenue Bonds 7,500,000
(Series 1995) Weekly VRDNs (Ravinia Festival Association
(IL))/(NBD Bank, Michigan LOC)
16,100,000 Illinois Health Facilities Authority Weekly VRDNs (OSF 16,100,000
Health Care Systems)
19,800,000 Illinois Health Facilities Authority, (Series 1989A) Weekly 19,800,000
VRDNs (Methodist Health Services Corp.)/(Fuji Bank, Ltd.,
Tokyo LOC)
35,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series 35,000,000
1985B) Weekly VRDNs (OSF Health Care Systems)/(Bank of
America Illinois and Rabobank Nederland, Utrecht LIQs)
1,000,000 Illinois Health Facilities Authority, Revolving Fund Pooled 1,000,000
Financing Program (Series 1985F) Weekly VRDNs (NBD Bank,
Michigan LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ILLINOIS--CONTINUED
$ 5,000,000 Illinois Health Facilities Authority, Variable Rate $ 5,000,000
Adjustable Demand Revenue Bonds (Series 1996), 3.95% CP
(Evanston Hospital Corp.), Mandatory Tender 8/15/1997
14,000,000 Illinois Housing Development Authority, (1997 Subseries 14,000,000
B-1), 4.10% TOBs, Mandatory Tender 7/7/1998
3,245,000 Rockford Park District, IL, Series C, 5.30% Bonds, 3,261,392
12/15/1997
TOTAL 215,611,392
INDIANA--2.1%
830,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/(National 830,000
City Bank, Kentucky LOC)
4,100,000 Hamilton County, IN Hospital Authority Weekly VRDNs (Carmel 4,100,000
Hospital)/ (Daughters of Charity GTD)
10,000,000 Indiana Bond Bank, Series A-2, 4.25% TANs (Norwest Bank 10,051,100
Minnesota, Minneapolis LOC), 1/21/1998
1,745,000 Indiana Health Facilities Finance Authority Rehabilitation 1,745,000
Center Weekly VRDNs (Crossroads Rehabilitation
Center)/(Bank One, Indianapolis, IN LOC)
12,000,000 Indianapolis, IN Local Public Improvement Bond Bank, 12,031,685
(Series 1997 A), 4.375% TANs, 1/8/1998
4,735,000 Indianapolis, IN, Variable Rate Demand Economic Development 4,735,000
Revenue Bonds, (Series 1995) Weekly VRDNs (Pleasant Run
Children's Homes, Inc.)/(Fifth Third Bank, Cincinnati LOC)
9,000,000 Purdue University, IN, Student Fees Revenue Bonds (Series 9,000,000
H) Weekly VRDNs
TOTAL 42,492,785
IOWA--0.2%
5,000,000 Cedar Rapids Community School District, IA, General 5,020,909
Obligation Anticipatory Warrants, (Series 1997), 4.375%
TRANs, 7/1/1998
KANSAS--0.2%
3,420,000 Salina, KS, GO Municipal Temporary Notes (Series 1997-1), 3,420,000
3.90% BANs, 3/1/1998
KENTUCKY--2.1%
1,260,000 Boone County, KY, Revenue Refunding Bonds Weekly VRDNs 1,260,000
(Spring Meadow Associates)/ (Huntington National Bank,
Columbus, OH LOC)
6,835,000 Jefferson County, KY, (Series 1997) Weekly VRDNs (First 6,835,000
Trust Restoration Partners)/ (Bank One, Kentucky LOC)
35,000,000 Owensboro, KY, (Series 1996) Weekly VRDNs (Owensboro Mercy 35,000,000
Health System, Inc. Project)/ (Bank of America Illinois
LOC)
TOTAL 43,095,000
LOUISIANA--0.5%
250,000 Baton Rouge, LA, Public Improvement Sales Tax Revenue 250,000
Bonds, Series 1992A, 9.00% Bonds (FSA INS), 8/1/1997
800,000 Calcasieu Parish, LA, IDB, PCR Bonds Weekly VRDNs (Citgo 800,000
Petroleum Corp.)/ (Westdeutsche Landesbank Girozentrale
LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
LOUISIANA--CONTINUED
$ 80,000 Louisiana PFA, (Series 1985A) Weekly VRDNs (FGIC $ 80,000
INS)/(Societe Generale, Paris LIQ)
1,765,000 Louisiana PFA, (Series A), 4.50% TANs (East Baton Rouge 1,766,507
School Board), 9/24/1997
4,000,000 Louisiana PFA, (Series B), 4.50% TANs (Orleans Parish, LA 4,003,415
School Board), 9/24/1997
3,200,000 Louisiana PFA, Hospital Revenue Bonds Series 1995 Weekly 3,200,000
VRDNs (Willis-Knighton Medical Center)/(AMBAC INS)/(Mellon
Bank N.A., Pittsburgh LIQ)
TOTAL 10,099,922
MARYLAND--1.4%
400,000 Baltimore County, MD Port Facility Monthly VRDNs 400,000
(Occidental Petroleum Corp.)/ (Morgan Guaranty Trust Co.,
New York LOC)
2,000,000 Maryland EDC, Pooled Financing Revenue Bonds, (Series 1995) 2,000,000
Weekly VRDNs (Maryland Municipal Bond Fund)/(Nationsbank,
N.A., Charlotte LOC)
1,200,000 Maryland Health & Higher Educational Facilities Authority, 1,200,000
(Series 1985B) Weekly VRDNs (First National Bank of Chicago
LOC)
1,800,000 Maryland Health & Higher Educational Facilities Authority, 1,800,000
ACES Revenue Bonds (Series 1994) Weekly VRDNs (Daughters of
Charity)
1,000,000 Maryland Health & Higher Educational Facilities Authority, 1,000,000
Pooled Loan Program Revenue Notes, 3.75% CP (John Hopkins
University)/(Sanwa Bank Ltd., Osaka LIQ), Mandatory Tender
9/26/1997
4,970,000 Maryland Health & Higher Educational Facilities Authority, 4,970,000
Pooled Loan Program Revenue Notes, 3.90% CP (John Hopkins
University)/(Sanwa Bank Ltd., Osaka LIQ), Mandatory Tender
10/28/1997
8,640,000 Maryland State CDA, (Series 1987-2), 3.80% TOBs (First 8,640,000
National Bank of Chicago LIQ), Optional Tender 10/1/1997
9,500,000 Montgomery County, MD, EDR Weekly VRDNs (U.S. Pharmacopeial 9,500,000
Convention Facility)/ (Chase Manhattan Bank N.A., New York
LOC)
TOTAL 29,510,000
MASSACHUSETTS--0.9%
7,000,000 Clinton, MA, 4.00% BANs, 11/21/1997 7,008,040
3,200,000 Danvers, Massachusetts, 4.00% BANs, 3/31/1998 3,204,074
8,000,000 North Andover, MA, 4.00% BANs, 1/22/1998 8,011,014
TOTAL 18,223,128
MICHIGAN--5.4%
4,700,000 Battle Creek, MI Economic Development Corporation, Limited 4,700,000
Obligation Economic Development Revenue Refunding Bonds
(Series 1992) Weekly VRDNs (Michigan Carton & Paperboard
Company)/(American National Bank, Chicago LOC)
5,300,000 Dearborn, MI Economic Development Corp, (Series 1991) 5,300,000
Weekly VRDNs (Oakbrook Common)/ (Mellon Bank N.A.,
Pittsburgh LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--CONTINUED
$ 800,000 Detroit, MI Water Supply System, Water Supply System $ 800,000
Revenue and Revenue Refunding Bonds (Series 1993) Weekly
VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ)
2,000,000 Garden City, MI HFA, Hospital Revenue Bonds (Series 1996A) 2,000,000
Weekly VRDNs (Garden City Hospital, Osteopathic)/(First of
America Bank - Michigan LOC)
2,100,000 Grand Rapids, MI EDR, Floating/Fixed Rate Demand Bonds 2,100,000
(Series 1983-B) Weekly VRDNs (Amway Grand Plaza Hotel
Facilities)/(Old Kent Bank & Trust Co., Grand Rapids LOC)
4,855,000 Kalamazoo, MI Economic Development Corp., 1995 Limited 4,855,000
Obligation Revenue Refunding Bonds Weekly VRDNs (Wyndham
Project, MI)/(First of America Bank - Illinois LOC)
1,000,000 Michigan Higher Education Facilities Authority, Variable 1,000,000
Rate Demand Limited Obligation Revenue Bonds (Series 1997)
Weekly VRDNs (Davenport College of Business)/(Old Kent Bank
& Trust Co., Grand Rapids LOC)
15,800,000 Michigan State Hospital Finance Authority, (Series 1994) 15,800,000
Weekly VRDNs (Mt. Clemens General Hospital)/(Comerica Bank,
Detroit, MI LOC)
6,000,000 Michigan State Hospital Finance Authority, (Series A) 6,000,000
Weekly VRDNs (OSF Health Care Systems)
8,200,000 Michigan State Hospital Finance Authority, Hospital 8,200,000
Equipment Loan Program Bonds (Series A) Weekly VRDNs (First
of America Bank - Michigan LOC)
3,900,000 Michigan State Housing Development Authority, (Series 1991) 3,900,000
Weekly VRDNs (Forest Hills Apartments)/(National Australia
Bank, Ltd., Melbourne LOC)
3,000,000 Michigan State Housing Development Authority, (Series 1991) 3,000,000
Weekly VRDNs (Regency Square Apartments)/(National
Australia Bank, Ltd., Melbourne LOC)
15,000,000 Michigan State Housing Development Authority, Merlots 15,480,600
(Series G) Weekly VRDNs (MBIA INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ)
28,000,000 Michigan State, 4.50% TRANs, 9/30/1997 28,046,163
5,200,000 Michigan Strategic Fund, Limited Obligation PCR Bonds 5,200,000
(Series 1993) Weekly VRDNs (Allied-Signal, Inc.)
3,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds 3,000,000
(Series 1995) Weekly VRDNs (Wellness Plan Project)/(NBD
Bank, Michigan LOC)
2,695,000 Ottawa County, MI Economic Development Corp., Limited 2,695,000
Obligation Revenue Bonds (Series 1995B) Weekly VRDNs
(Sunset Manor, Inc. Project)/(Old Kent Bank & Trust Co.,
Grand Rapids LOC)
TOTAL 112,076,763
MINNESOTA--6.9%
10,300,000 Burnsville, MN, Variable Rate Demand Revenue Bonds (Series 10,300,000
1996) Weekly VRDNs (YMCA Projects)/(Norwest Bank Minnesota,
Minneapolis LOC)
2,100,000 DDSB Municipal Securities Trusts, Series 1994O Weekly VRDNs 2,100,000
(Richfield, MN ISD 280)/ (First Bank N.A., Minneapolis LIQ)
1,000,000 DDSB Municipal Securities Trusts, Series 1994S Weekly VRDNs 1,000,000
(Osseo, MN ISD 279)/ (First Bank N.A., Minneapolis LIQ)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MINNESOTA--CONTINUED
$ 6,390,000 DDSB Municipal Securities Trusts, Series 1994T Weekly VRDNs $ 6,390,000
(Osseo, MN ISD 279)/ (First Bank N.A., Minneapolis LIQ)
11,000,000 DDSB Municipal Securities Trusts, Series 1994V Weekly VRDNs 11,000,000
(St. Louis Park Healthsystem, MN)/(Norwest Bank Minnesota,
Minneapolis LIQ)
1,865,000 Dakota County, MN Housing & Redevelopment Authority, 1,865,000
Multifamily Rental Housing Revenue Bonds (Series 1994-B)
Weekly VRDNs (Westwood Ridge Senior Residence Project)/
(First Bank N.A., Minneapolis LOC)
7,000,000 Eagan, MN, Multifamily Housing (Series 1992A) Weekly VRDNs 7,000,000
(Cinnamon Ridge)/ (Mellon Bank N.A., Pittsburgh LOC)
7,200,000 Hennepin Co. MN, (Series 1995C) Weekly VRDNs (Hennepin Co. 7,200,000
MN GTD)
4,250,000 MN Municipal Securities Trust, Series 1996F, Floating Rate 4,250,000
Certificates Weekly VRDNs (Lakeville, MN ISD 194)/(Norwest
Bank Minnesota, Minneapolis LIQ)
10,000,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) 10,000,000
Weekly VRDNs (Walker Methodist Health Center, Inc.
Project)/(First Bank N.A., Minneapolis LOC)
7,900,000 Minneapolis, MN, 4.016% TOBs (Minneapolis Institute of 7,900,000
Arts), Optional Tender 10/1/1997
5,000,000 Minneapolis, MN, Variable Rate Housing Revenue Bonds Weekly 5,000,000
VRDNs (One Ten Grant Project)/(First Bank N.A., Minneapolis
LOC)
9,875,000 Minneapolis, MN, Various Purpose Bonds (Series 1996) Weekly 9,875,000
VRDNs (Bayerische Vereinsbank AG, Munich LIQ)
2,842,000 Minnesota State Higher Education Coordinating Board, 2,842,000
Supplemental Student Loan Program Refunding Revenue Bonds
(Series 1994A) Weekly VRDNs (Norwest Bank Minnesota,
Minneapolis LIQ)
4,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs 4,000,000
(Mayo Foundation)
13,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs 13,000,000
(Mayo Foundation)
10,900,000 Rosemount, MN, PCR (Series 1984) Weekly VRDNs (Koch 10,900,000
Refining Co.)
11,500,000 Southern Minnesota Municipal Power Agency, 3.70% CP, 11,500,000
Mandatory Tender 9/9/1997
5,200,000 St. Paul, MN Port Authority, (Series 1991) Weekly VRDNs 5,200,000
(West Gate Office)/(First Bank N.A., Minneapolis LOC)
10,000,000 VRDC/IVRC Trust, Tax-Exempt Variable Rate Demand 10,000,000
Certificates (Series 1997A) Weekly VRDNs (Regents of
University of Minnesota)/(Citibank N.A., New York LIQ)
TOTAL 141,322,000
MISSISSIPPI--0.3%
1,590,000 Hinds County, MS, (Series 1991) Weekly VRDNs (North State 1,590,000
St. Project)/(Amsouth Bank N.A., Birmingham LOC)
4,000,000 Perry County, MS, PC Revenue Bonds (Series 1989) Weekly 4,000,000
VRDNs (Leaf River Forest Project)/ (Morgan Guaranty Trust
Co., New York LOC)
TOTAL 5,590,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MISSOURI--0.8%
$ 6,000,000 Missouri State Environmental Improvement & Energy $ 6,000,000
Authority, 3.65% CP (Kansas City Power and Light Co.),
Mandatory Tender 11/5/1997
1,000,000 Missouri State HEFA, (Series 1995B) Weekly VRDNs (Sisters 1,000,000
of Mercy Health System, St. Louis, Inc.)/(ABN AMRO Bank
N.V., Amsterdam, Credit Suisse, Zurich and Rabobank
Nederland, Utrecht LIQs)
1,695,000 Missouri State HEFA, (Series 1996), 4.50% TRANs 1,696,020
(Pattonville, MO School District), 9/8/1997
1,000,000 Missouri State HEFA, (Series 1996D), 4.50% TRANs (Rockwood 1,000,602
R-VI School District), 9/8/1997
1,700,000 Missouri State HEFA, Health Facilities Revenue Bonds 1,700,000
(Series 1989 B) Weekly VRDNs (Sisters of Mercy Health
Corporation (Michigan & Iowa))/(ABN AMRO Bank N.V.,
Amsterdam LIQ)
1,000,000 Missouri State HEFA, Series 1995B Weekly VRDNs (SSM Health 1,000,000
Care)/(MBIA INS)/ (Rabobank Nederland, Utrecht LIQ)
4,200,000 Poplar Bluff, MO IDA, (Series 1987) Weekly VRDNs (Gates 4,200,000
Rubber Co.)/(NBD Bank, Michigan LOC)
TOTAL 16,596,622
NEBRASKA--0.2%
3,610,000 Lancaster County, NE Leasing Corp., Refunding Bonds PT-103 3,610,000
(Series 1988) Weekly VRDNs (Bayerische Hypotheken-Und
Wechsel-Bank AG LIQ)
NEVADA--0.8%
15,900,000 Nevada Housing Division, Multi-Unit Housing Revenue 15,900,000
Refunding Bonds (1991 Series A) Weekly VRDNs (Park Vista
Apartments Project)/(Sumitomo Bank Ltd., Osaka LOC)
NEW JERSEY--0.5%
5,000,000 Galloway Township, NJ, (Series 1997), 4.125% BANs, 5,011,027
3/12/1998
5,000,000 West Windsor-Plainsboro, NJ Regional School District, 4.00% 5,007,453
BANs, 2/10/1998
TOTAL 10,018,480
NEW YORK--2.1%
6,100,000 Metropolitan Transportation Authority, New York Weekly 6,100,000
VRDNs (Bank of Tokyo-Mitsubishi Ltd., Industrial Bank of
Japan Ltd., Tokyo, J.P. Morgan Delaware, Wilmington, Morgan
Guaranty Trust Co., New York, National Westminster Bank,
PLC, London and Sumitomo Bank Ltd., Osaka LOCs)
1,430,000 Metropolitan Transportation Authority, New York, Trust 1,430,000
Receipts (Series 1997 FR/RI-9) Weekly VRDNs (FGIC
INS)/(Bank of New York, New York LIQ)
5,900,000 New York City, NY, (Series 1995 F-5) Weekly VRDNs 5,900,000
(Landesbank Hessen-Thueringen, Frankfurt LOC)
8,000,000 New York City, NY, Variable Rate Series (F-7) Weekly VRDNs 8,000,000
(Union Bank of Switzerland, Zurich LOC)
1,000,000 Royalton-Hartland, NY CSD, 4.50% BANs, 8/15/1997 1,000,184
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NEW YORK--CONTINUED
$ 5,000,000 Ulster County, NY, Custodial Receipts (2nd Series 1997-A), $ 5,008,742
4.00% TANs (State Street Bank and Trust Co. LOC), 3/18/1998
7,000,000 VRDC/IVRC Trust, (Series 1993B) Weekly VRDNs (Metropolitan 7,000,000
Transportation Authority, New York)/(AMBAC INS)/(Hongkong &
Shanghai Banking Corp. LIQ)
8,500,000 VRDC/IVRC Trust, (Series 1993G) Weekly VRDNs (St. Lukes 8,500,000
Roosevelt Hospital Center)/ (FHA INS)/(Hongkong & Shanghai
Banking Corp. LIQ)
TOTAL 42,938,926
NORTH CAROLINA--1.2%
15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs 15,000,000
(Weyerhaeuser Co.)
50,000 NCNB Pooled Tax-Exempt Trust, (Series 1990A) Weekly VRDNs 50,000
(NCNB Tax Exempt Trust 1990a)/(Nationsbank, N.A., Charlotte
LOC)
2,700,000 North Carolina Medical Care Commission Hospital, Revenue 2,700,000
Bonds (Series 1992B) Weekly VRDNs (North Carolina Baptist)
4,250,000 North Carolina Medical Care Commission Hospital, Revenue 4,250,000
Bonds (Series 1993) Weekly VRDNs (Moses H. Cone Memorial)
3,000,000 Winston-Salem, NC, GO Bonds (Series 1990) Weekly VRDNs 3,000,000
(Credit Suisse, Zurich LIQ)
TOTAL 25,000,000
OHIO--3.7%
1,875,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs 1,875,000
(Visiting Nurses)/(National City Bank, Cleveland, OH LOC)
9,000,000 Clermont County, OH, Adjustable Rate Hospital Facilities 9,000,000
Revenue Bonds (Series 1996) Weekly VRDNs (Mercy Health
Systems)/(Credit Suisse, Zurich LIQ)
2,450,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking 2,450,000
Co.)/(KeyBank, N.A. LOC)
2,895,000 Franklin County, OH Hospital Facility Authority, (Series 2,895,000
1992) Weekly VRDNs (Wesley Glenn, Inc.)/(Fifth Third Bank,
Cincinnati LOC)
5,630,000 Greene County, OH, Various Purpose Certificates of 5,636,862
Indebtedness, 4.00% BANs, 12/11/1997
5,600,000 Hamilton County, OH Health System Weekly VRDNs (West Park 5,600,000
Community)/ (Fifth Third Bank, Cincinnati LOC)
17,700,000 Hamilton County, OH Hospital Facilities Authority, 17,700,000
Adjustable Rate Hospital Facilities Revenue Bonds (Series
1997A) Weekly VRDNs (Health Alliance of Greater
Cincinnati)/(MBIA INS)/ (Credit Suisse, Zurich LIQ)
240,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs 240,000
(Sunshine Children's Home)/ (National City Bank, Cleveland,
OH LOC)
6,745,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995) 6,745,000
Weekly VRDNs (Copeland Oaks Project)/(Bank One, Ohio, N.A.
LOC)
835,000 Marion County, OH Hospital Authority, (Series 1991) Weekly 835,000
VRDNs (Marion County, OH Pooled Hospital Program)/(Bank
One, Ohio, N.A. LOC)
700,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex 700,000
Venture)/(KeyBank, N.A. LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 2,020,000 Montgomery County, OH, Adjustable Rate Economic Development $ 2,020,000
Revenue Refunding Bonds (Series 1997) Weekly VRDNs (Cross
Country Inns, Inc.)/(Bank One, Ohio, N.A. LOC)
1,630,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited 1,630,000
Partnership)/(Huntington National Bank, Columbus, OH LOC)
2,000,000 Ohio State Air Quality Development Authority, (Series 2,000,000
1988A) Weekly VRDNs (PPG Industries, Inc.)
2,500,000 Ohio State Water Development Authority, Multimodal Water 2,500,000
Development (Series 1993) Weekly VRDNs (Timken
Co.)/(Wachovia Bank of Georgia N.A., Atlanta LOC)
7,300,000 Rickenbacker, OH Port Authority, (Series 1992) Weekly VRDNs 7,300,000
(Rickenbacker Holdings, Inc.)/ (Bank One, Ohio, N.A. LOC)
3,200,000 Toledo, OH, Adjustable Rate City Services Special 3,200,000
Assessment Notes (Services 1997) Weekly VRDNs (Canadian
Imperial Bank of Commerce, Toronto LOC)
1,000,000 Twinsburg, OH IDA Weekly VRDNs (Carl J Massara 1,000,000
Project)/(KeyBank, N.A. LOC)
1,990,000 Wayne County, OH, Health Care Facility Revenue Bonds 1,990,000
(Series 1995) Weekly VRDNs (D & M Realty Project)/(Bank
One, Ohio, N.A. LOC)
TOTAL 75,316,862
OKLAHOMA--2.3%
24,500,000 Oklahoma State Industrial Authority, Flexible Rate Hospital 24,500,000
Revenue Bonds (Series 1990B) Weekly VRDNs (Baptist Medical
Center, OK)/(Credit Suisse, Zurich and Morgan Guaranty
Trust Co., New York LIQs)
23,275,000 Oklahoma State Industrial Authority, Health System Revenue 23,275,000
Bonds (Series 1995A) Weekly VRDNs (Baptist Medical Center,
OK)/(Credit Suisse, Zurich and Morgan Guaranty Trust Co.,
New York LIQs)
TOTAL 47,775,000
OREGON--0.4%
2,000,000 Oregon Health, Housing & Cultural Facilities Authority, 2,000,000
Revenue Bonds (1995 Series A) Weekly VRDNs (Guide Dogs for
the Blind, Inc. Project)/(Banque Nationale de Paris LOC)
4,950,000 Oregon Health, Housing & Cultural Facilities Authority, 4,950,000
Variable Rate Health Facilities Revenue Bonds (1995 Series
A) Weekly VRDNs (Evangelical Lutheran Good Samaritan
Society)/ (First Bank N.A., Minneapolis LOC)
1,000,000 Oregon State Housing and Community Services Department, 1,000,000
Single Family Mortgage Program (Series 1996F), 4.00% TOBs,
Mandatory Tender 8/1/1997
TOTAL 7,950,000
PENNSYLVANIA--6.7%
8,800,000 Allegheny County, PA IDA, PCR (Series 1992A), 3.65% TOBs 8,800,000
(Duquesne Light Power Co.)/ (Canadian Imperial Bank of
Commerce, Toronto LOC), Optional Tender 10/30/1997
6,100,000 Allegheny County, PA IDA, Variable Rate Demand Revenue 6,100,000
Bonds (Series 1997A) Daily VRDNs (Longwood at Oakmont,
Inc.)/(Dresdner Bank AG, Frankfurt LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 5,000,000 Allegheny County, PA Port Authority, (Series A of 1997, $ 5,000,000
3.85% GANs (PNC Bank, N.A. LOC), 6/30/1998
6,250,000 Beaver County, PA IDA, PCR Refunding Bonds (1992 Series-E), 6,250,000
3.70% CP (Toledo Edison Co.)/ (Toronto-Dominion Bank LOC),
Mandatory Tender 12/4/1997
6,300,000 Beaver County, PA IDA, PCR Refunding Bonds (Series 1990 B) 6,300,000
Weekly VRDNs (Duquesne Light Power Co.)/(Barclays Bank PLC,
London LOC)
7,230,000 Commonwealth of Pennsylvania, 5.25% Bonds (FGIC INS), 7,262,449
11/15/1997
7,690,000 Cumberland County, PA Municipal Authority, Variable Rate 7,702,436
Revenue Bonds (Series 1996 B), 4.25% TOBs (Dickinson
College)/(Mellon Bank N.A., Pittsburgh LOC), Optional
Tender 10/31/1997
9,360,000 (b)Delaware County, PA IDA, Refunding Revenue Bonds (Series 9,360,000
1993G), 3.625% TOBs (Delaware County Resource Recovery
(PA))/(General Electric Capital Corp. LOC), Optional Tender
12/1/1997
15,500,000 Erie County, PA Hospital Authority Weekly VRDNs (St. 15,500,000
Vincent Health System)/ (Mellon Bank N.A., Pittsburgh LOC)
7,500,000 Erie County, PA, 4.25% TANs (PNC Bank, N.A. LOC), 7,507,537
12/31/1997
9,300,000 New Castle, PA Area Hospital Authority, (Series 1996) 9,300,000
Weekly VRDNs (Jameson Memorial Hospital)/(FSA INS)/(PNC
Bank, N.A. LIQ)
19,500,000 Northeastern, PA Hospital & Education Authority, (Series 19,500,000
1996) Weekly VRDNs (Allhealth Pooled Financing
Program)/(Chase Manhattan Bank N.A., New York LOC)
1,945,000 Pennsylvania HFA, 3.85% TOBs (First National Bank of 1,945,000
Chicago LIQ), Optional Tender 10/1/1997
16,290,000 Pennsylvania HFA, PT-119A (Series 1997-56C) Weekly VRDNs 16,290,000
(Credit Suisse First Boston LIQ)
9,000,000 Philadelphia Redevelopment Authority, Multifamily Revenue 9,000,000
Bonds (Series 1985) Weekly VRDNs (Franklin Town
Towers)/(Marine Midland Bank N.A., Buffalo, NY LOC)
2,000,000 Washington County, PA Hospital Authority Weekly VRDNs 2,000,000
(Keystone Diversified Management Corp.)/(Mellon Bank N.A.,
Pittsburgh LOC)
TOTAL 137,817,422
SOUTH CAROLINA--1.3%
26,500,000 South Carolina State Public Service Authority, 3.80% CP 26,500,000
(Nationsbank, N.A., Charlotte LIQ), Mandatory Tender
9/12/1997
TENNESSEE--2.9%
8,000,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie 8,000,000
School)/(SunTrust Bank, Atlanta LOC)
19,700,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken 19,700,000
Hospital)/(Sumitomo Bank Ltd., Osaka LOC)
3,565,000 Maury County, TN HEFA, (Series 1996E) Weekly VRDNs 3,565,000
(Southern Healthcare Systems, Inc.)/ (Bank One, Texas N.A.
LOC)
6,475,000 Memphis, TN Center City Revenue Finance Corp., (Series 6,475,000
1996A) Weekly VRDNs (South Bluffs)/ (National Bank of
Commerce, Memphis, TN LOC)
2,700,000 Memphis, TN, General Improvement Refunding Bonds, (Series 2,700,000
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale
LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
TENNESSEE--CONTINUED
$ 1,000,000 Memphis, TN, General Improvement Refunding Bonds, (Series $ 1,000,000
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale
LOC)
1,800,000 Metropolitan Government Nashville & Davidson County, TN 1,800,000
HEFA, (Series 1996) Weekly VRDNs (Dede Wallace Center
Project)/(SunTrust Bank, Nashville LOC)
4,500,000 Metropolitan Government Nashville & Davidson County, TN 4,500,000
HEFA, Revenue Bonds (Series 1985A), 3.65% TOBs (Vanderbilt
University), Optional Tender 1/15/1998
5,900,000 Metropolitan Nashville Tennessee AA, Airport Improvement 5,900,000
Revenue Bonds Refunding (Series 1995) Weekly VRDNs (FGIC
INS)/(Credit Local de France LIQ)
2,500,000 Montgomery Co, TN Public Building Authority, Pooled 2,500,000
Financing Revenue Bonds (Series 1996) Weekly VRDNs
(Montgomery County Loan)/(Nationsbank, N.A., Charlotte LOC)
3,500,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil 3,500,000
Fibers, Inc. Project)/ (ABN AMRO Bank N.V., Amsterdam LOC)
1,000,000 Washington County, TN IDB, Revenue Refunding Bonds (Series 1,000,000
1996) Weekly VRDNs (Springbrook Properties
Project)/(SunTrust Bank, Nashville LOC)
TOTAL 60,640,000
TEXAS--9.6%
3,660,000 Dallas, TX, (Series C), 3.95% TOBs, Optional Tender 3,660,000
6/15/1998
400,000 Grapevine, TX, IDC, SimuFlite Training International 400,000
Project (Series 1993) Weekly VRDNs (Southern Air Transport,
Inc.)/(Bank of Montreal LOC)
2,500,000 Gulf Coast, TX Waste Disposal Authority, Pollution Control 2,500,000
Revenue Refunding Bonds (Series 1995) Daily VRDNs (Exxon
Corp.)
19,500,000 Harris County, TX HFDC, (Series 1994) Daily VRDNs 19,500,000
(Methodist Hospital, Harris County, TX)
56,800,000 Harris County, TX HFDC, (Series 1997A) Daily VRDNs (St. 56,800,000
Luke's Episcopal Hospital)/ (Morgan Guaranty Trust Co., New
York, Nationsbank of Texas, N.A. and Toronto-Dominion Bank
LIQs)
1,720,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, 1,720,000
Inc.)/(Nationsbank, N.A., Charlotte LOC)
40,000,000 Plano ISD, TX, Variable Rate Unlimited Tax School Building 40,006,655
Bonds, (Series 1997), 3.86% TOBs (Texas Permanent School
Fund Guarantee Program GTD)/(Union Bank of Switzerland,
Zurich LIQ), Mandatory Tender 2/5/1998
8,645,000 TX Pooled Tax Exempt Trust, Certificates of Participation 8,645,000
(Series 1996) Weekly VRDNs (Bank One, Texas N.A. LOC)
13,800,000 Texas State Public Finance Authority, (Series 1993A), 3.70% 13,800,000
CP (Texas State), Mandatory Tender 8/11/1997
50,250,000 Texas State, 4.75% TRANs, 8/29/1997 50,280,468
TOTAL 197,312,123
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
UTAH--1.0%
$ 10,200,000 Intermountain Power Agency, UT, Variable Rate Power Supply $ 10,200,000
Bonds (1985 Series F), 3.50% TOBs (Swiss Bank Corp. New
York LOC), Optional Tender 9/15/1997
10,000,000 Utah State, (Series 1997A), 3.80% CP (Toronto-Dominion Bank 10,000,000
LIQ), Mandatory Tender 10/16/1997
TOTAL 20,200,000
VERMONT--0.0%
1,000,000 Vermont Educational and Health Buildings Financing Agency, 1,000,000
(Series 1995A) Weekly VRDNs (Key Bank of New York LOC)
VIRGINIA--0.8%
6,600,000 Roanoke, VA IDA, Series B Weekly VRDNs (Carillion Health 6,600,000
System)/ (Morgan Guaranty Trust Co., New York LIQ)
9,600,000 York County, VA IDA, (Series 1985), 3.95% CP (Virginia 9,600,000
Electric Power Co.), Mandatory Tender 10/9/1997
TOTAL 16,200,000
WASHINGTON--0.1%
2,200,000 Port of Seattle, WA, IDR Bonds (Series 1985) Weekly VRDNs 2,200,000
(Douglas Management Company Project)/(Mellon Bank N.A.,
Pittsburgh LOC)
WEST VIRGINIA--0.9%
15,430,000 Cabell County Commission, WV, Life Care Facilities 15,430,000
Multi-Option Revenue Bonds (Series 1995) Weekly VRDNs
(Foster Foundation)/(Huntington National Bank, Columbus, OH
LOC)
3,000,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG 3,000,000
Industries, Inc.)
TOTAL 18,430,000
WISCONSIN--1.9%
3,250,000 Hancock, WI, Industrial Development Revenue Refunding Bonds 3,250,000
(Series 1996) Weekly VRDNs (Ore-Ida Foods, Inc.)/(Heinz
(H.J.) Co. GTD)
15,000,000 Wisconsin Health and Educational Facilities Authority 15,000,000
Weekly VRDNs (St. Luke's Medical Center)/(First National
Bank of Chicago LOC)
21,590,000 Wisconsin Health and Educational Facilities Authority, 21,590,000
MERLOTS-(Series 1997B) Weekly VRDNs (Sinai Samaritan
Medical Center, Inc.)/(Corestates Bank N.A., Philadelphia,
PA LIQ)
TOTAL 39,840,000
WYOMING--0.2%
2,400,000 Douglas, WY, IDR Bonds, 3.90% TOBs (Safeway, Inc.)/(Bankers 2,400,000
Trust Co., New York LOC), Mandatory Tender 12/1/1997
1,125,000 Natrona County, WY, Hospital Revenue, 5.525% TOBs (Grainger 1,125,000
(W.W.), Inc.), Optional Tender 12/1/1997
TOTAL 3,525,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NO STATE--1.2%
$ 19,081,010 Equity Trust II, (1996 Series) Weekly VRDNs (Republic $ 19,081,010
National Bank of New York LOC)
5,295,930 LaSalle National Bank Leasetops Trust, Series 1995A 5,295,930
Leasetops Certificates Weekly VRDNs (Lasalle National Bank,
Chicago LIQ)/(Lasalle National Bank, Chicago LOC)
TOTAL 24,376,940
TOTAL INVESTMENTS (AT AMORTIZED $ 2,053,927,275
COST)(C)
</TABLE>
(a) The Fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An
NRSRO's two highest rating categories are determined without regard for
sub-categories and gradations. For example, securities rated SP-1+, SP-1 or
SP-2 by Standard & Poor's Corporation, MIG-1, or MIG-2 by Moody's Investors
Service, Inc., F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all
considered rated in one of the two highest short-term rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and
unrated securities of comparable quality) are identified as Second Tier
securities. The Fund follows applicable regulations in determining whether a
security is rated and whether a security rated by multiple NRSROs in
different rating categories should be identified as a First or Second Tier
security.
At July 31 1997, the portfolio securities were rated as follows:
Tier Rating Percent Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.00% 0.00%
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1997, these securities amounted
to $9,360,000 which represents 0.5% of net assets.
(c) Cost for federal tax purposes $2,054,030,605.
Note: The categories of investments are shown as a percentage of net assets
($2,062,163,006) at July 31, 1997.
The following acronyms are used throughout this portfolio:
ACES --Adjustable Convertible Extendable Securities
AMBAC --American Municipal Bond Assurance Corporation
BANs --Bond Anticipation Notes
CDA --Community Development Administration
CP --Commercial Paper
CSD --Central School District
EDC --Economic Development Commission
EDR --Economic Development Revenue
FGIC --Financial Guaranty Insurance Company
FHA --Federal Housing Administration
FSA --Financial Security Assurance
GANs --Grant Anticipation Notes
GO --General Obligation
GTD --Guaranty
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
IFA --Industrial Finance Authority
INS --Insured
INV --Investment Agreement
ISD --Independent School District
LIQ --Liquidity Agreement
LOCs --Letter(s) of Credit
MBIA --Municipal Bond Investors Assurance
PCR --Pollution Control Revenue
PC --Participation Certificate
PFA --Public Facility Authority
PLC --Public Limited Company
SA --Support Agreement
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
TRANs --Tax and Revenue Anticipation Notes
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TAX-FREE OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value (tax $ 2,053,927,275
cost $2,054,030,605)
Cash 159,042
Income receivable 14,083,995
Receivable for shares sold 125,718
Total assets 2,068,296,030
LIABILITIES:
Payable for shares redeemed $ 411,552
Income distribution payable 5,482,724
Accrued expenses 238,748
Total liabilities 6,133,024
Net Assets for 2,062,261,061 shares outstanding $ 2,062,163,006
NET ASSETS CONSIST OF:
Paid in capital $ 2,062,261,061
Accumulated net realized loss on investments (122,570)
Undistributed net investment income 24,515
Total Net Assets $ 2,062,163,006
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$1,474,180,243 / 1,474,256,160 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$587,982,763 / 588,004,901 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
TAX-FREE OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 77,902,801
EXPENSES:
Investment advisory fee $ 4,284,365
Administrative personnel and services fee 1,617,952
Custodian fees 134,730
Transfer and dividend disbursing agent fees and 73,813
expenses
Directors'/Trustees' fees 18,794
Auditing fees 14,499
Legal fees 15,608
Portfolio accounting fees 205,080
Shareholder services fee--Institutional Shares 4,151,037
Shareholder services fee--Institutional Service 1,204,420
Shares
Share registration costs 57,927
Printing and postage 24,146
Insurance premiums 18,415
Taxes 3,863
Miscellaneous 26,305
Total expenses 11,850,954
Waivers--
Waiver of investment advisory fee $ (2,116,877)
Waiver of shareholder services fee--Institutional (4,151,037)
Shares
Total waivers (6,267,914)
Net expenses 5,583,040
Net investment income 72,319,761
Net realized loss on investments (9,927)
Change in net assets resulting from operations $ 72,309,834
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 72,319,761 $ 62,658,478
Net realized gain (loss) on investments ($107,581 net (9,927) (66,893)
loss and $36,269 net loss, respectively, as computed for
federal income tax purposes)
Change in net assets resulting from operations 72,309,834 62,591,585
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (56,940,629) (51,152,839)
Institutional Service Shares (15,379,132) (11,505,639)
Change in net assets resulting from distributions to (72,319,761) (62,658,478)
shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 12,978,635,504 12,426,624,832
Net asset value of shares issued to shareholders in 9,465,909 4,751,851
payment of distributions declared
Cost of shares redeemed (12,847,315,602) (12,057,396,164)
Change in net assets resulting from share transactions 140,785,811 373,980,519
Change in net assets 140,775,884 373,913,626
NET ASSETS:
Beginning of period 1,921,387,122 1,547,473,496
End of period (including undistributed net investment $ 2,062,163,006 $ 1,921,387,122
income of $24,515 and $0, respectively)
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TAX-FREE OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios. The
financial statements included herein are only those of Tax-Free Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The investment objective of the Fund is to provide dividend income exempt
from federal regular income tax consistent with stability of principal.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio securities 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.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing book/tax
treatments of partnerships. The following reclassifications have been made
to the financial statements.
INCREASE (DECREASE)
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED
INCOME LOSS
$24,515 $(24,515)
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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, 1997, the Fund, for federal tax purposes, had a capital loss
carryforward of $163,650, 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:
EXPIRATION YEAR EXPIRATION AMOUNT
2001 $580
2002 19,220
2004 36,269
2005 107,581
Additionally, net capital losses of $16,488 attributable to security
transactions incurred after October 31, 1996, are treated as arising on the
first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The
Fund records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
restoration 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 upon exercise or a demand
feature. Such restricted securities may be determined to be liquid under
criteria established by the Board of Directors. 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 the restricted security held at July 31, 1997, is
as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Delaware County, PA (Series 1993G) 12/2/1996 $9,360,000
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in aggregated
$2,062,261,061.
Transactions in shares were as follows:
<TABLE>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 11,143,842,232 10,558,231,210
Shares issued to shareholders in payment of distributions 7,389,962 3,176,723
declared
Shares redeemed (11,192,024,289) (10,341,838,613)
Net change resulting from Institutional Share (40,792,095) 219,569,320
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 1,834,793,272 1,868,393,620
Shares issued to shareholders in payment of distributions 2,075,947 1,575,129
declared
Shares redeemed (1,655,291,313) (1,715,557,550)
Net change resulting from Institutional Service Share 181,577,906 154,411,199
transactions
Net change resulting from share transactions 140,785,811 373,980,519
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The
fee paid to FServ is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average
daily net assets of the Fund for the period. The fee paid to FSS is used to
finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS
can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Fund. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended July 31, 1997, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers.
These purchase and sale transactions were made at current market value
pursuant to Rule 17a-7 under the Act amounting to $3,767,305,926 and
$3,859,725,000, respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of MONEY MARKET OBLIGATIONS TRUST
(Tax-Free Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Tax-Free Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule
of portfolio investments, as of July 31, 1997, 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, 1997, 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
Tax-Free Obligations Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended, and its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
[Graphic]
Federated Investors
Tax-Free Obligations Fund
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
TAX-FREE OBLIGATIONS FUND
INSTITUTIONAL SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N401
9110207A-IS (9/97)
[Graphic]
Tax-Free Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
The Institutional Service Shares of Tax-Free Obligations Fund (the "Fund")
offered by this prospectus represent interests in a portfolio of Money
Market Obligations Trust (the "Trust"), an open-end management investment
company (a mutual fund). The Fund invests in short-term 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, 1997, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-341-7400. To obtain other information, or make inquiries about
the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund is
maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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 5
Investment Risks 5
Investment Limitations 5
Fund Information 5
Management of the Fund 5
Distribution of Institutional Service Shares 6
Administration of the Fund 7
Net Asset Value 7
How to Purchase Shares 7
Purchasing Shares by Wire 7
Purchasing Shares by Check 7
Invest-by-Phone 7
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Accounts and Share Information 8
Dividends 8
Capital Gains 8
Confirmations and Account Statements 8
Accounts with Low Balances 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 9
Other Classes of Shares 9
Performance Information 10
Financial Highlights--Institutional Shares 11
Financial Statements 12
Report of Independent Public Accountants 36
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1) 0.10%
12b-1 Fee None
Total Other Expenses 0.35%
Shareholder Services Fee 0.25%
Total Operating Expenses (after waiver)(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 0.55% absent the voluntary
waivers of a portion of the management fee.
The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of the Institutional Service
Shares of the Fund will bear, either directly or indirectly. For more
complete descriptions of the various costs and expenses, see "Fund
Information" and "How to Purchase Shares." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE
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.
<S> <C>
1 Year $5
3 Years $14
5 Years $25
10 Years $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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
36.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.002
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.03) (0.03) (0.002)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 3.24% 3.29% 3.39% 0.18%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.39%*
Net investment income 3.19% 3.22% 3.48% 3.04%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.14% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $587,983 $406,408 $252,016 $25,148
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 5, 1994 (date of initial
public investment) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust permits
the Trust to offer separate series of shares representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. With respect to this Fund, as of the date of
this prospectus, the Board of Trustees (the "Trustees") has established two
classes of shares known as Institutional Service Shares and Institutional
Shares. This prospectus relates only to Institutional Service Shares of the
Fund, which are designed primarily for financial institutions, financial
intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed portfolio investing
primarily in short-term municipal securities. The Fund may not be a suitable
investment for retirement plans because it invests in municipal securities.
A minimum initial investment of $1,000,000 over a one-year period is
required.
The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide dividend income exempt
from federal regular income tax consistent with stability of principal. This
investment objective cannot be changed without shareholder approval. While
there is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940 which
regulates money market mutual funds and by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio of
municipal securities maturing in 13 months or less. The average maturity of
the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. As a matter of investment policy, which cannot be
changed without shareholder approval, at least 80% of the Fund's annual
interest income will be exempt from federal regular income tax. (Federal
regular income tax does not include the federal individual alternative
minimum tax or the federal alternative minimum tax for corporations.) Unless
indicated otherwise, the investment policies may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in debt obligations issued by or on behalf of
states, territories, and possessions of the United States, including the
District of Columbia, and any political subdivision or financing authority
of any of these, the income from which is, in the opinion of qualified legal
counsel, exempt from federal regular income tax ("Municipal Securities").
Examples of Municipal Securities include, but are not limited to:
* tax and revenue anticipation notes issued to finance working capital
needs in anticipation of receiving taxes or other revenues;
* bond anticipation notes that are intended to be refinanced through a
later issuance of longer-term bonds;
* municipal commercial paper and other short-term notes;
* variable rate demand notes;
* municipal bonds (including bonds having serial maturities and
pre-refunded bonds) and leases; and
* participation, trust, and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND NOTES
Variable rate demand notes are long-term debt instruments that have variable
or floating interest rates and provide the Fund with the right to tender the
security for repurchase at its stated principal amount plus accrued
interest. Such securities typically bear interest at a rate that is intended
to cause the securities to trade at par. The interest rate may float or be
adjusted at regular intervals (ranging from daily to annually), and is
normally based on a published interest rate or interest rate index. Most
variable rate demand notes allow the Fund to demand the repurchase of the
security on not more than seven days prior notice. Other notes only permit
the Fund to tender the security at the time of each interest rate adjustment
or at other fixed intervals. See "Demand Features." The Fund treats variable
rate demand notes as maturing on the later of the date of the next interest
rate adjustment or the date on which the Fund may next tender the security
for repurchase.
PARTICIPATION INTERESTS
The Fund may purchase interests in Municipal Securities from financial
institutions such as commercial and investment banks, savings associations,
and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests or
any other form of indirect ownership that allows the Fund to treat the
income from the investment as exempt from federal income tax. The Fund
invests in these participation interests in order to obtain credit
enhancement or demand features that would not be available through direct
ownership of the underlying Municipal Securities.
MUNICIPAL LEASES
Municipal leases are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities. They may
take the form of a lease, an installment purchase contract, a conditional
sales contract, or a participation interest in any of the above. Lease
obligations may be subject to periodic appropriation. Municipal leases are
subject to certain specific risks in the event of default or failure of
appropriation.
CREDIT ENHANCEMENT
Certain of the Fund's acceptable investments may be credit-enhanced by a
guaranty, letter of credit, or insurance. Any bankruptcy, receivership,
default, or change in the credit quality of the party providing the credit
enhancement will adversely affect the quality and marketability of the
underlying security and could cause losses to the Fund and affect its share
price. The Fund may have more than 25% of its total assets invested in
securities credit-enhanced by banks.
DEMAND FEATURES
The Fund may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or default
by the issuer of the demand feature, or a default on the underlying security
or other event that terminates the demand feature before its exercise, will
adversely affect the liquidity of the underlying security. Demand features
that are exercisable even after a payment default on the underlying security
may be treated as a form of credit enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure
to complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.
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, and, as a matter of
fundamental investment policy which cannot be changed without shareholder
approval, will limit such investments to 10% of its net assets. This
restriction is not applicable to restricted securities determined to be
liquid under criteria established by the Trustees. Restricted securities are
any securities in which the Fund may invest pursuant to its investment
objective and policies but which are subject to restrictions on resale under
federal securities law. As a matter of non-fundamental investment policy,
the Fund will limit investments in illiquid securities including restricted
securities not determined to be liquid, and non-negotiable time deposits, to
10% of its net assets.
TEMPORARY INVESTMENTS
From time to time, when the investment adviser determines that market
conditions call for a temporary defensive posture, the Fund may invest in
tax-exempt or taxable securities, all of comparable quality to other
securities in which the Fund invests, such as: obligations issued by or on
behalf of municipal or corporate issuers; obligations issued or guaranteed
by the U.S. government, its agencies, or instrumentalities; instruments
issued by a U.S. branch of a domestic bank or other deposit institutions
having capital, surplus, and undivided profits in excess of $100,000,000 at
the time of investment; and repurchase agreements (arrangements in which the
organization selling the Fund a temporary investment agrees at the time of
sale to repurchase it at a mutually agreed upon time and price).
Although the Fund is permitted to make taxable, temporary investments, there
is no current intention to do so. However, the interest from certain
Municipal Securities is subject to the federal alternative minimum tax.
MUNICIPAL SECURITIES
Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued
to repay outstanding obligations, to raise funds for general operating
expenses, and to make loans to other public institutions and facilities.
Municipal Securities include industrial development bonds issued by or on
behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations.
The availability of this financing encourages these corporations to locate
within the sponsoring communities and thereby increases local employment.
The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. Interest on and principal of revenue
bonds, however, are payable only from the revenue generated by the facility
financed by the bond or other specified sources of revenue. Revenue bonds do
not represent a pledge of credit or create any debt of or charge against the
general revenues of a municipality or public authority. Industrial
development bonds are typically classified as revenue bonds.
INVESTMENT RISKS
Yields on Municipal Securities depend on a variety of factors, including:
the general conditions of the short-term municipal note market and of the
municipal bond market; the size of the particular offering; the maturity of
the obligations; and the rating of the issue. The ability of the Fund to
achieve its investment objective also depends on the continuing ability of
the issuers of Municipal Securities and participation interests, or the
credit enhancers of either, to meet their obligations for the payment of
interest and principal when due. In addition, from time to time, the supply
of Municipal Securities acceptable for purchase by the Fund could become
limited.
The Fund may invest in Municipal Securities which are repayable out of
revenue streams generated from economically related projects or facilities
and/or whose issuers are located in the same state. Sizable investments in
these Municipal Securities could involve an increased risk to the Fund
should any of these related projects or facilities experience financial
difficulties.
Obligations of issuers of Municipal Securities are subject to the provisions
of bankruptcy, insolvency, and other laws affecting the rights and remedies
of creditors. In addition, the obligations of such issuers may become
subject to laws enacted in the future by Congress, state legislators, or
referenda extending the time for payment of principal and/or interest, or
imposing other constraints upon enforcement of such obligations or upon the
ability of states or municipalities to levy taxes. There is also the
possibility that, as a result of litigation or other conditions, the power
or ability of any issuer to pay, when due, the principal of and interest on
its municipal securities may be materially affected. The Fund's
concentration in Municipal Securities may entail a greater level of risk
than other types of money market funds.
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 up to 15% of the value of those assets to secure such
borrowings. These investment limitations cannot be changed without
shareholder approval.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are responsible for
managing the Fund's business affairs and for exercising all the Trust's
powers except those reserved for the shareholders. An Executive Committee of
the Board of Trustees handles the Board's responsibilities between meetings
of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management, the
Fund's investment adviser, subject to direction by the Trustees. The adviser
continually conducts investment research and supervision for the Fund and is
responsible for the purchase and sale of portfolio instruments.
Advisory Fees
The adviser receives an annual investment advisory fee equal to 0.20% of the
Fund's average daily net assets. The adviser may voluntarily choose to waive
a portion of its fee or reimburse other expenses of the Fund, but reserves
the right to terminate such waiver or reimbursement at any time at its sole
discretion.
Adviser's Background
Federated Management, a Delaware business trust, organized on April 11,
1989, is a registered investment adviser under the Investment Advisers Act
of 1940. It is a subsidiary of Federated Investors. All of the Class A
(voting) shares of Federated Investors are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Trustee of Federated Investors, Mr.
Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Trustee of Federated Investors.
Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private
accounts. Certain other subsidiaries also provide administrative services to
a number of investment companies. With over $110 billion invested across
over 300 funds under management and/or administration by its subsidiaries,
as of December 31, 1996, Federated Investors is one of the largest mutual
fund investment managers in the United States. With more than 2,000
employees, Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through 4,500
financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics governing
the conduct of all employees who manage the Fund and its portfolio
securities. These codes recognize that such persons owe a fiduciary duty to
the Fund's shareholders and must place the interests of shareholders ahead
of the employees' own interests. Among other things, the codes: require
preclearance and periodic reporting of personal securities transactions;
prohibit personal transactions in securities being purchased or sold, or
being considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits on
securities held for less than sixty days. Violations of the codes are
subject to review by the Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, under which the
Fund may make payments up to 0.25% of the average daily net asset value of
its shares, computed at an annual rate, to obtain certain personal services
for shareholders and to maintain shareholder accounts. From time to time and
for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or
will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Fund and
Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services Agreement,
Federated Securities Corp. and Federated Shareholder Services, from their
own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount
of shares the financial institution sells or may sell, and/or upon the type
and nature of sales or marketing support furnished by the financial
institution. Any payments made by the distributor may be reimbursed by the
Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund at an annual rate which
relates to the average aggregate daily net assets of all funds advised by
affiliates of Federated Investors specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities attributable
to Institutional Service Shares from the value of Fund assets attributable
to Institutional Service Shares, and dividing the remainder by the number of
Institutional Service 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, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York Stock
Exchange is open for business. Shares may be purchased either by wire or by
check. The Fund reserves the right to reject any purchase request.
To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone. The
minimum initial investment is $1,000,000. However, an account may be opened
with a smaller amount as long as the minimum is reached within one year of
opening the account. Financial institutions may impose different minimum
investment requirements on their customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund before
3:00 p.m. (Eastern time) to place an order. The order is considered received
immediately. Payment by federal funds must be received before 3:00 p.m.
(Eastern time) that day. Federal funds should be wired as follows: Federated
Shareholder Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention: EDGEWIRE; For Credit to: Tax-Free Obligations Fund --
Institutional Service Shares; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot be
purchased by wire on holidays when wire transfers are restricted. Questions
on wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The check should be made
payable to: Tax-Free Obligations Fund -- Institutional Service Shares.
Orders by mail are considered received when payment by check is converted
into federal funds (normally the business day after the check is received),
and shares begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone for
investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the Fund.
Approximately two weeks after sending the form to Federated Shareholder
Services Company, the shareholder may call Federated Shareholder Services
Company to purchase shares. Federated Shareholder Services Company will send
a request for monies to the shareholder's commercial bank, savings bank, or
credit union ("bank") via the Automated Clearing House. The shareholder's
bank, which must be an Automated Clearing House member, will then forward
the monies to Federated Shareholder Services Company. The purchase is
normally entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after Federated
Shareholder Services Company receives the redemption request. Redemptions
will be made on days on which the Fund computes its net asset value.
Redemption requests must be received in proper form and can be made as
described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the Fund
has a properly completed authorization form. These forms can be obtained
from Federated Securities Corp. Proceeds from redemption requests received
before 12:00 noon (Eastern time) will be wired the same day to the
shareholder's account at a domestic commercial bank which is a member of the
Federal Reserve System, but will not include that day's dividend. Proceeds
from redemption requests received after that time include that day's
dividend but will be wired the following business day. Proceeds from
redemption requests on holidays when wire transfers are restricted will be
wired the following business day. Questions about telephone redemptions on
days when wire transfers are restricted should be directed to your
shareholder services representative at the telephone number listed on your
account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs, "Redeeming
Shares By Mail" should be considered. If at any time the Fund shall
determine it necessary to terminate or modify the telephone redemption
privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be sent
unendorsed with the written request by registered or certified mail to the
address noted above.
The written request should state: the Fund name and the class designation;
the account name as registered with the Fund; the account number; and the
number of shares to be redeemed or the dollar amount requested. All owners
of the account must sign the request exactly as the shares are registered.
Normally, a check for the proceeds is mailed within one business day, but in
no event more than seven days, after the receipt of a proper written
redemption request. Dividends are paid up to and including the day that a
redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have their signatures guaranteed by a
commercial or savings bank, trust company or savings association whose
deposits are insured by an organization which is administered by the Federal
Deposit Insurance Corporation; a member firm of a domestic stock exchange;
or any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934. The Fund does not accept signatures guaranteed by a
notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire
before 3:00 p.m. (Eastern time) begin earning dividends that day. Shares
purchased by check begin earning dividends the day after the check is
converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease
in dividends. The Fund will distribute in cash or additional shares any
realized net long-term capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends
paid. The Fund will not issue share certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase
additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder one
vote in Trustee elections and other matters submitted to shareholders for
vote. All shares of all classes of each portfolio in the Trust have equal
voting rights, except that in matters affecting only a particular portfolio
or class, only shareholders of that portfolio or class are entitled to vote.
The Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust's or the
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of the
Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such
companies. 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, within the limits of its investment
policies, all types of municipal bonds, including private activity bonds.
The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular
taxable income of the taxpayer increased by certain "tax preference" items
not included in regular taxable income and reduced by only a portion of the
deductions allowed in the calculation of the regular tax.
Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed as
ordinary income.
These tax consequences apply whether dividends are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Fund would be subject to such taxes if owned
directly by residents of those jurisdictions.
Because interest received by the Fund may not be exempt from all state and
local income taxes, shareholders may be required to pay state and local
taxes on dividends received from the Fund. Shareholders are urged to consult
their own tax advisers regarding the status of their accounts under state
and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Shares are sold at net
asset value primarily to entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries, and
institutional investors and are subject to a minimum initial investment of
$1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan but are subject to
shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class, investors
may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield,
tax-equivalent yield, and total return. The performance figures will be
calculated separately for each class of shares.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment. The tax-equivalent yield is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that
would have to be earned to equal the Fund's tax-exempt yield, assuming a
specific tax rate.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page
36.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income 0.03 0.03 0.04 0.02 0.03 0.04 0.05 0.04
LESS DISTRIBUTIONS
Distributions from
net investment income (0.03) (0.03) (0.04) (0.02) (0.03) (0.04) (0.05) (0.04)
NET ASSET VALUE, END
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 3.49% 3.55% 3.64% 2.45% 2.54% 3.73% 5.13% 3.70%
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%*
Net investment
income 3.43% 3.46% 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%*
Expense waiver/ 0.35% 0.36% 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%*
reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $1,474,180 $1,514,979 $1,295,458$789,755 $454,119 $308,855 $165,669$145,552
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 12, 1989 (date of
initial public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
TAX-FREE OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--99.6%
ALABAMA--6.1%
$ 3,830,000 Alabama HFA, 1995 Series E Weekly VRDNs (Royal Gardens $ 3,830,000
Apartments Project)/ (SouthTrust Bank of Alabama,
Birmingham LOC)
6,500,000 Anniston, AL, IDB, (Series 1989-A) Weekly VRDNs (Union 6,500,000
Foundry Co.)/ (Amsouth Bank N.A., Birmingham LOC)
3,200,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly VRDNs 3,200,000
(S.P. Hotel Company)/ (Amsouth Bank N.A., Birmingham LOC)
6,000,000 Birmingham, AL Medical Clinic Board Daily VRDNs (University 6,000,000
of Alabama Health System)/ (Morgan Guaranty Trust Co., New
York LOC)
3,095,000 Birmingham, AL Special Care Facilities Financing Authority, 3,095,000
Capital Improvement Revenue Bonds (Series 1995) Weekly
VRDNs (Methodist Home for the Aging (AL))/(SouthTrust Bank
of Alabama, Birmingham LOC)
4,600,000 Birmingham, AL, GO (Series 1992A) Weekly VRDNs (Regions 4,600,000
Bank, Alabama LOC)
12,000,000 Birmingham, AL, GO Refunding Bonds (Series 1997-A) Weekly 12,000,000
VRDNs (AMBAC INS)/ (Societe Generale, Paris LIQ)
2,000,000 Bon Air, AL IDB Weekly VRDNs (Avondale Mills, 2,000,000
Inc.)/(SunTrust Bank, Atlanta LOC)
3,500,000 Cherokee, AL IDB, IDR Refunding Bonds (Series 1993) Weekly 3,500,000
VRDNs (BOC Group, Inc.)/ (Wachovia Bank of Georgia N.A.,
Atlanta LOC)
8,710,000 Columbia, AL IDB, CDC Municipal Products, Inc. (Series 8,710,000
1997I) Weekly VRDNs (Alabama Power Co.)/(AMBAC INS)/(CDC
Municipal Products, Inc. LIQ)
3,300,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn (Homewood 3,300,000
AL))/ (SouthTrust Bank of Alabama, Birmingham LOC)
6,900,000 Huntsville, AL Health Care Authority/Health Care 6,900,000
Facilities, Health Care Facilities Revenue Bonds (Series
1994-B) Weekly VRDNs (MBIA INS)/(Amsouth Bank N.A.,
Birmingham LIQ)
2,156,000 Irondale, AL IDB, Revenue Bonds (Series 1989) Weekly VRDNs 2,156,000
(Collateral Mortgage, Ltd.)/ (SouthTrust Bank of Alabama,
Birmingham LOC)
6,000,000 Jefferson County, AL, GO Warrants (Series 1996) Weekly 6,000,000
VRDNs (Bayerische Landesbank Girozentrale LOC)
2,540,000 Madison, AL IDA, (Series A) Weekly VRDNs (Executive 2,540,000
Inn)/(Amsouth Bank N.A., Birmingham LOC)
2,770,000 Marshall County, AL, Special Obligation School Refunding 2,770,000
Warrant (Series 1994) Weekly VRDNs (Marshall County, AL
Board of Education)/(Regions Bank, Alabama LOC)
2,500,000 Mobile, AL IDA Weekly VRDNs (McRae's Industries, 2,500,000
Inc.)/(Nationsbank, N.A., Charlotte LOC)
3,500,000 Mobile, AL IDB, PCR (Series 1993A) Weekly VRDNs (Alabama 3,500,000
Power Co.)/ (Alabama Power Co. GTD)
8,450,000 Mobile, AL IDB, PCR (Series 1993B) Weekly VRDNs (Alabama 8,450,000
Power Co.)/ (Alabama Power Co. GTD)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ALABAMA--CONTINUED
$ 2,000,000 Montgomery, AL BMC Special Care Facilities Finance $ 2,000,000
Authority, (Series 94A) Weekly VRDNs (Baptist Medical
Center, AL)/(Amsouth Bank N.A., Birmingham LOC)
22,800,000 The Board of Trustees of the University of Alabama, (Series 22,800,000
B) Weekly VRDNs (Bank of America NT and SA, San Francisco
LIQ)
3,500,000 Tuscaloosa County, AL Board of Education, Capital Outlay 3,500,000
Variable Rate Warants, (Series 1997-B) Weekly VRDNs (First
Alabama Bank, Montgomery LOC)
1,335,000 Tuscaloosa County, AL Port Authority, (Series 1989A) Weekly 1,335,000
VRDNs (Capstone Hotel Ltd.)/ (SouthTrust Bank of Alabama,
Birmingham LOC)
1,030,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) 1,030,000
Weekly VRDNs (Harco, Inc.)/ (Amsouth Bank N.A., Birmingham
LOC)
2,900,000 Winfield, AL, Variable/Fixed Rate Industrial Revenue Bonds 2,900,000
(Series 1984) Weekly VRDNs (Union Underwear Company,
Inc.)/(Bank of Nova Scotia, Toronto LOC)
TOTAL 125,116,000
ARIZONA--2.0%
3,000,000 Apache County, AZ IDA, 1983 (Series A) Weekly VRDNs (Tucson 3,000,000
Electric Power Co.)/ (Barclays Bank PLC, London LOC)
11,000,000 Apache County, AZ Weekly VRDNs (Tucson Electric Power 11,000,000
Co.)/(Chase Manhattan Bank N.A., New York LOC)
4,000,000 Arizona Health Facilities Authority Weekly VRDNs 4,000,000
(University Physicians, Inc.)/ (Bank One, Arizona N.A. LOC)
6,800,000 Arizona Health Facilities Authority, Pooled Loan Program 6,800,000
Revenue Bonds (Series 1985B) Weekly VRDNs (FGIC INS)/(Chase
Manhattan Bank N.A., New York LIQ)
1,000,000 Arizona Insured Municipal Securities Trust, (Series 1996A) 1,000,000
Weekly VRDNs (Chandler Street and Highway)/(MBIA
INS)/(Norwest Bank Minnesota, Minneapolis LIQ)
1,500,000 Arizona Insured Municipal Securities Trust, (Series 1996C) 1,500,000
Weekly VRDNs (Maricopa County, AZ Unified School District
No. 93)/(FGIC INS)/ (Norwest Bank Minnesota, Minneapolis
LIQ)
1,250,000 Arizona Insured Municipal Securities Trust, (Series 1996E) 1,250,000
Weekly VRDNs (Scottsdale (Memorial Hospitals))/(AMBAC
INS)/(Norwest Bank Minnesota, Minneapolis LIQ)
5,000,000 Chandler, AZ IDA, (SMP II Limited Partnership) Weekly VRDNs 5,000,000
(Bank One, Arizona N.A. LOC)
8,500,000 Coconino County, AZ Pollution Control Corporation, PCR 8,500,000
Refunding Bonds (Series 1995E) Weekly VRDNs (Nevada Power
Co.)/(Societe Generale, Paris LOC)
2,000,000 Pima County, AZ IDA Weekly VRDNs (Tucson Electric Power 2,000,000
Co.)/ (Barclays Bank PLC, London LOC)
TOTAL 44,050,000
ARKANSAS--0.0%
1,000,000 Sheridan, AR IDA Weekly VRDNs (H.H. Robertson Co.)/(PNC 1,000,000
Bank, N.A. LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
CALIFORNIA--4.6%
$ 135,000 California Public Capital Improvements Financing Authority, $ 135,000
Trust Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA
INS)/(Bank of New York, New York LIQ)
5,000,000 California School Cash Reserve Program Authority, (Series 5,016,657
B), 4.50% TRANs (MBIA INS), 12/19/1997
35,000,000 California School Cash Reserve Program Authority, Pool 35,278,188
Bonds (Series 1997A), 4.75% TRANs (AMBAC INS)/(Trinity
Funding Company INV), 7/2/1998
30,000,000 Los Angeles County, CA, 4.50% TRANs, 6/30/1998 30,171,257
20,000,000 Riverside County, CA, 4.50% TRANs, 6/30/1998 20,096,424
5,000,000 Santa Clara County, CA, 4.50% TRANs, 8/1/1997 5,000,000
TOTAL 95,697,526
COLORADO--0.1%
2,825,000 Denver (City & County), CO, 4.10% TOBs (Blake Street 2,825,000
Compendium)/ (Norwest Bank Minnesota, Minneapolis LOC),
Optional Tender 12/15/1997
DISTRICT OF COLUMBIA--1.1%
2,070,000 District of Columbia Housing Finance Agency, Multifamily 2,070,000
Housing, 3.90% TOBs (Chastleton Project)/(Nationsbank,
N.A., Charlotte LOC), Optional Tender 7/1/1998
16,000,000 District of Columbia, (Series 1997A), 4.50% TRANs (National 16,013,440
Westminster Bank, PLC, London and Societe Generale, Paris
LOCs), 9/30/1997
3,575,000 District of Columbia, Revenue Bonds (Series 1997B) Weekly 3,575,000
VRDNs (Association of American Medical Colleges)/(AMBAC
INS)/(Chase Manhattan Bank N.A., New York LIQ)
TOTAL 21,658,440
FLORIDA--14.4%
3,400,000 Alachua County, FL Health Facilities Authority, Health 3,400,000
Facilities Revenue Bonds (Series 1996B) Weekly VRDNs
(Shands Teaching Hospital and Clinics, Inc.)/(MBIA
INS)/(SunTrust Bank, Central Florida LIQ)
6,500,000 Bradford County, FL Health Facilities Authority, Health 6,500,000
Facilities Revenue Bonds (Series 1996) Weekly VRDNs (Shands
Teaching Hospital and Clinics, Inc.)/(MBIA INS)/(SunTrust
Bank, Central Florida LIQ)
3,000,000 Citrus Park, FL Community Development District, Capital 3,000,000
Improvement Bonds (Series 1996) Weekly VRDNs (Hillsborough
County, FL IDA)/(Dresdner Bank AG, Frankfurt LOC)
4,300,000 Collier County, FL HFA, Multifamily Revenue Bonds (Series 4,300,000
1985) Weekly VRDNs (River Reach Project)/(Morgan Guaranty
Trust Co., New York LOC)
10,000,000 Dade County, FL HFA, Hospital Revenue Bonds (Series 1995) 10,000,000
Weekly VRDNs (Miami Children's Hospital Project)/(AMBAC
INS)/(SunTrust Bank, Atlanta LIQ)
5,610,000 Dade County, FL Solid Waste System, 4.00% Bonds (AMBAC 5,614,537
INS), 10/1/1997
4,000,000 Dade County, FL Water & Sewer System Weekly VRDNs (FGIC 4,000,000
INS)/ (Commerzbank AG, Frankfurt LIQ)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 11,070,000 Eustis Health Facilities Authority, FL, (Series 1985) $ 11,070,000
Weekly VRDNs (Waterman Medical Center)/ (SunTrust Bank,
Central Florida LOC)
8,000,000 Florida HFA Weekly VRDNs (Cornerstone Imaging, Inc.)/(PNC 8,000,000
Bank, N.A. LOC)
5,120,000 Florida State Board of Education Administration, (CR55), 5,120,000
(Series 1989A), 3.50% TOBs (Citibank N.A., New York LIQ),
Optional Tender 8/1/1997
7,570,000 Florida State, PA-146 Weekly VRDNs (Jacksonville 7,570,000
Transportation Authority)/ (Merrill Lynch Capital Services,
Inc. LIQ)
7,160,000 Fort Lauderdale, FL Performing Arts Center Authority Weekly 7,160,000
VRDNs (SunTrust Bank, Central Florida LOC)
7,000,000 Gulf Breeze, FL, Variable Rate Demand Revenue Bonds (Series 7,000,000
1995A) Weekly VRDNs (Florida Municipal Bond Fund)/(Barnett
Bank, N.A. LOC)
30,500,000 Highlands County, FL Health Facilities, (Series 1996A 30,500,000
Accounts Receivable) Weekly VRDNs (Adventist Health
System)/(Capital Markets Assurance Corp. INS)/ (First
National Bank of Chicago LIQ)
25,000,000 Highlands County, FL Health Facilities, (Series 1996B 25,000,000
Accounts Receivable) Weekly VRDNs (Adventist Health
System)/(Capital Markets Assurance Corp. INS)/ (Canadian
Imperial Bank of Commerce, Toronto LIQ)
8,000,000 Highlands County, FL Health Facilities, Variable Rate 8,000,000
Demand Revenue Bonds (Series 1996A) Weekly VRDNs (Adventist
Health System)/(SunTrust Bank, Central Florida LOC)
7,000,000 Indian River County, FL Hospital District, (Series 1985) 7,000,000
Weekly VRDNs (Kredietbank N.V., Brussels LOC)
4,300,000 Jacksonville, FL, Industrial Development Refunding Revenue 4,300,000
Bonds (Series 1996) Weekly VRDNs (Pavilion Associates,
Ltd.)/(Barnett Bank, N.A. LOC)
4,100,000 Key West, FL Community Redevelopment Authority Weekly VRDNs 4,100,000
(Pier House Joint Venture)/ (PNC Bank, N.A. LOC)
3,695,000 Manatee County, FL HFA, Multifamily Mortgage Revenue 3,695,000
Refunding Bonds (Series 1989- A) Weekly VRDNs
(Hampton/McGuire L.P.)/(Nationsbank, N.A., Charlotte LOC)
5,000,000 Miami, FL Health Facilities Authority, Health Facilities 5,000,000
Revenue Bonds (Series 1992) Weekly VRDNs (Miami Jewish Home
and Hospital for the Aged, Inc.)/ (SunTrust Bank, Miami
LOC)
8,000,000 Miami, FL Health Facilities Authority, Health Facilities 8,000,000
Revenue Bonds (Series 1996) Weekly VRDNs (Miami Jewish Home
and Hospital for the Aged, Inc.)/(SunTrust Bank, Central
Florida LOC)
4,000,000 Mount Dora, FL Health Facility Authority, (Series 1996A) 4,000,000
Weekly VRDNs (Waterman Village (Mount Dora, FL))/(Barnett
Bank of Central Florida, Orlando LOC)
4,000,000 Orange County, FL Educational Facilities Authority, Revenue 4,000,000
Bonds (Series 1997) Weekly VRDNs (Rollins College)/(Barnett
Bank, N.A. LOC)
9,000,000 Orange County, FL HFA, Multifamily Housing Revenue Bonds 9,000,000
Weekly VRDNs (Sutton Place Ltd. Project)/(Nationsbank,
N.A., Charlotte LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 16,500,000 Pasco County, FL School Board, Variable Rate Certificates $ 16,500,000
Weekly VRDNs (AMBAC INS)/ (Landesbank Hessen-Thueringen,
Frankfurt LIQ)
6,400,000 Pinellas County, FL Health Facility Authority Daily VRDNs 6,400,000
(Chase Manhattan Bank N.A., New York LOC)
4,065,000 Putnam County, FL Development Authority, PCR Bonds (Pooled 4,065,000
Series 1984S) Weekly VRDNs (Seminole Electric Cooperative,
Inc (FL))/(National Rural Utilities Cooperative Finance
Corp. LOC)
8,400,000 Sarasota County, FL Public Hospital District, Series 1993A, 8,400,000
3.85% CP (Sarasota Memorial Hospital), Mandatory Tender
9/19/1997
8,350,000 Sarasota County, FL Public Hospital District, Variable Rate 8,350,000
Demand Hospital Revenue Bonds (Series 1996A), 3.75% CP
(Sarasota Memorial Hospital)/(SunTrust Bank, Central
Florida LIQ), Mandatory Tender 8/13/1997
20,000,000 Sarasota County, FL Public Hospital District, Variable Rate 20,000,000
Demand Hospital Revenue Bonds (Series 1996A), 3.75% CP
(Sarasota Memorial Hospital)/(SunTrust Bank, Central
Florida LIQ), Mandatory Tender 9/26/1997
2,000,000 Sarasota, FL, Educational Facilities Revenue Bonds (Series 2,000,000
1996) Weekly VRDNs (Ringling School of Art and Design,
Inc.)/(SunTrust Bank, Central Florida LOC)
13,400,000 Southeast Volusia Hospital District, Revenue Bonds (Series 13,400,000
1995) Weekly VRDNs (Bert Fish Medical Center
(FL))/(SouthTrust Bank of Alabama, Birmingham LOC)
9,000,000 St. Johns County, FL HFA, (Series 1993) Weekly VRDNs 9,000,000
(Remington at Ponte Verda Project)/ (SunTrust Bank, Atlanta
LOC)
7,000,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs 7,000,000
(Savannahs Hospital)/ (Nationsbank, N.A., Charlotte LOC)
4,500,000 Suwannee County, FL, Health Facilities Revenue Bonds 4,500,000
(Series 1996) Weekly VRDNs (Shands Teaching Hospital and
Clinics, Inc.)/(MBIA INS)/(SunTrust Bank, Central Florida
LIQ)
2,855,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/ 2,855,000
(Mellon Bank N.A., Pittsburgh LOC)
TOTAL 297,799,537
GEORGIA--1.6%
2,000,000 Albany-Dougherty County, GA Hospital Authority, Refunding 2,000,000
Revenue Anticipation Certificates (Series 1991) Weekly
VRDNs (AMBAC INS)/(Credit Local de France LIQ)
2,600,000 Atlanta, GA, Urban Residential Finance Authority, 2,600,000
Residential Construction Revenue Bonds, (Series 1995)
Weekly VRDNs (Summerhill Neighborhood Bond Program)/(First
Union National Bank, Charlotte, N.C. LOC)
13,000,000 Cherokee County, GA School System, 4.10% TANs, 12/31/1997 13,010,582
5,000,000 Cobb-Marietta, GA Coliseum & Exhibit Hall Authority, Junior 5,000,000
Lien Revenue Bonds (Series 1996A) Weekly VRDNs (MBIA
INS)/(Canadian Imperial Bank of Commerce, Toronto LIQ)
4,405,000 Conyers-Rockdale-Big Haynes, GA Impoundment Authority, 4,405,882
(Series 1997), 3.75% BANs, 12/31/1997
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--CONTINUED
$ 1,600,000 De Kalb County, GA Development Authority, (Series 1992) $ 1,600,000
Weekly VRDNs (American Cancer Society, GA)/(SunTrust Bank,
Atlanta LOC)
4,470,000 Fulton County, GA Housing Authority, (Series 1994B) Weekly 4,470,000
VRDNs (Champions Green Apartments Project)/(SouthTrust Bank
of Alabama, Birmingham LOC)
TOTAL 33,086,464
IDAHO--0.6%
13,000,000 Idaho State, (Series 1997), 4.625% TANs, 6/30/1998 13,085,034
ILLINOIS--10.5%
12,000,000 Chicago, IL Board of Education, Merlots (Series 1997E) 12,000,000
Weekly VRDNs (Corestates Bank N.A., Philadelphia, PA LIQ)
20,000,000 Chicago, IL Board of Education, Variable Rate Certificates 20,000,000
(Series 1996BB) Weekly VRDNs (MBIA INS)/(Bank of America NT
and SA, San Francisco LIQ)
20,000,000 Chicago, IL, GO Tender Notes (Series 1997), 3.65% TOBs 20,000,000
(Morgan Guaranty Trust Co., New York LOC), Mandatory Tender
2/5/1998
350,000 Darien, IL IDA, (Series 1989C) Weekly VRDNs (KinderCare 350,000
Learning Centers, Inc.)/ (Toronto-Dominion Bank LOC)
7,000,000 Galesburg, IL, (Series 1996) Weekly VRDNs (Knox College 7,000,000
Project)/ (Lasalle National Bank, Chicago LOC)
3,000,000 Illinois Development Finance Authority Weekly VRDNs 3,000,000
(Newlywed Food)/ (Mellon Bank N.A., Pittsburgh LOC)
5,100,000 Illinois Development Finance Authority, (Series 1993A) 5,100,000
Weekly VRDNs (Loyola Academy)/ (Northern Trust Co.,
Chicago, IL LOC)
24,000,000 Illinois Development Finance Authority, PCR, (Series 1996A) 24,000,000
Weekly VRDNs (Commonwealth Edison Co.)/(AMBAC INS)/(Bank of
New York, New York LIQ)
15,000,000 Illinois Development Finance Authority, Variable/Fixed Rate 15,000,000
Demand Revenue Bonds, (Series 1996) Weekly VRDNs (Chicago
Symphony Orchestra Project)/ (Bank of America Illinois LOC)
7,500,000 Illinois Educational Facilities Authority, 3.90% CP (Field 7,500,000
Museum of Natural History)/ (Northern Trust Co., Chicago,
IL LOC), Mandatory Tender 11/19/1997
7,500,000 Illinois Educational Facilities Authority, Revenue Bonds 7,500,000
(Series 1995) Weekly VRDNs (Ravinia Festival Association
(IL))/(NBD Bank, Michigan LOC)
16,100,000 Illinois Health Facilities Authority Weekly VRDNs (OSF 16,100,000
Health Care Systems)
19,800,000 Illinois Health Facilities Authority, (Series 1989A) Weekly 19,800,000
VRDNs (Methodist Health Services Corp.)/(Fuji Bank, Ltd.,
Tokyo LOC)
35,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series 35,000,000
1985B) Weekly VRDNs (OSF Health Care Systems)/(Bank of
America Illinois and Rabobank Nederland, Utrecht LIQs)
1,000,000 Illinois Health Facilities Authority, Revolving Fund Pooled 1,000,000
Financing Program (Series 1985F) Weekly VRDNs (NBD Bank,
Michigan LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
ILLINOIS--CONTINUED
$ 5,000,000 Illinois Health Facilities Authority, Variable Rate $ 5,000,000
Adjustable Demand Revenue Bonds (Series 1996), 3.95% CP
(Evanston Hospital Corp.), Mandatory Tender 8/15/1997
14,000,000 Illinois Housing Development Authority, (1997 Subseries 14,000,000
B-1), 4.10% TOBs, Mandatory Tender 7/7/1998
3,245,000 Rockford Park District, IL, Series C, 5.30% Bonds, 3,261,392
12/15/1997
TOTAL 215,611,392
INDIANA--2.1%
830,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/(National 830,000
City Bank, Kentucky LOC)
4,100,000 Hamilton County, IN Hospital Authority Weekly VRDNs (Carmel 4,100,000
Hospital)/ (Daughters of Charity GTD)
10,000,000 Indiana Bond Bank, Series A-2, 4.25% TANs (Norwest Bank 10,051,100
Minnesota, Minneapolis LOC), 1/21/1998
1,745,000 Indiana Health Facilities Finance Authority Rehabilitation 1,745,000
Center Weekly VRDNs (Crossroads Rehabilitation
Center)/(Bank One, Indianapolis, IN LOC)
12,000,000 Indianapolis, IN Local Public Improvement Bond Bank, 12,031,685
(Series 1997 A), 4.375% TANs, 1/8/1998
4,735,000 Indianapolis, IN, Variable Rate Demand Economic Development 4,735,000
Revenue Bonds, (Series 1995) Weekly VRDNs (Pleasant Run
Children's Homes, Inc.)/(Fifth Third Bank, Cincinnati LOC)
9,000,000 Purdue University, IN, Student Fees Revenue Bonds (Series 9,000,000
H) Weekly VRDNs
TOTAL 42,492,785
IOWA--0.2%
5,000,000 Cedar Rapids Community School District, IA, General 5,020,909
Obligation Anticipatory Warrants, (Series 1997), 4.375%
TRANs, 7/1/1998
KANSAS--0.2%
3,420,000 Salina, KS, GO Municipal Temporary Notes (Series 1997-1), 3,420,000
3.90% BANs, 3/1/1998
KENTUCKY--2.1%
1,260,000 Boone County, KY, Revenue Refunding Bonds Weekly VRDNs 1,260,000
(Spring Meadow Associates)/ (Huntington National Bank,
Columbus, OH LOC)
6,835,000 Jefferson County, KY, (Series 1997) Weekly VRDNs (First 6,835,000
Trust Restoration Partners)/ (Bank One, Kentucky LOC)
35,000,000 Owensboro, KY, (Series 1996) Weekly VRDNs (Owensboro Mercy 35,000,000
Health System, Inc. Project)/ (Bank of America Illinois
LOC)
TOTAL 43,095,000
LOUISIANA--0.5%
250,000 Baton Rouge, LA, Public Improvement Sales Tax Revenue 250,000
Bonds, Series 1992A, 9.00% Bonds (FSA INS), 8/1/1997
800,000 Calcasieu Parish, LA, IDB, PCR Bonds Weekly VRDNs (Citgo 800,000
Petroleum Corp.)/ (Westdeutsche Landesbank Girozentrale
LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
LOUISIANA--CONTINUED
$ 80,000 Louisiana PFA, (Series 1985A) Weekly VRDNs (FGIC $ 80,000
INS)/(Societe Generale, Paris LIQ)
1,765,000 Louisiana PFA, (Series A), 4.50% TANs (East Baton Rouge 1,766,507
School Board), 9/24/1997
4,000,000 Louisiana PFA, (Series B), 4.50% TANs (Orleans Parish, LA 4,003,415
School Board), 9/24/1997
3,200,000 Louisiana PFA, Hospital Revenue Bonds Series 1995 Weekly 3,200,000
VRDNs (Willis-Knighton Medical Center)/(AMBAC INS)/(Mellon
Bank N.A., Pittsburgh LIQ)
TOTAL 10,099,922
MARYLAND--1.4%
400,000 Baltimore County, MD Port Facility Monthly VRDNs 400,000
(Occidental Petroleum Corp.)/ (Morgan Guaranty Trust Co.,
New York LOC)
2,000,000 Maryland EDC, Pooled Financing Revenue Bonds, (Series 1995) 2,000,000
Weekly VRDNs (Maryland Municipal Bond Fund)/(Nationsbank,
N.A., Charlotte LOC)
1,200,000 Maryland Health & Higher Educational Facilities Authority, 1,200,000
(Series 1985B) Weekly VRDNs (First National Bank of Chicago
LOC)
1,800,000 Maryland Health & Higher Educational Facilities Authority, 1,800,000
ACES Revenue Bonds (Series 1994) Weekly VRDNs (Daughters of
Charity)
1,000,000 Maryland Health & Higher Educational Facilities Authority, 1,000,000
Pooled Loan Program Revenue Notes, 3.75% CP (John Hopkins
University)/(Sanwa Bank Ltd., Osaka LIQ), Mandatory Tender
9/26/1997
4,970,000 Maryland Health & Higher Educational Facilities Authority, 4,970,000
Pooled Loan Program Revenue Notes, 3.90% CP (John Hopkins
University)/(Sanwa Bank Ltd., Osaka LIQ), Mandatory Tender
10/28/1997
8,640,000 Maryland State CDA, (Series 1987-2), 3.80% TOBs (First 8,640,000
National Bank of Chicago LIQ), Optional Tender 10/1/1997
9,500,000 Montgomery County, MD, EDR Weekly VRDNs (U.S. Pharmacopeial 9,500,000
Convention Facility)/ (Chase Manhattan Bank N.A., New York
LOC)
TOTAL 29,510,000
MASSACHUSETTS--0.9%
7,000,000 Clinton, MA, 4.00% BANs, 11/21/1997 7,008,040
3,200,000 Danvers, Massachusetts, 4.00% BANs, 3/31/1998 3,204,074
8,000,000 North Andover, MA, 4.00% BANs, 1/22/1998 8,011,014
TOTAL 18,223,128
MICHIGAN--5.4%
4,700,000 Battle Creek, MI Economic Development Corporation, Limited 4,700,000
Obligation Economic Development Revenue Refunding Bonds
(Series 1992) Weekly VRDNs (Michigan Carton & Paperboard
Company)/(American National Bank, Chicago LOC)
5,300,000 Dearborn, MI Economic Development Corp, (Series 1991) 5,300,000
Weekly VRDNs (Oakbrook Common)/ (Mellon Bank N.A.,
Pittsburgh LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--CONTINUED
$ 800,000 Detroit, MI Water Supply System, Water Supply System $ 800,000
Revenue and Revenue Refunding Bonds (Series 1993) Weekly
VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ)
2,000,000 Garden City, MI HFA, Hospital Revenue Bonds (Series 1996A) 2,000,000
Weekly VRDNs (Garden City Hospital, Osteopathic)/(First of
America Bank - Michigan LOC)
2,100,000 Grand Rapids, MI EDR, Floating/Fixed Rate Demand Bonds 2,100,000
(Series 1983-B) Weekly VRDNs (Amway Grand Plaza Hotel
Facilities)/(Old Kent Bank & Trust Co., Grand Rapids LOC)
4,855,000 Kalamazoo, MI Economic Development Corp., 1995 Limited 4,855,000
Obligation Revenue Refunding Bonds Weekly VRDNs (Wyndham
Project, MI)/(First of America Bank - Illinois LOC)
1,000,000 Michigan Higher Education Facilities Authority, Variable 1,000,000
Rate Demand Limited Obligation Revenue Bonds (Series 1997)
Weekly VRDNs (Davenport College of Business)/(Old Kent Bank
& Trust Co., Grand Rapids LOC)
15,800,000 Michigan State Hospital Finance Authority, (Series 1994) 15,800,000
Weekly VRDNs (Mt. Clemens General Hospital)/(Comerica Bank,
Detroit, MI LOC)
6,000,000 Michigan State Hospital Finance Authority, (Series A) 6,000,000
Weekly VRDNs (OSF Health Care Systems)
8,200,000 Michigan State Hospital Finance Authority, Hospital 8,200,000
Equipment Loan Program Bonds (Series A) Weekly VRDNs (First
of America Bank - Michigan LOC)
3,900,000 Michigan State Housing Development Authority, (Series 1991) 3,900,000
Weekly VRDNs (Forest Hills Apartments)/(National Australia
Bank, Ltd., Melbourne LOC)
3,000,000 Michigan State Housing Development Authority, (Series 1991) 3,000,000
Weekly VRDNs (Regency Square Apartments)/(National
Australia Bank, Ltd., Melbourne LOC)
15,000,000 Michigan State Housing Development Authority, Merlots 15,480,600
(Series G) Weekly VRDNs (MBIA INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ)
28,000,000 Michigan State, 4.50% TRANs, 9/30/1997 28,046,163
5,200,000 Michigan Strategic Fund, Limited Obligation PCR Bonds 5,200,000
(Series 1993) Weekly VRDNs (Allied-Signal, Inc.)
3,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds 3,000,000
(Series 1995) Weekly VRDNs (Wellness Plan Project)/(NBD
Bank, Michigan LOC)
2,695,000 Ottawa County, MI Economic Development Corp., Limited 2,695,000
Obligation Revenue Bonds (Series 1995B) Weekly VRDNs
(Sunset Manor, Inc. Project)/(Old Kent Bank & Trust Co.,
Grand Rapids LOC)
TOTAL 112,076,763
MINNESOTA--6.9%
10,300,000 Burnsville, MN, Variable Rate Demand Revenue Bonds (Series 10,300,000
1996) Weekly VRDNs (YMCA Projects)/(Norwest Bank Minnesota,
Minneapolis LOC)
2,100,000 DDSB Municipal Securities Trusts, Series 1994O Weekly VRDNs 2,100,000
(Richfield, MN ISD 280)/ (First Bank N.A., Minneapolis LIQ)
1,000,000 DDSB Municipal Securities Trusts, Series 1994S Weekly VRDNs 1,000,000
(Osseo, MN ISD 279)/ (First Bank N.A., Minneapolis LIQ)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MINNESOTA--CONTINUED
$ 6,390,000 DDSB Municipal Securities Trusts, Series 1994T Weekly VRDNs $ 6,390,000
(Osseo, MN ISD 279)/ (First Bank N.A., Minneapolis LIQ)
11,000,000 DDSB Municipal Securities Trusts, Series 1994V Weekly VRDNs 11,000,000
(St. Louis Park Healthsystem, MN)/(Norwest Bank Minnesota,
Minneapolis LIQ)
1,865,000 Dakota County, MN Housing & Redevelopment Authority, 1,865,000
Multifamily Rental Housing Revenue Bonds (Series 1994-B)
Weekly VRDNs (Westwood Ridge Senior Residence Project)/
(First Bank N.A., Minneapolis LOC)
7,000,000 Eagan, MN, Multifamily Housing (Series 1992A) Weekly VRDNs 7,000,000
(Cinnamon Ridge)/ (Mellon Bank N.A., Pittsburgh LOC)
7,200,000 Hennepin Co. MN, (Series 1995C) Weekly VRDNs (Hennepin Co. 7,200,000
MN GTD)
4,250,000 MN Municipal Securities Trust, Series 1996F, Floating Rate 4,250,000
Certificates Weekly VRDNs (Lakeville, MN ISD 194)/(Norwest
Bank Minnesota, Minneapolis LIQ)
10,000,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) 10,000,000
Weekly VRDNs (Walker Methodist Health Center, Inc.
Project)/(First Bank N.A., Minneapolis LOC)
7,900,000 Minneapolis, MN, 4.016% TOBs (Minneapolis Institute of 7,900,000
Arts), Optional Tender 10/1/1997
5,000,000 Minneapolis, MN, Variable Rate Housing Revenue Bonds Weekly 5,000,000
VRDNs (One Ten Grant Project)/(First Bank N.A., Minneapolis
LOC)
9,875,000 Minneapolis, MN, Various Purpose Bonds (Series 1996) Weekly 9,875,000
VRDNs (Bayerische Vereinsbank AG, Munich LIQ)
2,842,000 Minnesota State Higher Education Coordinating Board, 2,842,000
Supplemental Student Loan Program Refunding Revenue Bonds
(Series 1994A) Weekly VRDNs (Norwest Bank Minnesota,
Minneapolis LIQ)
4,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs 4,000,000
(Mayo Foundation)
13,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs 13,000,000
(Mayo Foundation)
10,900,000 Rosemount, MN, PCR (Series 1984) Weekly VRDNs (Koch 10,900,000
Refining Co.)
11,500,000 Southern Minnesota Municipal Power Agency, 3.70% CP, 11,500,000
Mandatory Tender 9/9/1997
5,200,000 St. Paul, MN Port Authority, (Series 1991) Weekly VRDNs 5,200,000
(West Gate Office)/(First Bank N.A., Minneapolis LOC)
10,000,000 VRDC/IVRC Trust, Tax-Exempt Variable Rate Demand 10,000,000
Certificates (Series 1997A) Weekly VRDNs (Regents of
University of Minnesota)/(Citibank N.A., New York LIQ)
TOTAL 141,322,000
MISSISSIPPI--0.3%
1,590,000 Hinds County, MS, (Series 1991) Weekly VRDNs (North State 1,590,000
St. Project)/(Amsouth Bank N.A., Birmingham LOC)
4,000,000 Perry County, MS, PC Revenue Bonds (Series 1989) Weekly 4,000,000
VRDNs (Leaf River Forest Project)/ (Morgan Guaranty Trust
Co., New York LOC)
TOTAL 5,590,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
MISSOURI--0.8%
$ 6,000,000 Missouri State Environmental Improvement & Energy $ 6,000,000
Authority, 3.65% CP (Kansas City Power and Light Co.),
Mandatory Tender 11/5/1997
1,000,000 Missouri State HEFA, (Series 1995B) Weekly VRDNs (Sisters 1,000,000
of Mercy Health System, St. Louis, Inc.)/(ABN AMRO Bank
N.V., Amsterdam, Credit Suisse, Zurich and Rabobank
Nederland, Utrecht LIQs)
1,695,000 Missouri State HEFA, (Series 1996), 4.50% TRANs 1,696,020
(Pattonville, MO School District), 9/8/1997
1,000,000 Missouri State HEFA, (Series 1996D), 4.50% TRANs (Rockwood 1,000,602
R-VI School District), 9/8/1997
1,700,000 Missouri State HEFA, Health Facilities Revenue Bonds 1,700,000
(Series 1989 B) Weekly VRDNs (Sisters of Mercy Health
Corporation (Michigan & Iowa))/(ABN AMRO Bank N.V.,
Amsterdam LIQ)
1,000,000 Missouri State HEFA, Series 1995B Weekly VRDNs (SSM Health 1,000,000
Care)/(MBIA INS)/ (Rabobank Nederland, Utrecht LIQ)
4,200,000 Poplar Bluff, MO IDA, (Series 1987) Weekly VRDNs (Gates 4,200,000
Rubber Co.)/(NBD Bank, Michigan LOC)
TOTAL 16,596,622
NEBRASKA--0.2%
3,610,000 Lancaster County, NE Leasing Corp., Refunding Bonds PT-103 3,610,000
(Series 1988) Weekly VRDNs (Bayerische Hypotheken-Und
Wechsel-Bank AG LIQ)
NEVADA--0.8%
15,900,000 Nevada Housing Division, Multi-Unit Housing Revenue 15,900,000
Refunding Bonds (1991 Series A) Weekly VRDNs (Park Vista
Apartments Project)/(Sumitomo Bank Ltd., Osaka LOC)
NEW JERSEY--0.5%
5,000,000 Galloway Township, NJ, (Series 1997), 4.125% BANs, 5,011,027
3/12/1998
5,000,000 West Windsor-Plainsboro, NJ Regional School District, 4.00% 5,007,453
BANs, 2/10/1998
TOTAL 10,018,480
NEW YORK--2.1%
6,100,000 Metropolitan Transportation Authority, New York Weekly 6,100,000
VRDNs (Bank of Tokyo-Mitsubishi Ltd., Industrial Bank of
Japan Ltd., Tokyo, J.P. Morgan Delaware, Wilmington, Morgan
Guaranty Trust Co., New York, National Westminster Bank,
PLC, London and Sumitomo Bank Ltd., Osaka LOCs)
1,430,000 Metropolitan Transportation Authority, New York, Trust 1,430,000
Receipts (Series 1997 FR/RI-9) Weekly VRDNs (FGIC
INS)/(Bank of New York, New York LIQ)
5,900,000 New York City, NY, (Series 1995 F-5) Weekly VRDNs 5,900,000
(Landesbank Hessen-Thueringen, Frankfurt LOC)
8,000,000 New York City, NY, Variable Rate Series (F-7) Weekly VRDNs 8,000,000
(Union Bank of Switzerland, Zurich LOC)
1,000,000 Royalton-Hartland, NY CSD, 4.50% BANs, 8/15/1997 1,000,184
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NEW YORK--CONTINUED
$ 5,000,000 Ulster County, NY, Custodial Receipts (2nd Series 1997-A), $ 5,008,742
4.00% TANs (State Street Bank and Trust Co. LOC), 3/18/1998
7,000,000 VRDC/IVRC Trust, (Series 1993B) Weekly VRDNs (Metropolitan 7,000,000
Transportation Authority, New York)/(AMBAC INS)/(Hongkong &
Shanghai Banking Corp. LIQ)
8,500,000 VRDC/IVRC Trust, (Series 1993G) Weekly VRDNs (St. Lukes 8,500,000
Roosevelt Hospital Center)/ (FHA INS)/(Hongkong & Shanghai
Banking Corp. LIQ)
TOTAL 42,938,926
NORTH CAROLINA--1.2%
15,000,000 Martin County, NC IFA, (Series 1993) Weekly VRDNs 15,000,000
(Weyerhaeuser Co.)
50,000 NCNB Pooled Tax-Exempt Trust, (Series 1990A) Weekly VRDNs 50,000
(NCNB Tax Exempt Trust 1990a)/(Nationsbank, N.A., Charlotte
LOC)
2,700,000 North Carolina Medical Care Commission Hospital, Revenue 2,700,000
Bonds (Series 1992B) Weekly VRDNs (North Carolina Baptist)
4,250,000 North Carolina Medical Care Commission Hospital, Revenue 4,250,000
Bonds (Series 1993) Weekly VRDNs (Moses H. Cone Memorial)
3,000,000 Winston-Salem, NC, GO Bonds (Series 1990) Weekly VRDNs 3,000,000
(Credit Suisse, Zurich LIQ)
TOTAL 25,000,000
OHIO--3.7%
1,875,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs 1,875,000
(Visiting Nurses)/(National City Bank, Cleveland, OH LOC)
9,000,000 Clermont County, OH, Adjustable Rate Hospital Facilities 9,000,000
Revenue Bonds (Series 1996) Weekly VRDNs (Mercy Health
Systems)/(Credit Suisse, Zurich LIQ)
2,450,000 Cuyahoga County, OH IDA Weekly VRDNs (H.P. Parking 2,450,000
Co.)/(KeyBank, N.A. LOC)
2,895,000 Franklin County, OH Hospital Facility Authority, (Series 2,895,000
1992) Weekly VRDNs (Wesley Glenn, Inc.)/(Fifth Third Bank,
Cincinnati LOC)
5,630,000 Greene County, OH, Various Purpose Certificates of 5,636,862
Indebtedness, 4.00% BANs, 12/11/1997
5,600,000 Hamilton County, OH Health System Weekly VRDNs (West Park 5,600,000
Community)/ (Fifth Third Bank, Cincinnati LOC)
17,700,000 Hamilton County, OH Hospital Facilities Authority, 17,700,000
Adjustable Rate Hospital Facilities Revenue Bonds (Series
1997A) Weekly VRDNs (Health Alliance of Greater
Cincinnati)/(MBIA INS)/ (Credit Suisse, Zurich LIQ)
240,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs 240,000
(Sunshine Children's Home)/ (National City Bank, Cleveland,
OH LOC)
6,745,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995) 6,745,000
Weekly VRDNs (Copeland Oaks Project)/(Bank One, Ohio, N.A.
LOC)
835,000 Marion County, OH Hospital Authority, (Series 1991) Weekly 835,000
VRDNs (Marion County, OH Pooled Hospital Program)/(Bank
One, Ohio, N.A. LOC)
700,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex 700,000
Venture)/(KeyBank, N.A. LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 2,020,000 Montgomery County, OH, Adjustable Rate Economic Development $ 2,020,000
Revenue Refunding Bonds (Series 1997) Weekly VRDNs (Cross
Country Inns, Inc.)/(Bank One, Ohio, N.A. LOC)
1,630,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited 1,630,000
Partnership)/(Huntington National Bank, Columbus, OH LOC)
2,000,000 Ohio State Air Quality Development Authority, (Series 2,000,000
1988A) Weekly VRDNs (PPG Industries, Inc.)
2,500,000 Ohio State Water Development Authority, Multimodal Water 2,500,000
Development (Series 1993) Weekly VRDNs (Timken
Co.)/(Wachovia Bank of Georgia N.A., Atlanta LOC)
7,300,000 Rickenbacker, OH Port Authority, (Series 1992) Weekly VRDNs 7,300,000
(Rickenbacker Holdings, Inc.)/ (Bank One, Ohio, N.A. LOC)
3,200,000 Toledo, OH, Adjustable Rate City Services Special 3,200,000
Assessment Notes (Services 1997) Weekly VRDNs (Canadian
Imperial Bank of Commerce, Toronto LOC)
1,000,000 Twinsburg, OH IDA Weekly VRDNs (Carl J Massara 1,000,000
Project)/(KeyBank, N.A. LOC)
1,990,000 Wayne County, OH, Health Care Facility Revenue Bonds 1,990,000
(Series 1995) Weekly VRDNs (D & M Realty Project)/(Bank
One, Ohio, N.A. LOC)
TOTAL 75,316,862
OKLAHOMA--2.3%
24,500,000 Oklahoma State Industrial Authority, Flexible Rate Hospital 24,500,000
Revenue Bonds (Series 1990B) Weekly VRDNs (Baptist Medical
Center, OK)/(Credit Suisse, Zurich and Morgan Guaranty
Trust Co., New York LIQs)
23,275,000 Oklahoma State Industrial Authority, Health System Revenue 23,275,000
Bonds (Series 1995A) Weekly VRDNs (Baptist Medical Center,
OK)/(Credit Suisse, Zurich and Morgan Guaranty Trust Co.,
New York LIQs)
TOTAL 47,775,000
OREGON--0.4%
2,000,000 Oregon Health, Housing & Cultural Facilities Authority, 2,000,000
Revenue Bonds (1995 Series A) Weekly VRDNs (Guide Dogs for
the Blind, Inc. Project)/(Banque Nationale de Paris LOC)
4,950,000 Oregon Health, Housing & Cultural Facilities Authority, 4,950,000
Variable Rate Health Facilities Revenue Bonds (1995 Series
A) Weekly VRDNs (Evangelical Lutheran Good Samaritan
Society)/ (First Bank N.A., Minneapolis LOC)
1,000,000 Oregon State Housing and Community Services Department, 1,000,000
Single Family Mortgage Program (Series 1996F), 4.00% TOBs,
Mandatory Tender 8/1/1997
TOTAL 7,950,000
PENNSYLVANIA--6.7%
8,800,000 Allegheny County, PA IDA, PCR (Series 1992A), 3.65% TOBs 8,800,000
(Duquesne Light Power Co.)/ (Canadian Imperial Bank of
Commerce, Toronto LOC), Optional Tender 10/30/1997
6,100,000 Allegheny County, PA IDA, Variable Rate Demand Revenue 6,100,000
Bonds (Series 1997A) Daily VRDNs (Longwood at Oakmont,
Inc.)/(Dresdner Bank AG, Frankfurt LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 5,000,000 Allegheny County, PA Port Authority, (Series A of 1997, $ 5,000,000
3.85% GANs (PNC Bank, N.A. LOC), 6/30/1998
6,250,000 Beaver County, PA IDA, PCR Refunding Bonds (1992 Series-E), 6,250,000
3.70% CP (Toledo Edison Co.)/ (Toronto-Dominion Bank LOC),
Mandatory Tender 12/4/1997
6,300,000 Beaver County, PA IDA, PCR Refunding Bonds (Series 1990 B) 6,300,000
Weekly VRDNs (Duquesne Light Power Co.)/(Barclays Bank PLC,
London LOC)
7,230,000 Commonwealth of Pennsylvania, 5.25% Bonds (FGIC INS), 7,262,449
11/15/1997
7,690,000 Cumberland County, PA Municipal Authority, Variable Rate 7,702,436
Revenue Bonds (Series 1996 B), 4.25% TOBs (Dickinson
College)/(Mellon Bank N.A., Pittsburgh LOC), Optional
Tender 10/31/1997
9,360,000 (b)Delaware County, PA IDA, Refunding Revenue Bonds (Series 9,360,000
1993G), 3.625% TOBs (Delaware County Resource Recovery
(PA))/(General Electric Capital Corp. LOC), Optional Tender
12/1/1997
15,500,000 Erie County, PA Hospital Authority Weekly VRDNs (St. 15,500,000
Vincent Health System)/ (Mellon Bank N.A., Pittsburgh LOC)
7,500,000 Erie County, PA, 4.25% TANs (PNC Bank, N.A. LOC), 7,507,537
12/31/1997
9,300,000 New Castle, PA Area Hospital Authority, (Series 1996) 9,300,000
Weekly VRDNs (Jameson Memorial Hospital)/(FSA INS)/(PNC
Bank, N.A. LIQ)
19,500,000 Northeastern, PA Hospital & Education Authority, (Series 19,500,000
1996) Weekly VRDNs (Allhealth Pooled Financing
Program)/(Chase Manhattan Bank N.A., New York LOC)
1,945,000 Pennsylvania HFA, 3.85% TOBs (First National Bank of 1,945,000
Chicago LIQ), Optional Tender 10/1/1997
16,290,000 Pennsylvania HFA, PT-119A (Series 1997-56C) Weekly VRDNs 16,290,000
(Credit Suisse First Boston LIQ)
9,000,000 Philadelphia Redevelopment Authority, Multifamily Revenue 9,000,000
Bonds (Series 1985) Weekly VRDNs (Franklin Town
Towers)/(Marine Midland Bank N.A., Buffalo, NY LOC)
2,000,000 Washington County, PA Hospital Authority Weekly VRDNs 2,000,000
(Keystone Diversified Management Corp.)/(Mellon Bank N.A.,
Pittsburgh LOC)
TOTAL 137,817,422
SOUTH CAROLINA--1.3%
26,500,000 South Carolina State Public Service Authority, 3.80% CP 26,500,000
(Nationsbank, N.A., Charlotte LIQ), Mandatory Tender
9/12/1997
TENNESSEE--2.9%
8,000,000 Chattanooga, TN HEFA Weekly VRDNs (Mccallie 8,000,000
School)/(SunTrust Bank, Atlanta LOC)
19,700,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken 19,700,000
Hospital)/(Sumitomo Bank Ltd., Osaka LOC)
3,565,000 Maury County, TN HEFA, (Series 1996E) Weekly VRDNs 3,565,000
(Southern Healthcare Systems, Inc.)/ (Bank One, Texas N.A.
LOC)
6,475,000 Memphis, TN Center City Revenue Finance Corp., (Series 6,475,000
1996A) Weekly VRDNs (South Bluffs)/ (National Bank of
Commerce, Memphis, TN LOC)
2,700,000 Memphis, TN, General Improvement Refunding Bonds, (Series 2,700,000
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale
LOC)
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
TENNESSEE--CONTINUED
$ 1,000,000 Memphis, TN, General Improvement Refunding Bonds, (Series $ 1,000,000
1995A) Weekly VRDNs (Westdeutsche Landesbank Girozentrale
LOC)
1,800,000 Metropolitan Government Nashville & Davidson County, TN 1,800,000
HEFA, (Series 1996) Weekly VRDNs (Dede Wallace Center
Project)/(SunTrust Bank, Nashville LOC)
4,500,000 Metropolitan Government Nashville & Davidson County, TN 4,500,000
HEFA, Revenue Bonds (Series 1985A), 3.65% TOBs (Vanderbilt
University), Optional Tender 1/15/1998
5,900,000 Metropolitan Nashville Tennessee AA, Airport Improvement 5,900,000
Revenue Bonds Refunding (Series 1995) Weekly VRDNs (FGIC
INS)/(Credit Local de France LIQ)
2,500,000 Montgomery Co, TN Public Building Authority, Pooled 2,500,000
Financing Revenue Bonds (Series 1996) Weekly VRDNs
(Montgomery County Loan)/(Nationsbank, N.A., Charlotte LOC)
3,500,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil 3,500,000
Fibers, Inc. Project)/ (ABN AMRO Bank N.V., Amsterdam LOC)
1,000,000 Washington County, TN IDB, Revenue Refunding Bonds (Series 1,000,000
1996) Weekly VRDNs (Springbrook Properties
Project)/(SunTrust Bank, Nashville LOC)
TOTAL 60,640,000
TEXAS--9.6%
3,660,000 Dallas, TX, (Series C), 3.95% TOBs, Optional Tender 3,660,000
6/15/1998
400,000 Grapevine, TX, IDC, SimuFlite Training International 400,000
Project (Series 1993) Weekly VRDNs (Southern Air Transport,
Inc.)/(Bank of Montreal LOC)
2,500,000 Gulf Coast, TX Waste Disposal Authority, Pollution Control 2,500,000
Revenue Refunding Bonds (Series 1995) Daily VRDNs (Exxon
Corp.)
19,500,000 Harris County, TX HFDC, (Series 1994) Daily VRDNs 19,500,000
(Methodist Hospital, Harris County, TX)
56,800,000 Harris County, TX HFDC, (Series 1997A) Daily VRDNs (St. 56,800,000
Luke's Episcopal Hospital)/ (Morgan Guaranty Trust Co., New
York, Nationsbank of Texas, N.A. and Toronto-Dominion Bank
LIQs)
1,720,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, 1,720,000
Inc.)/(Nationsbank, N.A., Charlotte LOC)
40,000,000 Plano ISD, TX, Variable Rate Unlimited Tax School Building 40,006,655
Bonds, (Series 1997), 3.86% TOBs (Texas Permanent School
Fund Guarantee Program GTD)/(Union Bank of Switzerland,
Zurich LIQ), Mandatory Tender 2/5/1998
8,645,000 TX Pooled Tax Exempt Trust, Certificates of Participation 8,645,000
(Series 1996) Weekly VRDNs (Bank One, Texas N.A. LOC)
13,800,000 Texas State Public Finance Authority, (Series 1993A), 3.70% 13,800,000
CP (Texas State), Mandatory Tender 8/11/1997
50,250,000 Texas State, 4.75% TRANs, 8/29/1997 50,280,468
TOTAL 197,312,123
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
UTAH--1.0%
$ 10,200,000 Intermountain Power Agency, UT, Variable Rate Power Supply $ 10,200,000
Bonds (1985 Series F), 3.50% TOBs (Swiss Bank Corp. New
York LOC), Optional Tender 9/15/1997
10,000,000 Utah State, (Series 1997A), 3.80% CP (Toronto-Dominion Bank 10,000,000
LIQ), Mandatory Tender 10/16/1997
TOTAL 20,200,000
VERMONT--0.0%
1,000,000 Vermont Educational and Health Buildings Financing Agency, 1,000,000
(Series 1995A) Weekly VRDNs (Key Bank of New York LOC)
VIRGINIA--0.8%
6,600,000 Roanoke, VA IDA, Series B Weekly VRDNs (Carillion Health 6,600,000
System)/ (Morgan Guaranty Trust Co., New York LIQ)
9,600,000 York County, VA IDA, (Series 1985), 3.95% CP (Virginia 9,600,000
Electric Power Co.), Mandatory Tender 10/9/1997
TOTAL 16,200,000
WASHINGTON--0.1%
2,200,000 Port of Seattle, WA, IDR Bonds (Series 1985) Weekly VRDNs 2,200,000
(Douglas Management Company Project)/(Mellon Bank N.A.,
Pittsburgh LOC)
WEST VIRGINIA--0.9%
15,430,000 Cabell County Commission, WV, Life Care Facilities 15,430,000
Multi-Option Revenue Bonds (Series 1995) Weekly VRDNs
(Foster Foundation)/(Huntington National Bank, Columbus, OH
LOC)
3,000,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG 3,000,000
Industries, Inc.)
TOTAL 18,430,000
WISCONSIN--1.9%
3,250,000 Hancock, WI, Industrial Development Revenue Refunding Bonds 3,250,000
(Series 1996) Weekly VRDNs (Ore-Ida Foods, Inc.)/(Heinz
(H.J.) Co. GTD)
15,000,000 Wisconsin Health and Educational Facilities Authority 15,000,000
Weekly VRDNs (St. Luke's Medical Center)/(First National
Bank of Chicago LOC)
21,590,000 Wisconsin Health and Educational Facilities Authority, 21,590,000
MERLOTS-(Series 1997B) Weekly VRDNs (Sinai Samaritan
Medical Center, Inc.)/(Corestates Bank N.A., Philadelphia,
PA LIQ)
TOTAL 39,840,000
WYOMING--0.2%
2,400,000 Douglas, WY, IDR Bonds, 3.90% TOBs (Safeway, Inc.)/(Bankers 2,400,000
Trust Co., New York LOC), Mandatory Tender 12/1/1997
1,125,000 Natrona County, WY, Hospital Revenue, 5.525% TOBs (Grainger 1,125,000
(W.W.), Inc.), Optional Tender 12/1/1997
TOTAL 3,525,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)SHORT-TERM MUNICIPALS--CONTINUED
NO STATE--1.2%
$ 19,081,010 Equity Trust II, (1996 Series) Weekly VRDNs (Republic $ 19,081,010
National Bank of New York LOC)
5,295,930 LaSalle National Bank Leasetops Trust, Series 1995A 5,295,930
Leasetops Certificates Weekly VRDNs (Lasalle National Bank,
Chicago LIQ)/(Lasalle National Bank, Chicago LOC)
TOTAL 24,376,940
TOTAL INVESTMENTS (AT AMORTIZED $ 2,053,927,275
COST)(C)
</TABLE>
(a) The Fund may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An
NRSRO's two highest rating categories are determined without regard for
sub-categories and gradations. For example, securities rated SP-1+, SP-1 or
SP-2 by Standard & Poor's Corporation, MIG-1, or MIG-2 by Moody's Investors
Service, Inc., F-1+, F-1, and F-2 by Fitch Investors Service, Inc. are all
considered rated in one of the two highest short-term rating categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and
unrated securities of comparable quality) are identified as Second Tier
securities. The Fund follows applicable regulations in determining whether a
security is rated and whether a security rated by multiple NRSROs in
different rating categories should be identified as a First or Second Tier
security.
At July 31 1997, the portfolio securities were rated as follows:
Tier Rating Percent Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.00% 0.00%
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1997, these securities amounted
to $9,360,000 which represents 0.5% of net assets.
(c) Cost for federal tax purposes $2,054,030,605.
Note: The categories of investments are shown as a percentage of net assets
($2,062,163,006) at July 31, 1997.
The following acronyms are used throughout this portfolio:
ACES --Adjustable Convertible Extendable Securities
AMBAC --American Municipal Bond Assurance Corporation
BANs --Bond Anticipation Notes
CDA --Community Development Administration
CP --Commercial Paper
CSD --Central School District
EDC --Economic Development Commission
EDR --Economic Development Revenue
FGIC --Financial Guaranty Insurance Company
FHA --Federal Housing Administration
FSA --Financial Security Assurance
GANs --Grant Anticipation Notes
GO --General Obligation
GTD --Guaranty
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
IFA --Industrial Finance Authority
INS --Insured
INV --Investment Agreement
ISD --Independent School District
LIQ --Liquidity Agreement
LOCs --Letter(s) of Credit
MBIA --Municipal Bond Investors Assurance
PCR --Pollution Control Revenue
PC --Participation Certificate
PFA --Public Facility Authority
PLC --Public Limited Company
SA --Support Agreement
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
TRANs --Tax and Revenue Anticipation Notes
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TAX-FREE OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value (tax $ 2,053,927,275
cost $2,054,030,605)
Cash 159,042
Income receivable 14,083,995
Receivable for shares sold 125,718
Total assets 2,068,296,030
LIABILITIES:
Payable for shares redeemed $ 411,552
Income distribution payable 5,482,724
Accrued expenses 238,748
Total liabilities 6,133,024
Net Assets for 2,062,261,061 shares outstanding $ 2,062,163,006
NET ASSETS CONSIST OF:
Paid in capital $ 2,062,261,061
Accumulated net realized loss on investments (122,570)
Undistributed net investment income 24,515
Total Net Assets $ 2,062,163,006
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$1,474,180,243 / 1,474,256,160 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$587,982,763 / 588,004,901 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
TAX-FREE OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 77,902,801
EXPENSES:
Investment advisory fee $ 4,284,365
Administrative personnel and services fee 1,617,952
Custodian fees 134,730
Transfer and dividend disbursing agent fees and 73,813
expenses
Directors'/Trustees' fees 18,794
Auditing fees 14,499
Legal fees 15,608
Portfolio accounting fees 205,080
Shareholder services fee--Institutional Shares 4,151,037
Shareholder services fee--Institutional Service 1,204,420
Shares
Share registration costs 57,927
Printing and postage 24,146
Insurance premiums 18,415
Taxes 3,863
Miscellaneous 26,305
Total expenses 11,850,954
Waivers--
Waiver of investment advisory fee $ (2,116,877)
Waiver of shareholder services fee--Institutional (4,151,037)
Shares
Total waivers (6,267,914)
Net expenses 5,583,040
Net investment income 72,319,761
Net realized loss on investments (9,927)
Change in net assets resulting from operations $ 72,309,834
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 72,319,761 $ 62,658,478
Net realized gain (loss) on investments ($107,581 net (9,927) (66,893)
loss and $36,269 net loss, respectively, as computed for
federal income tax puposes)
Change in net assets resulting from operations 72,309,834 62,591,585
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (56,940,629) (51,152,839)
Institutional Service Shares (15,379,132) (11,505,639)
Change in net assets resulting from distributions to (72,319,761) (62,658,478)
shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 12,978,635,504 12,426,624,832
Net asset value of shares issued to shareholders in 9,465,909 4,751,851
payment of distributions declared
Cost of shares redeemed (12,847,315,602) (12,057,396,164)
Change in net assets resulting from share transactions 140,785,811 373,980,519
Change in net assets 140,775,884 373,913,626
NET ASSETS:
Beginning of period 1,921,387,122 1,547,473,496
End of period (including undistributed net investment $ 2,062,163,006 $ 1,921,387,122
income of $24,515 and $0, respectively)
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TAX-FREE OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios. The
financial statements included herein are only those of Tax-Free Obligations
Fund (the "Fund"). The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
The investment objective of the Fund is to provide dividend income exempt
from federal regular income tax consistent with the stability of principal.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio securities 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.
Income and captial gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing book/tax
treatments of partnerships. The following reclassifications have been made
to the financial statements.
INCREASE(DECREASE)
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT NET REALIZED
INCOME LOSS
$24,515 $(24,515)
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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, 1997, the Fund, for federal tax purposes, had a capital loss
carryforward of $163,650, 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:
EXPIRATION YEAR EXPIRATION AMOUNT
2001 $ 580
2002 19,220
2004 36,269
2005 107,581
Additionally, net capital losses of $16,488 attributable to security
transactions incurred after October 31, 1996 are treated as arising on the
first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The
Fund records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued
or delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
restoration 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 upon exercise or a demand
feature. Such restricted securities may be determined to be liquid under
criteria established by the Board of Directors. 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 the restricted security held at July 31, 1997 is
as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Delaware County, PA (Series 1993G) 12/2/1996 $9,360,000
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in aggregated
$2,062,261,061.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 11,143,842,232 10,558,231,210
Shares issued to shareholders in payment of distributions 7,389,962 3,176,723
declared
Shares redeemed (11,192,024,289) (10,341,838,613)
Net change resulting from Institutional Share (40,792,095) 219,569,320
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 1,834,793,272 1,868,393,620
Shares issued to shareholders in payment of distributions 2,075,947 1,575,129
declared
Shares redeemed (1,655,291,313) (1,715,557,550)
Net change resulting from Institutional Service Share 181,577,906 154,411,199
transactions
Net change resulting from share transactions 140,785,811 373,980,519
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The
fee paid to FServ is based on the level of average aggregate daily net
assets of all funds advised by subsidiaries of Federated Investors for the
period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio
and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of average
daily net assets of the Fund for the period. The fee paid to FSS is used to
finance certain services for shareholders and to maintain shareholder
accounts. FSS may voluntarily choose to waive any portion of its fee. FSS
can modify or terminate this voluntary waiver at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Fund. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a fee.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS
During the period ended July 31, 1997, the Fund engaged in purchase and sale
transactions with funds that have a common investment adviser (or affiliated
investment advisers), common Directors/Trustees, and/or common Officers.
These purchase and sale transactions were made at current market value
pursuant to Rule 17a-7 under the Act amounting to $3,767,305,926 and
$3,859,725,000, respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors
or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of MONEY MARKET OBLIGATIONS TRUST
(Tax-Free Obligations Fund):
We have audited the accompanying statement of assets and liabilities of
Tax-Free Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the schedule
of portfolio investments, as of July 31, 1997, 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, 1997, 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
Tax-Free Obligations Fund (an investment portfolio of Money Market
Obligations Trust) as of July 31, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended, and its financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
[Graphic]
Federated Investors
Tax-Free Obligations Fund
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
TAX-FREE OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributors
Cusip 60934N880
9110207A-SS (9/97)
[Graphic]
TAX-FREE OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus(es) of Tax-Free Obligations Fund (the "Fund"), a portfolio of
Money Market Obligations Trust (the "Trust") dated September 30, 1997. This
Statement is not a prospectus. You may request a copy of a prospectus or a
paper copy of this Statement, if you have received it electronically, free
of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1997
Federated Investors
Federated Securities Corp., Distributor
[Graphic]
Cusip 60934N401
Cusip 60934N880
9110207B (9/97)
TABLE OF CONTENTS
INVESTMENT POLICIES 1
Acceptable Investments 1
Participation Interests 1
Municipal Leases 1
Ratings 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 2
Restricted and Illiquid Securities 2
Credit Enhancement 2
INVESTMENT LIMITATIONS 2
Selling Short and Buying on Margin 2
Issuing Senior Securities and Borrowing Money 2
Pledging Assets 2
Lending Cash or Securities 3
Investment in Commodities 3
Investing in Real Estate 3
Underwriting 3
Concentration of Investments 3
Diversification of Investments 3
Investing in Restricted Securities 3
Investing in Illiquid Securities 3
Investing in Securities of Other Investment Companies 3
Investing for Control 4
Investing in Options 4
Regulatory Compliance 4
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 5
Share Ownership 8
Trustee Compensation 9
Trustee Liability 9
INVESTMENT ADVISORY SERVICES 10
Investment Adviser 10
Advisory Fees 10
BROKERAGE TRANSACTIONS 10
OTHER SERVICES 10
Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 11
Independent Auditors 11
Shareholder Services 11
DETERMINING NET ASSET VALUE 11
REDEMPTION IN KIND 11
MASSACHUSETTS PARTNERSHIP LAW 12
THE FUND'S TAX STATUS 12
PERFORMANCE INFORMATION 12
YIELD 12
Effective Yield 12
Tax-Equivalent Yield 12
Tax-Equivalency Table 13
Total Return 13
PERFORMANCE COMPARISONS 14
Economic and Market Information 14
ABOUT FEDERATED INVESTORS 14
Mutual Fund Market 15
Institutional Clients 15
Bank Marketing 15
Broker/Dealers and Bank Broker/Dealer Subsidiaries 15
APPENDIX 16
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be
changed by the Board of Trustees (the "Trustees") without shareholder
approval. Shareholders will be notified before any material change in
these policies becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer
of the security; the issuer of any demand feature applicable to the
security; or any guarantor of either the security or any demand
feature.
PARTICIPATION INTERESTS
The financial institutions from which the Fund purchases participation
interests frequently provide or secure from another financial
institution irrevocable letters of credit or guarantees and give the
Fund the right to demand payment of the principal amounts of the
participation interests plus accrued interest on short notice (usually
within seven days). The municipal securities subject to the
participation interests are not limited to the Fund's maximum maturity
requirements so long as the participation interests include the right
to demand payment from the issuers of those interests. By purchasing
these participation interests, the Fund is buying a security meeting
the maturity and quality requirements of the Fund and also is
receiving the tax-free benefits of the underlying securities.
MUNICIPAL LEASES
The Fund may purchase municipal securities in the form of
participation interests that represent an undivided proportional
interest in lease payments by a governmental or nonprofit entity. The
lease payments and other rights under the lease provide for and secure
payments on the certificates. Lease obligations may be limited by
municipal charter or the nature of the appropriation for the lease.
Furthermore, a lease may provide that the participants cannot
accelerate lease obligations upon default. The participants would only
be able to enforce lease payments as they became due. In the event of
a default or failure of appropriation, unless the participation
interests are credit enhanced, it is unlikely that the participants
would be able to obtain an acceptable substitute source of payment.
In determining the liquidity of municipal lease securities, the
investment adviser, under the authority delegated by the Trustees,
will base its determination on the following factors: whether the
lease can be terminated by the lessee; the potential recovery, if any,
from a sale of the leased property upon termination of the lease; the
lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); the likelihood
that the lessee will discontinue appropriating funding for the leased
property because the property is no longer deemed essential to its
operations (e.g., the potential for an "event of non-appropriation");
and any credit enhancement or legal recourse provided upon an event of
non-appropriation or other termination of the lease.
RATINGS
The securities in which the Fund invests must be rated in the highest
short-term rating category by one or more nationally recognized
statistical rating organizations ("NRSROs") or be of comparable
quality to securities having such ratings. An NRSRO's highest rating
category is determined without regard for sub-categories and
gradations. For example, securities rated SP-1+ or SP-1 by Standard &
Poor's Ratings Group ("S&P"), MIG-1 by Moody's Investors Service, Inc.
("Moody's"), or F-1+ or F-1 by Fitch Investors Service, Inc. ("Fitch")
are all considered rated in the highest short-term rating category.
The Fund will follow applicable regulations in determining whether a
security rated by more than one NRSRO can be treated as being in the
highest short-term rating category; currently, such securities must be
rated by two NRSROs in their highest rating category. See "Regulatory
Compliance."
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund in a dollar amount sufficient to make payment for
the securities to be purchased are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled. The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its
assets.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant
to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial
institutions sell securities to the Fund and agree at the time of sale
to repurchase them at a mutually agreed upon time and price. To the
extent that the seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any
sale of such securities. The Fund or its custodian will take
possession of the securities subject to repurchase agreements, and
these securities will be marked to market daily. In the event that a
defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Fund might be delayed pending
court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction
would rule in favor of the Fund and allow retention or disposition of
such securities. The Fund will only enter into repurchase agreements
with banks and other recognized financial institutions, such as
broker/dealers, which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.
RESTRICTED AND ILLIQUID SECURITIES
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.
CREDIT ENHANCEMENT
The Fund typically evaluates the credit quality and ratings of
credit-enhanced securities based upon the financial condition and
ratings of the party providing the credit enhancement (the "credit
enhancer"), rather than the issuer. However, credit-enhanced
securities will not be treated as having been issued by the credit
enhancer for diversification purposes, unless the Fund has invested
more than 10% of its assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the
securities will be treated as having been issued by both the issuer
and the credit enhancer.
The Fund may have more than 25% of its total assets invested in
securities credit enhanced by banks.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money in amounts up to one-third of the value of its total
assets, including the amounts borrowed.
The Fund will not borrow money for investment leverage, but rather as
a temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of the value of its total
assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except
as necessary to secure permitted borrowings. In those cases, it may
pledge assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of total assets of the
fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets. This shall not prevent the
Fund from purchasing or holding bonds, debentures, notes, certificates
of indebtedness or other debt securities or engaging in other
transactions where permitted by its investment objective, policies,
and limitations or the Declaration of Trust.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts,
or commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, although it may invest
in securities of issuers whose business involves the purchase or sale
of real estate or in securities which are secured by real estate or
interests in real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such
purchase, 25% or more of the value of its total assets would be
invested in any one industry, or in industrial development bonds or
other securities, the interest upon which is paid from revenues of
similar types of projects. The Fund may invest, as temporary
investments, 25% or more of the value of its total assets in cash or
cash items, securities issued or guaranteed by the U.S. Government its
agencies or instrumentalities or instruments secured by these money
market instruments, such as repurchase agreements. The Fund does not
intend to purchase securities that would increase the percentage of
its assets invested in the securities of governmental subdivisions
located in any one state, territory, or U.S. possession to 25% or
more. However, the Fund may invest 25% or more of the value of its
assets in tax-exempt project notes guaranteed by the U.S. government,
regardless of the location of the issuing municipality. If the value
of the Fund's assets invested in securities of a governmental
subdivision changes because of changing values, the Fund will not be
required to make any reduction in its holdings.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities
and repurchase agreements collateralized by such U.S. government
securities) if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer, or if it
would own more than 10% of the outstanding voting securities of that
issuer.
Under this limitation, each governmental subdivision, including states
and the District of Columbia, territories, possessions of the United
States, or their political subdivisions, agencies, authorities,
instrumentalities, or similar entities, will be considered a separate
issuer if its assets and revenues are separate from those of the
governmental body creating it and the security is backed only by its
own assets and revenues. Industrial development bonds backed only by
the assets and revenues of a nongovernmental user are considered to be
issued solely by that user.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 10% of its total assets in
securities subject to restrictions on resale under federal securities
law, except for restricted securities determined to be liquid under
criteria established by the Trustees.
The above limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets
in illiquid securities including certain restricted securities not
determined to be liquid under criteria established by the Trustees and
non-negotiable time deposits.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
For purposes of the above limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a
domestic bank or savings association having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment
to be "cash items." Except with respect to borrowing money, if a
percentage limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any change in value
or net assets will not result in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth
in the prospectus and this Statement of Additional Information, in
order to comply with applicable laws and regulations, including the
provisions of and regulations under the Investment Company Act of
1940. In particular, the Fund will comply with the various
requirements of Rule 2a-7, which regulates money market mutual funds.
The Fund will determine the effective maturity of its investments, as
well as its ability to consider a security as having received the
requisite short-term ratings by NRSROs, according to Rule 2a-7. The
Fund may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates,
present positions with Money Market Obligations Trust, and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly,
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee, University of Pittsburgh;
Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center--Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of
the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; Director or Trustee of
the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica & Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University and U.S.
Space Foundation; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy
and Technology, Federal Emergency Management Advisory Board and Czech
Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive
Vice President and Secretary of the Funds; Treasurer of some of the
Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in
the Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Trustees and Officers, "Funds" includes
the following investment companies: 111 Corcoran Funds; Arrow Funds;
Automated Government Money Trust; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S.
Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust;
Federated Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund:
2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income
Securities, Inc.; High Yield Cash Trust; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; RIMCO Monument Funds; Targeted Duration Trust;
Tax-Free Instruments Trust; The Planters Funds; The Virtus Funds;
Trust for Financial Institutions; Trust for Government Cash Reserves;
Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 4, 1997, the following shareholders of record owned 5%
or more of the outstanding Institutional Shares of the Fund: Maril and
Company, Milwaukee, WI, owned approximately 92,868,884 shares (5.64%);
The Chase Manhattan Bank N.A., New York, NY, owned approximately
107,858,888 shares (6.55%); Fleet Securities Corp., Rochester, NY,
owned approximately 163,023,454 shares (9.89%); Wachovia Bank of North
Carolina, Winston-Salem, NC, owned approximately 146,145,095 shares
(8.87%); VAR and Company, Saint Paul, MN, owned approximately
255,171,869 shares (15.48%).
As of September 4, 1997, the following shareholders of record owned 5%
or more of the outstanding Institutional Service Shares of the Fund:
HAMAC, Richmond, VA, owned approximately 33,263,989 shares (5.25%);
Naidot and Company, Woodbridge, NJ, owned approximately 114,719,800
shares (18.10%); F M Company, Zeeland, MI, owned approximately
32,877,875 shares (5.19%); Morand and Company, Chicago, IL, owned
approximately 42,758,124 shares (6.74%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <S>
John F. Donahue $0 $0 for the Trust and
Chairman and 56 other investment
Trustee companies in the Fund Complex
Thomas G. Bigley $16,489 $108,725 for the Trust and
56 other investment
Trustee companies in the Fund Complex
John T. Conroy,Jr. $18,139 $119,615 for the Trust and
56 other investment
Trustee companies in the Fund Complex
William J.
Copeland $18,139 $119,615 for the Trust and
56 other investment
Trustee companies in the Fund Complex
J. Christopher
Donahue $0 $0 for the Trust and
President and 18 other investment
Trustee companies in the Fund
Complex
James E. Dowd $18,139 $119,615 for the Trust and
56 other investment
Trustee companies in the Fund Complex
Lawrence D. Ellis,
M.D. $16,489 $108,725 for the Trust and
Trustee 56 other investment
companies in the Fund Complex
Edward L.
Flaherty, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment
companies in the Fund Complex
Peter E. Madden $16,489 $108,725 for the Trust and
Trustee 56 other investment
companies in the Fund Complex
Gregor F. Meyer $16,489 $108,725 for the Trust and
Trustee 56 other investment
companies in the Fund Complex
John E. Murray,
Jr., $16,489 $108,725 for the Trust and
Trustee 56 other investment
companies in the Fund Complex
Wesley W. Posvar $16,489 $108,725 for the Trust and
Trustee 56 other investment
companies in the Fund Complex
Marjorie P. Smuts $16,489 $108,725 for the Trust and
Trustee 56 other investment
companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1997.
# The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+ The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Management. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended July 31, 1997, 1996, and 1995, the adviser earned
$4,284,365, $3,668,956, and $2,318,805, respectively, of which
$2,116,877, $2,000,281, and $1,581,210, respectively, were waived.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Trustees. The adviser may select brokers and
dealers who offer brokerage and research services. These services may
be furnished directly to the Fund or to the adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the adviser or
its affiliates in advising the Fund and other accounts. To the extent
that receipt of these services may supplant services for which the
adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended July 31, 1997, 1996,
and 1995, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When
the Fund and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in
a manner believed by the adviser to be equitable to each. In some
cases, this procedure may adversely affect the price paid or received
by the Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and
the ability to participate in volume transactions will be to the
benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. From March 1, 1994 to March 1, 1996,
Federated Administrative Services, a subsidiary of Federated
Investors, served as the Fund's Administrator. For purposes of this
Statement of Additional Information, Federated Services Company and
Federated Administrative Services may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended July
31, 1997, 1996, and 1995, the Administrators earned $1,617,952,
$1,387,430, and $877,668, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company,
Pittsburgh, PA, provides certain accounting and recordkeeping services
with respect to the Fund's portfolio investments. The fee paid for
this service is based upon the level of the Fund's average net assets
for the period plus out-of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records. For its services, the transfer agent receives a
fee based on the size, type, and number of accounts and transactions
made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen
LLP, Pittsburgh, PA.
SHAREHOLDER SERVICES
This arrangement permits the payment of fees to Federated Shareholder
Services to cause services to be provided which are necessary for the
maintenance of shareholder accounts and to encourage personal services
to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and
services may include but are not limited to providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish
and maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account
cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and
addresses.
By adopting the Shareholder Services Agreement, the Trustees expect
that the Fund will benefit by: (1) providing personal services to
shareholders; (2) investing shareholder assets with a minimum of delay
and administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal year ended July 31, 1997, the Fund earned shareholder
service fees on behalf of Institutional Shares and Institutional
Service Shares in the amounts of $4,151,037 and $1,204,420,
respectively, $0 and $1,204,420 of which, respectively, was paid to
financial institutions.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the
value of portfolio instruments is amortized cost. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted
for amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Fund computed by dividing
the annualized daily income on the Fund's portfolio by the net asset
value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market
prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule
2a-7 (the "Rule") promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940. Under the Rule,
the Trustees must establish procedures reasonably designed to
stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The
procedures include monitoring the relationship between the amortized
cost value per share and the net asset value per share based upon
available indications of market value. The Trustees will decide what,
if any, steps should be taken if there is a difference of more than
0.5 of 1% between the two values. The Trustees will take any steps
they consider appropriate (such as redemption in kind or shortening
the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods
of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000
or 1% of the Fund's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Trustees determine that further
payments should be in kind. In such cases, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments
valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable. Redemption in kind is not as liquid as a cash
redemption. If redemption is made in kind, shareholders who sell these
securities could receive less than the redemption value and could
incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for obligations of the
Trust. To protect its shareholders, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
its shareholders for acts or obligations of the Trust. These documents
require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust
to use its property to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment
against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder
will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated
investment companies, the Fund must, among other requirements: derive
at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; derive less than 30% of its gross income
from the sale of securities held less than three months; invest in
securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial
institutions and broker/dealers charge fees in connection with
services provided in conjunction with an investment in shares of the
Fund, the performance will be reduced for those shareholders paying
those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with
a balance of one share at the beginning of the base period, with the
net change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original
one share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the base
period return; and multiplying the base period return by 365/7.
For the seven-day period ended July 31, 1997, the yield for
Institutional Shares and Institutional Service Shares was 3.51%, and
3.26%, respectively.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum
to the 365/7th power; and subtracting 1 from the result.
For the seven-day period ended July 31, 1997, the effective yield for
Institutional Shares and Institutional Service Shares was 3.57%, and
3.32%, respectively.
TAX-EQUIVALENT YIELD
The tax-equivalent yield of the Fund is calculated similarly to the
yield but is adjusted to reflect the taxable yield that the Fund would
have had to earn to equal its actual yield, assuming 28% tax rate (the
maximum effective federal rate for individuals) and assuming that the
income is 100% tax exempt.
For the seven-day period ended July 31, 1997, the tax-equivalent yield
for Institutional Shares and Institutional Service Shares was 4.96%,
and 4.26%, respectively.
TAX-EQUIVALENCY TABLE
A tax-equivalency table may be used in advertising and sales
literature. The interest earned by the municipal securities in the
Fund's portfolio generally remains free from federal regular income
tax,* and is often free from state and local taxes as well. As the
table below indicates, a "tax-free" investment can be an attractive
choice for investors, particularly in times of narrow spreads between
tax-free and taxable yields.
<TABLE>
<CAPTION>
TAXABLE YIELD EQUIVALENT FOR 1997
MULTISTATE MUNICIPAL FUNDS
<S> <C> <C> <C> <C> <C>
FEDERAL
INCOME
TAX 15.00% 28.00% 31.00% 36.00% 39.60%
BRACKET:
JOINT $1- $41,201- $99,601- $151,751- OVER
RETURN 41,200 99,600 151,750 271,050 $271,050
SINGLE $1- $24,651- $59,751- $124,651- OVER
RETURN 24,650 59,750 124,650 271,050 $271,050
<CAPTION>
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
<C> <C> <C> <C> <C> <C> <C>
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
</TABLE>
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
TOTAL RETURN
Average annual total return is the average compounded rate of return
for a given period that would equate a $1,000 initial investment to
the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end
of the period by the net asset value per share at the end of the
period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
The Fund's average annual total returns for the one-year and five-year
periods, and for the period from December 12, 1989, (start of
performance) to July 31, 1997, were 3.49%, 3.13%, and 3.70%,
respectively for Institutional Shares.
The Fund's average annual total returns for the one-year period and
for the period from July 5, 1994, (date of initial public offering) to
July 31, 1997, were 3.24% and 3.28%, respectively, for Institutional
Service Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may
include:
* Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
* IBC/Donoghue's Money Fund Report publishes annualized yields of
money market funds weekly. Donoghue's Money Market Insight
publication reports monthly and 12-month-to-date investment
results for the same money funds.
* Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
* Salomon 30-Day CD Index compares rate levels of 30-day
certificates of deposit from the top ten prime representative
banks.
Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by portfolio managers and their views
and analysis on how such developments could affect the funds. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making --structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.
The company's disciplined security selection process is firmly rooted
in sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
These traders handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in
the mutual fund industry in 1974 with the creation of the first
institutional money market fund. Simultaneously, the company pioneered
the use of the amortized cost method of accounting for valuing shares
of money market funds, a principal means used by money managers today
to value money market fund shares. Other innovations include the first
institutional tax-free money market fund. As of December 31, 1996,
Federated Investors managed more than $50.3 billion in assets across
50 money market funds, including 18 government, 11 prime and 21
municipal with assets approximating $28.0 billion, $12.8 billion and
$9.5 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated
Investors' equity and high yield corporate bond management while
William D. Dawson, Executive Vice President, oversees Federated
Investors' domestic fixed income management. Henry A. Frantzen,
Executive Vice President, oversees the management of Federated
Investors' international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3.5 trillion to the
more than 6,000 funds available.*
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and
mutual funds for a variety of applications, including defined benefit
and defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.
BANK MARKETING
Other institutional clients include close relationships with more than
1,600 banks and trust organizations. Virtually all of the trust
divisions of the top 100 bank holding companies use Federated funds in
their clients' portfolios. The marketing effort to trust clients is
headed by Timothy C. Pillion, Senior Vice President, Bank Marketing &
Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage
firms nationwide--we have over 2,200 broker/dealer and bank
broker/dealer relationships across the country--supported by more
wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service quality measurement.
The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.
* Source: Investment Company Institute
APPENDIX
STANDARD & POOR'S RATINGS GROUP SHORT-TERM MUNICIPAL OBLIGATION RATINGS
A-- Standard & Poor's Ratings Group (S&P) note rating reflects the
liquidity concerns and market access risks unique to notes.
SP-1-- Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus sign (+) designation.
SP-2-- Satisfactory capacity to pay principal and interest.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
S&P assigns dual ratings to all long-term debt issues that have as
part of their provisions a variable rate demand feature. The first
rating (long-term rating) addresses the likelihood of repayment of
principal and interest when due, and the second rating (short-term
rating) describes the demand characteristics. Several examples are
AAA/A-l+, AA/A-I+, A/A-1. (The definitions for the long-term and the
short-term ratings are provided below.)
COMMERCIAL PAPER (CP) RATINGS
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no
more than 365 days.
A-1-- This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign
(+) designation.
A-2-- Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.
LONG-TERM DEBT RATINGS
AAA-- Debt rated "AAA" has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
AA-- Debt rate "AA" has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A-- Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
MOODY'S INVESTORS SERVICE, INC., SHORT-TERM MUNICIPAL OBLIGATIONS RATINGS
Moody's Investor Service, Inc. (Moody's) short-term ratings are
designated Moody's Investment Grade (MIG or VMIG) (see below). The
purpose of the MIG or VMIG ratings is to provide investors with a
simple system by which the relative investment qualities of short-term
obligations may be evaluated.
MIG1-- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG2-- This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
Short-term ratings on issues with demand features are differentiated
by the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and
payment relying on external liquidity. In this case, two ratings are
usually assigned, (for example, Aaa/VMIG-1); the first representing an
evaluation of the degree of risk associated with scheduled principal
and interest payments, and the second representing an evaluation of
the degree of risk associated with the demand feature. The VMIG rating
can be assigned a 1 or 2 designation using the same definitions
described above for the MIG rating.
COMMERCIAL PAPER (CP) RATINGS
P-1-- Issuers rated Prime-1 (or related supporting institutions) have
a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by
the following characteristics: leading market positions in well
established industries, high rates of return on funds employed,
conservative capitalization structure with moderate reliance on debt
and ample asset protection, broad margins in earning coverage of fixed
financial charges and high internal cash generation, well-established
access to a range of financial markets and assured sources of
alternate liquidity.
P-2-- Issuers rated Prime-2 (or related supporting institutions) have
a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
LONG-TERM DEBT RATINGS
Aaa-- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa-- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.
A-- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
NR-- Indicates that both the bonds and the obligor or credit enhancer
are not currently rated by S&P or Moody's with respect to short-term
indebtedness. However, management considers them to be of comparable
quality to securities rated A-1 or P-1.
NR(1)-- The underlying issuer/obligor/guarantor has other outstanding
debt rated "AAA" by S&P or "Aaa" by Moody's.
NR(2)-- The underlying issuer/obligor/guarantor has other outstanding
debt rated "AA" by S&P or "Aa" by Moody's.
NR(3)-- The underlying issuer/obligor/guarantor has other outstanding
debt rated "A" by S&P or Moody's.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATING DEFINITIONS
F-1+-- Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.
F-1-- Very Strong Credit Quality. Issues assigned this rating reflect
an assurance for timely payment, only slightly less in degree than
issues rated F-1+.
F-2-- Good Credit Quality. Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ and F-1 ratings.
Treasury Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
The Institutional Shares of Treasury Obligations Fund (the "Fund")
offered by this prospectus represent interests in a portfolio of Money
Market Obligations Trust (the "Trust"), an open-end management
investment company (a mutual fund). The Fund invests in short-term
U.S. Treasury securities to achieve 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, 1997 with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information, or make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this
document, and other information regarding the Fund is maintained
electronically with the SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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
Fund Information 4
Management of the Fund 4
Distribution of Institutional Shares 4
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 5
Purchasing Shares by Wire 5
Purchasing Shares by Check 6
Investing-by-Phone 6
How to Redeem Shares 6
Redeeming Shares by Telephone 6
Redeeming Shares by Mail 6
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 7
Federal Income Tax 7
State and Local Taxes 7
Other Classes of Shares 7
Performance Information 8
Financial Highlights --Institutional Service Shares 9
Financial Highlights --Institutional Capital Shares 10
Financial Statements 11
Report of Independent Public Accountants 19
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
<S> <C> <C>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1) 0.10%
12b-1 Fee None
Total Other Expenses 0.10%
Shareholder Services Fee (after waiver)(2) 0.00%
Total Operating Expenses(3) 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary
waiver of a portion of the management fee. The adviser can terminate
this voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.20%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider can
terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(3) The total operating expenses would have been 0.55% 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 Institutional
Shares of the Fund will bear, either directly or indirectly. For more
complete descriptions of the various costs and expenses, see "Fund
Information." and "How to Purchase Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE
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.
1 Year $ 2
3 Years $ 6
5 Years $11
10 Years $26
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1997 1996 1995 1994 1993 1992
1991 1990(A)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.05 0.03 0.03
0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from net (0.05) (0.05) (0.05) (0.03) (0.03)
(0.05) (0.07) (0.04)
investment income
NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
PERIOD
TOTAL RETURN(B) 5.36% 5.53% 5.50% 3.35% 3.15%
4.61% 7.11% 5.09%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20%
0.20% 0.20% 0.20%*
Net investment income 5.24% 5.37% 5.42% 3.29% 3.11%
4.49% 6.65% 8.16%*
Expense 0.35% 0.36% 0.36% 0.10% 0.07%
0.08% 0.09% 0.15%*
waiver/reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of $4,814,583 $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037
$1,678,880 $576,048
period (000 omitted)
</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 charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees (the
"Trustees") has established three classes of shares known as
Institutional Shares, Institutional Service Shares, and Institutional
Capital Shares. This prospectus relates only to Institutional Shares
of the Fund, which are designed primarily for entities holding shares
in an agency or fiduciary capacity, financial institutions, financial
intermediaries and institutional investors as a convenient means of
accumulating an interest in a professionally managed portfolio
investing in short-term U.S. Treasury securities. A minimum initial
investment of $1,000,000 over a one-year period is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares
are currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with
stability of principal. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by
complying with the diversification and other requirements of Rule 2a-7
under the Investment Company Act of 1940 which regulates money market
mutual funds and by following the investment policies described in
this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a
portfolio of U.S. Treasury securities maturing in 13 months or less.
The average maturity of the securities in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the
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.
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 up to 15% of the value of those
assets to secure such borrowings.
The above investment limitations 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.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management,
the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision
for the Fund and is responsible for the purchase and sale of portfolio
instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April
11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors. All
of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee
of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interests. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Shares of the Fund. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to 0.25% of the average
daily net asset value of its shares, computed at an annual rate, to
obtain certain personal services for shareholders and to maintain
shareholder accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services
Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes
of the Fund. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund
at an annual rate which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00
by valuing the portfolio securities using the amortized cost method.
The net asset value per share is determined by subtracting liabilities
attributable to Institutional Shares from the value of Fund assets
attributable to Institutional Shares, and dividing the remainder by
the number of Institutional 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York
Stock Exchange is open for business. Shares may be purchased either by
wire or by check. The Fund reserves the right to reject any purchase
request.
To make a purchase, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken by
telephone. The minimum initial investment is $1,000,000. However, an
account may be opened with a smaller amount as long as the minimum is
reached within one year of opening the account. Financial institutions
may impose different minimum investment requirements on their
customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund
before 5:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 5:00 p.m. (Eastern time) that day. Federal funds
should be wired as follows: Federated Shareholder Services Company,
c/o State Street Bank and Trust Company, Boston, MA; Attention:
EDGEWIRE; For Credit to: Treasury Obligations Fund--Institutional
Shares; Fund Number (this number can be found on the account statement
or by contacting the Fund); Group Number or Order Number; Nominee or
Institution Name; and ABA Number 011000028. Shares cannot be purchased
by wire on holidays when wire transfers are restricted. Questions on
wire purchases should be directed to your shareholder services
representative at the telephone number listed on your account
statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check
should be made payable to: Treasury Obligations Fund--Institutional
Shares. Orders by mail are considered received when payment by check
is converted into federal funds (normally the business day after the
check is received), and shares begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone
for investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated
Shareholder Services Company to purchase shares. Federated Shareholder
Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the
Automated Clearing House. The shareholder's bank, which must be an
Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally
entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper
form and can be made as described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the
Fund has a properly completed authorization form. These forms can be
obtained from Federated Securities Corp. Proceeds from redemption
requests received before 5:00 p.m. (Eastern time) will be wired the
same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include
that day's dividend. Proceeds from redemption requests on holidays
when wire transfers are restricted will be wired the following
business day. Questions about telephone redemptions on days when wire
transfers are restricted should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
Telephone instructions may be recorded and if reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs,
"Redeeming Shares by Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified
mail to the address noted above.
The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Fund unless cash payments are requested by writing to the Fund. Shares
purchased by wire before 5:00 p.m. (Eastern time) begin earning
dividends that day. Shares purchased by check begin earning dividends
the day after the check is converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If
capital gains or losses were to occur, they could result in an
increase or decrease in dividends. The Fund will distribute in cash or
additional shares any realized net long-term capital gains at least
once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account, except accounts maintained by
retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000,000 due
to shareholder redemptions. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder
one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of all classes of each portfolio in
the Trust have equal voting rights, except that in matters affecting
only a particular portfolio or class, only shareholders of that
portfolio or class are entitled to vote. The Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought
only for certain changes in the Trust's or the Fund's operation and
for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate
entity for federal income tax purposes so that income (including
capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions received. This
applies whether dividends and distributions are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent
that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Service Shares and
Institutional Capital Shares are sold at net asset value primarily to
financial institutions, financial intermediaries and institutional
investors and are subject to a minimum initial investment of
$1,000,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan but
are subject to shareholder services fees.
Institutional Capital Shares are distributed with no 12b-1 Plan but
are subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class,
investors may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and
total return. The performance figures will be calculated separately
for each class of shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during
the period on an investment shown as a percentage of the investment.
The effective yield is calculated similarly to the yield, but when
annualized, the income earned by an investment is assumed to be
reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.10% 5.26% 5.23% 0.29%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.39%*
Net investment income 5.03% 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,054,110 $1,516,839 $543,855 $8,887
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 5, 1994, (date of
initial public investment) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL CAPITAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31, 1997(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00
TOTAL RETURN(B) 1.58%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.30%*
Net investment income 5.42%*
Expense waiver/reimbursement(c) 0.25%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $42,505
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 14, 1997 (date of
initial public investment) to July 31, 1997.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--16.6%
$ 141,000,000 (a)U.S. Treasury Bills--1.7%
5.60%-5.96%, 2/5/1998-6/25/1998 $ 135,848,080
1,176,000,000 U.S. Treasury Notes--14.9%
5.000% - 7.875%, 10/31/1997-5/31/1998 1,180,329,647
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,316,177,727
(B)REPURCHASE AGREEMENTS--83.4%
330,000,000 BT Securities Corporation, 5.790%, dated 7/31/1997, 330,000,000
due 8/1/1997
325,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.790%, dated 325,000,000
7/31/1997, due 8/1/1997
316,000,000 Barclays de Zoete Wedd Securities, Inc., 5.790%, dated 316,000,000
7/31/1997, due 8/1/1997
377,000,000 Bear, Stearns and Co., 5.770%, dated 7/31/1997, due 377,000,000
8/1/1997
250,000,000 CIBC Wood Gundy Securities Corp., 5.770%, dated 250,000,000
7/31/1997, due 8/1/1997
100,000,000 CIBC Wood Gundy Securities Corp., 5.790%, dated 100,000,000
7/31/1997, due 8/1/1997
375,000,000 Credit Suisse First Boston, 5.790%, dated 7/31/1997, 375,000,000
due 8/1/1997
50,000,000 Dean Witter Reynolds, Inc., 5.790%, dated 7/31/1997, 50,000,000
due 8/1/1997
65,000,000 Deutsche Bank Government Securities, Inc., 5.790%, 65,000,000
dated 7/31/1997, due 8/1/1997
610,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 610,000,000
5.770%, dated 7/31/1997, due 8/1/1997
265,000,000 First Chicago Capital Markets, Inc., 5.800%, dated 265,000,000
7/31/1997, due 8/1/1997
150,000,000 Goldman Sachs Group, LP, 5.950%, dated 7/31/1997, due 150,000,000
8/1/1997
320,000,000 Greenwich Capital Markets, Inc., 5.790%, dated 320,000,000
7/31/1997, due 8/1/1997
250,000,000 Harris Government Securities, Inc., 5.770%, dated 250,000,000
7/31/1997, due 8/1/1997
380,000,000 Harris Government Securities, Inc., 5.780%, dated 380,000,000
7/31/1997, due 8/1/1997
375,000,000 Sanwa-BGK Securities Co., LP, 5.770%, dated 7/31/1997, 375,000,000
due 8/1/1997
375,000,000 Societe Generale, New York, 5.770%, dated 7/31/1997, 375,000,000
due 8/1/1997
40,000,000 State Street Bank and Trust Co., 5.770%, dated 40,000,000
7/31/1997, due 8/1/1997
395,000,000 Swiss Bank Capital Markets, 5.770%, dated 7/31/1997, 395,000,000
due 8/1/1997
105,500,000 Swiss Bank Capital Markets, 5.780%, dated 7/31/1997, 105,500,000
due 8/1/1997
530,000,000 UBS Securities, Inc., 5.770%, dated 7/31/1997, due 530,000,000
8/1/1997
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS--CONTINUED
$ 315,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1997, due $ 315,000,000
8/1/1997
50,000,000 UBS Securities, Inc., 6.250%, dated 7/31/1997, due 50,000,000
8/1/1997
250,000,000 Westdeutsche Landesbank Girozentrale, 5.800%, dated 250,000,000
7/31/1997, due 8/1/1997
TOTAL REPURCHASE AGREEMENTS 6,598,500,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 7,914,677,727
</TABLE>
(a) The issue shows the rate of discount at time of purchase.
(b) The 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) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($7,911,198,833) at July 31, 1997.
The following acronym is used throughout this portfolio:
LP--Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TREASURY OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 6,598,500,000
Investments in securities 1,316,177,727
Total investments in securities, at amortized cost and value $7,914,677,727
Cash 828,499
Income receivable 23,896,310
Receivable for shares sold 696,198
Total assets 7,940,098,734
LIABILITIES:
Payable for shares redeemed 509,713
Income distribution payable 27,128,652
Accrued expenses 1,261,536
Total liabilities 28,899,901
NET ASSETS for 7,911,198,833 shares outstanding $7,911,198,833
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$4,814,583,335 / 4,814,583,335 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$3,054,110,180 / 3,054,110,180 shares outstanding $1.00
INSTITUTIONAL CAPITAL SHARES:
$42,505,318 / 42,505,318 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
TREASURY OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $378,993,945
EXPENSES:
Investment advisory fee $ 13,886,919
Administrative personnel and services fee 5,244,250
Custodian fees 405,543
Transfer and dividend disbursing agent fees and expenses 112,425
Directors'/Trustees' fees 62,567
Auditing fees 13,938
Legal fees 20,294
Portfolio accounting fees 526,748
Shareholder services fee--Institutional Shares 12,135,054
Shareholder services fee--Institutional Service Shares 5,214,861
Shareholder services fee--Institutional Capital Shares 8,734
Share registration costs 611,689
Printing and postage 24,206
Insurance premiums 51,435
Taxes 79,791
Miscellaneous 31,734
Total expenses 38,430,187
Waivers --
Waiver of investment advisory fee $ (6,879,101)
Waiver of shareholder services fee--Institutional (12,135,054)
Shares
Waiver of shareholder services fee--Institutional (5,240)
Capital Shares
Total waivers (19,019,395)
Net expenses 19,410,792
Net investment income $359,583,153
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 359,583,153 $ 300,534,344
Change in net assets resulting from operations 359,583,153 300,534,344
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (254,552,990) (240,569,688)
Institutional Service Shares (104,840,770) (59,964,656)
Institutional Capital Shares (189,393) --
Change in net assets resulting from distributions (359,583,153) (300,534,344)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 43,911,491,307 36,669,931,962
Net asset value of shares issued to shareholders in 84,240,302 62,692,910
payment of distributions declared
Cost of shares redeemed (42,251,242,453) (34,550,837,468)
Change in net assets resulting from share 1,744,489,156 2,181,787,404
transactions
Change in net assets 1,744,489,156 2,181,787,404
NET ASSETS:
Beginning of period 6,166,709,677 3,984,922,273
End of period $ 7,911,198,833 $ 6,166,709,677
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios.
The financial statements included herein are only those of Treasury
Obligations Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest
is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income consistent with stability of
principal.
The Fund offers three classes of shares: Institutional Shares, Institutional
Service Shares, and Institutional Capital Shares. Effective April 14, 1997,
the Trust added Institutional Capital Shares.
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 uses the amortized cost method to value its portfolio
securities in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the
Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and
other recognized financial institutions, such as broker/dealers, which
are deemed by the Fund's adviser to be creditworthy pursuant to the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and
discount, if applicable, are amortized as required by the Internal
Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions.
The Fund records when-issued securities on the trade date and
maintains security positions such that sufficient liquid assets will
be available to make payment for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual
results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 27,254,234,550 27,640,869,241
Shares issued to shareholders in payment of 50,228,539 35,998,981
distributions declared
Shares redeemed (27,139,750,037) (26,468,065,612)
Net change resulting from Institutional Share 164,713,052 1,208,802,610
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 16,581,686,843 9,029,062,721
Shares issued to shareholders in payment of 33,822,698 26,693,929
distributions declared
Shares redeemed (15,078,238,755) (8,082,771,856)
Net change resulting from Institutional
Service Share 1,537,270,786 972,984,794
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL CAPITAL SHARES 1997(A) 1996
<S> <C> <C>
Shares sold 75,569,914 --
Shares issued to shareholders in payment
of distributions declared 189,065 --
Shares redeemed (33,253,661) --
Net change resulting from Institutional
Capital Share transactions 42,505,318 --
Net change resulting from share transactions 1,744,489,156 2,181,787,404
</TABLE>
(a) For the period from April 14, 1997 (date of initial public
investment) to July 31, 1997.
At July 31, 1997, capital paid-in aggregated $7,911,198,833.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to
0.20% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can
modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative
Services Agreement, provides the Fund with administrative personnel
and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received
during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to
FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver
at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a
fee. The fee is based on the level of the Fund's average daily net
assets for the period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities
of Treasury Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the
schedule of portfolio investments, as of July 31, 1997, 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, 1997, 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, 1997, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and its
financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
NOTES
[Graphic]
Federated Investors
Treasury Obligations Fund
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
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 Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N500
9110208A-IS (9/97)
[Graphic]
Treasury Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
The Institutional Service Shares of Treasury Obligations Fund (the
"Fund") offered by this prospectus represent interests in a portfolio
of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in
short-term U.S. Treasury securities to achieve 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, 1997 with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information, or make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this
document, and other information regarding the Fund is maintained
electronically with the SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED SEPTEMBER 30, 1997
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
Fund Information 4
Management of the Fund 4
Distribution of Institutional Service Shares 4
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 5
Purchasing Shares by Wire 5
Purchasing Shares by Check 6
Investing-by-Phone 6
How to Redeem Shares 6
Redeeming Shares by Telephone 6
Redeeming Shares by Mail 6
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 7
Federal Income Tax 7
State and Local Taxes 7
Other Classes of Shares 8
Performance Information 8
Financial Highlights --Institutional Shares 9
Financial Highlights --Institutional Capital Shares 10
Financial Statements 11
Report of Independent Public Accountants 19
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
<C> <C>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1) 0.10%
12b-1 Fee None
Total Other Expenses 0.35%
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 0.55% 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
"Fund Information" and "How to Purchase Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE
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.
1 Year $ 5
3 Years $14
5 Years $25
10 Years $57
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.10% 5.26% 5.23% 0.29%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.39%*
Net investment income 5.03% 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,054,110 $1,516,839 $543,855 $8,887
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 5, 1994, (date of
initial public investment) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees (the
"Trustees") has established three classes of shares known as
Institutional Shares, Institutional Service Shares, and Institutional
Capital Shares. This prospectus relates only to Institutional Service
Shares of the Fund, which are designed primarily for financial
institutions, financial intermediaries and institutional investors as
a convenient means of accumulating an interest in a professionally
managed portfolio investing in short-term U.S. Treasury securities. A
minimum initial investment of $1,000,000 over a one-year period is
required.
The Fund attempts to stabilize the value of a share at $1.00. Shares
are currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with
stability of principal. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by
complying with the diversification and other requirements of Rule 2a-7
under the Investment Company Act of 1940 which regulates money market
mutual funds and by following the investment policies described in
this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a
portfolio of U.S. Treasury securities maturing in 13 months or less.
The average maturity of the securities in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the
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.
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 up to 15% of the value of those
assets to secure such borrowings.
The above investment limitations 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.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management,
the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision
for the Fund and is responsible for the purchase and sale of portfolio
instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April
11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors. All
of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee
of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With
over$110 billion invested across over 300 funds under management
and/or administration by its subsidiaries, as of December 31, 1996,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
4,500 financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interests. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to 0.25% of the average
daily net asset value of its shares, computed at an annual rate, to
obtain certain personal services for shareholders and to maintain
shareholder accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services
Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes
of the Fund. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund
at an annual rate which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00
by valuing the portfolio securities using the amortized cost method.
The net asset value per share is determined by subtracting liabilities
attributable to Institutional Service Shares from the value of Fund
assets attributable to Institutional Service Shares, and dividing the
remainder by the number of Institutional Service 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York
Stock Exchange is open for business. Shares may be purchased either by
wire or by check. The Fund reserves the right to reject any purchase
request.
To make a purchase, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken by
telephone. The minimum initial investment is $1,000,000. However, an
account may be opened with a smaller amount as long as the minimum is
reached within one year of opening the account. Financial institutions
may impose different minimum investment requirements on their
customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund
before 5:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 5:00 p.m. (Eastern time) that day. Federal funds
should be wired as follows: Federated Shareholder Services Company,
c/o State Street Bank and Trust Company, Boston, MA; Attention:
EDGEWIRE; For Credit to: Treasury Obligations Fund -- Institutional
Service Shares; Fund Number (this number can be found on the account
statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot
be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check
should be made payable to: Treasury Obligations Fund--Institutional
Service Shares. Orders by mail are considered received when payment by
check is converted into federal funds (normally the business day after
the check is received), and shares begin earning dividends the next
day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone
for investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated
Shareholder Services Company to purchase shares. Federated Shareholder
Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the
Automated Clearing House. The shareholder's bank, which must be an
Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally
entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper
form and can be made as described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the
Fund has a properly completed authorization form. These forms can be
obtained from Federated Securities Corp. Proceeds from redemption
requests received before 5:00 p.m. (Eastern time) will be wired the
same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include
that day's dividend. Proceeds from redemption requests on holidays
when wire transfers are restricted will be wired the following
business day. Questions about telephone redemptions on days when wire
transfers are restricted should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
Telephone instructions may be recorded and if reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs,
"Redeeming Shares by Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified
mail to the address noted above.
The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Fund unless cash payments are requested by writing to the Fund. Shares
purchased by wire before 5:00 p.m. (Eastern time) begin earning
dividends that day. Shares purchased by check begin earning dividends
the day after the check is converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If
capital gains or losses were to occur, they could result in an
increase or decrease in dividends. The Fund will distribute in cash or
additional shares any realized net long-term capital gains at least
once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account, except accounts maintained by
retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000,000 due
to shareholder redemptions. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder
one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of all classes of each portfolio in
the Trust have equal voting rights, except that in matters affecting
only a particular portfolio or class, only shareholders of that
portfolio or class are entitled to vote. The Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought
only for certain changes in the Trust's or the Fund's operation and
for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate
entity for federal income tax purposes so that income (including
capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions received. This
applies whether dividends and distributions are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent
that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Shares are sold at
net asset value primarily to entities holding shares in an agency or
fiduciary capacity, financial institutions, financial intermediaries
and institutional investors and are subject to a minimum initial
investment of $1,000,000. Institutional Capital Shares are sold at net
asset value primarily to financial institutions, financial
intermediaries and institutional investors and are subject to a
minimum initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan but are
subject to shareholder services fees.
Institutional Capital Shares are distributed with no 12b-1 Plan but
are subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class,
investors may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and
total return. The performance figures will be calculated separately
for each class of shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during
the period on an investment shown as a percentage of the investment.
The effective yield is calculated similarly to the yield, but when
annualized, the income earned by an investment is assumed to be
reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1997 1996 1995 1994 1993 1992
1991 1990(A)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.05 0.03 0.03
0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from net (0.05) (0.05) (0.05) (0.03) (0.03)
(0.05) (0.07) (0.04)
investment income
NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
PERIOD
TOTAL RETURN(B) 5.36% 5.53% 5.50% 3.35% 3.15%
4.61% 7.11% 5.09%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20%
0.20% 0.20% 0.20%*
Net investment income 5.24% 5.37% 5.42% 3.29% 3.11%
4.49% 6.65% 8.16%*
Expense 0.35% 0.36% 0.36% 0.10% 0.07%
0.08% 0.09% 0.15%*
waiver/reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of $4,814,583 $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037
$1,678,880 $576,048
period (000 omitted)
</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 charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL CAPITAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31, 1997(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00
TOTAL RETURN(B) 1.58%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.30%*
Net investment income 5.42%*
Expense waiver/reimbursement(c) 0.25%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $42,505
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 14, 1997 (date of
initial public investment) to July 31, 1997.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--16.6%
$ 141,000,000 (a)U.S. Treasury Bills--1.7%
5.60%-5.96%, 2/5/1998-6/25/1998 $ 135,848,080
1,176,000,000 U.S. Treasury Notes--14.9%
5.000% - 7.875%, 10/31/1997-5/31/1998 1,180,329,647
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,316,177,727
(B)REPURCHASE AGREEMENTS--83.4%
330,000,000 BT Securities Corporation, 5.790%, dated 7/31/1997, 330,000,000
due 8/1/1997
325,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.790%, dated 325,000,000
7/31/1997, due 8/1/1997
316,000,000 Barclays de Zoete Wedd Securities, Inc., 5.790%, dated 316,000,000
7/31/1997, due 8/1/1997
377,000,000 Bear, Stearns and Co., 5.770%, dated 7/31/1997, due 377,000,000
8/1/1997
250,000,000 CIBC Wood Gundy Securities Corp., 5.770%, dated 250,000,000
7/31/1997, due 8/1/1997
100,000,000 CIBC Wood Gundy Securities Corp., 5.790%, dated 100,000,000
7/31/1997, due 8/1/1997
375,000,000 Credit Suisse First Boston, 5.790%, dated 7/31/1997, 375,000,000
due 8/1/1997
50,000,000 Dean Witter Reynolds, Inc., 5.790%, dated 7/31/1997, 50,000,000
due 8/1/1997
65,000,000 Deutsche Bank Government Securities, Inc., 5.790%, 65,000,000
dated 7/31/1997, due 8/1/1997
610,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 610,000,000
5.770%, dated 7/31/1997, due 8/1/1997
265,000,000 First Chicago Capital Markets, Inc., 5.800%, dated 265,000,000
7/31/1997, due 8/1/1997
150,000,000 Goldman Sachs Group, LP, 5.950%, dated 7/31/1997, due 150,000,000
8/1/1997
320,000,000 Greenwich Capital Markets, Inc., 5.790%, dated 320,000,000
7/31/1997, due 8/1/1997
250,000,000 Harris Government Securities, Inc., 5.770%, dated 250,000,000
7/31/1997, due 8/1/1997
380,000,000 Harris Government Securities, Inc., 5.780%, dated 380,000,000
7/31/1997, due 8/1/1997
375,000,000 Sanwa-BGK Securities Co., LP, 5.770%, dated 7/31/1997, 375,000,000
due 8/1/1997
375,000,000 Societe Generale, New York, 5.770%, dated 7/31/1997, 375,000,000
due 8/1/1997
40,000,000 State Street Bank and Trust Co., 5.770%, dated 40,000,000
7/31/1997, due 8/1/1997
395,000,000 Swiss Bank Capital Markets, 5.770%, dated 7/31/1997, 395,000,000
due 8/1/1997
105,500,000 Swiss Bank Capital Markets, 5.780%, dated 7/31/1997, 105,500,000
due 8/1/1997
530,000,000 UBS Securities, Inc., 5.770%, dated 7/31/1997, due 530,000,000
8/1/1997
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS--CONTINUED
$ 315,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1997, due $ 315,000,000
8/1/1997
50,000,000 UBS Securities, Inc., 6.250%, dated 7/31/1997, due 50,000,000
8/1/1997
250,000,000 Westdeutsche Landesbank Girozentrale, 5.800%, dated 250,000,000
7/31/1997, due 8/1/1997
TOTAL REPURCHASE AGREEMENTS 6,598,500,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 7,914,677,727
</TABLE>
(a) The issue shows the rate of discount at time of purchase.
(b) The 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) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($7,911,198,833) at July 31, 1997.
The following acronym is used throughout this portfolio:
LP--Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TREASURY OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 6,598,500,000
Investments in securities 1,316,177,727
Total investments in securities, at amortized cost and value $7,914,677,727
Cash 828,499
Income receivable 23,896,310
Receivable for shares sold 696,198
Total assets 7,940,098,734
LIABILITIES:
Payable for shares redeemed 509,713
Income distribution payable 27,128,652
Accrued expenses 1,261,536
Total liabilities 28,899,901
NET ASSETS for 7,911,198,833 shares outstanding $7,911,198,833
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$4,814,583,335 / 4,814,583,335 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$3,054,110,180 / 3,054,110,180 shares outstanding $1.00
INSTITUTIONAL CAPITAL SHARES:
$42,505,318 / 42,505,318 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
TREASURY OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $378,993,945
EXPENSES:
Investment advisory fee $ 13,886,919
Administrative personnel and services fee 5,244,250
Custodian fees 405,543
Transfer and dividend disbursing agent fees and expenses 112,425
Directors'/Trustees' fees 62,567
Auditing fees 13,938
Legal fees 20,294
Portfolio accounting fees 526,748
Shareholder services fee--Institutional Shares 12,135,054
Shareholder services fee--Institutional Service Shares 5,214,861
Shareholder services fee--Institutional Capital Shares 8,734
Share registration costs 611,689
Printing and postage 24,206
Insurance premiums 51,435
Taxes 79,791
Miscellaneous 31,734
Total expenses 38,430,187
Waivers --
Waiver of investment advisory fee $ (6,879,101)
Waiver of shareholder services fee--Institutional (12,135,054)
Shares
Waiver of shareholder services fee--Institutional (5,240)
Capital Shares
Total waivers (19,019,395)
Net expenses 19,410,792
Net investment income $359,583,153
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 359,583,153 $ 300,534,344
Change in net assets resulting from operations 359,583,153 300,534,344
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (254,552,990) (240,569,688)
Institutional Service Shares (104,840,770) (59,964,656)
Institutional Capital Shares (189,393) --
Change in net assets resulting from distributions (359,583,153) (300,534,344)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 43,911,491,307 36,669,931,962
Net asset value of shares issued to shareholders in 84,240,302 62,692,910
payment of distributions declared
Cost of shares redeemed (42,251,242,453) (34,550,837,468)
Change in net assets resulting from share 1,744,489,156 2,181,787,404
transactions
Change in net assets 1,744,489,156 2,181,787,404
NET ASSETS:
Beginning of period 6,166,709,677 3,984,922,273
End of period $ 7,911,198,833 $ 6,166,709,677
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios.
The financial statements included herein are only those of Treasury
Obligations Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest
is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income consistent with stability of
principal.
The Fund offers three classes of shares: Institutional Shares, Institutional
Service Shares, and Institutional Capital Shares. Effective April 14, 1997,
the Trust added Institutional Capital Shares.
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 uses the amortized cost method to value its portfolio
securities in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the
Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and
other recognized financial institutions, such as broker/dealers, which
are deemed by the Fund's adviser to be creditworthy pursuant to the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and
discount, if applicable, are amortized as required by the Internal
Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions.
The Fund records when-issued securities on the trade date and
maintains security positions such that sufficient liquid assets will
be available to make payment for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual
results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 27,254,234,550 27,640,869,241
Shares issued to shareholders in payment of 50,228,539 35,998,981
distributions declared
Shares redeemed (27,139,750,037) (26,468,065,612)
Net change resulting from Institutional Share 164,713,052 1,208,802,610
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 16,581,686,843 9,029,062,721
Shares issued to shareholders in payment of 33,822,698 26,693,929
distributions declared
Shares redeemed (15,078,238,755) (8,082,771,856)
Net change resulting from Institutional
Service Share 1,537,270,786 972,984,794
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL CAPITAL SHARES 1997(A) 1996
<S> <C> <C>
Shares sold 75,569,914 --
Shares issued to shareholders in payment
of distributions declared 189,065 --
Shares redeemed (33,253,661) --
Net change resulting from Institutional
Capital Share transactions 42,505,318 --
Net change resulting from share transactions 1,744,489,156 2,181,787,404
</TABLE>
(a) For the period from April 14, 1997 (date of initial public
investment) to July 31, 1997.
At July 31, 1997, capital paid-in aggregated $7,911,198,833.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to
0.20% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can
modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative
Services Agreement, provides the Fund with administrative personnel
and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received
during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to
FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver
at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a
fee. The fee is based on the level of the Fund's average daily net
assets for the period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities
of Treasury Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the
schedule of portfolio investments, as of July 31, 1997, 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, 1997, 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, 1997, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and its
financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
NOTES
[Graphic]
Federated Investors
Treasury Obligations Fund
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
TREASURY OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N872
9110208A-SS (9/97)
[Graphic]
Treasury Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Capital Shares
PROSPECTUS
The Institutional Capital Shares of Treasury Obligations Fund (the
"Fund") offered by this prospectus represent interests in a portfolio
of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in
short-term U.S. Treasury securities to achieve 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, 1997 with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information, or make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this
document, and other information regarding the Fund is maintained
electronically with the SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights --Institutional Capital Shares 2
General Information 3
Investment Information 3
Investment Objective 3
Investment Policies 3
Investment Limitations 4
Fund Information 4
Management of the Fund 4
Distribution of Institutional Capital Shares 4
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 5
Purchasing Shares by Wire 5
Purchasing Shares by Check 6
Investing-by-Phone 6
How to Redeem Shares 6
Redeeming Shares by Telephone 6
Redeeming Shares by Mail 6
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 7
Federal Income Tax 7
State and Local Taxes 7
Other Classes of Shares 8
Performance Information 8
Financial Highlights --Institutional Shares 9
Financial Highlights --Institutional Service Shares 10
Financial Statements 11
Report of Independent Public Accountants 19
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL CAPITAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
<S> <C> <C>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1) 0.10%
12b-1 Fee None
Total Other Expenses 0.20%
Shareholder Services Fee (after waiver)(2) 0.10%
Total Operating Expenses(3) 0.30%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary
waiver of a portion of the management fee. The adviser can terminate
this voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.20%.
(2) The shareholder services fee has been reduced to reflect the
voluntary waiver of a portion of the shareholder services fee. The
shareholder service provider can terminate this voluntary waiver at
any time at its sole discretion. The maximum shareholder services fee
is 0.25%.
(3) The total operating expenses would have been 0.55% absent the
voluntary waivers of portions 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 Institutional
Capital Shares of the Fund will bear, either directly or indirectly.
For more complete descriptions of the various costs and expenses, see
"Fund Information" and "How to Purchase Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
EXAMPLE
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.
1 Year $ 3
3 Years $10
5 Years $17
10 Years $38
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL CAPITAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31, 1997(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00
TOTAL RETURN(B) 1.58%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.30%*
Net investment income 5.42%*
Expense waiver/reimbursement(c) 0.25%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $42,505
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 14, 1997 (date of
initial public investment) to July 31, 1997.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees (the
"Trustees") has established three classes of shares known as
Institutional Shares, Institutional Service Shares, and Institutional
Capital Shares. This prospectus relates only to Institutional Capital
Shares of the Fund, which are designed primarily for financial
institutions, financial intermediaries and institutional investors as
a convenient means of accumulating an interest in a professionally
managed portfolio investing in short-term U.S. Treasury securities. A
minimum initial investment of $1,000,000 over a one-year period is
required.
The Fund attempts to stabilize the value of a share at $1.00. Shares
are currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with
stability of principal. This investment objective cannot be changed
without shareholder approval. While there is no assurance that the
Fund will achieve its investment objective, it endeavors to do so by
complying with the diversification and other requirements of Rule 2a-7
under the Investment Company Act of 1940 which regulates money market
mutual funds and by following the investment policies described in
this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a
portfolio of U.S. Treasury securities maturing in 13 months or less.
The average maturity of the securities in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the
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.
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 up to 15% of the value of those
assets to secure such borrowings.
The above investment limitations 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.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management,
the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision
for the Fund and is responsible for the purchase and sale of portfolio
instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.20%
of the Fund's average daily net assets. The adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April
11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors. All
of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee
of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interests. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL CAPITAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Capital Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to 0.25% of the average
daily net asset value of its shares, computed at an annual rate, to
obtain certain personal services for shareholders and to maintain
shareholder accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services
Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes
of the Fund. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund
at an annual rate which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00
by valuing the portfolio securities using the amortized cost method.
The net asset value per share is determined by subtracting liabilities
attributable to Institutional Capital Shares from the value of Fund
assets attributable to Institutional Capital Shares, and dividing the
remainder by the number of Institutional Capital 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York
Stock Exchange is open for business. Shares may be purchased either by
wire or by check. The Fund reserves the right to reject any purchase
request.
To make a purchase, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken by
telephone. The minimum initial investment is $1,000,000. However, an
account may be opened with a smaller amount as long as the minimum is
reached within one year of opening the account. Financial institutions
may impose different minimum investment requirements on their
customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund
before 5:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 5:00 p.m. (Eastern time) that day. Federal funds
should be wired as follows: Federated Shareholder Services Company,
c/o State Street Bank and Trust Company, Boston, MA; Attention:
EDGEWIRE; For Credit to: Treasury Obligations Fund--Institutional
Capital Shares; Fund Number (this number can be found on the account
statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 011000028. Shares cannot
be purchased by wire on holidays when wire transfers are restricted.
Questions on wire purchases should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check
should be made payable to: Treasury Obligations Fund -- Institutional
Capital Shares. Orders by mail are considered received when payment by
check is converted into federal funds (normally the business day after
the check is received), and shares begin earning dividends the next
day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone
for investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated
Shareholder Services Company to purchase shares. Federated Shareholder
Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the
Automated Clearing House. The shareholder's bank, which must be an
Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally
entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper
form and can be made as described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the
Fund has a properly completed authorization form. These forms can be
obtained from Federated Securities Corp. Proceeds from redemption
requests received before 5:00 p.m. (Eastern time) will be wired the
same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include
that day's dividend. Proceeds from redemption requests on holidays
when wire transfers are restricted will be wired the following
business day. Questions about telephone redemptions on days when wire
transfers are restricted should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
Telephone instructions may be recorded and if reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs,
"Redeeming Shares by Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified
mail to the address noted above.
The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Fund unless cash payments are requested by writing to the Fund. Shares
purchased by wire before 5:00 p.m. (Eastern time) begin earning
dividends that day. Shares purchased by check begin earning dividends
the day after the check is converted into federal funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If
capital gains or losses were to occur, they could result in an
increase or decrease in dividends. The Fund will distribute in cash or
additional shares any realized net long-term capital gains at least
once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account, except accounts maintained by
retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000,000 due
to shareholder redemptions. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder
one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of all classes of each portfolio in
the Trust have equal voting rights, except that in matters affecting
only a particular portfolio or class, only shareholders of that
portfolio or class are entitled to vote. The Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought
only for certain changes in the Trust's or the Fund's operation and
for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
As of September 4, 1997, Excelsior-Henderson Motorcycle Manufacturing
Company, 607 W. Travelers Trail, Burnsville, MN, owned 63.46% of the
voting securities of the Fund, and, therefore, may, for certain
purposes, be deemed to control the Fund and be able to affect the
outcome of certain matters presented for a vote of shareholders.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate
entity for federal income tax purposes so that income (including
capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions received. This
applies whether dividends and distributions are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent
that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Shares are sold at
net asset value primarily to entities holding shares in an agency or
fiduciary capacity, financial institutions, financial intermediaries
and institutional investors and are subject to a minimum initial
investment of $1,000,000. Institutional Service Shares are sold at net
asset value primarily to financial institutions, financial
intermediaries and institutional investors and are subject to a
minimum initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan but are
subject to shareholder services fees.
Institutional Service Shares are distributed with no 12b-1 Plan but
are subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class,
investors may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and
total return. The performance figures will be calculated separately
for each class of shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during
the period on an investment shown as a percentage of the investment.
The effective yield is calculated similarly to the yield, but when
annualized, the income earned by an investment is assumed to be
reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1997 1996 1995 1994 1993
1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.05 0.03 0.03
0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from net (0.05) (0.05) (0.05) (0.03) (0.03)
(0.05) (0.07) (0.04)
investment income
NET ASSET VALUE, END OF $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00
PERIOD
TOTAL RETURN(B) 5.36% 5.53% 5.50% 3.35% 3.15%
4.61% 7.11% 5.09%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.20% 0.20% 0.20% 0.20% 0.20%
0.20% 0.20% 0.20%*
Net investment income 5.24% 5.37% 5.42% 3.29% 3.11%
4.49% 6.65% 8.16%*
Expense 0.35% 0.36% 0.36% 0.10% 0.07%
0.08% 0.09% 0.15%*
waiver/reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end of $4,814,583 $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037
$1,678,880 $576,048
period (000 omitted)
</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 charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 19.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995 1994(A)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.10% 5.26% 5.23% 0.29%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.39%*
Net investment income 5.03% 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,054,110 $1,516,839 $543,855 $8,887
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 5, 1994, (date of
initial public investment) to July 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY OBLIGATIONS--16.6%
$ 141,000,000 (a)U.S. Treasury Bills--1.7%
5.60%-5.96%, 2/5/1998-6/25/1998 $ 135,848,080
1,176,000,000 U.S. Treasury Notes--14.9%
5.000% - 7.875%, 10/31/1997-5/31/1998 1,180,329,647
TOTAL SHORT-TERM U.S. TREASURY OBLIGATIONS 1,316,177,727
(B)REPURCHASE AGREEMENTS--83.4%
330,000,000 BT Securities Corporation, 5.790%, dated 7/31/1997, 330,000,000
due 8/1/1997
325,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.790%, dated 325,000,000
7/31/1997, due 8/1/1997
316,000,000 Barclays de Zoete Wedd Securities, Inc., 5.790%, dated 316,000,000
7/31/1997, due 8/1/1997
377,000,000 Bear, Stearns and Co., 5.770%, dated 7/31/1997, due 377,000,000
8/1/1997
250,000,000 CIBC Wood Gundy Securities Corp., 5.770%, dated 250,000,000
7/31/1997, due 8/1/1997
100,000,000 CIBC Wood Gundy Securities Corp., 5.790%, dated 100,000,000
7/31/1997, due 8/1/1997
375,000,000 Credit Suisse First Boston, 5.790%, dated 7/31/1997, 375,000,000
due 8/1/1997
50,000,000 Dean Witter Reynolds, Inc., 5.790%, dated 7/31/1997, 50,000,000
due 8/1/1997
65,000,000 Deutsche Bank Government Securities, Inc., 5.790%, 65,000,000
dated 7/31/1997, due 8/1/1997
610,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 610,000,000
5.770%, dated 7/31/1997, due 8/1/1997
265,000,000 First Chicago Capital Markets, Inc., 5.800%, dated 265,000,000
7/31/1997, due 8/1/1997
150,000,000 Goldman Sachs Group, LP, 5.950%, dated 7/31/1997, due 150,000,000
8/1/1997
320,000,000 Greenwich Capital Markets, Inc., 5.790%, dated 320,000,000
7/31/1997, due 8/1/1997
250,000,000 Harris Government Securities, Inc., 5.770%, dated 250,000,000
7/31/1997, due 8/1/1997
380,000,000 Harris Government Securities, Inc., 5.780%, dated 380,000,000
7/31/1997, due 8/1/1997
375,000,000 Sanwa-BGK Securities Co., LP, 5.770%, dated 7/31/1997, 375,000,000
due 8/1/1997
375,000,000 Societe Generale, New York, 5.770%, dated 7/31/1997, 375,000,000
due 8/1/1997
40,000,000 State Street Bank and Trust Co., 5.770%, dated 40,000,000
7/31/1997, due 8/1/1997
395,000,000 Swiss Bank Capital Markets, 5.770%, dated 7/31/1997, 395,000,000
due 8/1/1997
105,500,000 Swiss Bank Capital Markets, 5.780%, dated 7/31/1997, 105,500,000
due 8/1/1997
530,000,000 UBS Securities, Inc., 5.770%, dated 7/31/1997, due 530,000,000
8/1/1997
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)REPURCHASE AGREEMENTS--CONTINUED
$ 315,000,000 UBS Securities, Inc., 5.800%, dated 7/31/1997, due $ 315,000,000
8/1/1997
50,000,000 UBS Securities, Inc., 6.250%, dated 7/31/1997, due 50,000,000
8/1/1997
250,000,000 Westdeutsche Landesbank Girozentrale, 5.800%, dated 250,000,000
7/31/1997, due 8/1/1997
TOTAL REPURCHASE AGREEMENTS 6,598,500,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 7,914,677,727
</TABLE>
(a) The issue shows the rate of discount at time of purchase.
(b) The 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) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($7,911,198,833) at July 31, 1997.
The following acronym is used throughout this portfolio:
LP--Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TREASURY OBLIGATIONS FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 6,598,500,000
Investments in securities 1,316,177,727
Total investments in securities, at amortized cost and value $7,914,677,727
Cash 828,499
Income receivable 23,896,310
Receivable for shares sold 696,198
Total assets 7,940,098,734
LIABILITIES:
Payable for shares redeemed 509,713
Income distribution payable 27,128,652
Accrued expenses 1,261,536
Total liabilities 28,899,901
NET ASSETS for 7,911,198,833 shares outstanding $7,911,198,833
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$4,814,583,335 / 4,814,583,335 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$3,054,110,180 / 3,054,110,180 shares outstanding $1.00
INSTITUTIONAL CAPITAL SHARES:
$42,505,318 / 42,505,318 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
TREASURY OBLIGATIONS FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $378,993,945
EXPENSES:
Investment advisory fee $ 13,886,919
Administrative personnel and services fee 5,244,250
Custodian fees 405,543
Transfer and dividend disbursing agent fees and expenses 112,425
Directors'/Trustees' fees 62,567
Auditing fees 13,938
Legal fees 20,294
Portfolio accounting fees 526,748
Shareholder services fee--Institutional Shares 12,135,054
Shareholder services fee--Institutional Service Shares 5,214,861
Shareholder services fee--Institutional Capital Shares 8,734
Share registration costs 611,689
Printing and postage 24,206
Insurance premiums 51,435
Taxes 79,791
Miscellaneous 31,734
Total expenses 38,430,187
Waivers --
Waiver of investment advisory fee $ (6,879,101)
Waiver of shareholder services fee--Institutional (12,135,054)
Shares
Waiver of shareholder services fee--Institutional (5,240)
Capital Shares
Total waivers (19,019,395)
Net expenses 19,410,792
Net investment income $359,583,153
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 359,583,153 $ 300,534,344
Change in net assets resulting from operations 359,583,153 300,534,344
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (254,552,990) (240,569,688)
Institutional Service Shares (104,840,770) (59,964,656)
Institutional Capital Shares (189,393) --
Change in net assets resulting from distributions (359,583,153) (300,534,344)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 43,911,491,307 36,669,931,962
Net asset value of shares issued to shareholders in 84,240,302 62,692,910
payment of distributions declared
Cost of shares redeemed (42,251,242,453) (34,550,837,468)
Change in net assets resulting from share 1,744,489,156 2,181,787,404
transactions
Change in net assets 1,744,489,156 2,181,787,404
NET ASSETS:
Beginning of period 6,166,709,677 3,984,922,273
End of period $ 7,911,198,833 $ 6,166,709,677
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios.
The financial statements included herein are only those of Treasury
Obligations Fund (the "Fund"), a diversified portfolio. The financial
statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest
is limited to the portfolio in which shares are held. The investment
objective of the Fund is current income consistent with stability of
principal.
The Fund offers three classes of shares: Institutional Shares, Institutional
Service Shares, and Institutional Capital Shares. Effective April 14, 1997,
the Trust added Institutional Capital Shares.
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 uses the amortized cost method to value its portfolio
securities in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the
Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and
other recognized financial institutions, such as broker/dealers, which
are deemed by the Fund's adviser to be creditworthy pursuant to the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and
discount, if applicable, are amortized as required by the Internal
Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions.
The Fund records when-issued securities on the trade date and
maintains security positions such that sufficient liquid assets will
be available to make payment for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual
results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 27,254,234,550 27,640,869,241
Shares issued to shareholders in payment of 50,228,539 35,998,981
distributions declared
Shares redeemed (27,139,750,037) (26,468,065,612)
Net change resulting from Institutional Share 164,713,052 1,208,802,610
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 16,581,686,843 9,029,062,721
Shares issued to shareholders in payment of 33,822,698 26,693,929
distributions declared
Shares redeemed (15,078,238,755) (8,082,771,856)
Net change resulting from Institutional
Service Share 1,537,270,786 972,984,794
transactions
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL CAPITAL SHARES 1997(A) 1996
<S> <C> <C>
Shares sold 75,569,914 --
Shares issued to shareholders in payment
of distributions declared 189,065 --
Shares redeemed (33,253,661) --
Net change resulting from Institutional
Capital Share transactions 42,505,318 --
Net change resulting from share transactions 1,744,489,156 2,181,787,404
</TABLE>
(a) For the period from April 14, 1997 (date of initial public
investment) to July 31, 1997.
At July 31, 1997, capital paid-in aggregated $7,911,198,833.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to
0.20% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can
modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative
Services Agreement, provides the Fund with administrative personnel
and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received
during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to
FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver
at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a
fee. The fee is based on the level of the Fund's average daily net
assets for the period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Treasury Obligations Fund):
We have audited the accompanying statement of assets and liabilities
of Treasury Obligations Fund (an investment portfolio of Money Market
Obligations Trust, a Massachusetts business trust), including the
schedule of portfolio investments, as of July 31, 1997, 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, 1997, 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, 1997, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and its
financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
NOTES
[Graphic]
Federated Investors
Treasury Obligations Fund
Institutional Capital Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
TREASURY OBLIGATIONS FUND
INSTITUTIONAL CAPITAL 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 Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N823
G01353-01 (9/97)
[Graphic]
TREASURY OBLIGATIONS FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
INSTITUTIONAL CAPITAL SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectuses of Treasury Obligations Fund (the "Fund"), a portfolio of
Money Market Obligations Trust (the "Trust") dated September 30, 1997.
This Statement is not a prospectus. You may request a copy of a
prospectus or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1997
Cusip 60934N500 [Graphic]
Cusip 60934N872
Cusip 60934N823
9110208B (9/97) [Graphic]
TABLE OF CONTENTS
INVESTMENT POLICIES 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Lending of Portfolio Securities 1
INVESTMENT LIMITATIONS 1
Selling Short and Buying on Margin 1
Issuing Senior Securities and Borrowing Money 1
Pledging Assets 1
Lending Cash or Securities 1
Investing in Commodities 1
Investing in Real Estate 2
Underwriting 2
Concentration of Investments 2
Diversification of Investments 2
Investing in Illiquid Securities 2
Investing in Securities of Other Investment Companies 2
Investing for Control 2
Investing in Options 2
Regulatory Compliance 2
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 3
Share Ownership 6
Trustee Compensation 7
Trustee Liability 8
INVESTMENT ADVISORY SERVICES 8
Investment Adviser 8
Advisory Fees 8
BROKERAGE TRANSACTIONS 8
OTHER SERVICES 8
Fund Administration 8
Custodian and Portfolio Accountant 9
Transfer Agent 9
Independent Public Accountants 9
Shareholder Services 9
DETERMINING NET ASSET VALUE 9
REDEMPTION IN KIND 10
MASSACHUSETTS PARTNERSHIP LAW 10
THE FUND'S TAX STATUS 10
PERFORMANCE INFORMATION 10
Yield 10
Effective Yield 10
Total Return 11
Performance Comparisons 11
Economic and Market Information 11
ABOUT FEDERATED INVESTORS 12
Mutual Fund Market 12
Institutional Clients 12
Bank Marketing 12
Broker/Dealers and
Bank Broker/Dealer Subsidiaries 12
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be
changed by the Board of Trustees (the "Trustees") without shareholder
approval. Shareholders will be notified before any material change in
these policies becomes effective.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund in a dollar amount sufficient to make payment for
the securities to be purchased are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled. The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its
assets.
REPURCHASE AGREEMENTS
The Fund believes that under the regular procedures normally in effect
for custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The
Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are
deemed by the Fund's adviser to be creditworthy pursuant to guidelines
established by the Trustees.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must
be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays
the Fund any dividends or interest paid on such securities. Loans are
subject to termination at the option of the Fund or the borrower. The
Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower
or placing broker.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money in amounts up to one-third of the value of its total
assets, including the amounts borrowed.
The Fund will not borrow money for investment leverage, but rather as
a temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of the value of its total
assets are outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except
as necessary to secure permitted borrowings. In those cases, it may
pledge assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of total assets of the
Fund at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities.
This shall not prevent the Fund from purchasing or holding bonds,
debentures, notes, certificates of indebtedness or other debt
securities, entering into repurchase agreements, or engaging in
transactions permitted by its investment objective, policies, and
limitations or Declaration of Trust.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts,
or commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets
in any one industry. However, the Fund may invest 25% or more of the
value of its total assets in cash, cash items, or securities issued or
guaranteed by the government of the United States or its agencies, or
instrumentalities and repurchase agreements collateralized by such
U.S. government securities.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities
and repurchase agreements collateralized by such U.S. government
securities) if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer, or if it
would own more than 10% of the outstanding voting securities of that
issuer.
The above limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets
in illiquid securities, including certain restricted securities not
determined to be liquid under criteria established by the Trustees and
repurchase agreements providing for settlement in more than seven days
after notice.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
For purposes of the above limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a
domestic bank or savings association having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment
to be "cash items." Except with respect to borrowing money, if a
percentage limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any change in value
or net assets will not result in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth
in the prospectus and this Statement of Additional Information, in
order to comply with applicable laws and regulations, including the
provisions of and regulations under the Investment Company Act of
1940. In particular, the Fund will comply with the various
requirements of Rule 2a-7, which regulates money market mutual funds.
The Fund will determine the effective maturity of its investments
according to Rule 2a-7. The Fund may change these operational policies
to reflect changes in the laws and regulations without the approval of
its shareholders.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates,
present positions with Money Market Obligations Trust, and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly,
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee, University of Pittsburgh;
Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza -- 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of
the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; Director or Trustee of
the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica & Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University and U.S.
Space Foundation; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy
and Technology, Federal Emergency Management Advisory Board and Czech
Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive
Vice President and Secretary of the Funds; Treasurer of some of the
Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in
the Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Trustees and Officers, "Funds" includes
the following investment companies:
111 Corcoran Funds; Arrow Funds; Automated Government Money Trust;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income
Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Investment Portfolios;
Federated Investment Trust; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal Securities
Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and
Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First
Priority Funds; Fixed Income Securities, Inc.; High Yield Cash Trust;
Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Term Trust, Inc.
- -- 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; RIMCO
Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Virtus Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term
U.S. Government Securities; Trust for U.S. Treasury Obligations;
Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 4, 1997, the following shareholders of record owned 5%
or more of the outstanding Institutional Shares of the Fund: Fleet
Securities Corp., Rochester, New York owned approximately
633,912,206.9200 shares (12.82%); Var & Co., First Trust National
Association, St. Paul, Minnesota owned approximately 425,731,314.0000
shares (8.61%); and State Street Bank and Trust, North Quincy,
Massachusetts owned approximately 419,147,632.3700 shares (8.48%).
As of September 4, 1997, the following shareholder of record owned 5%
or more of the outstanding Institutional Service Shares of the Fund:
Trustman, Suntrust Bank, Atlanta, Georgia owned approximately
172,251,877.6500 shares (5.37%).
As of September 4, 1997, the following shareholders of record owned 5%
or more of the outstanding Institutional Capital Shares of the Fund:
Excelsior-Henderson Motorcycle Manufacturing Company, Burnsville,
Minnesota owned approximately 28,038, 721.5100 shares (63.46%); Onbank
& Trust Co., A/O The Edwards Company, Syracuse, New York owned
approximately 3,065,109.7500 shares (6.94%); Onbank & Trust Co., A/O
Tessy Plastics, Syracuse, New York owned approximately 2,359,041.0800
shares (5.34%); and Onbank & Trust Co., A/O Syracuse Scientific,
Syracuse, New York owned approximately 2,254,996.4200 shares (5.10%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <S>
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies in the Fund Complex
Thomas G. Bigley $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John T. Conroy, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
William J. Copeland $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 18 other investment companies in the Fund Complex
James E. Dowd $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Peter E. Madden $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Gregor F. Meyer $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John E. Murray, Jr. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Wesley W. Posvar $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Marjorie P. Smuts $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1997.
# The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+ The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Management. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Fund.
ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended July 31, 1997, 1996, and 1995, the adviser earned
$13,886,919, $11,303,978, and $6,522,177, respectively, of which
$6,879,101, $5,936,217, and $3,742,710, respectively, were waived.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Trustees. The adviser may select brokers and
dealers who offer brokerage and research services. These services may
be furnished directly to the Fund or to the adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the adviser or
its affiliates in advising the Fund and other accounts. To the extent
that receipt of these services may supplant services for which the
adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended July 31, 1997, 1996,
and 1995, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When
the Fund and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in
a manner believed by the adviser to be equitable to each. In some
cases, this procedure may adversely affect the price paid or received
by the Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and
the ability to participate in volume transactions will be to the
benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. From March 1, 1994 to March 1, 1996,
Federated Administrative Services, a subsidiary of Federated
Investors, served as the Fund's Administrator. For purposes of this
Statement of Additional Information, Federated Services Company and
Federated Administrative Services may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended July
31, 1997, 1996, and 1995, the Administrators earned $5,244,250,
$4,274,511, and $2,468,644, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company,
Pittsburgh, PA, provides certain accounting and recordkeeping services
with respect to the Fund's portfolio investments. The fee paid for
this service is based upon the level of the Fund's average net assets
for the period plus out-of-pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records. For its services, the transfer agent receives a
fee based on the size, type and number of accounts and transactions
made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen
LLP, Pittsburgh, PA.
SHAREHOLDER SERVICES
This arrangement permits the payment of fees to Federated Shareholder
Services to cause services to be provided which are necessary for the
maintenance of shareholder accounts and to encourage personal services
to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and
services may include but are not limited to providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish
and maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account
cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and
addresses.
By adopting the Shareholder Services Agreement, the Trustees expect
that the Fund will benefit by: (1) providing personal services to
shareholders; (2) investing shareholder assets with a minimum of delay
and administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal year ended July 31, 1997, the Fund earned shareholder
service fees on behalf of the Institutional Shares, Institutional
Service Shares, and Institutional Capital Shares in the amounts of
$12,135,054, $5,214,861, and $8,734, respectively, $0, $5,214,861, and
$3,494 of which were paid to financial institutions, respectively.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the
value of portfolio instruments is amortized cost. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted
for amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Fund computed by dividing
the annualized daily income on the Fund's portfolio by the net asset
value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market
prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule
2a-7 (the "Rule") promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940. Under the Rule,
the Trustees must establish procedures reasonably designed to
stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The
procedures include monitoring the relationship between the amortized
cost value per share and the net asset value per share based upon
available indications of market value. The Trustees will decide what,
if any, steps should be taken if there is a difference of more than
0.5 of 1% between the two values. The Trustees will take any steps
they consider appropriate (such as redemption in kind or shortening
the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods
of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000
or 1% of the Fund's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Trustees determine that further
payments should be in kind. In such cases, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments
valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable. Redemption in kind is not as liquid as a cash
redemption. If redemption is made in kind, shareholders who sell these
securities could receive less than the redemption value and could
incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for obligations of the
Trust. To protect its shareholders, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
its shareholders for acts or obligations of the Trust. These documents
require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust
to use its property to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment
against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder
will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated
investment companies, the Fund must, among other requirements: derive
at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; derive less than 30% of its gross income
from the sale of securities held less than three months; invest in
securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial
institutions and broker/dealers charge fees in connection with
services provided in conjunction with an investment in shares of the
Fund, the performance will be reduced for those shareholders paying
those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with
a balance of one share at the beginning of the base period, with the
net change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original
one share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the base
period return; and multiplying the base period return by 365/7.
For the seven-day period ended July 31, 1997, the yield for
Institutional Shares, Institutional Service Shares and Institutional
Capital Shares, respectively, was 5.46%, 5.21%, and 5.36%,
respectively.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum
to the 365/7th power; and subtracting 1 from the result.
For the seven-day period ended July 31, 1997, the effective yield for
Institutional Shares, Institutional Service Shares and Institutional
Capital Shares, respectively, was 5.61%, 5.35%, and 5.51%,
respectively.
TOTAL RETURN
Average annual total return is the average compounded rate of return
for a given period that would equate a $1,000 initial investment to
the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end
of the period by the net asset value per share at the end of the
period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
Prior to the creation of separate classes of shares, for the one-year
and five-year periods ended July 31, 1997 and for the period from
December 12, 1989 (start of performance) through July 31, 1997, the
average annual total returns were 5.36%, 4.57% and 5.20%,
respectively, for Institutional Shares.
For the one-year period ended July 31, 1997 and for the period from
July 5, 1994 (date of initial public offering) through July 31, 1997,
the average annual total returns were 5.10% and 5.17%, respectively,
for Institutional Service Shares.
Cumulative total return reflects the total performance over a specific
period of time. For the period from April 14, 1997 (date of initial
public investment) through July 31, 1997, the cumulative total return
for Institutional Capital Shares was 1.58%. These total returns are
representative of only 4 months of activity since the date of initial
public investment.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may
include:
* LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment of
all income dividends and capital gains distributions, if any.
* IBC/DONOGHUE'S MONEY FUND REPORT publishes annualized yields of
money market funds weekly. Donoghue's Money Market Insight
publication reports monthly and 12-month-to-date investment results
for the same money funds.
* MONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day effective
yield.
* SALOMON 30-DAY CD INDEX compares rate levels of 30-day certificates
of deposit from the top ten prime representative banks.
* SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most
representative yields for selected securities, issued by the U.S. Treasury,
maturing in 30 days.
* DISCOUNT CORPORATION OF NEW YORK 30-DAY FEDERAL AGENCIES is a weekly
quote of the average daily offering price for selected federal
agency issues maturing in 30 days.
Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by portfolio managers and their views
and analysis on how such developments could affect the funds. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making --structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.
The company's disciplined security selection process is firmly rooted
in sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
These traders handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in
the mutual fund industry in 1974 with the creation of the first
institutional money market fund. Simultaneously, the company pioneered
the use of the amortized cost method of accounting for valuing shares
of money market funds, a principal means used by money managers today
to value money market fund shares. Other innovations include the first
institutional tax-free money market fund. As of December 31, 1996,
Federated Investors managed more than $50.3 billion in assets across
50 money market funds, including 18 government, 11 prime and 21
municipal with assets approximating $28.0 billion, $12.8 billion and
$9.5 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated
Investors' equity and high yield corporate bond management while
William D. Dawson, Executive Vice President, oversees Federated
Investors' domestic fixed income management. Henry A. Frantzen,
Executive Vice President, oversees the management of Federated
Investors' international and global portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3.5 trillion to the
more than 6,000 funds available.*
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and
mutual funds for a variety of applications, including defined benefit
and defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.
BANK MARKETING
Other institutional clients include close relationships with more than
1,600 banks and trust organizations. Virtually all of the trust
divisions of the top 100 bank holding companies use Federated funds in
their clients' portfolios. The marketing effort to trust clients is
headed by Timothy C. Pillion, Senior Vice President, Bank Marketing &
Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage
firms nationwide -- we have over 2,200 broker/dealer and bank
broker/dealer relationships across the country -- supported by more
wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service quality measurement.
The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.
* Source: Investment Company Institute
Automated Cash Management Trust
(A Portfolio of Money Market Obligations Trust)
Cash II Shares
PROSPECTUS
The Cash II Shares of Automated Cash Management Trust (the "Fund")
offered by this prospectus represent interests in a portfolio of Money
Market Obligations Trust (the "Trust"), an open-end management
investment company (a mutual fund). The Fund invests in short-term
money market securities to achieve stability of principal and current
income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
September 30, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information, or make inquiries about the Fund, contact your
financial institution. The Statement of Additional Information,
material incorporated by reference into this document, and other
information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
TABLE OF CONTENTS
Summary of Fund Expenses 1 Financial Highlights--Cash II Shares 2
General Information 3 Investment Information 3 Investment Objective 3
Investment Policies 3 Investment Risks 4 Investment Limitations 4
Fund Information 5 Management of the Fund 5 Distribution of Cash II
Shares 5 Administration of the Fund 6 Administrative Services 6 Net
Asset Value 6 How to Purchase Shares 6 Purchasing Shares Through a
Financial Institution 7 Purchasing Shares by Wire 7 Purchasing Shares
by Check 7 Invest-by-Phone 7 By Direct Deposit 7 Automatic
Investments 7 Subaccounting Services 7 Special Purchase Features 8
How to Redeem Shares 8 Redeeming Shares Through a Financial
Institution 8 Redeeming Shares by Telephone 8 Redemming Shares by
Mail 8 Special Redemption Features 8 Account and Share Information 9
Dividends 9 Capital Gains 9 Confirmations and Account Statements 9
Accounts with Low Balances 9 Voting Rights 9 Tax Information 9
Federal Income Tax 9 State and Local Taxes 9 Other Classes of Shares
10 Performance Information 10 Financial Highlights--Institutional
Service Shares 11 Financial Statements 12 Report of Independent
Public Accountants 23
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CASH II SHARES SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.18%
12b-1 Fee (after waiver)(2) 0.16%
Total Other Expenses 0.41%
Shareholder Services Fee 0.25%
Total Operating Expenses(3) 0.75%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary
waiver of a portion of the management fee. The adviser can terminate
this voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.50%.
(2) The 12b-1 fee has been reduced to reflect the voluntary waiver of
a portion of the 12b-1 fee. The distributor can terminate this
voluntary waiver at any time at its sole discretion. The maximum 12b-1
fee is 0.25%.
(3) The total operating expenses would have been 1.16% absent the
voluntary waivers of portions of the management fee and the 12b-1 fee.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of Cash II Shares of
the Trust will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "Fund Information"
and "How to Purchase Shares." Wire-transferred redemptions of less
than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE
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.
<S> <C>
1 year $8
3 years $24
5 years $42
10 years $93
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS-- CASH II SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 23.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31,
1997(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04
LESS DISTRIBUTIONS
Distributions from net investment income (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00
TOTAL RETURN (B) 4.14%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.75%*
Net investment income 4.84%*
Expense waiver/ reimbursement(c) 0.41%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $725,267
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from September 27, 1996 (date
of initial public offering) to July 31, 1997.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees (the
"Trustees") has established two classes of shares known as Cash II
Shares and Institutional Service Shares. This prospectus relates only
to Cash II Shares of the Fund, which are designed primarily for the
retail customers of financial institutions as a convenient means of
accumulating an interest in a professionally managed portfolio
investing in short-term money market securities. A minimum initial
investment of $25,000 over a 90-day period is required except for
retirement plans.
The Fund attempts to stabilize the value of a share at $1.00. Shares
are currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is stability of principal and
current income consistent with stability of principal. This investment
objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940
which regulates money market mutual funds and by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio
of money market instruments maturing in 13 months or less. The average
maturity of the money market instruments in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may not be changed by the
Trustees without shareholder approval.
ACCEPTABLE INVESTMENTS
The Fund invests in high quality money market instruments that are
either rated in the highest short-term rating category by one or more
nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples
of these instruments include, but are not limited to:
* instruments of domestic and foreign banks and savings and loans
(such as certificates of deposit, demand and time deposits,
savings shares, and bankers' acceptances) if they have capital,
surplus, and undivided profits of over $100,000,000, or if the
principal amount of the instrument is insured by the Bank
Insurance Fund ("BIF") which is administered by the Federal
Deposit Insurance Corporation ("FDIC") or the Savings Association
Insurance Fund ("SAIF") which is administered by the FDIC. These
instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), and
Eurodollar Time Deposits ("ETDs");
* commercial paper rated A-1 by Standard & Poor's Ratings Group,
Prime-1 by Moody's Investors Service, Inc., or F-1 by Fitch
Investors Service, and unrated but of comparable quality,
including Canadian Commercial Paper ("CCPs") and Europaper.
* marketable obligations issued or guaranteed by the U.S. government, its
agencies, or instrumentalities; and
* repurchase agreements.
The Fund invests only in instruments denominated and payable in U.S.
dollars.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant
to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial
institutions sell U. S. government securities or certificates of
deposit to the Fund and agree, at the time of sale, to repurchase them
at a mutually agreed upon time and price within one year from the date
of acquisition. The Fund or its custodian will take possession of the
securities subject to repurchase agreements and these securities will
be marked to market daily. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
CREDIT ENHANCEMENT
Certain of the Fund's acceptable investments may be credit-enhanced by
a guaranty, letter of credit, or insurance. Any bankruptcy,
receivership, default or change in the credit quality of the party
providing the credit enhancement will adversely affect the quality and
marketability of the underlying security and could cause losses to the
Fund and affect its share price.
DEMAND FEATURES
As a matter of non-fundamental policy, the Fund may acquire securities
that are subject to puts and standby commitments ("demand features")
to purchase the securities at their principal amount (usually with
accrued interest) within a fixed period (usually seven days) following
a demand by the Fund. The demand feature may be issued by the issuer
of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the
underlying security. The Fund uses these arrangements to provide the
Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership, or
default by the issuer of the demand feature, or a default on the
underlying security or other event that terminates the demand feature
before its exercise, will adversely affect the liquidity of the
underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of
credit enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase short-term U.S. government obligations on a
when-issued or delayed delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The Fund engages in when-issued
and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective
and policies, not for investment leverage. In when-issued and delayed
delivery transactions, the Fund relies on the seller to complete the
transaction. The seller's failure to deliver the securities 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.
As a matter of operating policy, the Fund may dispose of a commitment
prior to settlement if the adviser deems it appropriate to do so. In
addition, the Fund may enter into transactions to sell its purchase
commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in restricted securities and as a matter of
fundamental investment policy which may not be changed without
shareholder approval, will limit such investments to 10% of its net
assets. This restriction is not applicable to commercial paper issued
under Section 4(2) of the Securities Act of 1933. Restricted
securities are any securities in which the Fund may invest pursuant to
its investment objective and policies but which are subject to
restrictions on resale under federal securities law. In addition, as a
matter of fundamental policy, the Fund will limit investments in
illiquid securities, including restricted securities determined not to
be liquid and repurchase agreements providing for settlement in more
than seven days after notice, to 10% of its net assets. Certain
instruments in which the Fund may invest, such as ETDs and repurchase
agreements with maturities of more than seven days, could be
considered illiquid.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are
subject to different risks than domestic obligations of domestic banks
or corporations. Examples of these risks include international
economic and political developments, foreign governmental restrictions
that may adversely affect the payment of principal or interest,
foreign withholding or other taxes on interest income, difficulties in
obtaining or enforcing a judgment against the issuing entity, and the
possible impact of interruptions in the flow of international currency
transactions. Risks may also exist for ECDs, ETDs, and Yankee CDs
because the banks issuing these instruments, or their domestic or
foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, and the public availability of information. These
factors will be carefully considered by the Fund's adviser in
selecting investments for the Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market
instrument for a percentage of its cash value with an agreement to buy
it back on a set date) or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its
total assets and pledge up to 10% of the value of its total assets to
secure such borrowings. These investment limitations cannot be changed
without shareholder approval.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management,
the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision
for the Fund and is responsible for the purchase and sale of portfolio
instruments.
ADVISORY FEES
The adviser receives an annual investment advisory fee equal to 0.50%
of the Fund's average daily net assets. The adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
ADVISER'S BACKGROUND
Federated Management, a Delaware business trust, organized on April
11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors. All
of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee
of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interests. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF CASH II SHARES
Federated Securities Corp. is the principal distributor for Cash II Shares
of the Fund. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
Under a distribution plan adopted in accordance with Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan"), the distributor may
be paid a fee by the Fund in an amount computed at an annual rate of
up to 0.25% of the average daily net asset value of the Fund. The
distributor may select financial institutions such as banks,
fiduciaries, custodians for public funds, investment advisers, and
broker/dealers to provide sales services or distribution-related
support services as agents for their clients or customers.
The Plan is a compensation-type Plan. As such, the Fund makes no
payments to the distributor except as described above. Therefore, the
Fund does not pay for unreimbursed expenses of the distributor,
including amounts expended by the distributor in excess of amounts
received by it from the Fund, interest, carrying or other financing
charges in connection with excess amounts expended, or the
distributor's overhead expenses. However, the distributor may be able
to recover such amounts or may earn a profit from future payments made
by the Fund under the Plan.
In addition, the Fund has entered into a Shareholder Services
Agreement with Federated Shareholder Services, a subsidiary of
Federated Investors, under which the Fund may make payments up to
0.25% of the average daily net asset value of its shares to obtain
certain personal services for shareholders and to maintain shareholder
accounts. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly
or will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares owned by
their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time
by the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Distribution Plan and
Shareholder Services Agreement, Federated Securities Corp. and
Federated Shareholder Services, from their own assets, may pay
financial institutions supplemental fees for the performance of
substantial sales services, distribution-related support services, or
shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize
the attributes of the Fund. Such assistance will be predicated upon
the amount of shares the financial institution sells or may sell,
and/or upon the type and nature of sales or marketing support
furnished by the financial institution. Any payments made by the
distributor may be reimbursed by the Fund's investment adviser or its
affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund
at an annual rate which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00
by valuing the portfolio securities using the amortized cost method.
The net asset value per share is determined by subtracting liabilities
attributable to Cash II Shares from the value of Fund assets
attributable to Cash II Shares, and dividing the remainder by the
number of Cash II 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York
Stock Exchange is open for business. Shares may be purchased as
described below, either through a financial institution (such as a
bank or broker/dealer) or by wire or by check directly from the Fund,
with a minimum initial investment of $25,000 or more over a 90-day
period. Financial institutions may impose different minimum investment
requirements on their customers.
In connection with any sale, Federated Securities Corp. may from time
to time offer certain items of nominal value to any shareholder or
investor. The Fund reserves the right to reject any purchase request.
An account must be established at a financial institution or by
completing, signing, and returning the new account form available from
the Fund before shares can be purchased.
PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION
Investors may purchase shares through a financial institution which
has a sales agreement with the distributor. Orders are considered
received when the Fund receives payment by wire or converts payment by
check from the financial institution into federal funds. It is the
financial institution's responsibility to transmit orders promptly.
Financial institutions may charge additional fees for their services.
PURCHASING SHARES BY WIRE
Shares may be purchased by wire by calling the Fund before 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 in order to begin earning dividends that same day.
Federal funds should be wired as follows: Federated Shareholder
Services Company, c/o State Street Bank and Trust Company, Boston, MA;
Attention: EDGEWIRE; For Credit to: Automated Cash Management
Trust--Cash II Shares; Fund Number (this number can be found on the
account statement or by contacting the Fund); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028. Shares
cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check
should be made payable to Automated Cash Management Trust--Cash II
Shares. Please include an account number on the check. Orders by mail
are considered received when payment by check is converted into
federal funds (normally the business day after the check is received),
and shares begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone
for investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated
Shareholder Services Company to purchase shares. Federated Shareholder
Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the
Automated Clearing House. The shareholder's bank, which must be an
Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally
entered the next business day after the initial phone request. For
further information and an application, call the Fund.
BY DIRECT DEPOSIT
Shareholders of the Fund may have their Social Security, Railroad
Retirement, VA Compensation or Pension, Civil Service Retirement, and
certain other retirement payments invested directly into their Fund
account. Shareholders must complete an application and file it with
Federated Shareholder Services Company prior to use of this program.
Allow 60 to 90 days for the application to be processed.
AUTOMATIC INVESTMENTS
Investors may establish accounts with their financial institutions to
have cash accumulations automatically invested in the Fund. The
investments may be made on predetermined dates or when the investor's
account reaches a certain level. Participating financial institutions
are responsible for prompt transmission of orders relating to the
program, and they may charge for their services. Investors should read
this prospectus along with the financial institution's agreement or
literature describing these services and fees.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts.
A subaccounting system is available through the transfer agent to
minimize internal recordkeeping requirements. The transfer agent
charges a fee based on the level of subaccounting services rendered.
Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They
may also charge fees for other services provided which may be related
to the ownership of Fund shares. This prospectus should, therefore, be
read together with any agreement between the customer and the
financial institution with regard to the services provided, the fees
charged for those services, and any restrictions and limitations
imposed.
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM
A minimum of $100 can be automatically withdrawn periodically from the
shareholder's checking account at an Automated Clearing House ("ACH")
member and invested in Fund shares. Shareholders should contact their
financial institution or the Fund to participate in this program.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper
form and can be made as described below.
REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION
Shares may be redeemed by contacting the shareholder's financial
institution. Shares will be redeemed at the net asset value next
determined after Federated Shareholder Services Company receives the
redemption request. According to the shareholder's instructions,
redemption proceeds can be sent to the financial institution or to the
shareholder by check or by wire. The financial institution is
responsible for promptly submitting redemption requests and providing
proper written redemption instructions. Customary fees and commissions
may be charged by the financial institution for this service.
REDEEMING SHARES BY TELEPHONE
Redemptions in minimum amounts of $1,000 may be made by calling the
Fund provided the Fund has a properly completed authorization form.
These forms can be obtained from Federated Securities Corp. Proceeds
from redemption requests received before 5:00 p.m. (Eastern time) will
be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, but
will not include that day's dividend. Proceeds from redeemed shares
purchased by check or through ACH will not be wired until that method
of payment has cleared. Proceeds from redemption requests on holidays
when wire transfers are restricted will be wired the following
business day. Questions about telephone redemptions on days when wire
transfers are restricted should be directed to your shareholder
services representative at the telephone number listed on your account
statement.
Telephone instructions may be recorded and if reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs,
"Redeeming Shares by Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified
mail to the address noted above.
The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
SPECIAL REDEMPTION FEATURES
CHECK WRITING
Upon request, a checking account will be established to allow
shareholders to redeem their Fund shares. Shareholder accounts will
continue to receive the daily dividend declared on the shares to be
redeemed until the check is presented to UMB Bank, N.A., the bank
responsible for administering the check writing program, for payment.
However, checks should never be made payable or sent to UMB Bank, N.A.
or the Fund to redeem shares, and a check may not be written to close
an account.
DEBIT CARD
Upon request, a debit account will be established. This account allows
shareholders to redeem shares by using a debit card. A fee will be
charged to the account for this service.
SYSTEMATIC WITHDRAWAL PROGRAM
If a shareholder's account has a value of at least $25,000, other than
retirement accounts subject to required minimum distributions, a
systematic withdrawal program may be established whereby automatic
redemptions are made from the account and transferred electronically
to any commercial bank, savings bank, or credit union that is an ACH
member. Shareholders may apply for participation in this program
through their financial institutions or the Fund.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Fund unless cash payments are requested by writing to the Fund. 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.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account, except accounts maintained by
retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $10,000 due to
shareholder redemptions. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder
one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of all classes of each portfolio in
the Trust have equal voting rights, except that in matters affecting
only a particular portfolio or class, only shareholders of that
portfolio or class are entitled to vote. The Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought
only for certain changes in the Trust's or the Fund's operation and
for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate
entity for federal income tax purposes so that income (including
capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions received. This
applies whether dividends and distributions are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent
that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Service Shares are
sold at net asset value primarily to retail and private banking
customers of financial institutions and are subject to a minimum
initial investment of $25,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan but
are subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class,
investors may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and
total return. The performance figures will be calculated separately
for each class of shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during
the period on an investment shown as a percentage of the investment.
The effective yield is calculated similarly to the yield, but when
annualized, the income earned by an investment is assumed to be
reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 23.
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED ENDED
JULY 31, JULY 31, YEAR ENDED APRIL 30,
1997 1996 1995(A) 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
Net investment 0.05 0.05 0.01 0.03 0.03 0.05 0.07 0.08 0.08 0.07 0.06
income
LESS
DISTRIBUTIONS
Distributions (0.05) (0.05) (0.01) (0.03) (0.03) (0.05) (0.07) (0.08) (0.08) (0.07) (0.06)
from net
investment income
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
END OF PERIOD
TOTAL RETURN(B) 5.09% 5.20% 1.42% 2.84% 3.11% 5.02% 7.52% 8.69% 8.20% 6.72% 6.00%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.58% 0.57% 0.57%* 0.57% 0.56% 0.56% 0.55% 0.55% 0.55% 0.55% 0.55%
Net investment 4.97% 5.08% 5.60%* 2.80% 3.07% 4.88% 7.23% 8.32% 7.93% 6.53% 5.82%
income
Expense waiver/ 0.33% 0.31% 0.40%* 0.07% 0.04% 0.03% 0.12% 0.09% 0.10% 0.04% 0.04%
reimbursement(c)
SUPPLEMENTAL DATA
Net assets,
end of period $1,378,982 $1,274,419 $1,141,043 $975,453 $1,172,170 $1,220,212 $1,464,710 $1,164,013 $943,136$924,558 $867,725
(000 omitted)
</TABLE>
* Computed on an annualized basis.
(a) For the period from May 1, 1995 to July 31, 1995, the Fund was
reorganized into Money Market Obligations Trust effective July 30,
1994. The Fund changed its fiscal year-end from April 30, to July 31,
effective October 27, 1994.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--39.3%
BANKING--15.2%
$ 23,000,000 ABN AMRO Bank N.V., Amsterdam, 5.793%, 1/5/1998 $ 22,435,280
10,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank 9,880,209
N.V., Amsterdam), 5.921%, 10/15/1997
37,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National 36,787,843
Bank PLC, London), 5.419%-5.869%, 8/21/1997-10/10/1997
10,000,000 Bank of Nova Scotia, Toronto, 5.661%, 9/17/1997 9,927,150
27,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian 26,831,832
Imperial Bank of Commerce, Toronto), 5.424%--5.681%,
8/25/1997 - 10/1/1997
25,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal 24,828,400
de Belgique, Brussels), 5.660% - 5.680%, 9/9/1997 -
9/22/1997
23,000,000 Den Danske Corp., Inc., (Guaranteed by Den Danske Bank 22,575,160
A/S), 5.821% - 5.858%, 11/26/1997
15,000,000 Glencore Finance (Berumda) Ltd., 5.680%, 9/11/1997 14,904,333
30,000,000 Lloyds Bank PLC, London, 5.773% - 5.857%, 10/9/1997 - 29,485,789
12/29/1997
18,000,000 PEMEX Capital, Inc., (Swiss Bank Corp., Basle LOC), 5.449%, 17,973,476
8/11/1997
20,000,000 Societe Generale North America, Inc., (Guaranteed by 19,789,307
Societe Generale, Paris), 5.604% - 5.920%, 9/10/1997 -
11/3/1997
60,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska 59,327,808
Handelsbanken, Stockholm), 5.672% - 5.920%, 8/22/1997 -
12/2/1997
10,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by 9,786,484
Toronto-Dominion Bank), 5.730%, 12/17/1997
15,000,000 Westpac Capital Corp., (Guaranteed by Westpac Banking Corp. 14,977,875
Ltd.), 5.455%, 8/11/1997
TOTAL 319,510,946
BROKERAGE--2.4%
50,000,000 Merrill Lynch & Co., Inc., 5.628% - 5.762%, 8/18/1997 - 49,687,578
10/6/1997
FINANCE - AUTOMOTIVE--0.7%
15,000,000 Ford Motor Credit Corp., 5.467%, 8/7/1997 14,986,700
FINANCE - COMMERCIAL--13.7%
20,000,000 Asset Securitization Cooperative Corp., 5.717% - 5.825%, 19,687,670
8/18/1997 - 12/9/1997
58,000,000 Beta Finance, Inc., 5.660% - 5.920%, 8/7/1997 - 11/10/1997 57,538,315
17,000,000 CXC, Inc., 5.578% - 5.680%, 8/19/1997 - 10/23/1997 16,853,594
10,000,000 Falcon Asset Securitization Corp., 5.580%, 10/27/1997 9,867,083
23,000,000 General Electric Capital Corp., 5.465% - 5.709%, 8/11/1997 22,601,990
- 1/15/1998
76,304,000 Greenwich Funding Corp., 5.577% - 5.745%, 8/11/1997 - 75,902,232
10/23/1997
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - COMMERCIAL--CONTINUED
$ 50,525,000 PREFCO-Preferred Receivables Funding Co., 5.596% - 5.941%, $ 49,970,742
9/4/1997 - 11/12/1997
35,350,000 Sheffield Receivables Corp., 5.650% - 5.681%, 9/5/1997 - 35,109,458
9/23/1997
TOTAL 287,531,084
FINANCE - RETAIL--3.7%
60,000,000 Associates Corp. of North America, 5.596% - 5.851%, 59,865,067
8/1/1997 - 10/28/1997
20,000,000 New Center Asset Trust, A1+/P1 Series, 5.690% - 5.939%, 19,813,942
9/3/1997 - 10/24/1997
TOTAL 79,679,009
INSURANCE--1.7%
25,000,000 AIG Funding, Inc., (Guaranteed by AIG), 5.851%, 8/1/1997 25,000,000
10,000,000 CommoLoCo, (Guaranteed by American General Corp.), 5.964%, 9,860,075
10/27/1997
TOTAL 34,860,075
OIL & OIL FINANCE--1.9%
40,000,000 Koch Industries, Inc., 5.901%, 8/1/1997 40,000,000
TOTAL COMMERCIAL PAPER 826,255,392
SHORT-TERM NOTES--6.4%
BANKING--1.6%
24,100,000 (e)SALTS II Cayman Islands Corp. (Bankers Trust 24,100,000
International Swap Agreement), 5.863%, 9/18/1997
10,000,000 (e)SALTS III Cayman Islands Corp. (Bankers Trust 10,000,000
International Swap Agreement), 6.065%, 12/18/1997
TOTAL 34,100,000
BROKERAGE--1.0%
20,000,000 (e)Goldman Sachs & Co., 5.670%, 10/28/1997 20,000,000
FINANCE - AUTOMOTIVE--2.7%
12,690,615 Chase Manhattan Auto Owner Trust 1997-A, 5.545%, 4/10/1998 12,690,615
16,732,838 Chase Manhattan Auto Owner Trust 1997-B, 5.744%, 7/10/1998 16,732,838
9,574,260 Ford Credit Auto Lease Trust 1996-1, 5.451%, 11/15/1997 9,573,982
14,390,736 Navistar Financial Corp. Owner Trust 1997-A, 5.841%, 14,390,736
5/15/1998
2,580,954 Olympic Automobile Receivables Trust 1997-A (FSA 2,580,954
Guaranteed), 5.500%, 3/15/1998
TOTAL 55,969,125
FINANCE - COMMERCIAL--0.1%
3,530,859 (e)Cargill Lease Receivables Trust 1996-A, 5.613%, 3,530,859
12/20/1997
FINANCE - EQUIPMENT--1.0%
3,468,152 Capita Equipment Receivables Trust 1996-1, 5.600%, 3,468,152
10/15/1997
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
FINANCE - EQUIPMENT--CONTINUED
$ 18,242,118 Copelco Capital Funding Corp. X 1997-A, 5.809%, 7/20/1998 $ 18,242,118
TOTAL 21,710,270
TOTAL SHORT-TERM NOTES 135,310,254
CERTIFICATES OF DEPOSIT--5.6%
BANKING--5.6%
15,000,000 Australia & New Zealand Banking Group, Melbourne, 5.420%, 15,000,148
8/20/1997
15,000,000 National Australia Bank, Ltd., Melbourne, 5.505%, 8/6/1997 15,000,010
77,000,000 Societe Generale, Paris, 5.430% - 5.920%, 8/11/1997 - 76,995,262
7/16/1998
10,000,000 Svenska Handelsbanken, Stockholm, 5.690%, 9/9/1997 10,000,088
TOTAL CERTIFICATES OF DEPOSIT 116,995,508
(B) VARIABLE RATE INSTRUMENTS--26.7%
BANKING--10.8%
3,560,000 Arapahoe Water & Sanitation District, Arapahoe County, CO, 3,560,000
Series 1997A, (Banque Nationale de Paris (Canada) LOC),
6.000%, 12/1/1997
60,000,000 Bank One, Milwaukee, WI N.A., 5.510%, 8/5/1997 59,991,826
6,000,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.690%, 6,000,000
8/4/1997
5,300,000 Development Authority of Richmond Cty, GA, (PNC Bank, N.A. 5,300,000
LOC), 5.690%, 8/4/1997
60,000,000 Liquid Asset Backed Securities Trust, Series 1996-3, 60,000,000
(Westdeutsche Landesbank Girozentrale Swap Agreement),
5.700%, 8/15/1997
25,000,000 Liquid Asset Backed Securities Trust, Series 1997-1, 25,000,000
(Westdeutsche Landesbank Girozentrale Swap Agreement),
5.680%, 8/15/1997
6,700,000 Massachusetts IFA, (Kendell Square), (PNC Bank, N.A. LOC), 6,700,000
5.650%, 8/7/1997
48,802,141 Rabobank Optional Redemption Trust, Series 1997-101, 48,802,141
5.750%, 8/15/1997
4,000,000 SMM Trust, Series 1996-B, (Morgan Guaranty Trust Co., New 4,000,000
York Swap Agreement), 5.738%, 8/1/1997
2,765,000 Vista Funding Corp., Series 1996-A, (Bank One, Ohio, N.A. 2,765,000
LOC), 5.640%, 8/7/1997
5,250,000 Wendys of Las Vegas and San Antonio, (Huntington National 5,250,000
Bank, Columbus, OH LOC), 5.650%, 8/6/1997
TOTAL 227,368,967
ELECTRICAL EQUIPMENT--1.3%
2,916,325 GE Engines RPP Trust -1995-1, Series B, 5.620%, 8/4/1997 2,916,325
3,500,812 Marta Leasing Ltd., (Guaranteed by General Electric Co.), 3,500,812
5.690%, 8/4/1997
20,181,046 Northwest Airlines, Inc., (Guaranteed by General Electric 20,181,046
Co.), 5.580%, 8/4/1997
TOTAL 26,598,183
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B) VARIABLE RATE INSTRUMENTS--CONTINUED
FINANCE - RETAIL--1.4%
$ 30,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class $ 30,000,000
A1), 5.695%, 8/15/1997
INSURANCE--13.2%
54,500,000 General American Life Insurance Co., 5.872%, 8/21/1997 54,500,000
30,000,000 (e)Jackson National Life Insurance Company, 5.900%, 30,000,000
8/1/1997
69,031,145 Liquid Asset Backed Securities Trust, Series 1997-3 Senior 69,031,145
Notes, (Westdeutsche Landesbank Girozentrale Swap
Agreement, Guaranteed by AMBAC), 5.751%, 9/28/1997
25,000,000 (e)Peoples Security Life Insurance Company, 5.840%, 25,000,000
8/1/1997
25,000,000 (e)SunAmerica Life Insurance Company, 5.788%, 8/1/1997 25,000,000
30,000,000 Transamerica Occidental Life Insurance Company, 5.859%, 30,000,000
8/6/1997
44,000,000 (e)Travelers Insurance Company, 5.841%, 8/20/1997 44,000,000
TOTAL 277,531,145
TOTAL VARIABLE RATE INSTRUMENTS 561,498,295
(A) TIME DEPOSITS--5.4%
BANKING--5.4%
35,000,000 Mellon Bank N.A., Pittsburgh, 5.813%, 8/1/1997 35,000,000
25,000,000 Royal Bank of Canada, Montreal, 5.813%, 8/1/1997 25,000,000
53,800,000 Toronto-Dominion Bank, 5.813%, 8/1/1997 53,800,000
TOTAL TIME DEPOSITS 113,800,000
(C) REPURCHASE AGREEMENTS--16.6%
50,300,000 Bear, Stearns and Co., 5.770%, dated 7/31/1997, due 50,300,000
8/1/1997
50,000,000 Chase Government Securities, Inc., 5.870%, dated 7/31/1997, 50,000,000
due 8/1/1997
75,000,000 Goldman Sachs Group, LP, 5.850%, dated 7/31/1997, due 75,000,000
8/1/1997
25,000,000 Greenwich Capital Markets, Inc., 5.850%, dated 7/31/1997, 25,000,000
due 8/1/1997
75,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1997, due 75,000,000
8/1/1997
50,000,000 Toronto Dominion Securities (USA) Inc., 5.850%, dated 50,000,000
7/31/1997, due 8/1/1997
25,000,000 UBS Securities, Inc., 5.770%, dated 7/31/1997, due 8/1/1997 25,000,000
TOTAL REPURCHASE AGREEMENTS 350,300,000
TOTAL INVESTMENTS (AT AMORTIZED $ 2,104,159,449
COST)(D)
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Variable rate securities with current rate and next demand date.
(c) The repurchase agreements are fully collateralized by U.S.
government and/or agency obligations based on market prices at the
date of the portfolio. The investments in the repurchase agreements
are through participation in joint accounts with other Federated
funds.
(d) Also represents cost for federal tax purposes.
(e) Denotes a restricted security which is subject to restrictions on
resale under Federal Securities laws. At July 31, 1997, these
securities amounted to $181,630,859 which represents 8.6% of net
assets.
Note: The categories of investments are shown as a percentage of net assets
($2,104,248,881) at July 31, 1997. The following acronyms are used
throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FSA --Financial Security Assurance
IFA --Industrial Finance Authority
LOC --Letter of Credit
LP --Limited Partnership
PLC --Public Limited Company
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 350,300,000
Investments in securities 1,753,859,449
Total investments in securities, at amortized cost and value $ 2,104,159,449
Cash 335,977
Income receivable 5,060,100
Receivable for shares sold 1,460,117
Total assets 2,111,015,643
LIABILITIES:
Payable for shares redeemed 2,303,403
Income distribution payable 3,546,669
Accrued expenses 916,690
Total liabilities 6,766,762
Net Assets for 2,104,248,881 shares outstanding $ 2,104,248,881
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SERVICE SHARES:
$1,378,981,952 / 1,378,981,952 shares outstanding $1.00
CASH II SHARES:
$725,266,929 / 725,266,929 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
AUTOMATED CASH MANAGEMENT TRUST
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 103,384,706
EXPENSES:
Investment advisory fee $ 9,287,875
Administrative personnel and services fee 1,402,868
Custodian fees 180,901
Transfer and dividend disbursing agent fees and 725,675
expenses
Directors'/Trustees' fees 13,201
Auditing fees 17,750
Legal fees 33,194
Portfolio accounting fees 139,790
Distribution services fee--Cash II Shares 1,245,101
Shareholder services fee--Institutional Service 3,398,836
Shares
Shareholder services fee--Cash II Shares 1,245,101
Share registration costs 321,222
Printing and postage 49,595
Insurance premiums 12,418
Taxes 46,010
Miscellaneous 10,632
Total expenses 18,130,169
Waivers --
Waiver of investment advisory fee $ (5,899,812)
Waiver of distribution services fee--Cash II (438,145)
Shares
Waiver of shareholder services fee--Institutional (95,168)
Service Shares
Total waivers (6,433,125)
Net expenses 11,697,044
Net investment income $ 91,687,662
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 91,687,662 $ 64,070,284
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Service Shares (67,586,616) (64,070,284)
Cash II Shares (24,101,046) --
Change in net assets resulting from distributions (91,687,662) (64,070,284)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 10,582,198,767 7,830,763,212
Net asset value of shares issued to shareholders in 63,190,890 37,792,484
payment of distributions declared
Cost of shares redeemed (9,815,560,140) (7,735,179,515)
Change in net assets resulting from share 829,829,517 133,376,181
transactions
Change in net assets 829,829,517 133,376,181
NET ASSETS:
Beginning of period 1,274,419,364 1,141,043,183
End of period $ 2,104,248,881 $ 1,274,419,364
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios.
The financial statements included herein are only those of Automated
Cash Management Trust (the "Fund"). The financial statements of the
other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to
the portfolio in which shares are held. The investment objective of
the Fund is stability of principal and current income consistent with
stability of principal.
The Fund offers two classes of shares: Institutional Service Shares and Cash
II Shares.
Effective September 27, 1996, the Trust added Cash II Shares.
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 uses the amortized cost method to value its portfolio
securities in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the
Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and
other recognized financial institutions, such as broker/dealers, which
are deemed by the Fund's adviser to be creditworthy pursuant to the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and
discount, if applicable, are amortized as required by the Internal
Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions.
The Fund records when-issued securities on the trade date and
maintains security positions such that sufficient liquid assets will
be available to make payment for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
registration under federal securities laws or in transactions exempt
from such registration. Many restricted securities may be resold in
the secondary market in transactions exempt from registration. In some
cases, the restricted securities may be resold without registration
upon exercise of a demand feature. Such restricted securities may be
determined to be liquid under criteria established by the 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,
1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Cargill Lease Receivables Trust 1996-A, 12/17/1996 $ 3,530,859
5.613%
Goldman Sachs & Co., 5.670% 7/28/1997 20,000,000
Jackson National Life Insurance Company, 4/25/1997 30,000,000
5.900%
Peoples Security Life Insurance Company, 7/8/1997 25,000,000
5.840%
SALTS II Cayman Islands Corp., 5.863% 6/11/1997 24,100,000
SALTS III Cayman Islands Corp., 6.065% 6/5/1997 10,000,000
SunAmerica Life Insurance Company, 5.788% 9/13/1996 25,000,000
Travelers Insurance Company, 5.841% 2/20/1997 44,000,000
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual
results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in
aggregated $2,104,248,881. Transactions in capital stock were as
follows:
<TABLE>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 7,323,418,360 7,830,763,212
Shares issued to shareholders in payment of distributions declared 41,494,370 37,792,484
Shares redeemed (7,260,350,142) (7,735,179,515)
Net change resulting from Institutional Service Share 104,562,588 133,376,181
transactions
PERIOD ENDED YEAR ENDED
JULY 31, JULY 31,
CASH II SHARES 1997(A) 1996
<S> <C> <C>
Shares sold 3,258,780,407 --
Shares issued to shareholders in payment of distributions declared 21,696,520 --
Shares redeemed (2,555,209,998) --
Net change resulting from Cash II Share transactions 725,266,929 --
Net change resulting from share transactions 829,829,517 133,376,181
</TABLE>
(a) For the period from September 27, 1996 (date of initial public
offering) through July 31, 1997.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can
modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative
Services Agreement, provides the Fund with administrative personnel
and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received
during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities
intended to result in the sale of the Fund's Cash II Shares. The Plan
provides that the Fund may incur distribution expenses up to 0.25% of
the average daily net assets of Cash II Shares, annually, to
compensate FSC. FSC may voluntarily choose to waive any portion of its
fee. FSC can modify or terminate this voluntary waiver at any time at
its sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to
FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver
at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a
fee. The fee is based on the level of the Fund's average daily net
assets for the period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of MONEY MARKET OBLIGATIONS
TRUST (Automated Cash Management Trust):
We have audited the accompanying statement of assets and liabilities
of Automated Cash Management Trust (an investment portfolio of Money
Market Obligations Trust, a Massachusetts business trust), including
the schedule of portfolio investments, as of July 31, 1997, 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 each of the two years in the
period then ended, and for the period from May 1, 1995, to July 31,
1995. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits. The financial highlights for Automated
Cash Management Trust--Institutional Service Shares for the periods
ended April 30, 1987, through April 30, 1994, were audited by other
auditors whose report dated June 9, 1994, expressed an unqualified
opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 1997, by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Automated Cash Management Trust (an investment
portfolio of Money Market Obligations Trust) as of July 31, 1997, and
the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and
its financial highlights for each of the two years in the period then
ended and for the period from May 1, 1995, to July 31, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
NOTES
[Graphic]
Federated Investors
Automated Cash Management Trust
Cash II Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
AUTOMATED CASH MANAGEMENT TRUST CASH II SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N831
G00554-03-CII (9/97)
[Graphic]
Automated Cash Management Trust
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
The Institutional Service Shares of Automated Cash Management Trust
(the "Fund") offered by this prospectus represent interests in a
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in
short-term money market securities to achieve stability of principal
and current income consistent with stability of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO
ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know
before you invest in the Fund. Keep this prospectus for future
reference.
The Fund has also filed a Statement of Additional Information dated
September 30, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information, or make inquiries about the Fund, contact your
financial institution. The Statement of Additional Information,
material incorporated by reference into this document, and other
information regarding the Fund is maintained electronically with the
SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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 4
Investment Limitations 5 Fund Information 5 Management of the Fund 5
Distribution of Institutional Service Shares 5 Shareholder Services 5
Supplemental Payments to Financial Institutions 6 Administration of
the Fund 6 Administration Services 6 Net Asset Value 6 How to
Purchase Shares 6 Purchasing Shares Through a Financial Institution 6
Purchasing Shares by Wire 7 Purchasing Shares by Check 7
Invest-by-Phone 7 By Direct Deposit 7 Automatic Investments 7
Subaccounting Services 7 Special Purchase Features 7 How to Redeem
Shares 8 Redeeming Shares Through a Financial Institution 8 Redeeming
Shares by Telephone 8 Redemming Shares by Mail 8 Special Redemption
Features 8 Account and Share Information 9 Dividends 9 Capital Gains
9 Confirmations and Account Statements 9 Accounts with Low Balances 9
Voting Rights 9 Tax Information 9 Federal Income Tax 9 State and
Local Taxes 9 Other Classes of Shares 10 Performance Information 10
Financial Highlights--Cash II Shares 11 Financial Statements 12
Report of Independent Public Accountants 23
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.18%
12b-1 Fee None
Total Other Expenses 0.40%
Shareholder Services Fee (after waiver)(2) 0.24%
Total Operating Expenses(3) 0.58%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary
waiver of a portion of the management fee. The adviser can terminate
this voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.50%.
(2) The shareholder services fee has been reduced to reflect the
voluntary waiver of a portion of the shareholder services fee. The
shareholder service provider can terminate this voluntary waiver at
any time at its sole discretion. The maximum shareholder services fee
is 0.25%.
(3) The total operating expenses would have been 0.91% absent the
voluntary waivers of portions 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 Institutional
Service Shares of the Trust will bear, either directly or indirectly.
For more complete descriptions of the various costs and expenses, see
"Fund Information" and "How to Purchase Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE
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.
<S> <C>
1 year $ 6
3 years $19
5 years $32
10 years $73
</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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 23.
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED ENDED
JULY 31, JULY 31, YEAR ENDED APRIL 30,
1997 1996 1995(A) 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $ 1.00 $ 1.00
BEGINNING OF
PERIOD
INCOME FROM
INVESTMENT
OPERATIONS
Net investment 0.05 0.05 0.01 0.03 0.03 0.05 0.07 0.08 0.08 0.07 0.06
income
LESS
DISTRIBUTIONS
Distributions (0.05) (0.05) (0.01) (0.03) (0.03) (0.05) (0.07) (0.08) (0.08) (0.07) (0.06)
from net
investment income
NET ASSET VALUE, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
END OF PERIOD
TOTAL RETURN(B) 5.09% 5.20% 1.42% 2.84% 3.11% 5.02% 7.52% 8.69% 8.20% 6.72% 6.00%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.58% 0.57% 0.57%* 0.57% 0.56% 0.56% 0.55% 0.55% 0.55% 0.55% 0.55%
Net investment 4.97% 5.08% 5.60%* 2.80% 3.07% 4.88% 7.23% 8.32% 7.93% 6.53% 5.82%
income
Expense waiver/ 0.33% 0.31% 0.40%* 0.07% 0.04% 0.03% 0.12% 0.09% 0.10% 0.04% 0.04%
reimbursement(c)
SUPPLEMENTAL DATA
Net assets, end $1,378,982 $1,274,419 $1,141,043 $975,453 $1,172,170 $1,220,212 $1,464,710 $1,164,013 $943,136 $924,558 $867,725
of period (000
omitted)
</TABLE>
* Computed on an annualized basis.
(a) For the period from May 1, 1995 to July 31, 1995, the Fund was
reorganized into Money Market Obligations Trust effective July 30,
1994. The Fund changed its fiscal year-end from April 30, to July 31,
effective October 27, 1994.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees (the
"Trustees") has established two classes of shares known as
Institutional Service Shares and Cash II Shares. This prospectus
relates only to Institutional Service Shares of the Fund, which are
designed primarily for retail and private banking customers of
financial institutions as a convenient means of accumulating an
interest in a professionally managed portfolio investing in short-term
money market securities. A minimum initial investment of $25,000 over
a 90-day period is required except for retirement plans.
The Fund attempts to stabilize the value of a share at $1.00. Shares
are currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is stability of principal and
current income consistent with stability of principal. This investment
objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940
which regulates money market mutual funds and by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a portfolio
of money market instruments maturing in 13 months or less. The average
maturity of the money market instruments in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may not be changed by the
Trustees without shareholder approval.
ACCEPTABLE INVESTMENTS
The Fund invests in high quality money market instruments that are
either rated in the highest short-term rating category by one or more
nationally recognized statistical rating organizations ("NRSROs") or
are of comparable quality to securities having such ratings. Examples
of these instruments include, but are not limited to:
* instruments of domestic and foreign banks and savings and loans
(such as certificates of deposit, demand and time deposits,
savings shares, and bankers' acceptances) if they have capital,
surplus, and undivided profits of over $100,000,000, or if the
principal amount of the instrument is insured by the Bank
Insurance Fund ("BIF") which is administered by the Federal
Deposit Insurance Corporation ("FDIC") or the Savings Association
Insurance Fund ("SAIF") which is administered by the FDIC. These
instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), and
Eurodollar Time Deposits ("ETDs");
* commercial paper rated A-1 by Standard & Poor's Ratings Group,
Prime-1 by Moody's Investors Service,Inc., or F-1 by Fitch
Investors Service, and unrated but of comparable quality,
including Canadian Commercial Paper ("CCPs") and Europaper.
* marketable obligations issued or guaranteed by the U.S. government, its
agencies, or instrumentalities; and
* repurchase agreements.
The Fund invests only in instruments denominated and payable in U.S.
dollars.
REPURCHASE AGREEMENTS
Certain securities in which the Fund invests may be purchased pursuant
to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial
institutions sell U. S. government securities or certificates of
deposit to the Fund and agree, at the time of sale, to repurchase them
at a mutually agreed upon time and price within one year from the date
of acquisition. The Fund or its custodian will take possession of the
securities subject to repurchase agreements and these securities will
be marked to market daily. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
CREDIT ENHANCEMENT
Certain of the Fund's acceptable investments may be credit-enhanced by
a guaranty, letter of credit, or insurance. Any bankruptcy,
receivership, default or change in the credit quality of the party
providing the credit enhancement will adversely affect the quality and
marketability of the underlying security and could cause losses to the
Fund and affect its share price.
DEMAND FEATURES
As a matter of non-fundamental investment policy, the Fund may acquire
securities that are subject to puts and standby commitments ("demand
features") to purchase the securities at their principal amount
(usually with accrued interest) within a fixed period (usually seven
days) following a demand by the Fund. The demand feature may be issued
by the issuer of the underlying securities, a dealer in the
securities, or by another third party, and may not be transferred
separately from the underlying security. The Fund uses these
arrangements to provide the Fund with liquidity and not to protect
against changes in the market value of the underlying securities. The
bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that
terminates the demand feature before its exercise, will adversely
affect the liquidity of the underlying security. Demand features that
are exercisable even after a payment default on the underlying
security may be treated as a form of credit enhancement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase short-term U.S. government obligations on a
when-issued or delayed delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The Fund engages in when-issued
and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective
and policies, not for investment leverage. In when-issued and delayed
delivery transactions, the Fund relies on the seller to complete the
transaction. The seller's failure to deliver the securities 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.
As a matter of operating policy, the Fund may dispose of a commitment
prior to settlement if the adviser deems it appropriate to do so. In
addition, the Fund may enter into transactions to sell its purchase
commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or
losses upon the sale of such commitments.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in restricted securities and as a matter of
fundamental investment policy which may not be changed without
shareholder approval, will limit such investments to 10% of its net
assets. This restriction is not applicable to commercial paper issued
under Section 4(2) of the Securities Act of 1933. Restricted
securities are any securities in which the Fund may invest pursuant to
its investment objective and policies but which are subject to
restrictions on resale under federal securities law. In addition, as a
matter of fundamental policy, the Fund will limit investments in
illiquid securities, including restricted securities determined not to
be liquid and repurchase agreements providing for settlement in more
than seven days after notice, to 10% of its net assets. Certain
instruments in which the Fund may invest, such as ETDs and repurchase
agreements with maturities of more than seven days, could be
considered illiquid.
INVESTMENT RISKS
ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are
subject to different risks than domestic obligations of domestic banks
or corporations. Examples of these risks include international
economic and political developments, foreign governmental restrictions
that may adversely affect the payment of principal or interest,
foreign withholding or other taxes on interest income, difficulties in
obtaining or enforcing a judgment against the issuing entity, and the
possible impact of interruptions in the flow of international currency
transactions. Risks may also exist for ECDs, ETDs, and Yankee CDs
because the banks issuing these instruments, or their domestic or
foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, and the public availability of information. These
factors will be carefully considered by the Fund's adviser in
selecting investments for the Fund.
INVESTMENT LIMITATIONS
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market
instrument for a percentage of its cash value with an agreement to buy
it back on a set date) or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its
total assets and pledge up to 10% of the value of its total assets to
secure such borrowings. These investment limitations cannot be changed
without shareholder approval.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated Management,
the Fund's investment adviser, subject to direction by the Trustees.
The adviser continually conducts investment research and supervision
for the Fund and is responsible for the purchase and sale of portfolio
instruments.
Advisory Fees
The adviser receives an annual investment advisory fee equal to 0.50%
of the Fund's average daily net assets. The adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
Adviser's Background
Federated Management, a Delaware business trust, organized on April
11, 1989, is a registered investment adviser under the Investment
Advisers Act of 1940. It is a subsidiary of Federated Investors. All
of the Class A (voting) shares of Federated Investors are owned by a
trust, the trustees of which are John F. Donahue, Chairman and Trustee
of Federated Investors, Mr. Donahue's wife, and Mr. Donahue's son, J.
Christopher Donahue, who is President and Trustee of Federated
Investors.
Federated Management and other subsidiaries of Federated Investors
serve as investment advisers to a number of investment companies and
private accounts. Certain other subsidiaries also provide
administrative services to a number of investment companies. With over
$110 billion invested across over 300 funds under management and/or
administration by its subsidiaries, as of December 31, 1996, Federated
Investors is one of the largest mutual fund investment managers in the
United States. With more than 2,000 employees, Federated continues to
be led by the management who founded the company in 1955. Federated
funds are presently at work in and through 4,500 financial
institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interests. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to 0.25% of the average
daily net asset value of its shares, computed at an annual rate, to
obtain certain personal services for shareholders and to maintain
shareholder accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services
Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes
of the Fund. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund
at an annual rate which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00
by valuing the portfolio securities using the amortized cost method.
The net asset value per share is determined by subtracting liabilities
attributable to Institutional Service Shares from the value of Fund
assets attributable to Institutional Service Shares, and dividing the
remainder by the number of Institutional Service 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 5:00 p.m. (Eastern time), Monday
through Friday, except on New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days which the New York
Stock Exchange is open for business. Shares may be purchased as
described below, either through a financial institution (such as a
bank or broker/dealer) or by wire or by check directly from the Fund,
with a minimum initial investment of $25,000 or more over a 90-day
period. Financial institutions may impose different minimum investment
requirements on their customers.
In connection with any sale, Federated Securities Corp. may from time
to time offer certain items of nominal value to any shareholder or
investor. The Fund reserves the right to reject any purchase request.
An account must be established at a financial institution or by
completing, signing, and returning the new account form available from
the Fund before shares can be purchased.
PURCHASING SHARES THROUGH A FINANCIAL INSTITUTION
Investors may purchase shares through a financial institution which
has a sales agreement with the distributor. Orders are considered
received when the Fund receives payment by wire or converts payment by
check from the financial institution into federal funds. It is the
financial institution's responsibility to transmit orders promptly.
Financial institutions may charge additional fees for their services.
PURCHASING SHARES BY WIRE
Shares may be purchased by wire by calling the Fund before 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 in order to begin earning dividends that same day.
Federal funds should be wired as follows: Federated Shareholder
Services Company, c/o State Street Bank and Trust Company, Boston, MA;
Attention: EDGEWIRE; For Credit to: Automated Cash Management
Trust--Institutional Service Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be
directed to your shareholder services representative at the telephone
number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check
should be made payable to Automated Cash Management
Trust--Institutional Service Shares. Please include an account number
on the check. Orders by mail are considered received when payment by
check is converted into federal funds (normally the business day after
the check is received), and shares begin earning dividends the next
day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone
for investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated
Shareholder Services Company to purchase shares. Federated Shareholder
Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the
Automated Clearing House. The shareholder's bank, which must be an
Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally
entered the next business day after the initial phone request. For
further information and an application, call the Fund.
BY DIRECT DEPOSIT
Shareholders of the Fund may have their Social Security, Railroad
Retirement, VA Compensation or Pension, Civil Service Retirement, and
certain other retirement payments invested directly into their Fund
account. Shareholders must complete an application and file it with
Federated Shareholder Services Company prior to use of this program.
Allow 60 to 90 days for the application to be processed.
AUTOMATIC INVESTMENTS
Investors may establish accounts with their financial institutions to
have cash accumulations automatically invested in the Fund. The
investments may be made on predetermined dates or when the investor's
account reaches a certain level. Participating financial institutions
are responsible for prompt transmission of orders relating to the
program, and they may charge for their services. Investors should read
this prospectus along with the financial institution's agreement or
literature describing these services and fees.
SUBACCOUNTING SERVICES
Financial institutions are encouraged to open single master accounts.
A subaccounting system is available through the transfer agent to
minimize internal recordkeeping requirements. The transfer agent
charges a fee based on the level of subaccounting services rendered.
Financial institutions may charge or pass through subaccounting fees
as part of or in addition to normal trust or agency account fees. They
may also charge fees for other services provided which may be related
to the ownership of Fund shares. This prospectus should, therefore, be
read together with any agreement between the customer and the
financial institution with regard to the services provided, the fees
charged for those services, and any restrictions and limitations
imposed.
SPECIAL PURCHASE FEATURES
SYSTEMATIC INVESTMENT PROGRAM
A minimum of $100 can be automatically withdrawn periodically from the
shareholder's checking account at an Automated Clearing House ("ACH")
member and invested in Fund shares. Shareholders should contact their
financial institution or the Fund to participate in this program.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper
form and can be made as described below.
REDEEMING SHARES THROUGH A FINANCIAL INSTITUTION
Shares may be redeemed by contacting the shareholder's financial
institution. Shares will be redeemed at the net asset value next
determined after Federated Shareholder Services Company receives the
redemption request. According to the shareholder's instructions,
redemption proceeds can be sent to the financial institution or to the
shareholder by check or by wire. The financial institution is
responsible for promptly submitting redemption requests and providing
proper written redemption instructions. Customary fees and commissions
may be charged by the financial institution for this service.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the
Fund has a properly completed authorization form. These forms can be
obtained from Federated Securities Corp. Proceeds from redemption
requests before 5:00 p.m. (Eastern time) will be wired the same day to
the shareholder's account at a domestic commercial bank which is a
member of the Federal Reserve System, but will not include that day's
dividend. Proceeds from redeemed shares purchased by check or through
ACH will not be wired until that method of payment has cleared.
Proceeds from redemption requests on holidays when wire transfers are
restricted will be wired the following business day. Questions about
telephone redemptions on days when wire transfers are restricted
should be directed to your shareholder services representative at the
telephone number listed on your account statement.
Telephone instructions may be recorded and if reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs,
"Redeeming Shares by Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified
mail to the address noted above.
The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
SPECIAL REDEMPTION FEATURES
CHECK WRITING
Upon request, a checking account will be established to allow
shareholders to redeem their Fund shares. Shareholder accounts will
continue to receive the daily dividend declared on the shares to be
redeemed until the check is presented to UMB Bank, N.A., the bank
responsible for administering the check writing program, for payment.
However, checks should never be made payable or sent to UMB Bank, N.A.
or the Fund to redeem shares, and a check may not be written to close
an account.
DEBIT CARD
Upon request, a debit account will be established. This account allows
shareholders to redeem shares by using a debit card. A fee will be
charged to the account for this service.
SYSTEMATIC WITHDRAWAL PROGRAM
If a shareholder's account has a value of at least $25,000, other than
retirement accounts subject to required minimum distributions, a
systematic withdrawal program may be established whereby automatic
redemptions are made from the account and transferred electronically
to any commercial bank, savings bank, or credit union that is an ACH
member. Shareholders may apply for participation in this program
through their financial institutions or the Fund.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Fund unless cash payments are requested by writing to the Fund. 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.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account, except accounts maintained by
retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $25,000 due to
shareholder redemptions. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder
one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of all classes of each portfolio in
the Trust have equal voting rights, except that in matters affecting
only a particular portfolio or class, only shareholders of that
portfolio or class are entitled to vote. The Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought
only for certain changes in the Trust's or the Fund's operation and
for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate
entity for federal income tax purposes so that income (including
capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions received. This
applies whether dividends and distributions are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent
that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Cash II Shares are sold at net
asset value primarily to retail customers of financial institutions
and are subject to a minimum initial investment of $25,000.
All classes are subject to certain of the same expenses.
Cash II Shares are distributed under a 12b-1 Plan adopted by the Fund
and also are subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class,
investors may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and
total return. The performance figures will be calculated separately
for each class of shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during
the period on an investment shown as a percentage of the investment.
The effective yield is calculated similarly to the yield, but when
annualized, the income earned by an investment is assumed to be
reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS-- CASH II SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
page 23.
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31,
1997(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04
LESS DISTRIBUTIONS
Distributions from net investment income (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00
TOTAL RETURN (B) 4.14%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.75%*
Net investment income 4.84%*
Expense waiver/ reimbursement(c) 0.41% *
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $725,267
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from September 27, 1996 (date
of initial public offering) to July 31, 1997.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO
OF INVESTMENTS
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--39.3%
BANKING--15.2%
$ 23,000,000 ABN AMRO Bank N.V., Amsterdam, 5.793%, 1/5/1998 $ 22,435,280
10,000,000 ABN AMRO N.A., Finance, Inc., (Guaranteed by ABN AMRO Bank 9,880,209
N.V., Amsterdam), 5.921%, 10/15/1997
37,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National 36,787,843
Bank PLC, London), 5.419%-5.869%, 8/21/1997-10/10/1997
10,000,000 Bank of Nova Scotia, Toronto, 5.661%, 9/17/1997 9,927,150
27,000,000 Canadian Imperial Holdings, Inc., (Guaranteed by Canadian 26,831,832
Imperial Bank of Commerce, Toronto), 5.424%--5.681%,
8/25/1997 - 10/1/1997
25,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal 24,828,400
de Belgique, Brussels), 5.660% - 5.680%, 9/9/1997 -
9/22/1997
23,000,000 Den Danske Corp., Inc., (Guaranteed by Den Danske Bank 22,575,160
A/S), 5.821% - 5.858%, 11/26/1997
15,000,000 Glencore Finance (Berumda) Ltd., 5.680%, 9/11/1997 14,904,333
30,000,000 Lloyds Bank PLC, London, 5.773% - 5.857%, 10/9/1997 - 29,485,789
12/29/1997
18,000,000 PEMEX Capital, Inc., (Swiss Bank Corp., Basle LOC), 5.449%, 17,973,476
8/11/1997
20,000,000 Societe Generale North America, Inc., (Guaranteed by 19,789,307
Societe Generale, Paris), 5.604% - 5.920%, 9/10/1997 -
11/3/1997
60,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska 59,327,808
Handelsbanken, Stockholm), 5.672% - 5.920%, 8/22/1997 -
12/2/1997
10,000,000 Toronto Dominion Holdings (USA), Inc., (Guaranteed by 9,786,484
Toronto-Dominion Bank), 5.730%, 12/17/1997
15,000,000 Westpac Capital Corp., (Guaranteed by Westpac Banking Corp. 14,977,875
Ltd.), 5.455%, 8/11/1997
TOTAL 319,510,946
BROKERAGE--2.4%
50,000,000 Merrill Lynch & Co., Inc., 5.628% - 5.762%, 8/18/1997 - 49,687,578
10/6/1997
FINANCE - AUTOMOTIVE--0.7%
15,000,000 Ford Motor Credit Corp., 5.467%, 8/7/1997 14,986,700
FINANCE - COMMERCIAL--13.7%
20,000,000 Asset Securitization Cooperative Corp., 5.717% - 5.825%, 19,687,670
8/18/1997 - 12/9/1997
58,000,000 Beta Finance, Inc., 5.660% - 5.920%, 8/7/1997 - 11/10/1997 57,538,315
17,000,000 CXC, Inc., 5.578% - 5.680%, 8/19/1997 - 10/23/1997 16,853,594
10,000,000 Falcon Asset Securitization Corp., 5.580%, 10/27/1997 9,867,083
23,000,000 General Electric Capital Corp., 5.465% - 5.709%, 8/11/1997 22,601,990
- 1/15/1998
76,304,000 Greenwich Funding Corp., 5.577% - 5.745%, 8/11/1997 - 75,902,232
10/23/1997
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - COMMERCIAL--CONTINUED
$ 50,525,000 PREFCO-Preferred Receivables Funding Co., 5.596% - 5.941%, $ 49,970,742
9/4/1997 - 11/12/1997
35,350,000 Sheffield Receivables Corp., 5.650% - 5.681%, 9/5/1997 - 35,109,458
9/23/1997
TOTAL 287,531,084
FINANCE - RETAIL--3.7%
60,000,000 Associates Corp. of North America, 5.596% - 5.851%, 59,865,067
8/1/1997 - 10/28/1997
20,000,000 New Center Asset Trust, A1+/P1 Series, 5.690% - 5.939%, 19,813,942
9/3/1997 - 10/24/1997
TOTAL 79,679,009
INSURANCE--1.7%
25,000,000 AIG Funding, Inc., (Guaranteed by AIG), 5.851%, 8/1/1997 25,000,000
10,000,000 CommoLoCo, (Guaranteed by American General Corp.), 5.964%, 9,860,075
10/27/1997
TOTAL 34,860,075
OIL & OIL FINANCE--1.9%
40,000,000 Koch Industries, Inc., 5.901%, 8/1/1997 40,000,000
TOTAL COMMERCIAL PAPER 826,255,392
SHORT-TERM NOTES--6.4%
BANKING--1.6%
24,100,000 (e)SALTS II Cayman Islands Corp. (Bankers Trust 24,100,000
International Swap Agreement), 5.863%, 9/18/1997
10,000,000 (e)SALTS III Cayman Islands Corp. (Bankers Trust 10,000,000
International Swap Agreement), 6.065%, 12/18/1997
TOTAL 34,100,000
BROKERAGE--1.0%
20,000,000 (e)Goldman Sachs & Co., 5.670%, 10/28/1997 20,000,000
FINANCE - AUTOMOTIVE--2.7%
12,690,615 Chase Manhattan Auto Owner Trust 1997-A, 5.545%, 4/10/1998 12,690,615
16,732,838 Chase Manhattan Auto Owner Trust 1997-B, 5.744%, 7/10/1998 16,732,838
9,574,260 Ford Credit Auto Lease Trust 1996-1, 5.451%, 11/15/1997 9,573,982
14,390,736 Navistar Financial Corp. Owner Trust 1997-A, 5.841%, 14,390,736
5/15/1998
2,580,954 Olympic Automobile Receivables Trust 1997-A (FSA 2,580,954
Guaranteed), 5.500%, 3/15/1998
TOTAL 55,969,125
FINANCE - COMMERCIAL--0.1%
3,530,859 (e)Cargill Lease Receivables Trust 1996-A, 5.613%, 3,530,859
12/20/1997
FINANCE - EQUIPMENT--1.0%
3,468,152 Capita Equipment Receivables Trust 1996-1, 5.600%, 3,468,152
10/15/1997
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
FINANCE - EQUIPMENT--CONTINUED
$ 18,242,118 Copelco Capital Funding Corp. X 1997-A, 5.809%, 7/20/1998 $ 18,242,118
TOTAL 21,710,270
TOTAL SHORT-TERM NOTES 135,310,254
CERTIFICATES OF DEPOSIT--5.6%
BANKING--5.6%
15,000,000 Australia & New Zealand Banking Group, Melbourne, 5.420%, 15,000,148
8/20/1997
15,000,000 National Australia Bank, Ltd., Melbourne, 5.505%, 8/6/1997 15,000,010
77,000,000 Societe Generale, Paris, 5.430% - 5.920%, 8/11/1997 - 76,995,262
7/16/1998
10,000,000 Svenska Handelsbanken, Stockholm, 5.690%, 9/9/1997 10,000,088
TOTAL CERTIFICATES OF DEPOSIT 116,995,508
(B) VARIABLE RATE INSTRUMENTS--26.7%
BANKING--10.8%
3,560,000 Arapahoe Water & Sanitation District, Arapahoe County, CO, 3,560,000
Series 1997A, (Banque Nationale de Paris (Canada) LOC),
6.000%, 12/1/1997
60,000,000 Bank One, Milwaukee, WI N.A., 5.510%, 8/5/1997 59,991,826
6,000,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.690%, 6,000,000
8/4/1997
5,300,000 Development Authority of Richmond Cty, GA, (PNC Bank, N.A. 5,300,000
LOC), 5.690%, 8/4/1997
60,000,000 Liquid Asset Backed Securities Trust, Series 1996-3, 60,000,000
(Westdeutsche Landesbank Girozentrale Swap Agreement),
5.700%, 8/15/1997
25,000,000 Liquid Asset Backed Securities Trust, Series 1997-1, 25,000,000
(Westdeutsche Landesbank Girozentrale Swap Agreement),
5.680%, 8/15/1997
6,700,000 Massachusetts IFA, (Kendell Square), (PNC Bank, N.A. LOC), 6,700,000
5.650%, 8/7/1997
48,802,141 Rabobank Optional Redemption Trust, Series 1997-101, 48,802,141
5.750%, 8/15/1997
4,000,000 SMM Trust, Series 1996-B, (Morgan Guaranty Trust Co., New 4,000,000
York Swap Agreement), 5.738%, 8/1/1997
2,765,000 Vista Funding Corp., Series 1996-A, (Bank One, Ohio, N.A. 2,765,000
LOC), 5.640%, 8/7/1997
5,250,000 Wendys of Las Vegas and San Antonio, (Huntington National 5,250,000
Bank, Columbus, OH LOC), 5.650%, 8/6/1997
TOTAL 227,368,967
ELECTRICAL EQUIPMENT--1.3%
2,916,325 GE Engines RPP Trust -1995-1, Series B, 5.620%, 8/4/1997 2,916,325
3,500,812 Marta Leasing Ltd., (Guaranteed by General Electric Co.), 3,500,812
5.690%, 8/4/1997
20,181,046 Northwest Airlines, Inc., (Guaranteed by General Electric 20,181,046
Co.), 5.580%, 8/4/1997
TOTAL 26,598,183
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
FINANCE - RETAIL--1.4%
$ 30,000,000 Carco Auto Loan Master Trust 1993-2, (Series 1993-2 Class $ 30,000,000
A1), 5.695%, 8/15/1997
INSURANCE--13.2%
54,500,000 General American Life Insurance Co., 5.872%, 8/21/1997 54,500,000
30,000,000 (e)Jackson National Life Insurance Company, 5.900%, 30,000,000
8/1/1997
69,031,145 Liquid Asset Backed Securities Trust, Series 1997-3 Senior 69,031,145
Notes, (Westdeutsche Landesbank Girozentrale Swap
Agreement, Guaranteed by AMBAC), 5.751%, 9/28/1997
25,000,000 (e)Peoples Security Life Insurance Company, 5.840%, 25,000,000
8/1/1997
25,000,000 (e)SunAmerica Life Insurance Company, 5.788%, 8/1/1997 25,000,000
30,000,000 Transamerica Occidental Life Insurance Company, 5.859%, 30,000,000
8/6/1997
44,000,000 (e)Travelers Insurance Company, 5.841%, 8/20/1997 44,000,000
TOTAL 277,531,145
TOTAL VARIABLE RATE INSTRUMENTS 561,498,295
(A) TIME DEPOSITS--5.4%
BANKING--5.4%
35,000,000 Mellon Bank N.A., Pittsburgh, 5.813%, 8/1/1997 35,000,000
25,000,000 Royal Bank of Canada, Montreal, 5.813%, 8/1/1997 25,000,000
53,800,000 Toronto-Dominion Bank, 5.813%, 8/1/1997 53,800,000
TOTAL TIME DEPOSITS 113,800,000
(C) REPURCHASE AGREEMENTS--16.6%
50,300,000 Bear, Stearns and Co., 5.770%, dated 7/31/1997, due 50,300,000
8/1/1997
50,000,000 Chase Government Securities, Inc., 5.870%, dated 7/31/1997, 50,000,000
due 8/1/1997
75,000,000 Goldman Sachs Group, LP, 5.850%, dated 7/31/1997, due 75,000,000
8/1/1997
25,000,000 Greenwich Capital Markets, Inc., 5.850%, dated 7/31/1997, 25,000,000
due 8/1/1997
75,000,000 HSBC Securities, Inc., 5.850%, dated 7/31/1997, due 75,000,000
8/1/1997
50,000,000 Toronto Dominion Securities (USA) Inc., 5.850%, dated 50,000,000
7/31/1997, due 8/1/1997
25,000,000 UBS Securities, Inc., 5.770%, dated 7/31/1997, due 8/1/1997 25,000,000
TOTAL REPURCHASE AGREEMENTS 350,300,000
TOTAL INVESTMENTS (AT AMORTIZED $ 2,104,159,449
COST)(D)
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) Variable rate securities with current rate and next demand date.
(c) The repurchase agreements are fully collateralized by U.S.
government and/or agency obligations based on market prices at the
date of the portfolio. The investments in the repurchase agreements
are through participation in joint accounts with other Federated
funds.
(d) Also represents cost for federal tax purposes.
(e) Denotes a restricted security which is subject to restrictions on
resale under Federal Securities laws. At July 31, 1997, these
securities amounted to $181,630,859 which represents 8.6% of net
assets.
Note: The categories of investments are shown as a percentage of net assets
($2,104,248,881) at July 31, 1997.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FSA --Financial Security Assurance
IFA --Industrial Finance Authority
LOC --Letter of Credit
LP --Limited Partnership
PLC --Public Limited Company
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 350,300,000
Investments in securities 1,753,859,449
Total investments in securities, at amortized cost and value $ 2,104,159,449
Cash 335,977
Income receivable 5,060,100
Receivable for shares sold 1,460,117
Total assets 2,111,015,643
LIABILITIES:
Payable for shares redeemed 2,303,403
Income distribution payable 3,546,669
Accrued expenses 916,690
Total liabilities 6,766,762
Net Assets for 2,104,248,881 shares outstanding $ 2,104,248,881
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
INSTITUTIONAL SERVICE SHARES:
$1,378,981,952 / 1,378,981,952 shares outstanding $1.00
CASH II SHARES:
$725,266,929 / 725,266,929 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
AUTOMATED CASH MANAGEMENT TRUST
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 103,384,706
EXPENSES:
Investment advisory fee $ 9,287,875
Administrative personnel and services fee 1,402,868
Custodian fees 180,901
Transfer and dividend disbursing agent fees and 725,675
expenses
Directors'/Trustees' fees 13,201
Auditing fees 17,750
Legal fees 33,194
Portfolio accounting fees 139,790
Distribution services fee--Cash II Shares 1,245,101
Shareholder services fee--Institutional Service 3,398,836
Shares
Shareholder services fee--Cash II Shares 1,245,101
Share registration costs 321,222
Printing and postage 49,595
Insurance premiums 12,418
Taxes 46,010
Miscellaneous 10,632
Total expenses 18,130,169
Waivers --
Waiver of investment advisory fee $ (5,899,812)
Waiver of distribution services fee--Cash II (438,145)
Shares
Waiver of shareholder services fee--Institutional (95,168)
Service Shares
Total waivers (6,433,125)
Net expenses 11,697,044
Net investment income $ 91,687,662
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 91,687,662 $ 64,070,284
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Service Shares (67,586,616) (64,070,284)
Cash II Shares (24,101,046) --
Change in net assets resulting from distributions (91,687,662) (64,070,284)
to shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 10,582,198,767 7,830,763,212
Net asset value of shares issued to shareholders in 63,190,890 37,792,484
payment of distributions declared
Cost of shares redeemed (9,815,560,140) (7,735,179,515)
Change in net assets resulting from share 829,829,517 133,376,181
transactions
Change in net assets 829,829,517 133,376,181
NET ASSETS:
Beginning of period 1,274,419,364 1,141,043,183
End of period $ 2,104,248,881 $ 1,274,419,364
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios.
The financial statements included herein are only those of Automated
Cash Management Trust (the "Fund"). The financial statements of the
other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to
the portfolio in which shares are held. The investment objective of
the Fund is stability of principal and current income consistent with
stability of principal.
The Fund offers two classes of shares: Institutional Service Shares and Cash
II Shares.
Effective September 27, 1996, the Trust added Cash II Shares.
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 uses the amortized cost method to value its portfolio
securities in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS
It is the policy of the Fund to require the custodian bank to take
possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the
Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and
other recognized financial institutions, such as broker/dealers, which
are deemed by the Fund's adviser to be creditworthy pursuant to the
guidelines and/or standards reviewed or established by the Board of
Trustees (the "Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase
agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and
discount, if applicable, are amortized as required by the Internal
Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions.
The Fund records when-issued securities on the trade date and
maintains security positions such that sufficient liquid assets will
be available to make payment for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
registration under federal securities laws or in transactions exempt
from such registration. Many restricted securities may be resold in
the secondary market in transactions exempt from registration. In some
cases, the restricted securities may be resold without registration
upon exercise of a demand feature. Such restricted securities may be
determined to be liquid under criteria established by the 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,
1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST
Cargill Lease Receivables Trust 1996-A, 12/17/1996 $ 3,530,859
5.613%
Goldman Sachs & Co., 5.670% 7/28/1997 20,000,000
Jackson National Life Insurance Company, 4/25/1997 30,000,000
5.900%
Peoples Security Life Insurance Company, 7/8/1997 25,000,000
5.840%
SALTS II Cayman Islands Corp., 5.863% 6/11/1997 24,100,000
SALTS III Cayman Islands Corp., 6.065% 6/5/1997 10,000,000
SunAmerica Life Insurance Company, 5.788% 9/13/1996 25,000,000
Travelers Insurance Company, 5.841% 2/20/1997 44,000,000
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual
results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in
aggregated $2,104,248,881. Transactions in capital stock were as
follows:
<TABLE>
Year Ended July 31,
Institutional Service Shares 1997 1996
<S> <C> <C>
Shares sold 7,323,418,360 7,830,763,212
Shares issued to shareholders in payment of distributions declared 41,494,370 37,792,484
Shares redeemed (7,260,350,142) (7,735,179,515)
Net change resulting from Institutional Service Share 104,562,588 133,376,181
transactions
<CAPTION>
Period Ended Year Ended
July 31, July 31,
Cash II Shares 1997(a) 1996
<S> <C> <C>
Shares sold 3,258,780,407 --
Shares issued to shareholders in payment of distributions declared 21,696,520 --
Shares redeemed (2,555,209,998) --
Net change resulting from Cash II Share transactions 725,266,929 --
Net change resulting from share transactions 829,829,517 133,376,181
</TABLE>
(a) For the period from September 27, 1996 (date of initial public
offering) through July 31, 1997.
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Management, the Fund's investment adviser (the "Adviser"),
receives for its services an annual investment advisory fee equal to
0.50% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can
modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative
Services Agreement, provides the Fund with administrative personnel
and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received
during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares.
DISTRIBUTION SERVICES FEE
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities
intended to result in the sale of the Fund's Cash II Shares. The Plan
provides that the Fund may incur distribution expenses up to 0.25% of
the average daily net assets of Cash II Shares, annually, to
compensate FSC. FSC may voluntarily choose to waive any portion of its
fee. FSC can modify or terminate this voluntary waiver at any time at
its sole discretion.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to
FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver
at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ maintains the Fund's accounting records for which it receives a
fee. The fee is based on the level of the Fund's average daily net
assets for the period, plus out-of-pocket expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of MONEY MARKET OBLIGATIONS
TRUST (Automated Cash Management Trust):
We have audited the accompanying statement of assets and liabilities
of Automated Cash Management Trust (an investment portfolio of Money
Market Obligations Trust, a Massachusetts business trust), including
the schedules of portfolio investments, as of July 31, 1997, 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 each of the two years in the
period then ended, and for the period from May 1, 1995, to July 31,
1995. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits. The financial highlights for Automated
Cash Management Trust--Institutional Service Shares for the periods
ended April 30, 1987, through April 30, 1994, were audited by other
auditors whose report dated June 9, 1994, expressed an unqualified
opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 1997, by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Automated Cash Management Trust (an investment
portfolio of Money Market Obligations Trust) as of July 31, 1997, and
the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and
its financial highlights for each of the two years in the period then
ended and for the period from May 1, 1995, to July 31, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
NOTES
[Graphic]
Federated Investors
Automated Cash Management Trust
Institutional Service Shares
PROSPECTUS SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
AUTOMATED CASH MANAGEMENT TRUST
Institutional Service Shares
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N864
G00554-01-SS (9/97)
[Graphic]
AUTOMATED CASH MANAGEMENT TRUST
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
CASH II SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectuses of Automated Cash Management Trust (the "Fund"), a
portfolio of Money Market Obligations Trust (the "Trust") dated
September 30, 1997. This Statement is not a prospectus. You may
request a copy of a prospectus or a paper copy of this Statement, if
you have received it electronically, free of charge by calling
1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1997
[Graphic]
Federated Investors
Federated Securities Corp., Distributor
Cusip 60934N864
Cusip 60934N831
G00554-02 (9/97)
TABLE OF CONTENTS
FUND HISTORY 1 INVESTMENT POLICIES 1 Acceptable Investments 1 U.S.
Government Securities 1 Bank Instruments 1 Ratings 1 When-Issued and
Delayed Delivery Transactions 1 Repurchase Agreements 1 Restricted
and Illiquid Securities 2 Reverse Repurchase Agreements 2 Credit
Enhancement 2 INVESTMENT LIMITATIONS 2 Selling Short and Buying on
Margin 2 Issuing Senior Securities and Borrowing Money 2 Pledging
Assets 3 Lending Cash or Securities 3 Investing in Commodities,
Minerals, or Real Estate 3 Underwriting 3 Concentration of
Investments 3 Acquiring Securities 3 Diversification of Investments 3
Investing in Restricted Securities 3 Investing in New Issuers 3
Investing in Options 3 Investing in Issuers Whose Securities are
Owned by Officers and Trustees 3 Regulatory Compliance 4 MONEY MARKET
OBLIGATIONS TRUST MANAGEMENT 5 Share Ownership 8 Trustees
Compensation 9 Trustee Liability 9 INVESTMENT ADVISORY SERVICES 9
Investment Adviser 9 Advisory Fees 10 BROKERAGE TRANSACTIONS 10 OTHER
SERVICES 10 Fund Administration 10 Custodian and Portfolio Accountant
10 Transfer Agent 11 Independent Public Accountants 11 Distribution
Plan and Shareholder Services 11 DETERMINING NET ASSET VALUE 11
REDEMPTION IN KIND 12 MASSACHUSETTS PARTNERSHIP LAW 12 THE FUND'S TAX
STATUS 12 PERFORMANCE INFORMATION 12 Yield 12 Effective Yield 12
Total Return 13 Performance Comparisons 13 Economic and Market
Information 13 ABOUT FEDERATED INVESTORS 13 Mutual Fund Market 14
Institutional Clients 14 Bank Marketing 14 Broker/Dealers and Bank
Broker/Dealer Subsidiaries 14
FUND HISTORY
Effective July 30, 1994, Automated Cash Management Trust was
reorganized into an investment portfolio of Money Market Obligations
Trust. The Trust is registered under the Investment Company Act of
1940 as an open-end, management investment company. The Trust consists
of six diversified portfolios.
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may not be
changed by the Board of Trustees (the "Trustees") without shareholder
approval. Shareholders will be notified before any material change in
these policies becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer
of the security; the issuer of any demand feature applicable to the
security; or any guarantor of either the security or any demand
feature.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are backed
by:
* the full faith and credit of the U.S. Treasury;
* the issuer's right to borrow from the U.S. Treasury;
* the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
* the credit of the agency or instrumentality issuing the obligations.
BANK INSTRUMENTS
The instruments of banks and savings associations whose deposits are
insured by the Bank Insurance Fund ("BIF") or the Savings Association
Insurance Fund ("SAIF"), such as certificates of deposit, demand and
time deposits, savings shares, and bankers' acceptances, are not
necessarily guaranteed by those organizations. In addition to domestic
bank instruments, the Fund may invest in: Eurodollar Certificates of
Deposit issued by foreign branches of U.S. or foreign banks;
Eurodollar Time Deposits, which are U.S. dollar-denominated deposits
in foreign branches of U.S. or foreign banks; Canadian Time Deposits,
which are U.S. dollar-denominated deposits issued by branches of major
Canadian banks located in the United States; and Yankee Certificates
of Deposit, which are U.S. dollar-denominated certificates of deposit
issued by U.S. branches of foreign banks and held in the United
States.
RATINGS
An NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors
Service, Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc.
("Fitch") are all considered rated in the highest short-term rating
category. The Fund will follow applicable regulations in determining whether
a security rated by more than one NRSRO can be treated as being in the
highest short-term rating category; currently, such securities must be rated
by two NRSROs in their highest rating category. See "Regulatory Compliance."
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund in a dollar amount sufficient to make payment for
the securities to be purchased are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities
subject to repurchase agreements, and these securities will be marked
to market daily. In the event that a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the
Fund might be delayed pending court action. The Fund believes that
under the regular procedures normally in effect for custody of the
Fund's portfolio securities subject to repurchase agreements, a court
of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter
into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the
Trustees.
RESTRICTED AND ILLIQUID SECURITIES
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 generally is 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 normally is 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.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and
agrees that on a stipulated date in the future the Fund will
repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed-upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous,
but does not ensure this result. However, liquid assets of the Fund,
in a dollar amount sufficient to make payment for the securities to be
purchased, are: segregated on the Fund's records at the trade date;
marked to market daily; and maintained until the transaction is
settled.
CREDIT ENHANCEMENT
The Fund typically evaluates the credit quality and ratings of
credit-enhanced securities based upon the financial condition and
ratings of the party providing the credit enhancement (the "credit
enhancer"), rather than the issuer. However, credit-enhanced
securities will not be treated as having been issued by the credit
enhancer for diversification purposes unless the Fund has invested
more than 10% of its assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the
securities will be treated as having been issued by both the issuer
and the credit enhancer. The Fund may have more than 25% of its total
assets invested in securities credit enhanced by banks.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any money market instruments short or purchase
any money market instruments on margin but may obtain such short-term
credits as may be necessary for clearance of purchases and sales of
money market instruments.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets, including
the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except
as necessary to secure permitted borrowings. In those cases, it may
mortgage, pledge or hypothecate assets having a market value not
exceeding the lesser of the dollar amounts borrowed or 10% of the
value of total assets at the time of the borrowing.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may purchase
or hold money market instruments, including repurchase agreements,
permitted by its investment objective and policies.
INVESTING IN COMMODITIES, MINERALS, OR REAL ESTATE
The Fund will not invest in commodities, commodity contracts, oil,
gas, or other mineral programs or real estate, except that it may
purchase money market instruments issued by companies that invest in
or sponsor interests.
UNDERWRITING
The Fund will not underwrite any issue of securities except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted securities which the Fund may
purchase pursuant to its investment objective, policies, and
limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase money market instruments if, as a result of
such purchase, more than 25% of the value of its total assets would be
invested in one industry. However, investing in bank instruments (such
as time and demand deposits and certificates of deposit), U.S.
government obligations, or instruments secured by these money market
instruments, such as repurchase agreements, shall not be considered
investments in any one industry.
ACQUIRING SECURITIES
The Fund will not acquire the voting securities of any issuer. It will
not invest in securities issued by any other investment company,
except as part of a merger, consolidation, or other acquisition. It
will not invest in securities of a company for the purpose of
exercising control or management.
DIVERSIFICATION OF INVESTMENTS
The Fund will not purchase securities issued by any one issuer having
a value of more than 5% of the value of its total assets except cash
or cash items, repurchase agreements, and U.S. government obligations.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest in securities which are subject to
restrictions on resale under federal securities laws except that the
Fund may invest up to 10% of its net assets in high-quality securities
subject to such restrictions. This limitation is not applicable to
commercial paper issued under Section 4(2) of the Securities Act of
1933.
INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets
in money market instruments of unseasoned issuers, including their
predecessors, that have been in operation for less than three years.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES
The Fund will not purchase or retain the securities of any issuer if
the officers and Trustees of the Trust or its investment adviser,
owning individually more than 0.50 of 1% of the issuer's securities,
together beneficially own more than 5% of the issuer's securities.
The above limitations cannot be changed without shareholder approval.
For purposes of the above limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a
domestic bank or savings association having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment
to be "cash items." Except with respect to borrowing money, if a
percentage limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any change in value
or net assets will not result in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth
in the prospectus and this Statement of Additional Information, in
order to comply with applicable laws and regulations, including the
provisions of and regulations under the Investment Company Act of
1940. In particular, the Fund will comply with the various
requirements of Rule 2a-7, which regulates money market mutual funds.
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 also will determine the effective maturity of its investments, as
well as its ability to consider a security as having received the
requisite short-term ratings by NRSROs, according to Rule 2a-7. The
Fund may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates,
present positions with Money Market Obligations Trust, and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly,
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee, University of Pittsburgh;
Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center--Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of
the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; Director or Trustee of
the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica & Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University, and U.S.
Space Foundation; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy
and Technology, Federal Emergency Management Advisory Board, and Czech
Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive
Vice President and Secretary of the Funds; Treasurer of some of the
Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
@ Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
* This Trustee is deemed to be an "interested person" as defined in
the Investment Company Act of 1940.
As referred to in the list of Trustees and Officers, "Funds" includes
the following investment companies:
111 Corcoran Funds; Arrow Funds; Automated Government Money Trust;
Blanchard Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D.
Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S.
Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income
Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Investment Portfolios;
Federated Investment Trust; Federated Master Trust; Federated
Municipal Opportunities Fund, Inc.; Federated Municipal Securities
Fund, Inc.; Federated Municipal Trust; Federated Short-Term Municipal
Trust; Federated Short-Term U.S. Government Trust; Federated Stock and
Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond
Fund; Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; First
Priority Funds; Fixed Income Securities, Inc.; High Yield Cash Trust;
Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Term Trust,
Inc.--1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money
Market Obligations Trust; Money Market Obligations Trust II; Money
Market Trust; Municipal Securities Income Trust; Newpoint Funds; RIMCO
Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Virtus Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for Short-Term
U.S. Government Securities; Trust for U.S. Treasury Obligations;
Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 4, 1997, the following shareholders of record owned 5%
or more of the outstanding Institutional Service Shares of the Fund:
BHC Securities, Inc., Philadelphia, Pennsylvania owned approximately
161,733,288.4100 shares (11.00%); Stephens, Inc., Little Rock,
Arkansas owned approximately 157,246,313.1000 shares (10.69%); and
Fiduciary Trust Company International, New York, New York owned
approximately 98,908,300.0000 shares (6.73%).
As of September 4, 1997, no shareholder of record owned 5% or more of
the outstanding Cash II Shares of the Fund.
TRUSTEES COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <S>
John F. Donahue $0 $0 for the Trust and Chairman and
Trustee 56 other investment companies in the
Fund Complex
Thomas G. Bigley $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
John T. Conroy, Jr., 18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
William J. Copeland, $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
J. Christopher Donahue $0 $0 for the Trust and President and
Trustee 18 other investment companies in the
Fund Complex
James E. Dowd, $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Lawrence D. Ellis,
M.D., $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Edward L. Flaherty,
Jr., $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Peter E. Madden, $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Gregor F. Meyer, $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
John E. Murray, Jr., $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Wesley W. Posvar, $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Marjorie P. Smuts, $16,489 $108,725 for the Trust and
56 other investment companies in the
Trustee Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1997.
# The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+ The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Management. It is a subsidiary of
Federated Investors. All the voting securities of Federated Investors are
owned by a trust, the trustees of which are John F. Donahue, his wife and
his son, J. Christopher Donahue.
The adviser shall not be liable to the Automated Cash Management
Trust, the Fund, or any shareholder of the Fund for any losses that
may be sustained in the purchase, holding, or sale of any security or
for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the
Automated Cash Management Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended July 31, 1997 and 1996, the adviser earned $9,287,875 and
$6,308,051, respectively, of which $5,899,812 and $3,773,437,
respectively, were waived. For the fiscal year ended April 30, 1995,
and for the period from April 30, 1995 to July 31, 1995, the adviser
earned $5,173,695 and $1,348,977, respectively, of which $3,374,156
and $1,049,124 were waived, respectively.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Trustees. The adviser may select brokers and
dealers who offer brokerage and research services. These services may
be furnished directly to the Fund or to the adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the adviser or
its affiliates in advising the Fund and other accounts. To the extent
that receipt of these services may supplant services for which the
adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended July 31, 1997 and
1996, the fiscal year ended April 30, 1995, and the period from April
30, 1995, to July 31, 1995, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When
the Fund and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in
a manner believed by the adviser to be equitable to each. In some
cases, this procedure may adversely affect the price paid or received
by the Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and
the ability to participate in volume transactions will be to the
benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. From March 1, 1994, to March 1, 1996,
Federated Administrative Services, a subsidiary of Federated
Investors, served as the Fund's Administrator. For purposes of this
Statement of Additional Information, Federated Services Company and
Federated Administrative Services may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended July
31, 1997 and 1996, the Administrators earned $1,402,868 and $954,191,
respectively. For the fiscal year ended April 30, 1995, and for the
period from April 30, 1995, to July 31, 1995, the Administrators
earned $783,297 and $204,235, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund. Federated Services
Company, Pittsburgh, Pennsylvania, provides certain accounting and
recordkeeping services with respect to the Fund's portfolio
investments. The fee paid for this service is based upon the level of
the Fund's average net assets for the period plus out-of-pocket
expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records. For its services, the transfer agent receives a
fee based on the size, type, and number of accounts and transactions
made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen
LLP, Pittsburgh, Pennsylvania.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
With respect to Cash II Shares, the Fund has adopted a Plan pursuant
to Rule 12b-1 which was promulgated by the Securities and Exchange
Commission pursuant to the Investment Company Act of 1940. Both Cash
II Shares and Institutional Service Shares operate subject to
shareholder servicing agreements.
These arrangements permit the payment of fees to financial
institutions, the distributor, and Federated Shareholder Services, to
stimulate distribution activities and to cause services to be provided
to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and
services may include but are not limited to marketing efforts;
providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic
investments of client account cash balances; answering routine client
inquiries; and assisting clients in changing dividend options, account
designations, and addresses.
By adopting the Plan, the Trustees expect that the Fund will be able
to achieve a more predictable flow of cash for investment purposes and
to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in seeking to achieve its investment
objectives. By identifying potential investors whose needs are served
by the Fund's objectives, and properly servicing these accounts, the
Fund may be able to curb sharp fluctuations in rates of redemptions
and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2)
investing shareholder assets with a minimum of delay and
administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal year ended July 31, 1997, payments for Cash II Shares
in the amount of $1,245,101 were made pursuant to the Plan, $806,956
of which was paid to financial institutions. In addition, for the
fiscal year ended July 31, 1997, the Fund paid shareholder service
fees on behalf of Institutional Service Shares and Cash II Shares in
the amounts of $3,398,836 and $1,245,101, respectively, $95,168 and $0
of which were waived, respectively.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the
value of portfolio instruments is amortized cost. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted
for amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Fund computed by dividing
the annualized daily income on the Fund's portfolio by the net asset
value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market
prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule
2a-7 (the "Rule") promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940. Under the Rule,
the Trustees must establish procedures reasonably designed to
stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The
procedures include monitoring the relationship between the amortized
cost value per share and the net asset value per share based upon
available indications of market value. The Trustees will decide what,
if any, steps should be taken if there is a difference of more than
0.5 of 1% between the two values. The Trustees will take any steps
they consider appropriate (such as redemption in kind or shortening
the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods
of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000
or 1% of the Fund's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Trustees determine that further
payments should be in kind. In such cases, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments
valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable. Redemption in kind is not as liquid as a cash
redemption. If redemption is made in kind, shareholders who sell these
securities could receive less than the redemption value and could
incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for obligations of the
Trust. To protect its shareholders, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
its shareholders for acts or obligations of the Trust. These documents
require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust
to use its property to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment
against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder
will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated
investment companies, the Fund must, among other requirements: derive
at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; derive less than 30% of its gross income
from the sale of securities held less than three months; invest in
securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial
institutions and broker/dealers charge fees in connection with
services provided in conjunction with an investment in shares of the
Fund, the performance will be reduced for those shareholders paying
those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with
a balance of one share at the beginning of the base period, with the
net change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original
one share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the
base-period return; and multiplying the base-period return by 365/7.
For the seven-day period ended July 31, 1997, the yield for Cash II
Shares was 4.96%, and the yield for Institutional Service Shares was
5.13%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized
base-period return by: adding 1 to the base-period return; raising the
sum to the 365/7th power; and subtracting 1 from the result.
For the seven-day period ended July 31, 1997, the effective yield for
Cash II Shares was 5.08%, and the effective yield for Institutional
Service Shares was 5.26%.
TOTAL RETURN
Average annual total return is the average compounded rate of return
for a given period that would equate a $1,000 initial investment to
the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end
of the period by the net asset value per share at the end of the
period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
The average annual total returns for the Institutional Service Shares
of the Fund for the one-, five-, and ten-year periods ended July 31,
1997, were 5.09%, 4.31%, and 5.69%, respectively.
Cumulative total return reflects the total performance over a specific
period of time. For the period from September 27, 1996 (date of
initial public investment) through July 31, 1997, the cumulative total
return for Cash II Shares was 4.14%. These total returns are
representative of only ten months of activity since the date of
initial public investment.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may
include:
* Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
* IBC/Donoghue's Money Fund Report publishes annualized yields of
money market funds weekly. Donoghue's Money Market Insight
publication reports monthly and 12-month-to-date investment
results for the same money funds.
* Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
* Salomon 30-Day CD Index compares rate levels of 30-day
certificates of deposit from the top ten prime representative
banks.
Advertising and other promotional literature may include charts,
graphs, and other illustrations using the Fund's returns, or returns
in general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging, and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions
of economic, financial, and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by portfolio managers and their views
and analysis on how such developments could affect the funds. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making --structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.
The company's disciplined security selection process is firmly rooted
in sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
These traders handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in
the mutual fund industry in 1974 with the creation of the first
institutional money market fund. Simultaneously, the company pioneered
the use of the amortized cost method of accounting for valuing shares
of money market funds, a principal means used by money managers today
to value money market fund shares. Other innovations include the first
institutional tax-free money market fund. As of December 31, 1996,
Federated Investors managed more than $50.3 billion in assets across
50 money market funds, including 18 government, 11 prime, and 21
municipal with assets approximating $28.0 billion, $12.8 billion, and
$9.5 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high-yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic
fixed-income management. Henry A. Frantzen, Executive Vice President,
oversees the management of Federated Investors' international and global
portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3.5 trillion to the
more than 6,000 funds available.*
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and
mutual funds for a variety of applications, including defined benefit
and defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.
BANK MARKETING
Other institutional clients include close relationships with more than
1,600 banks and trust organizations. Virtually all of the trust
divisions of the top 100 bank holding companies use Federated funds in
their clients' portfolios. The marketing effort to trust clients is
headed by Timothy C. Pillion, Senior Vice President, Bank Marketing &
Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage
firms nationwide--we have over 2,200 broker/dealer and bank
broker/dealer relationships across the country--supported by more
wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service-quality measurement.
The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.
* Source: Investment Company Institute
Government Obligations Tax-Managed Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
The Institutional Shares of Government Obligations Tax-Managed Fund
(the "Fund") offered by this prospectus represent interests in a
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in
short-term U.S. government securities to 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, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information, or make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this
document, and other information regarding the Fund is maintained
electronically with the SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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
Fund Information 4
Management of the Fund 4
Distribution of Institutional Shares 5
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 6
Purchasing Shares by Wire 6
Purchasing Shares by Check 6
Invest-by-Phone 6
How to Redeem Shares 6
Redeeming Shares by Telephone 6
Redeeming Shares by Mail 7
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 8
Federal Income Tax 8
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Financial Highlights-- Institutional Service Shares 9
Financial Statements 10
Report of Independent Public Accountants Inside Back Cover
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.07%
12b-1 Fee None
Total Other Expenses 0.13%
Shareholder Services Fee (after waiver)(2) 0.00%
Total Operating Expenses(3) 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary
waiver of a portion of the management fee. The adviser can terminate
this voluntary waiver at any time at its sole discretion. The maximum
management fee is 0.20%.
(2) The shareholder services fee has been reduced to reflect the voluntary
waiver of the shareholder services fee. The shareholder service provider can
terminate this voluntary waiver at any time at its sole discretion. The
maximum shareholder services fee is 0.25%.
(3) The total operating expenses would be 0.58% 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 Institutional
Shares of the Fund will bear, either directly or indirectly. For more
complete descriptions of the various costs and expenses, see "Fund
Information" and "How to Purchase Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE
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.
<S> <C>
1 year $ 2
3 years $ 6
5 years $11
10 years $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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
the inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.35% 5.50% 0.94%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20% 0.17% 0.20%*
Net investment income 5.26% 5.28% 5.78%*
Expense waiver/reimbursement(c) 0.38% 0.44% 0.65%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $510,683 $199,243 $3,070
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 2, 1995 (date of
initial public investment) to July 31, 1995.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees (the
"Trustees") has established two classes of shares known as
Institutional Shares and Institutional Service Shares. This prospectus
relates only to Institutional Shares of the Fund, which are designed
primarily for entities holding shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries, and
institutional investors as a convenient means of accumulating an
interest in a professionally managed portfolio investing only in
short-term U.S. government securities. A minimum initial investment of
$1,000,000 is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares
are currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income
consistent with stability of principal and liquidity. This investment
objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940
which regulates money market mutual funds and by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a
portfolio of U.S. government securities maturing in 13 months or less.
The average maturity of the securities in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned
directly, pay interest exempt from state personal income tax.
Therefore, dividends paid by the Fund may be exempt from state
personal income tax.
ACCEPTABLE INVESTMENTS
The Fund invests only in U.S. government securities. These instruments are
either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities include, but are not limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S.
government agencies and instrumentalities supported by the full faith
and credit of the United States;
* notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
* notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the
instrumentalities.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These instrumentalities are supported by:
* the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
* discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
* the credit of the agency or instrumentality.
AGENCY MASTER DEMAND NOTES
The Fund may enter into master demand notes with various federal
agencies and instrumentalities. Under a master demand note, the Fund
has the right to increase or decrease the amount of the note on a
daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon
seven or more days notice by either the Fund or the borrower and bear
interest at a variable rate. The Fund relies on master demand notes,
in part, to provide daily liquidity. To the extent that the Fund
cannot obtain liquidity through master demand notes, it may be
required to maintain a larger cash position, invest more assets in
securities with current maturities or dispose of assets at a gain or
loss to maintain sufficient liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery
basis. These transactions are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Fund to
miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the
market values of the securities purchased may vary from the purchase
prices.
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 limitations 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.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated 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 0.20%
of the Fund's average daily net assets. The adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
Adviser's Background
Federated Administrative Services, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under
the Investment Advisers Act of 1940. It is a subsidiary of Federated
Investors. All of the Class A (voting) shares of Federated Investors
are owned by a trust, the trustees of which are John F. Donahue,
Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and
Mr. Donahue's son, J. Christopher Donahue, who is President and
Trustee of Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also
provide administrative services to a number of investment companies.
With over $110 billion invested across over 300 funds under management
and/or administration by its subsidiaries, as of December 31, 1996,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
4,500 financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interests. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SHARES
Federated Securities Corp. is the principal distributor for Institutional
Shares of the Fund. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment
companies. Federated Securities Corp. is a subsidiary of Federated
Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to 0.25% of the average
daily net asset value of its shares, computed at an annual rate, to
obtain certain personal services for shareholders and to maintain
shareholder accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services
Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes
of the Fund. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund
at an annual rate which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00
by valuing the portfolio securities using the amortized cost method.
The net asset value per share is determined by subtracting liabilities
attributable to Institutional Shares from the value of Fund assets
attributable to Institutional Shares, and dividing the remainder by
the number of Institutional Shares outstanding. The Fund cannot
guarantee that its net asset value will always remain at $1.00 per
share.
The net asset value is determined at 1:00 p.m. (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,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York
Stock Exchange is open for business. Shares may be purchased either by
wire or by check. The Fund reserves the right to reject any purchase
request.
To make a purchase, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken by
telephone. The minimum initial investment is $1,000,000. However, an
account may be opened with a smaller amount as long as the minimum is
reached within one year of opening the account. Financial institutions
may impose different minimum investment requirements on their
customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund
before 2:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 2:00 p.m. (Eastern time) that day. Federal funds
should be wired as follows: Federated Shareholder Services Company,
c/o State Street Bank and Trust Company, Boston, MA; Attention:
EDGEWIRE; For Credit to: Government Obligations Tax-Managed
Fund--Institutional Shares; Fund Number (this number can be found on
the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028.
Shares cannot be purchased by wire on holidays when wire transfers are
restricted. Questions on wire purchases should be directed to your
shareholder services representative at the telephone number listed on
your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check
should be made payable to: Government Obligations Tax-Managed
Fund--Institutional Shares. Orders by mail are considered received
when payment by check is converted into federal funds (normally the
business day after the check is received), and shares begin earning
dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone
for investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated
Shareholder Services Company to purchase shares. Federated Shareholder
Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the
Automated Clearing House. The shareholder's bank, which must be an
Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally
entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper
form and can be made as described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the
Fund has a properly completed authorization form. These forms can be
obtained from Federated Securities Corp. Proceeds from redemption
requests received before 2:00 p.m. (Eastern time) will be wired the
same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include
that day's dividend. Proceeds from redemption requests received after
that time include that day's dividend but will be wired the following
business day. Under limited circumstances, arrangements may be made
with the distributor for same-day payment of proceeds, without that
day's dividend, for redemption requests received after 2:00 p.m.
(Eastern time). Proceeds from redemption requests on holidays when
wire transfers are restricted will be wired the following business
day. Questions about telephone redemptions on days when wire transfers
are restricted should be directed to your shareholder services
representative at the telephone number listed on your account
statement.
Telephone instructions may be recorded and if reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs,
"Redeeming Shares by Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified
mail to the address noted above.
The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Fund unless cash payments are requested by writing to the Fund. Shares
purchased by wire before 2:00 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.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account, except accounts maintained by
retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000,000 due
to shareholder redemptions. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder
one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of all classes of each portfolio in
the Trust have equal voting rights, except that in matters affecting
only a particular portfolio or class, only shareholders of that
portfolio or class are entitled to vote. The Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought
only for certain changes in the Trust's or the Fund's operation and
for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate
entity for federal income tax purposes so that income (including
capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions received. This
applies whether dividends and distributions are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent
that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
The Fund will limit its investments to those which, if owned directly,
pay interest exempt from state personal income tax. However, under the
laws of some states, the net investment income distributed by the Fund
may be taxable to shareholders. Shareholders are urged to consult
their own tax advisers regarding the status of their accounts under
state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Service Shares are
sold at net asset value primarily to financial institutions, financial
intermediaries and institutional investors, and are subject to a
minimum initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Service Shares are distributed with no 12b-1 Plan but
are subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class,
investors may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and
total return. The performance figures will be calculated separately
for each class of shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during
the period on an investment shown as a percentage of the investment.
The effective yield is calculated similarly to the yield, but when
annualized, the income earned by an investment is assumed to be
reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
the inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.09% 5.23% 0.95%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.42% 0.45%*
Net investment income 4.97% 5.00% 5.55%*
Expense waiver/reimbursement(c) 0.13% 0.19% 0.40%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $421,095 $332,698 $76,165
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 30, 1995 (date of
initial public investment) to July 31, 1995.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
GOVERNMENT AGENCIES--102.5%
$ 10,000,000 Federal Farm Credit Bank, 5.69%, 10/1/1997 $ 10,000,000
28,690,000 (a)Federal Farm Credit Bank, Discount Notes, 5.36% - 5.55%, 28,619,590
8/8/1997 - 9/30/1997
26,000,000 (b)Federal Farm Credit Bank, Floating Rate Notes, 5.32% - 25,987,341
5.52%, 8/1/1997
109,650,000 (d)Federal Home Loan Bank, 5.46% - 13.00%, 8/29/1997 - 110,100,949
8/12/1998
468,310,000 (a)Federal Home Loan Bank, Discount Notes, 5.20% - 5.75%, 465,892,699
8/1/1997 - 3/17/1998
36,500,000 (b)Federal Home Loan Bank, Floating Rate Notes, 5.47% - 36,475,405
5.62%, 8/6/1997 - 9/4/1997
7,500,000 Student Loan Marketing Association, 5.54%, 2/25/1998 7,482,884
130,080,000 (a)Student Loan Marketing Association, Discount Notes, 5.38% 129,691,400
- 5.75%, 8/1/1997 - 9/30/1997
83,565,000 (b)Student Loan Marketing Association, Floating Rate Notes, 83,543,178
5.43% - 5.61%, 8/5/1997
37,200,000 (b)Student Loan Marketing Association, Master Notes, 5.46%, 37,200,000
8/5/1997
20,000,000 (a)Tennessee Valley Authority, Discount Notes, 5.44%, 19,864,125
9/15/1997
Total Government Agencies 954,857,571
U.S. TREASURY OBLIGATIONS--2.1%
U.S. TREASURY BILLS--0.7%
7,000,000 5.30% - 5.36%, 3/5/1998 6,775,960
U.S. TREASURY NOTES--1.4%
13,000,000 6.13% - 7.88%, 11/15/1997 - 5/15/1998 13,083,302
Total U.S. Treasury Obligations 19,859,262
Total Investments (at amortized cost)(c) $ 974,716,833
</TABLE>
(a) The issue shows the rate of discount at time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
(d) Certain of these securities represent delayed delivery securities.
Note: The categories of investments are shown as a percentage of net assets
($931,777,644) at July 31, 1997.
(See Notes which are an integral part of
the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $ 974,716,833
Cash 4,682,547
Income receivable 5,389,050
Deferred expenses 95,795
Total assets 984,884,225
LIABILITIES:
Payable for investments purchased $ 46,996,933
Payable for shares redeemed 3,200,000
Income distribution payable 2,730,237
Accrued expenses 179,411
Total liabilities 53,106,581
Net Assets for 931,777,644 shares outstanding $ 931,777,644
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$510,682,857 / 510,682,857 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$421,094,787 / 421,094,787 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 39,550,704
EXPENSES:
Investment advisory fee $ 1,452,990
Administrative personnel and services fee 548,677
Custodian fees 61,881
Transfer and dividend disbursing agent fees and 49,651
expenses
Directors'/Trustees' fees 6,511
Auditing fees 11,186
Legal fees 6,011
Portfolio accounting fees 121,105
Shareholder services fee--Institutional Shares 746,763
Shareholder services fee--Institutional Service 1,069,476
Shares
Share registration costs 119,667
Printing and postage 18,001
Insurance premiums 7,233
Miscellaneous 6,007
Total expenses 4,225,159
Waivers--
Waiver of investment advisory fee $ (923,964)
Waiver of shareholder services (746,763)
fee--Institutional Shares
Total waivers (1,670,727)
Net expenses 2,554,432
Net investment income $ 36,996,272
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 36,996,272 $ 17,665,003
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (15,718,201) (6,666,528)
Institutional Service Shares (21,278,071) (10,998,475)
Change in net assets resulting from distributions to (36,996,272) (17,665,003)
shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 3,043,939,190 1,393,097,071
Net asset value of shares issued to shareholders in payment 9,152,302 2,785,115
of distributions declared
Cost of shares redeemed (2,653,254,346) (943,176,795)
Change in net assets resulting from share transactions 399,837,146 452,705,391
Change in net assets 399,837,146 452,705,391
NET ASSETS:
Beginning of period 531,940,498 79,235,107
End of period $ 931,777,644 $ 531,940,498
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios.
The financial statements included herein are only those of Government
Obligations Tax-Managed Fund (the "Fund"). The financial statements of
the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to
the portfolio in which shares are held. The investment objective of
the Fund is to provide current income consistent with stability of
principal and liquidity.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio
securities in accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and
discount, if applicable, are amortized as required by the Internal
Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions.
The Fund records when-issued securities on the trade date and
maintains security positions such that sufficient liquid assets will
be available to make payment for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
DEFERRED EXPENSES
The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of
registering its shares, have been deferred and are being amortized
using the straight-line method over a period of five years from the
Fund's commencement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual
results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in
aggregated $931,777,644. Transactions in shares were as follows:
<TABLE>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 1,062,116,399 570,331,953
Shares issued to shareholders in payment of distributions 5,995,666 2,591,398
declared
Shares redeemed (756,672,059) (376,750,642)
Net change resulting from Institutional Shares transactions 311,440,006 196,172,709
</TABLE>
<TABLE>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 1,981,822,791 822,765,118
Shares issued to shareholders in payment of distributions declared 3,156,636 193,717
Shares redeemed (1,896,582,287) (566,426,153)
Net change resulting from Institutional Service Shares transactions 88,397,140 256,532,682
Net change resulting from share transactions 399,837,146 452,705,391
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Administrative Services, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory
fee equal to 0.20% of the Fund's average daily net assets. The Adviser
may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative
Services Agreement, provides the Fund with administrative personnel
and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received
during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to
FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver
at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ also maintains the Fund's accounting records for which it
receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $26,061 were borne initially by the
Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses during the five-year period following
effective date. For the period ended July 31, 1997, the Fund paid
$3,764 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, 1997,
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, 1997, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Government Obligations Tax-Managed Fund (an
investment portfolio of Money Market Obligations Trust) as of July 31,
1997, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
[GRAPHIC]
Federated Investors
Government Obligations Tax-Managed Fund
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
INSTITUTIONAL SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and
Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT
AND DIVIDEND
DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N856
G01140-01-IS (9/97)
[Graphic]
Government Obligations Tax-Managed Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
The Institutional Service Shares of Government Obligations Tax-Managed
Fund (the "Fund") offered by this prospectus represent interests in a
portfolio of Money Market Obligations Trust (the "Trust"), an open-end
management investment company (a mutual fund). The Fund invests in
short-term U.S. government securities to 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, 1997, with the Securities and Exchange Commission
("SEC"). The information contained in the Statement of Additional
Information is incorporated by reference into this prospectus. You may
request a copy of the Statement of Additional Information or a paper
copy of this prospectus, if you have received your prospectus
electronically, free of charge by calling 1-800-341-7400. To obtain
other information, or make inquiries about the Fund, contact the Fund
at the address listed in the back of this prospectus. The Statement of
Additional Information, material incorporated by reference into this
document, and other information regarding the Fund is maintained
electronically with the SEC at Internet Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated September 30, 1997
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
Fund Information 4
Management of the Fund 4
Distribution of Institutional Service Shares 5
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 6
Purchasing Shares by Wire 6
Purchasing Shares by Check 6
Invest-by-Phone 6
How to Redeem Shares 6
Redeeming Shares by Telephone 6
Redeeming Shares by Mail 7
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 8
Federal Income Tax 8
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Financial Highlights-- Institutional Shares 9
Financial Statements 10
Report of Independent Public Accountants Inside Back Cover
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.07%
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 be 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
"Fund Information" and "How to Purchase Shares." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE
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.
<S> <C>
1 year $ 5
3 years $14
5 years $25
10 years $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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
the inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.09% 5.23% 0.95%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.42% 0.45%*
Net investment income 4.97% 5.00% 5.55%*
Expense waiver/reimbursement(c) 0.13% 0.19% 0.40%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $421,095 $332,698 $76,165
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 30, 1995 (date of
initial public investment) to July 31, 1995.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated October 3, 1988. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. With respect to this
Fund, as of the date of this prospectus, the Board of Trustees (the
"Trustees") has established two classes of shares known as
Institutional Service Shares and Institutional Shares. This prospectus
relates only to Institutional Service Shares of the Fund, which are
designed primarily for financial institutions, financial
intermediaries, and institutional investors as a convenient means of
accumulating an interest in a professionally managed portfolio
investing only in short-term U.S. government securities. A minimum
initial investment of $1,000,000 is required.
The Fund attempts to stabilize the value of a share at $1.00. Shares
are currently sold and redeemed at that price.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income
consistent with stability of principal and liquidity. This investment
objective cannot be changed without shareholder approval. While there
is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by complying with the diversification and other
requirements of Rule 2a-7 under the Investment Company Act of 1940
which regulates money market mutual funds and by following the
investment policies described in this prospectus.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing only in a
portfolio of U.S. government securities maturing in 13 months or less.
The average maturity of the securities in the Fund's portfolio,
computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
The Fund will limit its investments to investments which, if owned
directly, pay interest exempt from state personal income tax.
Therefore, dividends paid by the Fund may be exempt from state
personal income tax.
ACCEPTABLE INVESTMENTS
The Fund invests only in U.S. government securities. These instruments are
either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities include, but are not limited to:
* direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
* notes, bonds, and discount notes issued or guaranteed by U.S.
government agencies and instrumentalities supported by the full faith
and credit of the United States;
* notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
* notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the
instrumentalities.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These instrumentalities are supported by:
* the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
* discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
* the credit of the agency or instrumentality.
AGENCY MASTER DEMAND NOTES
The Fund may enter into master demand notes with various federal
agencies and instrumentalities. Under a master demand note, the Fund
has the right to increase or decrease the amount of the note on a
daily basis within specified maximum and minimum amounts. Master
demand notes also normally provide for full or partial repayment upon
seven or more days notice by either the Fund or the borrower and bear
interest at a variable rate. The Fund relies on master demand notes,
in part, to provide daily liquidity. To the extent that the Fund
cannot obtain liquidity through master demand notes, it may be
required to maintain a larger cash position, invest more assets in
securities with current maturities or dispose of assets at a gain or
loss to maintain sufficient liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery
basis. These transactions are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Fund to
miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the
market values of the securities purchased may vary from the purchase
prices.
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 limitations 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.
FUND INFORMATION
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The Fund is managed by a Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER
Investment decisions for the Fund are made by Federated 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 0.20%
of the Fund's average daily net assets. The adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of
the Fund, but reserves the right to terminate such waiver or
reimbursement at any time at its sole discretion.
Adviser's Background
Federated Administrative Services, a Delaware business trust,
organized on April 11, 1989, is a registered investment adviser under
the Investment Advisers Act of 1940. It is a subsidiary of Federated
Investors. All of the Class A (voting) shares of Federated Investors
are owned by a trust, the trustees of which are John F. Donahue,
Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and
Mr. Donahue's son, J. Christopher Donahue, who is President and
Trustee of Federated Investors.
Federated Administrative Services and other subsidiaries of Federated
Investors serve as investment advisers to a number of investment
companies and private accounts. Certain other subsidiaries also
provide administrative services to a number of investment companies.
With over $110 billion invested across over 300 funds under management
and/or administration by its subsidiaries, as of December 31, 1996,
Federated Investors is one of the largest mutual fund investment
managers in the United States. With more than 2,000 employees,
Federated continues to be led by the management who founded the
company in 1955. Federated funds are presently at work in and through
4,500 financial institutions nationwide.
Both the Trust and the adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests
of shareholders ahead of the employees' own interests. Among other
things, the codes: require preclearance and periodic reporting of
personal securities transactions; prohibit personal transactions in
securities being purchased or sold, or being considered for purchase
or sale, by the Fund; prohibit purchasing securities in initial public
offerings; and prohibit taking profits on securities held for less
than sixty days. Violations of the codes are subject to review by the
Trustees, and could result in severe penalties.
DISTRIBUTION OF INSTITUTIONAL SERVICE SHARES
Federated Securities Corp. is the principal distributor for Institutional
Service Shares of the Fund. It is a Pennsylvania corporation organized on
November 14, 1969, and is the principal distributor for a number of
investment companies. Federated Securities Corp. is a subsidiary of
Federated Investors.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with
Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to 0.25% of the average
daily net asset value of its shares, computed at an annual rate, to
obtain certain personal services for shareholders and to maintain
shareholder accounts. From time to time and for such periods as deemed
appropriate, the amount stated above may be reduced voluntarily. Under
the Shareholder Services Agreement, Federated Shareholder Services
will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial
institutions will receive fees based upon shares owned by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid will be determined from time to time by
the Fund and Federated Shareholder Services.
SUPPLEMENTAL PAYMENTS TO FINANCIAL INSTITUTIONS
In addition to payments made pursuant to the Shareholder Services
Agreement, Federated Securities Corp. and Federated Shareholder
Services, from their own assets, may pay financial institutions
supplemental fees for the performance of substantial sales services,
distribution-related support services, or shareholder services. The
support may include sponsoring sales, educational and training
seminars for their employees, providing sales literature, and
engineering computer software programs that emphasize the attributes
of the Fund. Such assistance will be predicated upon the amount of
shares the financial institution sells or may sell, and/or upon the
type and nature of sales or marketing support furnished by the
financial institution. Any payments made by the distributor may be
reimbursed by the Fund's investment adviser or its affiliates.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain
legal and financial reporting services) necessary to operate the Fund
at an annual rate which relates to the average aggregate daily net
assets of all funds advised by affiliates of Federated Investors
specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250 million
0.125% on the next $250 million
0.100% on the next $250 million
0.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares. Federated Services Company may choose voluntarily to waive a
portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00
by valuing the portfolio securities using the amortized cost method.
The net asset value per share is determined by subtracting liabilities
attributable to Institutional Service Shares from the value of Fund
assets attributable to Institutional Service Shares, and dividing the
remainder by the number of Institutional Service Shares outstanding.
The Fund cannot guarantee that its net asset value will always remain
at $1.00 per share.
The net asset value is determined at 1:00 p.m. (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,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day.
HOW TO PURCHASE SHARES
Shares are sold at their net asset value, without a sales charge, next
determined after an order is received, on days on which the New York
Stock Exchange is open for business. Shares may be purchased either by
wire or by check. The Fund reserves the right to reject any purchase
request.
To make a purchase, open an account by calling Federated Securities
Corp. Information needed to establish the account will be taken by
telephone. The minimum initial investment is $1,000,000. However, an
account may be opened with a smaller amount as long as the minimum is
reached within one year of opening the account. Financial institutions
may impose different minimum investment requirements on their
customers.
PURCHASING SHARES BY WIRE
Shares may be purchased by Federal Reserve wire by calling the Fund
before 2:00 p.m. (Eastern time) to place an order. The order is
considered received immediately. Payment by federal funds must be
received before 2:00 p.m. (Eastern time) that day. Federal funds
should be wired as follows: Federated Shareholder Services Company,
c/o State Street Bank and Trust Company, Boston, MA; Attention:
EDGEWIRE; For Credit to: Government Obligations Tax-Managed
Fund--Institutional Service Shares; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number
011000028. Shares cannot be purchased by wire on holidays when wire
transfers are restricted. Questions on wire purchases should be
directed to your shareholder services representative at the telephone
number listed on your account statement.
PURCHASING SHARES BY CHECK
Shares may be purchased by sending a check to Federated Shareholder
Services Company, P.O. Box 8600, Boston, MA 02266-8600. The check
should be made payable to: Government Obligations Tax-Managed
Fund--Institutional Service Shares. Orders by mail are considered
received when payment by check is converted into federal funds
(normally the business day after the check is received), and shares
begin earning dividends the next day.
INVEST-BY-PHONE
Once an account has been opened, a shareholder may use invest-by-phone
for investments if an authorization form has been filed with Federated
Shareholder Services Company, the transfer agent for shares of the
Fund. Approximately two weeks after sending the form to Federated
Shareholder Services Company, the shareholder may call Federated
Shareholder Services Company to purchase shares. Federated Shareholder
Services Company will send a request for monies to the shareholder's
commercial bank, savings bank, or credit union ("bank") via the
Automated Clearing House. The shareholder's bank, which must be an
Automated Clearing House member, will then forward the monies to
Federated Shareholder Services Company. The purchase is normally
entered the next business day after the initial phone request. For
further information and an application, call the Fund.
HOW TO REDEEM SHARES
Shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests must be received in proper
form and can be made as described below.
REDEEMING SHARES BY TELEPHONE
Redemptions in any amount may be made by calling the Fund provided the
Fund has a properly completed authorization form. These forms can be
obtained from Federated Securities Corp. Proceeds from redemption
requests received before 2:00 p.m. (Eastern time) will be wired the
same day to the shareholder's account at a domestic commercial bank
which is a member of the Federal Reserve System, but will not include
that day's dividend. Proceeds from redemption requests received after
that time include that day's dividend but will be wired the following
business day. Under limited circumstances, arrangements may be made
with the distributor for same-day payment of proceeds, without that
day's dividend, for redemption requests received after 2:00 p.m.
(Eastern time). Proceeds from redemption requests on holidays when
wire transfers are restricted will be wired the following business
day. Questions about telephone redemptions on days when wire transfers
are restricted should be directed to your shareholder services
representative at the telephone number listed on your account
statement.
Telephone instructions may be recorded and if reasonable procedures
are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If this occurs,
"Redeeming Shares by Mail" should be considered. If at any time the
Fund shall determine it necessary to terminate or modify the telephone
redemption privilege, shareholders would be promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to:
Federated Shareholder Services Company, P.O. Box 8600, Boston, MA
02266-8600. If share certificates have been issued, they should be
sent unendorsed with the written request by registered or certified
mail to the address noted above.
The written request should state: the Fund name and the class
designation; the account name as registered with the Fund; the account
number; and the number of shares to be redeemed or the dollar amount
requested. All owners of the account must sign the request exactly as
the shares are registered. Normally, a check for the proceeds is
mailed within one business day, but in no event more than seven days,
after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is
processed.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund or a redemption
payable other than to the shareholder of record must have their
signatures guaranteed by a commercial or savings bank, trust company
or savings association whose deposits are insured by an organization
which is administered by the Federal Deposit Insurance Corporation; a
member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary
public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Fund unless cash payments are requested by writing to the Fund. Shares
purchased by wire before 2:00 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.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions
(except for systematic program transactions). In addition,
shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account, except accounts maintained by
retirement plans, and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000,000 due
to shareholder redemptions. Before shares are redeemed to close an
account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.
VOTING RIGHTS
Each share of the Trust owned by a shareholder gives that shareholder
one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of all classes of each portfolio in
the Trust have equal voting rights, except that in matters affecting
only a particular portfolio or class, only shareholders of that
portfolio or class are entitled to vote. The Trust is not required to
hold annual shareholder meetings. Shareholder approval will be sought
only for certain changes in the Trust's or the Fund's operation and
for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies. The Fund will be treated as a single, separate
entity for federal income tax purposes so that income (including
capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions received. This
applies whether dividends and distributions are received in cash or as
additional shares.
STATE AND LOCAL TAXES
In the opinion of Houston, Donnelly & Meck, counsel to the Trust, Fund
shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent
that the portfolio securities in the Fund would be subject to such
taxes if owned directly by residents of those jurisdictions.
The Fund will limit its investments to those which, if owned directly,
pay interest exempt from state personal income tax. However, under the
laws of some states, the net investment income distributed by the Fund
may be taxable to shareholders. Shareholders are urged to consult
their own tax advisers regarding the status of their accounts under
state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers other classes. Institutional Shares are sold at
net asset value primarily to financial institutions, financial
intermediaries, institutional investors, and entities holding shares
in an agency or fiduciary capacity, and are subject to a minimum
initial investment of $1,000,000.
All classes are subject to certain of the same expenses.
Institutional Shares are distributed with no 12b-1 Plan but are
subject to shareholder services fees.
Expense differences between classes may affect the performance of each
class.
To obtain more information and a prospectus for any other class,
investors may call 1-800-341-7400.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and
total return. The performance figures will be calculated separately
for each class of shares.
Yield represents the annualized rate of income earned on an investment
over a seven-day period. It is the annualized dividends earned during
the period on an investment shown as a percentage of the investment.
The effective yield is calculated similarly to the yield, but when
annualized, the income earned by an investment is assumed to be
reinvested daily. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
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.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on
the inside back cover.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996 1995(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.35% 5.50% 0.94%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20% 0.17% 0.20%*
Net investment income 5.26% 5.28% 5.78%*
Expense waiver/reimbursement(c) 0.38% 0.44% 0.65%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $510,683 $199,243 $3,070
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 2, 1995 (date of
initial public investment) to July 31, 1995.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
GOVERNMENT AGENCIES--102.5%
$ 10,000,000 Federal Farm Credit Bank, 5.69%, 10/1/1997 $ 10,000,000
28,690,000 (a)Federal Farm Credit Bank, Discount Notes, 5.36% - 5.55%, 28,619,590
8/8/1997 - 9/30/1997
26,000,000 (b)Federal Farm Credit Bank, Floating Rate Notes, 5.32% - 25,987,341
5.52%, 8/1/1997
109,650,000 (d)Federal Home Loan Bank, 5.46% - 13.00%, 8/29/1997 - 110,100,949
8/12/1998
468,310,000 (a)Federal Home Loan Bank, Discount Notes, 5.20% - 5.75%, 465,892,699
8/1/1997 - 3/17/1998
36,500,000 (b)Federal Home Loan Bank, Floating Rate Notes, 5.47% - 36,475,405
5.62%, 8/6/1997 - 9/4/1997
7,500,000 Student Loan Marketing Association, 5.54%, 2/25/1998 7,482,884
130,080,000 (a)Student Loan Marketing Association, Discount Notes, 5.38% 129,691,400
- 5.75%, 8/1/1997 - 9/30/1997
83,565,000 (b)Student Loan Marketing Association, Floating Rate Notes, 83,543,178
5.43% - 5.61%, 8/5/1997
37,200,000 (b)Student Loan Marketing Association, Master Notes, 5.46%, 37,200,000
8/5/1997
20,000,000 (a)Tennessee Valley Authority, Discount Notes, 5.44%, 19,864,125
9/15/1997
Total Government Agencies 954,857,571
U.S. TREASURY OBLIGATIONS--2.1%
U.S. TREASURY BILLS--0.7%
7,000,000 5.30% - 5.36%, 3/5/1998 6,775,960
U.S. TREASURY NOTES--1.4%
13,000,000 6.13% - 7.88%, 11/15/1997 - 5/15/1998 13,083,302
Total U.S. Treasury Obligations 19,859,262
Total Investments (at amortized cost)(c) $ 974,716,833
</TABLE>
(a) The issue shows the rate of discount at time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
(d) Certain of these securities represent delayed delivery securities.
Note: The categories of investments are shown as a percentage of net assets
($931,777,644) at July 31, 1997.
(See Notes which are an integral part of
the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $ 974,716,833
Cash 4,682,547
Income receivable 5,389,050
Deferred expenses 95,795
Total assets 984,884,225
LIABILITIES:
Payable for investments purchased $ 46,996,933
Payable for shares redeemed 3,200,000
Income distribution payable 2,730,237
Accrued expenses 179,411
Total liabilities 53,106,581
Net Assets for 931,777,644 shares outstanding $ 931,777,644
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$510,682,857 / 510,682,857 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$421,094,787 / 421,094,787 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF OPERATIONS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
YEAR ENDED JULY 31, 1997
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 39,550,704
EXPENSES:
Investment advisory fee $ 1,452,990
Administrative personnel and services fee 548,677
Custodian fees 61,881
Transfer and dividend disbursing agent fees and 49,651
expenses
Directors'/Trustees' fees 6,511
Auditing fees 11,186
Legal fees 6,011
Portfolio accounting fees 121,105
Shareholder services fee--Institutional Shares 746,763
Shareholder services fee--Institutional Service 1,069,476
Shares
Share registration costs 119,667
Printing and postage 18,001
Insurance premiums 7,233
Miscellaneous 6,007
Total expenses 4,225,159
Waivers--
Waiver of investment advisory fee $ (923,964)
Waiver of shareholder services (746,763)
fee--Institutional Shares
Total waivers (1,670,727)
Net expenses 2,554,432
Net investment income $ 36,996,272
</TABLE>
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF CHANGES IN NET ASSETS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1997 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 36,996,272 $ 17,665,003
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (15,718,201) (6,666,528)
Institutional Service Shares (21,278,071) (10,998,475)
Change in net assets resulting from distributions to (36,996,272) (17,665,003)
shareholders
SHARE TRANSACTIONS--
Proceeds from sale of shares 3,043,939,190 1,393,097,071
Net asset value of shares issued to shareholders in payment 9,152,302 2,785,115
of distributions declared
Cost of shares redeemed (2,653,254,346) (943,176,795)
Change in net assets resulting from share transactions 399,837,146 452,705,391
Change in net assets 399,837,146 452,705,391
NET ASSETS:
Beginning of period 531,940,498 79,235,107
End of period $ 931,777,644 $ 531,940,498
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1997
ORGANIZATION
Money Market Obligations Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of six portfolios.
The financial statements included herein are only those of Government
Obligations Tax-Managed Fund (the "Fund"). The financial statements of
the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to
the portfolio in which shares are held. The investment objective of
the Fund is to provide current income consistent with stability of
principal and liquidity.
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares.
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 uses the amortized cost method to value its portfolio
securities in accordance with Rule 2a-7 under the Act.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and
discount, if applicable, are amortized as required by the Internal
Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date.
FEDERAL TAXES
It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions.
The Fund records when-issued securities on the trade date and
maintains security positions such that sufficient liquid assets will
be available to make payment for the securities purchased. Securities
purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
DEFERRED EXPENSES
The costs incurred by the Fund with respect to registration of its
shares in its first fiscal year, excluding the initial expense of
registering its shares, have been deferred and are being amortized
using the straight-line method over a period of five years from the
Fund's commencement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual
results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1997, capital paid-in
aggregated $931,777,644. Transactions in shares were as follows:
<TABLE>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1997 1996
<S> <C> <C>
Shares sold 1,062,116,399 570,331,953
Shares issued to shareholders in payment of distributions 5,995,666 2,591,398
declared
Shares redeemed (756,672,059) (376,750,642)
Net change resulting from Institutional Shares transactions 311,440,006 196,172,709
</TABLE>
<TABLE>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1997 1996
<S> <C> <C>
Shares sold 1,981,822,791 822,765,118
Shares issued to shareholders in payment of distributions
declared 3,156,636 193,717
Shares redeemed (1,896,582,287) (566,426,153)
Net change resulting from Institutional Service Shares
transactions 88,397,140 256,532,682
Net change resulting from share transactions 399,837,146 452,705,391
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Administrative Services, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment advisory
fee equal to 0.20% of the Fund's average daily net assets. The Adviser
may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE
Federated Services Company ("FServ"), under the Administrative
Services Agreement, provides the Fund with administrative personnel
and services. The fee paid to FServ is based on the level of average
aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received
during the period of the Administrative Services Agreement shall be at
least $125,000 per portfolio and $30,000 per each additional class of
shares.
SHAREHOLDER SERVICES FEE
Under the terms of a Shareholder Services Agreement with Federated
Shareholder Services ("FSS"), the Fund will pay FSS up to 0.25% of
average daily net assets of the Fund for the period. The fee paid to
FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver
at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES
FServ also maintains the Fund's accounting records for which it
receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES
Organizational expenses of $26,061 were borne initially by the
Adviser. The Fund has agreed to reimburse the Adviser for the
organizational expenses during the five-year period following
effective date. For the period ended July 31, 1997, the Fund paid
$3,764 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, 1997,
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, 1997, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Government Obligations Tax-Managed Fund (an
investment portfolio of Money Market Obligations Trust) as of July 31,
1997, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then
ended, and its financial highlights for the periods presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 8, 1997
[Graphic]
Federated Investors
Government Obligations Tax-Managed Fund
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1997
A Portfolio of Money Market Obligations Trust, an Open-End Management
Investment Company
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
INSTITUTIONAL SERVICE SHARES
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSTODIAN
State Street Bank and
Trust Company
P.O. Box 8600
Boston, MA 02266-8600
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2100 One PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
Cusip 60934N849
G01140-02 (9/97)
[Graphic]
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectuses of Government Obligations Tax-Managed Fund (the "Fund"),
a portfolio of Money Market Obligations Trust (the "Trust") dated
September 30, 1997. This Statement is not a prospectus. You may
request a copy of a prospectus or a paper copy of this Statement, if
you have received it electronically, free of charge by calling
1-800-341-7400.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated September 30, 1997
Federated Investors
Federated Securities Corp., Distributor
[Graphic]
Cusip 60934N856
Cusip 60934N849
G01140-03 (9/97)
TABLE OF CONTENTS
INVESTMENT POLICIES 1 Acceptable Investments 1 When-Issued and
Delayed Delivery Transactions 1 Reverse Repurchase Agreements 1
INVESTMENT LIMITATIONS 1 Selling Short and Buying on Margin 1 Issuing
Senior Securities and Borrowing Money 1 Pledging Assets 1 Lending
Cash or Securities 1 Investing in Commodities 2 Investing in Real
Estate 2 Underwriting 2 Concentration of Investments 2
Diversification of Investments 2 Investing in Illiquid Securities 2
Investing in Securities of Other Investment Companies 2 Investing for
Control 2 Investing in Options 2 Regulatory Compliance 2 MONEY MARKET
OBLIGATIONS TRUST MANAGEMENT 3 Share Ownership 6 Trustee Compensation
7 Trustee Liability 7 INVESTMENT ADVISORY SERVICES 8 Investment
Adviser 8 Advisory Fees 8 BROKERAGE TRANSACTIONS 8 OTHER SERVICES 8
Fund Administration 8 Custodian and Portfolio Accountant 9 Transfer
Agent 9 Independent Public Accountants 9 Shareholder Services 9
DETERMINING NET ASSET VALUE 9 REDEMPTION IN KIND 10 MASSACHUSETTS
PARTNERSHIP LAW 10 THE FUND'S TAX STATUS 10 PERFORMANCE INFORMATION
10 Yield 10 Effective Yield 10 Total Return 11 Performance
Comparisons 11 Economic and Market Information 11 ABOUT FEDERATED
INVESTORS 12 Mutual Fund Market 12 Institutional Clients 12 Bank
Marketing 12 Broker/Dealers and Bank Broker/Dealer Subsidiaries 12
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be
changed by the Board of Trustees (the "Trustees") without shareholder
approval. Shareholders will be notified before any material change in
these policies becomes effective.
ACCEPTABLE INVESTMENTS
Some of the short-term U.S. government securities the Fund may
purchase carry variable interest rates. These securities have a rate
of interest subject to adjustment at least annually. This adjusted
interest rate is ordinarily tied to some objective standard, such as
the 91-day U.S. Treasury bill rate. Variable interest rates will
reduce the changes in the market value of such securities from their
original purchase prices. Accordingly, the potential for capital
appreciation or capital depreciation should not be greater than that
of fixed-interest-rate U.S. government securities having maturities
equal to the interest rate adjustment dates of the variable-rate U.S.
government securities. The Fund may purchase variable-rate U.S.
government securities upon the determination by the Trustees that the
interest rate as adjusted will cause the instrument to have a current
market value that approximates its par value on the adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Fund in a dollar amount sufficient to make payment for
the securities to be purchased are: segregated on the Fund's records
at the trade date; marked to market daily; and maintained until the
transaction is settled. The Fund does not intend to engage in
when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its
assets.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and
agrees that on a stipulated date in the future the Fund will
repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed-upon rate. The use of reverse
repurchase agreements may enable the Fund to avoid selling portfolio
instruments at a time when a sale may be deemed to be disadvantageous,
but does not ensure this result. However, liquid assets of the Fund,
in a dollar amount sufficient to make payment for the securities to be
purchased, are: segregated on the Fund's records at the trade date;
marked to market daily; and maintained until the transaction is
settled.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as are necessary for
clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money directly or through reverse repurchase agreements in
amounts up to one-third of the value of its total assets, including
the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are
outstanding. During the period any reverse repurchase agreements are
outstanding, the Fund will restrict the purchase of portfolio
securities to money market instruments maturing on or before the
expiration date of the reverse repurchase agreements, but only to the
extent necessary to assure completion of the reverse repurchase
agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except
as necessary to secure permitted borrowings.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may purchase
or hold portfolio securities permitted by its investment objective,
policies, and limitations, or Declaration of Trust.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts,
or commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in securities of issuers
whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real
estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any
one industry. The U.S. government is not considered to be an industry.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities
and repurchase agreements collateralized by such U.S. government
securities) if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer, or if it
would own more than 10% of the outstanding voting securities of that
issuer.
The above limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets
in illiquid securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any
combination of them.
For purposes of the above limitations, the Fund considers certificates
of deposit and demand and time deposits issued by a U.S. branch of a
domestic bank or savings association having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment
to be "cash items." Except with respect to borrowing money, if a
percentage limitation is adhered to at the time of investment, a later
increase or decrease in percentage resulting from any change in value
or net assets will not result in a violation of such limitation.
The Fund did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth
in the prospectus and this Statement of Additional Information, in
order to comply with applicable laws and regulations, including the
provisions of and regulations under the Investment Company Act of
1940. In particular, the Fund will comply with the various
requirements of Rule 2a-7, which regulates money market mutual funds.
The Fund will determine the effective maturity of its investments
according to Rule 2a-7. The Fund may change these operational policies
to reflect changes in the laws and regulations without the approval of
its shareholders.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates,
present positions with Money Market Obligations Trust, and principal
occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, President and
Trustee of the Company.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly,
Senior Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.;
Director, Member of Executive Committee, University of Pittsburgh;
Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice President, John R.
Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank
Corp.; Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center--Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly,
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; Director or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of
Massachusetts; formerly, President, State Street Bank and Trust
Company and State Street Boston Corporation; Director or Trustee of
the Funds.
Gregor F. Meyer
203 Kensington Ct.
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Chairman, Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Retired
from the law firm of Miller, Ament, Henny & Kochuba; Director or Trustee of
the Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica & Murray; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee,
Carnegie Endowment for International Peace, RAND Corporation, Online
Computer Library Center, Inc., National Defense University and U.S.
Space Foundation; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy
and Technology, Federal Emergency Management Advisory Board and Czech
Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning; Director or Trustee of the
Funds.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds; President,
Executive Vice President and Treasurer of some of the Funds.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated
Research; Director, Federated Research Corp. and Federated Global
Research Corp.; Trustee, Federated Shareholder Services Company;
Director, Federated Services Company; President and Trustee, Federated
Shareholder Services; Director, Federated Securities Corp.; Executive
Vice President and Secretary of the Funds; Treasurer of some of the
Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some of
the Funds; Director or Trustee of some of the Funds.
@ Member of the Executive Committee. The Executive Committee of the
Trustees handles the responsibilities of the Board between meetings of
the Board.
* This Trustee is deemed to be an "interested person" as defined in
the Investment Company Act of 1940.
As referred to in the list of Trustees and Officers, "Funds" includes
the following investment companies: 111 Corcoran Funds; Arrow Funds;
Automated Government Money Trust; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated
American Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity
Funds; Federated Equity Income Fund, Inc.; Federated Fund for U.S.
Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust;
Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Investment Portfolios; Federated Investment Trust;
Federated Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust;
Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government
Securities Fund: 1-3 Years; Federated U.S. Government Securities Fund:
2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; First Priority Funds; Fixed Income
Securities, Inc.; High Yield Cash Trust; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Investment
Series Trust; Liberty Term Trust, Inc.--1999; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted
Duration Trust; Tax-Free Instruments Trust; The Planters Funds; The
Starburst Funds; The Starburst Funds II; The Virtus Funds; Trust for
Financial Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; Wesmark Funds; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 4, 1997, the following shareholders of record owned 5%
or more of the outstanding Institutional Shares of the Fund: Panabco,
Newark, Ohio, owned approximately 35,675,552 shares (6.55%); Scaup &
Co., Boston, Massachusetts, owned approximately 89,892,290 shares
(16.51%); Frost National Bank, San Antonio, Texas, owned approximately
83,986,764 shares (15.42%); BDG & Co., Boston, Massachusetts, owned
approximately 49,757,500 shares (9.14%); Santa Monica Bank, Santa
Monica, California, owned approximately 31,582,903 shares (5.80%); and
Mellon Bank Capital Markets Omnibus Account, Pittsburgh, Pennsylvania,
owned approximately 50,000,000 shares (9.18%).
As of September 4, 1997, the following shareholders of record owned 5%
or more of the outstanding Institutional Service Shares of the Fund:
Perry Baker & Co., Westerly, Rhode Island, owned approximately
56,394,655 shares (12.54%); Pacific Bank, NA, San Francisco,
California, owned approximately 35,510,810 shares (7.89%); Currier &
Co., Salem, Massachusetts, owned approximately 57,218,087 shares
(12.72%); and Citizens Trust Co., Providence, Rhode Island, owned
approximately 57,253,402 shares (12.73%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX+
<S> <C> <C>
John F. Donahue $0 $0 for the Trust and
Chairman and Trustee 56 other investment companies in the
Fund Complex
Thomas G. Bigley $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
John T. Conroy, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
William J. Copeland $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
J. Christopher Donahue $0 $0 for the Trust and
President and Trustee 18 other investment companies in the
Fund Complex
James E. Dowd $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Lawrence D. Ellis, M.D. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Edward L. Flaherty, Jr. $18,139 $119,615 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Peter E. Madden $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Gregor F. Meyer $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
John E. Murray, Jr. $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Wesley W. Posvar $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
Marjorie P. Smuts $16,489 $108,725 for the Trust and
Trustee 56 other investment companies in the
Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1997.
# The aggregate compensation is provided for the Trust which is comprised of
six portfolios.
+ The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is Federated Administrative Services. It is a
subsidiary of Federated Investors. All the voting securities of Federated
Investors are owned by a trust, the trustees of which are John F. Donahue,
his wife and his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Fund.
ADVISORY FEES
For its advisory services, Federated Administrative Services receives
an annual investment advisory fee as described in the prospectus. For
the fiscal years ended July 31, 1997 and 1996, and for the period from
May 30, 1995 (date of initial public investment) to July 31, 1995, the
adviser earned $1,452,990, $692,278, and $24,484, respectively, of
which $923,964, $664,948, and $24,484, respectively, were waived.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Trustees. The adviser may select brokers and
dealers who offer brokerage and research services. These services may
be furnished directly to the Fund or to the adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the adviser or
its affiliates in advising the Fund and other accounts. To the extent
that receipt of these services may supplant services for which the
adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided. During the fiscal years ended July 31, 1997 and
1996, and for the period from May 30, 1995 (date of initial public
investment) to July 31, 1995, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the adviser, investments of the
type the Fund may make may also be made by those other accounts. When
the Fund and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in
a manner believed by the adviser to be equitable to each. In some
cases, this procedure may adversely affect the price paid or received
by the Fund or the size of the position obtained or disposed of by the
Fund. In other cases, however, it is believed that coordination and
the ability to participate in volume transactions will be to the
benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee
as described in the prospectus. From March 1, 1994 to March 1, 1996,
Federated Administrative Services, a subsidiary of Federated
Investors, served as the Fund's Administrator. For purposes of this
Statement of Additional Information, Federated Services Company and
Federated Administrative Services may hereinafter collectively be
referred to as the "Administrators." For the fiscal years ended July
31, 1997 and 1996, and for the period from May 30, 1995 (date of
initial public investment) to July 31, 1995, the Administrators earned
$548,677, $261,681, and $26,329, respectively.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund. Federated Services
Company, Pittsburgh, Pennsylvania, provides certain accounting and
recordkeeping services with respect to the Fund's portfolio
investments. The fee paid for this service is based upon the level of
the Fund's average net assets for the period plus out-of-pocket
expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary
shareholder records. For its services, the transfer agent receives a
fee based on the size, type and number of accounts and transactions
made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Fund are Arthur Andersen
LLP, Pittsburgh, Pennsylvania.
SHAREHOLDER SERVICES
This arrangement permits the payment of fees to Federated Shareholder
Services to cause services to be provided which are necessary for the
maintenance of shareholder accounts and to encourage personal services
to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and
services may include but are not limited to providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish
and maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account
cash balances; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and
addresses.
By adopting the Shareholder Services Agreement, the Trustees expect
that the Fund will benefit by: (1) providing personal services to
shareholders; (2) investing shareholder assets with a minimum of delay
and administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and
inquiries concerning their accounts.
For the fiscal year ended July 31, 1997, the Fund earned shareholder
service fees on behalf of Institutional Shares and Institutional
Service Shares in the amounts of $746,763 and $1,069,476,
respectively, $0 and $1,069,476 of which, respectively, was paid to
financial institutions.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the
value of portfolio instruments is amortized cost. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted
for amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Fund computed by dividing
the annualized daily income on the Fund's portfolio by the net asset
value computed as above may tend to be higher than a similar
computation made by using a method of valuation based upon market
prices and estimates. In periods of rising interest rates, the
opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule
2a-7 (the "Rule") promulgated by the Securities and Exchange
Commission under the Investment Company Act of 1940. Under the Rule,
the Trustees must establish procedures reasonably designed to
stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The
procedures include monitoring the relationship between the amortized
cost value per share and the net asset value per share based upon
available indications of market value. The Trustees will decide what,
if any, steps should be taken if there is a difference of more than
0.5 of 1% between the two values. The Trustees will take any steps
they consider appropriate (such as redemption in kind or shortening
the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods
of determining net asset value.
REDEMPTION IN KIND
The Fund is obligated to redeem shares solely in cash up to $250,000
or 1% of the Fund's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Trustees determine that further
payments should be in kind. In such cases, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments
valued in the same way as the Fund determines net asset value. The
portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable. Redemption in kind is not as liquid as a cash
redemption. If redemption is made in kind, shareholders who sell these
securities could receive less than the redemption value and could
incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for obligations of the
Trust. To protect its shareholders, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
its shareholders for acts or obligations of the Trust. These documents
require notice of this disclaimer to be given in each agreement,
obligation, or instrument the Trust or its Trustees enter into or
sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust
to use its property to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment
against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder
will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
THE FUND'S TAX STATUS
To qualify for the special tax treatment afforded to regulated
investment companies, the Fund must, among other requirements: derive
at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; derive less than 30% of its gross income
from the sale of securities held less than three months; invest in
securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial
institutions and broker/dealers charge fees in connection with
services provided in conjunction with an investment in shares of the
Fund, the performance will be reduced for those shareholders paying
those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with
a balance of one share at the beginning of the base period, with the
net change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original
one share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the base
period return; and multiplying the base period return by 365/7.
For the seven-day period ended July 31, 1997, the yields for
Institutional Shares and Institutional Service Shares were 5.35% and
5.10%, respectively.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum
to the 365/7th power; and subtracting 1 from the result.
For the seven-day period ended July 31, 1997, the effective yields for
Institutional Shares and Institutional Service Shares were 5.50% and
5.23%, respectively.
TOTAL RETURN
Average annual total return is the average compounded rate of return
for a given period that would equate a $1,000 initial investment to
the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end
of the period by the net asset value per share at the end of the
period. The number of shares owned at the end of the period is based
on the number of shares purchased at the beginning of the period with
$1,000, adjusted over the period by any additional shares, assuming
the monthly reinvestment of all dividends and distributions.
For the one-year period ended July 31, 1997, and for the period from
June 2, 1995 (date of initial public investment) through July 31,
1997, the average annual total returns were 5.35% and 5.46%,
respectively, for Institutional Shares.
For the one-year period ended July 31, 1997, and for the period from
May 30, 1995 (date of initial public investment) through July 31,
1997, the average annual total returns were 5.09% and 5.20%,
respectively, for Institutional Service Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may
include:
* Lipper Analytical Services, Inc., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
* IBC/Donoghue's Money Fund Report publishes annualized yields of
money market funds weekly. Donoghue's Money Market Insight
publication reports monthly and 12-month-to-date investment
results for the same money funds.
* Money, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
* Salomon 30-Day CD Index compares rate levels of 30-day
certificates of deposit from the top ten prime representative
banks.
* Salomon 30-Day Treasury Bill Index is a weekly quote of the most
representative yields for selected securities, issued by the U.S.
Treasury, maturing in 30 days.
* Discount Corporation of New York 30-Day Federal Agencies is a
weekly quote of the average daily offering price for selected
federal agency issues maturing in 30 days.
Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions
of economic, financial, and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by portfolio managers and their views
and analysis on how such developments could affect the funds. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute.
ABOUT FEDERATED INVESTORS
Federated Investors is dedicated to meeting investor needs which is
reflected in its investment decision making--structured,
straightforward, and consistent. This has resulted in a history of
competitive performance with a range of competitive investment
products that have gained the confidence of thousands of clients and
their customers.
The company's disciplined security selection process is firmly rooted
in sound methodologies backed by fundamental and technical research.
Investment decisions are made and executed by teams of portfolio
managers, analysts, and traders dedicated to specific market sectors.
These traders handle trillions of dollars in annual trading volume.
In the money market sector, Federated Investors gained prominence in
the mutual fund industry in 1974 with the creation of the first
institutional money market fund. Simultaneously, the company pioneered
the use of the amortized cost method of accounting for valuing shares
of money market funds, a principal means used by money managers today
to value money market fund shares. Other innovations include the first
institutional tax-free money market fund. As of December 31, 1996,
Federated Investors managed more than $50.3 billion in assets across
50 money market funds, including 18 government, 11 prime, and 21
municipal with assets approximating $28.0 billion, $12.8 billion, and
$9.5 billion, respectively.
J. Thomas Madden, Executive Vice President, oversees Federated Investors'
equity and high-yield corporate bond management while William D. Dawson,
Executive Vice President, oversees Federated Investors' domestic
fixed-income management. Henry A. Frantzen, Executive Vice President,
oversees the management of Federated Investors' international and global
portfolios.
MUTUAL FUND MARKET
Thirty-seven percent of American households are pursuing their
financial goals through mutual funds. These investors, as well as
businesses and institutions, have entrusted over $3.5 trillion to the
more than 6,000 funds available.*
Federated Investors, through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets
include:
INSTITUTIONAL CLIENTS
Federated Investors meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate accounts and
mutual funds for a variety of applications, including defined benefit
and defined contribution programs, cash management, and
asset/liability management. Institutional clients include
corporations, pension funds, tax-exempt entities,
foundations/endowments, insurance companies, and investment and
financial advisors. The marketing effort to these institutional
clients is headed by John B. Fisher, President, Institutional Sales
Division.
BANK MARKETING
Other institutional clients include close relationships with more than
1,600 banks and trust organizations. Virtually all of the trust
divisions of the top 100 bank holding companies use Federated funds in
their clients' portfolios. The marketing effort to trust clients is
headed by Timothy C. Pillion, Senior Vice President, Bank Marketing &
Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated funds are available to consumers through major brokerage
firms nationwide - we have over 2,200 broker/dealer and bank
broker/dealer relationships across the country - supported by more
wholesalers than any other mutual fund distributor. Federated's
service to financial professionals and institutions has earned it high
ratings in several surveys performed by DALBAR, Inc. DALBAR is
recognized as the industry benchmark for service quality measurement.
The marketing effort to these firms is headed by James F. Getz,
President, Federated Securities Corp.
* Source: Investment Company Institute
