1933 Act File No. 33-31602
1940 Act File No. 811-5950
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. .............................
Post-Effective Amendment No. 22 ............................ X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 23 ...............................................
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MONEY MARKET OBLIGATIONS TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
_ immediately upon filing pursuant to paragraph (b)
X on September 30, 1997, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i) on pursuant to paragraph
(a) (i) 75 days after filing pursuant to paragraph (a)(ii) on
_________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Registrant has filed with the Securities and Exchange Commission a declaration
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and:
X filed the Notice required by that Rule on September 15, 1997; or intends to
file the Notice required by that Rule on or about ____________; or
during the most recent fiscal year did not sell any securities pursuant to
Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to Rule
24f-2(b)(2), need not file the Notice.
Copies to:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037
<PAGE>
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of MONEY MARKET OBLIGATIONS
TRUST, which consists of six (6) portfolios: (1) Government Obligations Fund,
(a) Institutional Shares and (b) Institutional Service Shares; (2) Prime
Obligations Fund, (a) Institutional Shares and (b) Institutional Service Shares;
(3) Tax-Free Obligations Fund, (a) Institutional Shares and (b) Institutional
Service Shares; (4) Treasury Obligations Fund, (a) Institutional Shares, (b)
Institutional Service Shares, and (c) Institutional Capital Shares; (5)
Automated Cash Management Trust, (a) Institutional Service Shares and (b) Cash
II Shares; and (6) Government Obligations Tax-Managed Fund, (a) Institutional
Shares and (b) Institutional Service Shares, is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page......................(1-6) Cover Page.
Item 2. Synopsis (1-6) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-6) Financial Highlights; (1-6)
Performance Information; (1-6)
Financial Statements.
Item 4. General Description of
Registrant (1-6) General Information; (1-6)
Investment Information; (1-6)
Investment Objective; (1-6) Investment
Policies; (2,3,5) Investment Risks;
(1-6) Investment
Limitations; (3) Municipal Securities.
Item 5. Management of the Fund (1-6) Fund Information; (1-6)
Management of the Fund; (1-4,5(b),6)
Distribution of Shares; (1-6)
Administration of the Fund; (5)
Administrative Services.
Item 6. Capital Stock and Other
Securities (1-6) Account and Share Information;
(1-6) Dividends; (1-6) Capital Gains;
(1-6) Voting Rights; (1-6) Tax
Information; (1-6) Federal Income Tax;
(1-6) State and
Local Taxes; (1-6) Other Classes of
Shares.
Item 7. Purchase of Securities Being
Offered (1-6) Net Asset
Value; (1-6) How
to Purchase
Shares; (5)
Purchasing Shares
Through a
Financial
Institution; (1-6)
Purchasing Shares
by Wire; (1-6)
Purchasing Shares
by Check; (1-6)
Invest-by-Phone;
(5) By Direct
Deposit; (5)
Automatic
Investments; (5)
Subaccounting
Services; (5)
Special Purchase
Features; (1-6)
Confirmations and
Account
Statements; (5(a))
Distribution of
Institutional
Service Shares;
(5(a)) Shareholder
Services; (5(a))
Supplemental
Payments to
Financial
Institutions.
Item 8. Redemption or Repurchase (1-6) How to Redeem Shares; (5)
Redeeming Shares Through a Financial
Institution; (1-6) Redeeming Shares by
Telephone; (1-6) Redeeming Shares By
Mail; (5) Special
Redemption Features; (1-6) Accounts
with Low Balances.
Item 9. Pending Legal Proceedings None.
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page........................(1-6) Cover Page.
Item 11. Table of Contents (1-6) Table of Contents.
Item 12. General Information and
History (1-6) About Federated Investors; (5)
Fund History.
Item 13. Investment Objectives and
Policies (1-6) Investment Policies; (1-6)
Investment Limitations.
Item 14. Management of the Fund (1-6) Money Market Obligations Trust
Management; (1-6) Trustee
Compensation.
Item 15. Control Persons and Principal
Holders of Securities (1-6) Share Ownership.
Item 16. Investment Advisory and Other
Services (1-6) Investment Advisory Services;
(1-6) Other Services.
Item 17. Brokerage Allocation (1-6) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities (1-6) Massachusetts Partnership Law.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered (1-6) Determining Net Asset Value;
(1-6) Redemption in Kind.
Item 20. Tax Status (1-6) The Fund's Tax Status.
Item 21. Underwriters Not Applicable.
Item 22. Calculation of Performance
Data (1-6) Performance Information; (3)
Yield; (3) Performance Comparisons.
Item 23. Financial Statements Filed in Part A.
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
(See Notes which are an integral part of the Financial Statements)
</TABLE>
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 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>
<CAPTION>
<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 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(C) National Index, Miami Beach, Florida, published
weekly, is an average of the interest rates of personal money market
deposit accounts at ten of the largest banks and thrifts in each of the
five largest Standard Metropolitan Statistical Areas. If more than one rate
is offered, the lowest rate is used. Account minimums and compounding
methods may vary.
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>
<CAPTION>
<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>
<CAPTION>
<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
</TABLE>
<TABLE>
<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
</TABLE>
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
<TABLE>
<CAPTION>
<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
</TABLE>
<TABLE>
<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>
<CAPTION>
<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>
<CAPTION>
<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
</TABLE>
<TABLE>
<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
</TABLE>
<TABLE>
<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
</TABLE>
<TABLE>
<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>
<CAPTION>
<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>
<CAPTION>
<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
</TABLE>
<TABLE>
<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
</TABLE>
<TABLE>
<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
</TABLE>
<TABLE>
<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>
<CAPTION>
<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>
<CAPTION>
<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
</TABLE>
<TABLE>
<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
</TABLE>
<TABLE>
<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)
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
</TABLE>
<TABLE>
<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>
<CAPTION>
<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>
<CAPTION>
<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>
<CAPTION>
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
</TABLE>
<TABLE>
<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
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>
<CAPTION>
<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>
<CAPTION>
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)
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
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
a) Financial Statements (Filed in Part A).
b) Exhibits:
(1) Conformed copy of Declaration of Trust of the Registrant dated
October 3, 1988; (12)
(i) Conformed copy of Amendment to the Declaration of Trust dated
October 3, 1989; (12)
(ii) Conformed copy of Amendment No. 8 to Declaration of Trust
dated December 28, 1994; (10)
(iii) Conformed copy of Amendment No. 9 to Declaration of Trust
dated February 26, 1996; (15)
(iv) Conformed copy of Amendment No. 10 to Declaration of Trust
dated March 6, 1997; (+)
(2) Copy of By-Laws of the Registrant; (12)
(3) Not applicable;
(4) (i) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant; (8)
(ii) Copies of Specimen Certificates for Shares of Beneficial
Interest of Automated Cash Management Trust Cash II Shares
and Institutional Service Shares and Treasury Obligations
Fund Institutional Capital Shares; (+)
(5) Conformed copy of Investment Advisory Contract of the Registrant; (12)
(i) Conformed copy of Exhibits A through G to Investment Advisory
Contract; (12)
(ii) Conformed copy of Investment Advisory Contract, including
Exhibit A, between Registrant and Federated Administrative
Services dated March 1, 1995; (11)
(6) Conformed copy of Distributor's Contract of the Registrant; (7)
(i) Conformed copy of Exhibit B (regarding the Institutional Service
Shares of Government Obligations Fund, Prime Obligations Fund,
Tax-Free Obligations Fund and Treasury Obligations Fund) to the
Distributor's Contract; (15) (ii) Conformed copy of Exhibit D
(regarding Government Obligations Tax-Managed Fund, Institutional
Service Shares only) to Distributor's Contract; (15) (iii) Conformed
copy of Exhibit E to the Distributor's Contract; (+) (iv) Conformed
copy of Exhibit F to the Distributor's Contract; (+) (v) The
Registrant hereby incorporates the conformed copy of the specimen
Mutual Funds Sales and Service Agreement; Mutual Funds Service
Agreement; and Plan Trustee/ Mutual Funds
Service Agreement from Item 24(b)(6) of the Cash Trust Series
II Registration Statement filed with the Commission on July 24, 1995. (File
Nos. 33-38550 and 811-6269); (7) Not applicable; (8) Conformed copy of
Custodian Agreement of the Registrant; (8) (9) (i) Conformed copy of the
Agreement for Fund Accounting Services, Administrative Services, Transfer
Agency Services and Custody Services Procurement; (15)
(ii) The responses described in Item 24(b)(6) are hereby incorporated
by reference; (iii) Conformed copy of Shareholder Services Agreement
of the
Registrant; (13)
(iv) The Registrant hereby incorporates
by reference the conformed copy of
the Shareholder Services
Sub-Contract between Fidelity and
Federated Shareholder Services from
Item 24(b)(9)(iii) of the Federated
GNMA Trust Registration Statement
on Form N-1A, filed with the
Commission on March 25, 1996 (File
Nos. 2-75670 and 811-3375).
(10) Conformed copy of Opinion and Consent of Counsel as to legality of
shares being registered; (12)
(11) Conformed copy of Consent of Independent Public Accountants; (+)
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding; (12)
(14) Not applicable;
(15) (i) Conformed copy of Rule 12b-1 Plan dated June 1, 1994; (9)
(ii) Conformed copy of Rule 12b-1 Agreement dated June 1, 1994; (9)
(iii) Conformed copy of Distribution Plan and Exhibit A thereto; (+)
(16) Copy of Schedule for Computation of Fund Performance Data; (14)
(17) Copies of Financial Data Schedules; (+)
(18) The Registrant hereby incorporates the conformed copy of the specimen
Multiple Class Plan from Item 24(b)(18) of the World Investment
Series, Inc. Registration Statement on Form N-1A,
filed with the Commission on January 26, 1996. (File Nos. 33-52149 and
811-07141);
(19) Conformed copy of Power of Attorney (14).
+ All exhibits have been filed electronically.
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 of Form N-1A filed May 6, 1994. (File No. 33-31602)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed June 1, 1994. (File No. 33-31602)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed November 25, 1994. (File No. 33-31602)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 filed February 21, 1995. (File No. 33-31602)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 filed May 7, 1995. (File No. 33-31602)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 filed September 29, 1995. (File No. 33-31602)
13. Response is incorporated by reference to Form N-14 filed September 16,
1996. (File No. 33-31602)
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 filed September 19, 1996. (File No. 33-31602)
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 filed September 23, 1996. (File No. 33-31602)
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of September 4, 1997
-------------- -----------------------
Shares of Beneficial Interest
Government Obligations Fund
Institutional Shares 1,005
Institutional Service Shares 2,565
Prime Obligations Fund
Institutional Shares 1,807
Institutional Service Shares 2,456
Tax-Free Obligations Fund
Institutional Shares 382
Institutional Service Shares 546
Treasury Obligations Fund
Institutional Shares 1,323
Institutional Service Shares 1,239
Institutional Capital Shares 17
Automated Cash Management Trust
Institutional Service Shares 11,612
Cash II Shares 34,558
Government Obligations Tax-Managed Fund
Institutional Shares 56
Institutional Service Shares 300
Item 27. Indemnification: (1)
Item 28. Business and Other Connections of Investment Adviser:
(a) For a description of the other business of Federated Management,
the investment adviser for Automated Cash Management Trust,
Government Obligations Fund, Prime Obligations Fund, Tax-Free
Obligations Fund, and Treasury Obligations Fund, see the section
entitled "Fund Information - Management of the Fund" in Part A.
The affiliations with the Registrant of three of the Trustees and
two of the Officers of Federated Management are included in Part B
of this Registration Statement under "Money Market Obligations
Trust Management." The remaining Trustee of Federated Management,
his principal occupation and his business address is: Mark D.
Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market Street,
Georgetown, Delaware 19947.
The remaining Officers of Federated Management are:
Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed October 20, 1989. (File No. 33-31602)
<PAGE>
Senior Vice Presidents: Peter R. Anderson
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
J. Alan Minteer
Susan M. Nason
Mary Jo Ochson
Vice Presidents: J. Scott Albrecht
Joseph M. Balestrino
Randall S. Bauer
David F. Belton
David A. Briggs
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Marian R. Marinack
Sandra L. McInerney
Robert J. Ostrowski
Charles A. Ritter
Scott B. Schermerhorn
Frank Semack
Aash M. Shah
William F. Stotz
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Assistant Vice Presidents: Todd A. Abraham
Stefanie L. Bachhuber
Arthur J. Barry
Micheal W. Casey
Robert E. Cauley
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
Robert M. Marsh
Joseph M. Natoli
Keith J. Sabol
Michael W. Sirianni
Gregg S. Tenser
Secretary: Stephen A. Keen
Treasurer: Thomas R. Donahue
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. McGonigle
Assistant Treasurer: Richard B. Fisher
The business address of each of the Officers of Federated
Management is Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779. These individuals are also officers of a majority of
the investment advisers to the Funds listed in Part B of this
Registration Statement.
For a description of the other business of Federated
Administrative Services, the investment adviser for Government
Obligations Tax-Managed Fund, see the section entitled "Fund
Information - Management of the Fund" in Part A. The affiliations
with the Registrant of two of the Trustees of Federated
Administrative Services are included in Part B of this
Registration Statement under "Money Market Obligations Trust
Management." The remaining Trustees of Federated Administrative
Services, their principal occupations and business addresses are:
Mark D. Olson (Partner, Wilson, Halbrook & Bayard), 107 W. Market
Street, Georgetown, Delaware 19947, and Arthur L. Cherry
(President, Chief Executive Officer, and Trustee, Federated
Services Company; Director, Edgewood Services, Inc.; Trustee,
Advanced Information Systems; President and Director, Federated
Administrative Services, Inc.; President, Federated Administrative
Services; Trustee, Federated Bank and Trust; President and
Trustee, Federated Shareholder Services Company; President and
Director, FS Holdings, Inc.; Chairman and Trustee, Retirement Plan
Service Company of America), Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779. From 1994 to January 27,
1997, Mr. Cherry was Managing Partner, AT&T Solutions.
The remaining Officers of Federated Administrative Services are:
President: Arthur L. Cherry
Senior Vice Presidents: S. Elliott Cohan
Emily H. Emigh
Ronald M. Petnuch
Thomas J. Ward
Vice Presidents: Debbie Adams-Marshall
C. Grant Anderson
Cathy Z. Angellis
Keith A. Antle
Timothy Biedrzycki
F. Jefferson Bragdon
Gail Cagney
Charles L. Davis, Jr.
Peter J. Germain
Michael L. Guzzi
Steve S. Holstein
J. Crilley Kelly
Thomas P. Kelly
Dennis M. Laffey
Hans W. Lange, Jr.
Joseph S. Machi
Mary Beth Marchionda
Diane M. Marzula
Charles H. Miller
Jay S. Neuman
Kenneth W. Pegher
Lynne Plakidas-Klim
J. David Richter
Melinda Schmidt
Thomas P. Sholes
Vice Presidents: Victor R. Siclari
Jeffrey W. Sterling
Richard J. Thomas
C. Christine Thomson
Assistant Vice Presidents: Anthony R. Bosch
Karen M. Brownlee
Mark Crowley
Gerald P. DiMarco
C. Todd Gibson
Timothy S. Johnson
Judy Mackin
Deborah M. Molini
Donna J. Padezan
Leslie C. Petrone
James R. Risbon
Secretary: Thomas J. Ward
Treasurer: Lawrence Caracciolo
Assistant Secretary: S. Elliott Cohan
The business address of each of the Officers of Federated
Administrative Services is Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end investment
companies, including the Registrant:
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; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Marshall Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Obligations Trust II; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds;
Peachtree Funds; RIMCO Monument Funds; SouthTrust Vulcan Funds;
Star Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Virtus Funds; The Wachovia Funds; The
Wachovia Municipal Funds; Tower Mutual Funds; Trust for Financial
Institutions; Trust for Government Cash Reserves; Trust for
Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; Vision Group of Funds, Inc.; and World Investment
Series, Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Executive Vice
Federated Investors Tower President, Federated, President
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary --
Federated Investors Tower and Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian G. Kelly Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
<PAGE>
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
George D. Riedel Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
</TABLE>
<PAGE>
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder Services Company P.O. Box 8600
("Transfer Agent and Dividend Boston, MA 02266-8600
Disbursing Agent")
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
Federated Administrative Services Pittsburgh, PA 15222-3779
("Advisers")
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of Trustees and the
calling of special shareholder meetings by shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, MONEY MARKET OBLIGATIONS TRUST,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
22nd day of September, 1997.
MONEY MARKET OBLIGATIONS TRUST
BY: /s/ Anthony R. Bosch
Anthony R. Bosch, Assistant Secretary
Attorney in Fact for John F. Donahue
September 22, 1997
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ Anthony R. Bosch
Anthony R. Bosch Attorney In Fact September 22, 1997
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
J. Christopher Donahue* President and Trustee
John W. McGonigle* Treasurer and Executive Vice
President
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
Exhibit 1(iv) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
MONEY MARKET OBLIGATIONS TRUST
Amendment No. 10
DECLARATION OF TRUST
dated October 3, 1988
THIS Declaration of Trust is amended as follows:
Strike the first paragraph of Section 5 of Article III from the
Declaration of Trust and substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class."
Without limiting the authority of the Trustees set forth herein, to
establish and designate any additional series or class or to modify the rights
or preferences of any existing series or class, the series and classes have been
established and designated as:
Automated Cash Management Trust
Cash II Shares
Institutional Service Shares
Government Obligations Fund
Institutional Shares
Institutional Service Shares
Government Obligations Tax Managed Fund
Institutional Shares
Institutional Service Shares
Prime Obligations Fund
Institutional Shares
Institutional Service Shares
Tax-Free Obligations Fund
Institutional Shares
Institutional Service Shares
Treasury Obligations Fund
Institutional Shares
Institutional Service Shares
Institutional Capital Shares
The establishment and designation of any series or class of shares in
addition to those established and designated above shall be effective upon the
execution by a majority of the then Trustees, without the need for Shareholder
approval, of an amendment tot his Declaration of Trust, taking the form of a
complete restatement or otherwise, setting forth such establishment and
designation and the relative rights and preferences of any such series or class,
or as otherwise provided in such instrument.
The undersigned Assistant Secretary of Money Market Obligations Trust
hereby certifies that the above-stated Amendment is a true and correct Amendment
to the Declaration of Trust, as adopted by the Board of Trustees on the 24th day
of February, 1997.
WITNESS the due execution hereof this 6th day of March, 1997.
/s/ J Crilley Kelly
J Crilley Kelly
Assistant Secretary
q:org_docs/amendmts/297mmot.doc/alboley
Exhibit 4(ii) under Form N-1A
Exhibit 3(c) under Item 601/Reg. S-K
MONEY MARKET OBLIGATIONS TRUST
_____ PORTFOLIO _____
Account No. Alpha Code Organized Under See Reverse Side For
the Laws of the Certain Definitions
Commonwealth of
Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 60934N 83 1
Fully-Paid and Non-Assessable Shares of Beneficial Interest of the AUTOMATED
CASH MANAGEMENT TRUST (CASH II SHARES) Portfolio of MONEY MARKET OBLIGATIONS
TRUST hereafter called the "Trust," transferable on the books of the Trust by
the owner, in person or by duly authorized attorney, upon surrender of this
Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, to all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: MONEY MARKET OBLIGATIONS TRUST
TRUST
SEAL
MASSACHUSETTS
1988
/s/ John W. McGonigle /s/ John F. Donahue
Executive Vice President, Treasurer & Secretary Chairman
Countersigned:
Federated Shareholder
Services Company (Pittsburgh)
Transfer Agent
By
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations: TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entirety (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
- --------------------------------------
- -----------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of assignee)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
______________________________________________________________________ shares
of the beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint____________________________________
_____________________________________________________________________Attorney to
transfer the said shares on the books of the within named Trust with full power
of substitution in the premises.
Dated______________________
NOTICE:____________________
The signature to this
assignment must correspond
with the name as written
upon the face of the
certificate in every
particular, without
alteration or enlargement
or any change whatever.
ALL PERSONS DEALING WITH MONEY MARKET OBLIGATIONS TRUST, A MASSACHUSETTS
BUSINESS TRUST, MUST LOOK SOLELY TO THE TRUST PROPERTY FOR THE ENFORCEMENT OF
ANY CLAIM AGAINST THE TRUST, AS THE TRUSTEES, OFFICERS, AGENTS OR SHAREHOLDERS
OF THE TRUST ASSUME NO PERSONAL LIABILITY WHATSOEVER FOR OBLIGATIONS ENTERED
INTO ON BEHALF OF THE TRUST.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE>
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by a green one-half inch border.
B. The number in the upper left-hand corner and the number of shares in the
upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts trust seal appears in the bottom middle of the page.
Page Two
The social security or other identifying number of the assignee appears in
a box in the top-third upper-left area of the page.
<PAGE>
MONEY MARKET OBLIGATIONS TRUST
AUTOMATED CASH MANAGEMENT TRUST
(INSTITUTIONAL SERVICE SHARES)
Number Shares
_____ PORTFOLIO _____
Account No. Alpha Code Organized Under See Reverse Side For
the Laws of the Certain Definitions
Commonwealth of
Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 60934N 86 4
Fully-Paid and Non-Assessable Shares of Beneficial Interest of the AUTOMATED
CASH MANAGEMENT TRUST (INSTITUTIONAL SERVICE SHARES) Portfolio of MONEY MARKET
OBLIGATIONS TRUST hereafter called the "Trust," transferable on the books of the
Trust by the owner, in person or by duly authorized attorney, upon surrender of
this Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, to all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: MONEY MARKET OBLIGATIONS TRUST
TRUST
SEAL
MASSACHUSETTS
1988
/s/ John W. McGonigle /s/ John F. Donahue
Executive Vice President, Treasurer & Secretary Chairman
Countersigned:
Federated Shareholder
Services Company (Pittsburgh)
Transfer Agent
By
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations: TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entirety (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
- --------------------------------------
- -----------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of assignee)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
______________________________________________________________________ shares
of the beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint____________________________________
_____________________________________________________________________Attorney to
transfer the said shares on the books of the within named Trust with full power
of substitution in the premises.
Dated______________________
NOTICE:____________________
The signature to this
assignment must correspond
with the name as written
upon the face of the
certificate in every
particular, without
alteration or enlargement
or any change whatever.
ALL PERSONS DEALING WITH MONEY MARKET OBLIGATIONS TRUST, A MASSACHUSETTS
BUSINESS TRUST, MUST LOOK SOLELY TO THE TRUST PROPERTY FOR THE ENFORCEMENT OF
ANY CLAIM AGAINST THE TRUST, AS THE TRUSTEES, OFFICERS, AGENTS OR SHAREHOLDERS
OF THE TRUST ASSUME NO PERSONAL LIABILITY WHATSOEVER FOR OBLIGATIONS ENTERED
INTO ON BEHALF OF THE TRUST.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE>
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by a green one-half inch border.
B. The number in the upper left-hand corner and the number of shares in the
upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts trust seal appears in the bottom middle of the page.
Page Two
The social security or other identifying number of the assignee appears in
a box in the top-third upper-left area of the page.
<PAGE>
MONEY MARKET OBLIGATIONS TRUST
TREASURY OBLIGATIONS FUND
(INSTITUTIONAL CAPITAL SHARES)
Number Shares
_____ PORTFOLIO _____
Account No. Alpha Code Organized Under See Reverse Side For
the Laws of the Certain Definitions
Commonwealth of
Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 60934N 82 3
Fully-Paid and Non-Assessable Shares of Beneficial Interest of the TREASURY
OBLIGATIONS FUND (INSTITUTIONAL CAPITAL SHARES) Portfolio of MONEY MARKET
OBLIGATIONS TRUST hereafter called the "Trust," transferable on the books of the
Trust by the owner, in person or by duly authorized attorney, upon surrender of
this Certificate properly endorsed.
The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust, and all
amendments thereto, to all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer
Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its Seal.
Dated: MONEY MARKET OBLIGATIONS TRUST
TRUST
SEAL
MASSACHUSETTS
1988
/s/ John W. McGonigle /s/ John F. Donahue
Executive Vice President, Treasurer & Secretary Chairman
Countersigned:
Federated Shareholder
Services Company (Pittsburgh)
Transfer Agent
By
Authorized Signature
<PAGE>
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations: TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entirety (Cust) (Minor)
JT TEN - as joint tenants with the right under Uniform Gifts to Minors
of survivorship and not as Act.............................
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received__________ hereby sell, assign and transfer unto
Please insert social security or other
identifying number of assignee
- --------------------------------------
- -----------------------------------------------------------------------------
(Please print or typewrite name and address, including zip code, of assignee)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
______________________________________________________________________ shares
of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint____________________________________
_____________________________________________________________________Attorney to
transfer the said shares on the books of the within named Trust with full power
of substitution in the premises.
Dated______________________
NOTICE:____________________
The signature to this
assignment must correspond
with the name as written
upon the face of the
certificate in every
particular, without
alteration or enlargement
or any change whatever.
ALL PERSONS DEALING WITH MONEY MARKET OBLIGATIONS TRUST, A MASSACHUSETTS
BUSINESS TRUST, MUST LOOK SOLELY TO THE TRUST PROPERTY FOR THE ENFORCEMENT OF
ANY CLAIM AGAINST THE TRUST AS THE TRUSTEES, OFFICERS, AGENTS OR SHAREHOLDERS OF
THE TRUST ASSUME NO PERSONAL LIABILITY WHATSOEVER FOR OBLIGATIONS ENTERED INTO
ON BEHALF OF THE TRUST.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE>
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by a green one-half inch border.
B. The number in the upper left-hand corner and the number of shares in the
upper right-hand corner are outlined by octagonal boxes.
C. The cusip number in the middle right-hand area of the page is boxed.
D. The Massachusetts trust seal appears in the bottom middle of the page.
Page Two
The social security or other identifying number of the assignee appears in
a box in the top-third upper-left area of the page.
Money Market Obligations Trust Page 1 9/18/97
Exhibit 6(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit E
to the
Distributor's Contract
MONEY MARKET OBLIGATIONS TRUST
Automated Cash Management Trust
Cash II Shares
The following provisions are hereby incorporated and made part of
the Distributor's Contract dated March 1, 1994, between Money Market
Obligations Trust and Federated Securities Corp. with respect to the
Class of the Funds set forth above.
1. The TrustError! Reference source not found.=business trust "Trust"
"Corporation" hereby appoints FSC to engage in activities principally
intended to result in the sale of shares of the above-listed Classes
("Shares"). Pursuant to this appointment, FSC is authorized to select
a group of financial institutions ("Financial Institutions") to sell
Shares at the current offering price thereof as described and set
forth in the respective prospectuses of the TrustError! Reference
source not found.=business trust "Trust" "Corporation" .
2. During the term of this Agreement, the TrustError! Reference source
not found.=business trust "Trust" "Corporation" will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the
annual rate of 0.25% of the average aggregate net asset value of the
Shares held during the month. For the month in which this Agreement
becomes effective or terminates, there shall be an appropriate
proration of any fee payable on the basis of the number of days that
the Agreement is in effect during the month.
3. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Class' expenses
exceed such lower expense limitation as FSC may, by notice to the
TrustError! Reference source not found.=business trust "Trust"
"Corporation" , voluntarily declare to be effective.
4. FSC will enter into separate written agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC,
in its sole discretion, may pay Financial Institutions a periodic fee
in respect of Shares owned from time to time by their clients or
customers. The schedules of such fees and the basis upon which such
fees will be paid shall be determined from time to time by FSC in its
sole discretion.
5. FSC will prepare reports to the Board of TrusteesError! Reference
source not found.=business trust "Trustees" "Directors" of the
TrustError! Reference source not found.=business trust "Trust"
"Corporation" on a quarterly basis showing amounts expended hereunder
including amounts paid to Financial Institutions and the purpose for
such expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1994 between Money Market
Obligations Trust and Federated Securities Corp., Money Market
Obligations Trust executes and delivers this Exhibit on behalf of the
Funds, and with respect to the separate Classes of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this 1st day of September, 1996 .
ATTEST: Money Market Obligations Trust
/s/ John W. McGonigle By:/s/ J. Chris Donahue
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ Byron F. Bowman By: /s/ David M. Taylor
Secretary Executive Vice President
(SEAL)
Money Market Obligations Trust 030197
Exhibit 6(iv) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit F
to the
Distributor's Contract
MONEY MARKET OBLIGATIONS TRUST
Treasury Obligations Fund
Institutional Capital Shares
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1994 between Money Market
Obligations Trust and Federated Securities Corp., Money Market
Obligations Trust executes and delivers this Exhibit on behalf of
Treasury Obligations Fund, and with respect to the Institutional
Capital Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of March, 1997.
ATTEST: Money Market Obligations Trust
/s/ John W. McGonigle By:/s/ J. Christopher Donahue
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ Byron F. Bowman By:/s/ David M. Taylor
Secretary Executive Vice President
Exhibit 11 under Form N-1A
Exhibit 23 under Item 601/Reg. S-K
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in
Post-Effective Amendment No. 22 to Form N-1A Registration Statement of Money
Market Obligations Trust of our reports dated September 8, 1997, on the
financial statements of Money Market Obligations Trust (consisting of Automated
Cash Management Trust, Government Obligations Fund, Government Obligations
Tax-Managed Fund, Prime Obligations Fund, Tax-Free Obligations Fund, and
Treasury Obligations Fund) as of July 31, 1997, included in or made a part of
this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
September 22, 1997
Money Market Obligations Trust Page 1 9/18/97
Exhibit 15(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
MONEY MARKET OBLIGATIONS TRUST
DISTRIBUTION PLAN
This Distribution Plan ("Plan") is adopted as of September 1,
1996, by the Board of TrusteesError! Reference source not
found.=business trust "Trustees" "Directors" of Money Market
Obligations Trust (the "Trust"), a Masachusetts Business TrustError!
Reference source not found.=business trust "Massachusetts business
trust" "" with respect to certain classes of shares ("Classes") of the
portfolios of the TrustError! Reference source not found.=business
trust "Trust" "Corporation" (the "Funds") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the
TrustError! Reference source not found.=business trust "Trust"
"Corporation" to make payments as contemplated herein, in conjunction
with the distribution of Classes of the Funds ("Shares").
2. This Plan is designed to finance activities of Federated Securities
Corp. ("FSC") principally intended to result in the sale of Shares to
include: (a) providing incentives to financial institutions
("Financial Institutions") to sell Shares; (b) advertising and
marketing of Shares to include preparing, printing and distributing
prospectuses and sales literature to prospective shareholders and
with Financial Institutions; and (c) implementing and operating the
Plan. In compensation for services provided pursuant to this Plan,
FSC will be paid a fee in respect of the following Classes set forth
on the applicable exhibit.
3. Any payment to FSC in accordance with this Plan will be made pursuant
to the "Distributor's Contract" entered into by the TrustError!
Reference source not found.=business trust "Trust" "Corporation" and
FSC. Any payments made by FSC to Financial Institutions with funds
received as compensation under this Plan will be made pursuant to the
"Financial Institution Agreement" entered into by FSC and the
Institution.
4. FSC has the right (i) to select, in its sole discretion, the Financial
Institutions to participate in the Plan and (ii) to terminate without
cause and in its sole discretion any Financial Institution Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of theError! Reference
source not found.=business trust "Trustees" "Directors" TrustError!
Reference source not found.=business trust "Trust" "Corporation" , and
the Board of TrusteesError! Reference source not found.=business trust
"Trustees" "Directors" shall review, a written report of the amounts
expended under the Plan and the purpose for which such expenditures
were made.
6. This Plan shall become effective with respect to each Class (i) after
approval by majority votes of: (a) the TrustError! Reference source
not found.=business trust "Trust" "Corporation" 's Board of
TrusteesError! Reference source not found.=business trust "Trustees"
"Directors" ; (b) the members of the Board of the TrustError!
Reference source not found.=business trust "Trust" "Corporation" who
are not interested persons of the TrustError! Reference source not
found.=business trust "Trust" "Corporation" and have no direct or
indirect financial interest in the operation of the TrustError!
Reference source not found.=business trust "Trust" "Corporation" 's
Plan or in any related documents to the Plan ("Disinterested
TrusteesError! Reference source not found.=business trust "Trustees"
"Directors" "), cast in person at a meeting called for the purpose of
voting on the Plan; and (c) the outstanding voting securities of the
particular Class , as defined in Section 2(a)(42) of the Act and (ii)
upon execution of an exhibit adopting this Plan with respect to such
Class.
7. This Plan shall remain in effect with respect to each Class presently
set forth on an exhibit and any subsequent Classes added pursuant to
an exhibit during the initial year of this Plan for the period of one
year from the date set forth above and may be continued thereafter if
this Plan is approved with respect to each Class at least annually by
a majority of the TrustError! Reference source not found.=business
trust "Trust" "Corporation" 's Board of TrusteesError! Reference
source not found.=business trust "Trustees" "Directors" and a majority
of the Disinterested TrusteesError! Reference source not
found.=business trust "Trustees" "Directors" , cast in person at a
meeting called for the purpose of voting on such Plan. If this Plan is
adopted with respect to a Class after the first annual approval by the
TrusteesError! Reference source not found.=business trust "Trustees"
"Directors" as described above, this Plan will be effective as to that
Class upon execution of the applicable exhibit pursuant to the
provisions of paragraph 6(ii) above and will continue in effect until
the next annual approval of this Plan by the TrusteesError! Reference
source not found.=business trust "Trustees" "Directors" and thereafter
for successive periods of one year subject to approval as described
above.
8. All material amendments to this Plan must be approved by a vote of
the Board of TrusteesError! Reference source not found.=business
trust "Trustees" "Directors" of the TrustError! Reference source not
found.=business trust "Trust" "Corporation" and of the Disinterested
TrusteesError! Reference source not found.=business trust "Trustees"
"Directors" , cast in person at a meeting called for the purpose of
voting on it.
9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the
Plan without being approved by a majority vote of the outstanding
voting securities of the Classes as defined in Section 2(a)(42) of
the Act.
10. This Plan may be terminated with respect to a particular Class at any
time by: (a) a majority vote of the Disinterested Error! Reference
source not found.=business trust "Trustees" "Directors" ; or (b) a
vote of a majority of the outstanding voting securities of the
particular Class as defined in Section 2(a)(42) of the Act; or (c) by
FSC on 60 days' notice to the TrustError! Reference source not
found.=business trust "Trust" "Corporation" .
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees Error! Reference source not found.=business
trust "Trustees" "Directors" of the TrustError! Reference source not
found.=business trust "Trust" "Corporation" shall be committed to the
discretion of the Disinterested TrusteesError! Reference source not
found.=business trust "Trustees" "Directors" then in office.
12. All agreements with any person relating to the implementation of this
Plan shall be in writing and any agreement related to this Plan shall
be subject to termination, without penalty, pursuant to the provisions
of Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
<PAGE>
EXHIBIT A
to the
Distribution Plan
Money Market Obligations Trust
Automated Cash Management Trust
Cash II Shares
This Distribution Plan is adopted by Money Market Obligations
Trust with respect to the Cash II Shares of the portfolio of the
TrustError! Reference source not found.=business trust "Trust"
"Corporation" set forth above.
In compensation for the services provided pursuant to this Plan,
FSC will be paid a monthly fee computed at the annual rate of .25% of
the average aggregate net asset value of the Cash II Shares of
Automated Cash Management Trust held during the month.
Witness the due execution hereof this 1st day of September, 1996 .
Money Market Obligations Trust
By: /s/ J. Christopher Donahue
President
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> Money Market Obligations Trust
Prime Obligations Fund
Institutional Service Shares
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 5,836,199,040
<INVESTMENTS-AT-VALUE> 5,836,199,040
<RECEIVABLES> 11,938,578
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,848,137,618
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23,058,239
<TOTAL-LIABILITIES> 23,058,239
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,825,079,379
<SHARES-COMMON-STOCK> 2,236,997,069
<SHARES-COMMON-PRIOR> 1,297,019,163
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,236,997,069
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 278,842,332
<OTHER-INCOME> 0
<EXPENSES-NET> 14,600,080
<NET-INVESTMENT-INCOME> 264,242,252
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 264,242,252
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 88,966,641
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,210,823,937
<NUMBER-OF-SHARES-REDEEMED> 15,295,917,216
<SHARES-REINVESTED> 25,071,185
<NET-CHANGE-IN-ASSETS> 1,495,458,209
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,030,131
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 28,350,887
<AVERAGE-NET-ASSETS> 5,015,065,656
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> Money Market Obligations Trust
Tax-Free Obligations Fund
Institutional Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 2,053,927,275
<INVESTMENTS-AT-VALUE> 2,053,927,275
<RECEIVABLES> 14,209,713
<ASSETS-OTHER> 159,042
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,068,296,030
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,133,024
<TOTAL-LIABILITIES> 6,133,024
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,062,261,061
<SHARES-COMMON-STOCK> 1,474,256,160
<SHARES-COMMON-PRIOR> 1,515,048,255
<ACCUMULATED-NII-CURRENT> 24,515
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (122,570)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,474,180,243
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 77,902,801
<OTHER-INCOME> 0
<EXPENSES-NET> 5,583,040
<NET-INVESTMENT-INCOME> 72,319,761
<REALIZED-GAINS-CURRENT> (9,927)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 72,309,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 56,940,629
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,143,842,232
<NUMBER-OF-SHARES-REDEEMED> 11,192,024,289
<SHARES-REINVESTED> 7,389,962
<NET-CHANGE-IN-ASSETS> 140,775,884
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (88,128)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,284,365
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,850,954
<AVERAGE-NET-ASSETS> 2,142,183,159
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> Money Market Obligations Trust
Tax-Free Obligations Fund
Institutional Service Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 2,053,927,275
<INVESTMENTS-AT-VALUE> 2,053,927,275
<RECEIVABLES> 14,209,713
<ASSETS-OTHER> 159,042
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,068,296,030
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,133,024
<TOTAL-LIABILITIES> 6,133,024
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,062,261,061
<SHARES-COMMON-STOCK> 588,004,901
<SHARES-COMMON-PRIOR> 406,426,995
<ACCUMULATED-NII-CURRENT> 24,515
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (122,570)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 587,982,763
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 77,902,801
<OTHER-INCOME> 0
<EXPENSES-NET> 5,583,040
<NET-INVESTMENT-INCOME> 72,319,761
<REALIZED-GAINS-CURRENT> (9,927)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 72,309,834
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,379,132
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,834,793,272
<NUMBER-OF-SHARES-REDEEMED> 1,655,291,313
<SHARES-REINVESTED> 2,075,947
<NET-CHANGE-IN-ASSETS> 140,775,884
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (88,128)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,284,365
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,850,954
<AVERAGE-NET-ASSETS> 2,142,183,159
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> Money Market Obligations Trust
Treasury Obligations Fund
Institutional Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 7,914,677,727
<INVESTMENTS-AT-VALUE> 7,914,677,727
<RECEIVABLES> 24,592,508
<ASSETS-OTHER> 828,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,940,098,734
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,899,901
<TOTAL-LIABILITIES> 28,899,901
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,911,198,833
<SHARES-COMMON-STOCK> 4,814,583,335
<SHARES-COMMON-PRIOR> 4,649,870,283
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,814,583,335
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 378,993,945
<OTHER-INCOME> 0
<EXPENSES-NET> 19,410,792
<NET-INVESTMENT-INCOME> 359,583,153
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 359,583,153
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 254,552,990
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27,254,234,550
<NUMBER-OF-SHARES-REDEEMED> 27,139,750,037
<SHARES-REINVESTED> 50,228,539
<NET-CHANGE-IN-ASSETS> 1,744,489,156
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,886,919
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38,430,187
<AVERAGE-NET-ASSETS> 6,951,666,021
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 042
<NAME> Money Market Obligations Trust
Treasury Obligations Fund
Institutional Service Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 7,914,677,727
<INVESTMENTS-AT-VALUE> 7,914,677,727
<RECEIVABLES> 24,592,508
<ASSETS-OTHER> 828,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,940,098,734
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,899,901
<TOTAL-LIABILITIES> 28,899,901
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,911,198,833
<SHARES-COMMON-STOCK> 3,054,110,180
<SHARES-COMMON-PRIOR> 1,516,839,394
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,054,110,180
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 378,993,945
<OTHER-INCOME> 0
<EXPENSES-NET> 19,410,792
<NET-INVESTMENT-INCOME> 359,583,153
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 359,583,153
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 104,840,770
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,581,686,843
<NUMBER-OF-SHARES-REDEEMED> 15,078,238,755
<SHARES-REINVESTED> 33,822,698
<NET-CHANGE-IN-ASSETS> 1,744,489,156
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,886,919
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38,430,187
<AVERAGE-NET-ASSETS> 6,951,666,021
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 043
<NAME> Money Market Obligations Trust
Treasury Obligations Fund
Institutional Capital Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 7,914,677,727
<INVESTMENTS-AT-VALUE> 7,914,677,727
<RECEIVABLES> 24,592,508
<ASSETS-OTHER> 828,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,940,098,734
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,899,901
<TOTAL-LIABILITIES> 28,899,901
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,911,198,833
<SHARES-COMMON-STOCK> 42,505,318
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 42,505,318
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 378,993,945
<OTHER-INCOME> 0
<EXPENSES-NET> 19,410,792
<NET-INVESTMENT-INCOME> 359,583,153
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 359,583,153
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 189,393
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 75,569,914
<NUMBER-OF-SHARES-REDEEMED> 33,253,661
<SHARES-REINVESTED> 189,065
<NET-CHANGE-IN-ASSETS> 1,744,489,156
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,886,919
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38,430,187
<AVERAGE-NET-ASSETS> 6,951,666,021
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.020
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.020
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 051
<NAME> Money Market Obligations Trust
Automated Cash Management Trust
Institutional Service Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 2,104,159,449
<INVESTMENTS-AT-VALUE> 2,104,159,449
<RECEIVABLES> 6,520,217
<ASSETS-OTHER> 335,977
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,111,015,643
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,766,762
<TOTAL-LIABILITIES> 6,766,762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,104,248,881
<SHARES-COMMON-STOCK> 1,378,981,952
<SHARES-COMMON-PRIOR> 1,274,419,364
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,378,981,952
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 103,384,706
<OTHER-INCOME> 0
<EXPENSES-NET> 11,697,044
<NET-INVESTMENT-INCOME> 91,687,662
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 91,687,662
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 67,586,616
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,323,418,360
<NUMBER-OF-SHARES-REDEEMED> 7,260,350,142
<SHARES-REINVESTED> 41,494,370
<NET-CHANGE-IN-ASSETS> 829,829,517
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,287,875
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,130,169
<AVERAGE-NET-ASSETS> 2,061,406,193
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 052
<NAME> Money Market Obligations Trust
Automated Cash Management Trust
Cash II Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 2,104,159,449
<INVESTMENTS-AT-VALUE> 2,104,159,449
<RECEIVABLES> 6,520,217
<ASSETS-OTHER> 335,977
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,111,015,643
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,766,762
<TOTAL-LIABILITIES> 6,766,762
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,104,248,881
<SHARES-COMMON-STOCK> 725,266,929
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 725,266,929
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 103,384,706
<OTHER-INCOME> 0
<EXPENSES-NET> 11,697,044
<NET-INVESTMENT-INCOME> 91,687,662
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 91,687,662
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 24,101,046
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,258,780,407
<NUMBER-OF-SHARES-REDEEMED> 2,555,209,998
<SHARES-REINVESTED> 21,696,520
<NET-CHANGE-IN-ASSETS> 829,829,517
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,287,875
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,130,169
<AVERAGE-NET-ASSETS> 2,061,406,193
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 061
<NAME> Money Market Obligations Trust
Government Obligations Tax-Managed Fund
Institutional Shares
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jul-31-1997
<PERIOD-END> Jul-31-1997
<INVESTMENTS-AT-COST> 974,716,833
<INVESTMENTS-AT-VALUE> 974,716,833
<RECEIVABLES> 5,389,050
<ASSETS-OTHER> 4,778,342
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 984,884,225
<PAYABLE-FOR-SECURITIES> 46,996,933
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,109,648
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<NAME> Money Market Obligations Trust
Government Obligations Tax-Managed Fund
Institutional Services Shares
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