Automated Cash Management Trust
(A Portfolio of Money Market Obligations Trust)
Cash II Shares
PROSPECTUS
The Cash II Shares of Automated Cash Management Trust (the "Fund") offered by
this prospectus represent interests in a portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company
(a mutual fund). The Fund invests in short-term money market securities to
provide stability of principal and current income consistent with stability
of principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO
SO.
This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for
future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights -- Cash II Shares 2
General Information 3
Year 2000 Statement 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 Cash II Shares 5
Distribution Plan and Shareholder Services 6
Supplemental Payments to Financial Institutions 6
Administration of the Fund 6
Administrative Services 6
Net Asset Value 6
How to Purchase Shares 7
Purchasing Shares Through a Financial Institution 7
Purchasing Shares by Wire 7
Purchasing Shares by Check 7
Invest-by-Phone 7
By Direct Deposit 8
Automatic Investments 8
Subaccounting Services 8
Special Purchase Features 8
How to Redeem Shares 8
Redeeming Shares Through a Financial Institution 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 9
Special Redemption Features 9
Account and Share Information 9
Dividends 9
Capital Gains 9
Account Activity 9
Accounts with Low Balances 9
Voting Rights 9
Tax Information 10
Federal Income Tax 10
State and Local Taxes 10
Other Classes of Shares 10
Performance Information 10
Last Meeting of Shareholders 11
Financial Highlights--Institutional Service Shares 12
Financial Statements 13
Report of Independent Public Accountants Inside Back Cover
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
<S> <C>
CASH II SHARES
SHAREHOLDER TRANSACTION EXPENSES
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) 0.20%
12b-1 Fee (after waiver)(2) 0.16%
Total Other Expenses 0.40%
Shareholder Services Fee 0.25%
Total Operating Expenses(3) 0.76%
</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 1.15% 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.
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 $ 8
3 Years $24
5 Years $42
10 Years $94
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
AUTOMATED CASH MANAGEMENT TRUST
(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 PERIOD ENDED
JULY 31, JULY 31,
1998 1997(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.04
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.07% 4.14 %
RATIOS TO AVERAGE NET ASSETS
Expenses 0.76% 0.75%*
Net investment income 4.94% 4.84%*
Expense waiver/reimbursement(c) 0.38% 0.41%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $703,755 $725,267
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from September 27, 1996 (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 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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's
service providers (among them, the adviser, distributor, administrator and
transfer agent) must ensure that their computer systems are adjusted to
properly process and calculate date-related information from and after
January 1, 2000. Many software programs and, to a lesser extent, the computer
hardware in use today cannot distinguish the year 2000 from the year 1900.
Such a design flaw could have a negative impact in the handling of securities
trades, pricing and accounting services. The Fund and its service providers
are actively working on necessary changes to computer systems to deal with
the year 2000 issue and believe that systems will be year 2000 compliant when
required. Analysis continues regarding the financial impact of instituting a
year 2000 compliant program on the Fund's operations.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide 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, Prime-1 by Moody's
Investors Service, Inc., or F-1 by Fitch IBCA, Inc., 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 simul
taneously 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
As a matter of operating policy, the Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies, but which are
subject to restrictions on resale under federal securities law. Under
criteria established by the Trustees certain restricted securities are
determined to be liquid. To the extent that restricted securities are not
determined to be liquid, the Fund will limit their purchase, together with
other illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, to 10% of its net assets.
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, Inc. All of the Class A (voting)
shares of Federated Investors, Inc. are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Director of Federated Investors,
Inc., Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who
is President and Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc.
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 compa
nies. With over $120 billion invested across more than 300 funds under
management and/or administration by its subsidiaries, as of
December 31, 1997, Federated Investors, Inc. 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 approximately 4,000 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 subsid
iary of Federated Investors, Inc.
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, Inc.,
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, Inc.,
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, Inc. 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, Jr. 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 ("ACH"). The
shareholder's bank, which must be an ACH 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 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 redemption requests after that time include that day's dividend,
but will be wired the following business day. 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 mod
ify 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.
ACCOUNT ACTIVITY
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
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers another class of shares. 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.
Both 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 Institutional Service Shares,
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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of shareholders of Money Market Obligations Trust was held
on April 23, 1998. On February 24, 1998, the record date for shareholders
voting at the meeting, there were 28,912,813,604 total outstanding shares.
The following items were considered by shareholders of the Trust and the
results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
On February 24, 1998, the record date for shareholders of Automated Cash
Management Trust voting at the meeting, there were 28,912,813,604 total
outstanding shares. The following items were considered by shareholders of
the Fund and the results of their voting were as follows:
AGENDA ITEM 2: To approve or disapprove an amendment in the Fund's
fundamental investment policy on diversification of its investments.
The results of shareholders voting were as follows:
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
<S> <C> <C> <C>
1,065,215,819 76,204,328 32,578,757 13,056,789
</TABLE>
AGENDA ITEM 3: To approve or disapprove amending and changing from
fundamental to an operating policy the Fund's ability to invest in restricted
securities.
The results of shareholders voting were as follows:
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
<S> <C> <C> <C>
1,049,128,458 90,756,639 34,113,806 13,056,790
</TABLE>
AGENDA ITEM 4: To approve or disapprove removing the Fund's fundamental
investment policy on investing in new issuers.
The results of shareholders voting were as follows:
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
<S> <C> <C> <C>
1,051,095,975 88,245,518 34,657,411 13,056,789
</TABLE>
AGENDA ITEM 5: To approve or disapprove removing the Fund's fundamental
investment policy on investing in options.
The results of shareholders voting were as follows:
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
<S> <C> <C> <C>
1,026,930,114 111,516,885 35,551,904 13,056,790
</TABLE>
* The following Trustees of the Trust continued their terms as
Trustees of the Trust: John F. Donahue, William J. Copeland, J.
Christopher Donahue, James E. Dowd,
Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Esq.,
Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
AUTOMATED CASH MANAGEMENT TRUST
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on the
inside back cover.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
YEAR ENDED JULY 31, JULY 31, YEAR ENDED APRIL 30,
1998 1997 1996 1995(A) 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE
BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.05 0.05 0.05 0.01 0.03 0.03 0.05 0.07 0.08 0.08 0.07
LESS
DISTRIBUTIONS
Distributions
from net
investment
income (0.05) (0.05) (0.05) (0.01) (0.03) (0.03) (0.05) (0.07) (0.08) (0.08) (0.07)
NET ASSET
VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.25% 5.09% 5.20% 1.42% 2.84% 3.11% 5.02% 7.52% 8.69% 8.20% 6.72%
RATIOS TO
AVERAGE NET
ASSETS
Expenses 0.59% 0.58% 0.57% 0.57%* 0.57% 0.56% 0.56% 0.55% 0.55% 0.55% 0.55%
Net investment
income 5.13% 4.97% 5.08% 5.60%* 2.80% 3.07% 4.88% 7.23% 8.32% 7.93% 6.53%
Expense
waiver/
reimbursement
(C) 0.30% 0.33% 0.31% 0.40%* 0.07% 0.04% 0.03% 0.12% 0.09% 0.10% 0.04%
SUPPLEMENTAL
DATA
Net assets,
end of period
(000 omitted) $1,734,061 $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
</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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C>
(A)COMMERCIAL PAPER--45.9%
BANKING--14.4%
$ 50,000,000 Aspen Funding Corp., (Guaranteed by Deutsche Bank, AG), 5.550% - 5.687%,
8/3/1998 - 8/24/1998 $ 49,951,903
26,000,000 Commonwealth Bank of Australia, Sydney, 5.645%, 11/12/1998 25,591,605
40,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal de Belgique, Brussles),
5.500% - 5.515%, 11/9/1998 - 11/17/1998 39,350,872
123,300,000 Gotham Funding Corp., 5.680% - 5.720%, 8/7/1998 - 8/26/1998 123,015,880
20,000,000 J.P. Morgan & Co., Inc., 5.450%, 12/31/1998 19,539,778
15,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska Handelsbanken, Stockholm), 5.645%,
11/12/1998 14,764,388
80,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of Switzerland, Zurich),
5.450% - 5.520%, 8/7/1998 - 12/31/1998 78,489,211
Total 350,703,637
BROKERAGE--4.9%
42,000,000 Credit Suisse First Boston, Inc., 5.510% - 5.520%, 8/20/1998 - 9/17/1998 41,783,474
35,000,000 Merrill Lynch & Co., Inc., 5.520%, 8/24/1998 34,876,567
44,000,000 Morgan Stanley Group, Inc., 5.520%, 8/31/1998 43,797,600
Total 120,457,641
CONSUMER PRODUCTS--1.2%
30,000,000 Diageo Capital PLC, 5.450%, 12/29/1998 29,318,750
FINANCE - AUTOMOTIVE--2.4%
35,000,000 Chrysler Financial Corp., 5.530%, 9/14/1998 34,763,439
25,000,000 General Motors Acceptance Corp., 5.512%, 10/27/1998 24,666,983
Total 59,430,422
FINANCE - COMMERCIAL--17.7%
13,000,000 Asset Securitization Cooperative Corp., 5.520%, 10/30/1998 12,820,600
25,000,000 CIT Group Holdings, Inc., 5.520%, 8/17/1998 24,938,667
25,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.520%, 10/23/1998 24,681,833
110,000,000 General Electric Capital Corp., 5.380% - 5.680%, 8/3/1998 - 2/4/1999 109,060,081
78,425,000 Greenwich Funding Corp., 5.520% - 5.540%, 8/25/1998 - 9/14/1998 78,088,507
15,000,000 Falcon Asset Securitization Corp., 5.550%, 8/21/1998 14,953,750
40,000,000 PREFCO-Preferred Receivables Funding Co., 5.550% - 5.570%, 8/17/1998 - 9/3/1998 39,855,579
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C>
(A)COMMERCIAL PAPER--CONTINUED
FINANCE - COMMERCIAL--CONTINUED
$ 15,000,000 Receivables Capital Corp., 5.550%, 8/25/1998 $ 14,944,500
111,000,000 Sheffield Receivables Corp., 5.525% - 5.600%, 8/3/1998 - 9/3/1998 110,648,260
Total 429,991,777
FINANCE - RETAIL--4.4%
25,000,000 Associates Corp. of North America, 5.600%, 8/3/1998 24,992,222
12,725,000 CommoLoCo, (Guaranteed by American General Finance Corp.), 5.470%, 10/15/1998 12,579,988
50,000,000 Household Finance Corp., 5.690%, 8/3/1998 49,984,194
20,000,000 New Center Asset Trust, A1+/P1 Series, 5.500%, 8/11/1998 19,969,444
Total 107,525,848
INSURANCE--0.9%
23,000,000 CXC, Inc., 5.520%, 8/10/1998 22,968,260
TOTAL COMMERCIAL PAPER 1,120,396,335
SHORT-TERM NOTES--7.6%
BANKING--1.4%
4,500,000 SALTS II Cayman Islands Corp., (Bankers Trust International, PLC), 5.737%, 6/17/1999 4,500,000
30,000,000 SALTS III Cayman Island Corp., (Bankers Trust International, PLC), 5.818% - 5.850%,
12/18/98 -1/23/1999 30,000,000
Total 34,500,000
BROKERAGE--0.8%
20,000,000 Goldman Sachs Group, LP, 5.687%, 10/26/1998 20,000,000
FINANCE - AUTOMOTIVE--2.0%
5,658,426 Chase Manhattan Auto Owner Trust 1998-B, Class A-1, 5.578%, 5/10/1999 5,658,426
11,686,827 Chase Manhattan Auto Owner Trust 1998-C, Class A-1, 5.588%, 7/9/1999 11,685,618
6,000,000 Compass Auto Receivables Trust 1998-A, Class A-1, 5.659%, 7/15/1999 6,000,000
25,000,000 Ford Credit Auto Owner Trust 1998-C, Class A-2, 5.670%, 6/15/1999 25,000,000
120,186 MMCA Auto Owner Trust 1997-1, Class A-1, 5.630%, 11/15/1998 120,179
Total 48,464,223
FINANCE - COMMERCIAL--0.8%
15,000,000 Beta Finance, Inc., 5.790%, 4/8/1999 14,998,973
5,000,000 (e)Triangle Funding Ltd., 5.687%, 11/16/1998 5,000,000
Total 19,998,973
FINANCE - EQUIPMENT--0.6%
2,089,824 Caterpillar Financial Asset Trust 1997-B, Class A-1, 5.805%, 11/25/1998 2,089,824
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C>
SHORT-TERM NOTES--CONTINUED
FINANCE - EQUIPMENT--CONTINUED
$ 3,651,026 Capita Equipment Receivables Trust 1997-1, Class A-1, 5.800%, 12/15/1998 $ 3,650,762
7,501,199 Green Tree Lease Finance 1997-1 LLC, Class A1, 5.906%, 1/20/1999 7,501,199
Total 13,241,785
INSURANCE--1.5%
11,422,869 ContiMortgage Home Equity Loan Trust 1998-2, Class A-1,
(Guaranteed by MBIA), 5.648%, 6/15/1999 11,422,869
12,864,404 WFS Financial 1998-A Owner Trust, Class A-1, (Guaranteed by FSA), 5.618%, 2/20/1999 12,864,404
13,200,000 WFS Financial 1998-B Owner Trust, Class A-1, (Guaranteed by FSA), 5.658%, 7/20/1999 13,200,000
Total 37,487,273
RECREATION--0.5%
11,492,809 GreenTree Recreational, Equipment & Consumer Trust 1998-B, Class
A-1, 5.668%,
7/15/1999 11,492,809
TOTAL SHORT-TERM NOTES 185,185,063
CERTIFICATE OF DEPOSIT--7.8%
BANKING--7.8%
28,000,000 Bankers Trust Co., New York, 5.610% - 5.880%, 10/13/1998 - 5/21/1999 27,998,251
30,000,000 Bank of Nova Scotia, Toronto, 5.870%, 4/29/1999 29,985,080
10,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.800%, 4/1/1999 9,996,175
10,000,000 Rabobank Nederland, Utrecht, 5.700%, 1/7/1999 9,994,704
10,000,000 Svenska Handelsbanken, Stockholm, 5.800%, 4/6/1999 9,997,074
101,000,000 Societe Generale, Paris, 5.690% - 5.970%, 8/13/1998 - 4/28/1999 100,982,340
TOTAL CERTIFICATE OF DEPOSIT 188,953,624
LOAN PARTICIPATION--1.3%
FINANCE - EQUIPMENT--1.3%
31,000,000 PITNEY BOWES CREDIT CORP., 5.675%, 8/10/1998 30,956,228
(B)VARIABLE RATE INSTRUMENTS--23.9%
BANKING--8.0%
48,000,000 Bankers Trust Co., New York, 5.690%, 8/3/1998 47,972,421
6,000,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 6,000,000
4,600,000 Development Authority of Richmond Cty., GA, (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 4,600,000
20,988,923 (e)Liquid Asset Backed Securities Trust, Series 1997-1, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.656%, 8/19/1998 20,988,923
60,000,000 (e)Liquid Asset Backed Securities Trust, Series 1996-3, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.676%, 8/15/1998 60,000,000
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C>
(B)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 10,000,000 Long Lane Master Trust III, Series 1997-C, 5.749%, 8/3/1998 $ 10,000,000
6,500,000 Massachusetts IFA, (Kendell Square), (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 6,500,000
30,404,684 (e)Rabobank Optional Redemption Trust, Series 1997-101, 5.688%, 10/15/1998 30,404,684
2,701,000 Vista Funding Corp., Series 1996-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 2,701,000
5,250,000 Wendys of Las Vegas and San Antonio, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 5,250,000
Total 194,417,028
ELECTRICAL EQUIPMENT--0.9%
2,625,609 Marta Leasing Ltd., (Guaranteed by General Electric Co.), 5.639%, 8/3/1998 2,625,609
20,181,046 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.639%, 8/3/1998 20,181,046
Total 22,806,655
FINANCE - RETAIL--2.9%
40,000,000 (e)Associates Corp. of North America, 5.710%, 8/3/1998 39,991,722
30,000,000 Carco Auto Loan Master Trust 1993-2, Class A1, 5.605%, 8/17/1998 30,000,000
Total 69,991,722
INSURANCE--12.1%
94,500,000 General American Life Insurance Co., 5.850%, 8/23/1998 94,500,000
30,000,000 Jackson National Life Insurance Co., 5.758%, 8/1/1998 30,000,000
46,945,177 (e)Liquid Asset Backed Securities Trust, Series 1997-3 Senior Notes, (Guaranteed by
AMBAC), 5.658%, 9/28/1998 46,945,177
25,000,000 Peoples Security Life Insurance Company, 5.840%, 8/1/1998 25,000,000
25,000,000 SunAmerica Life Insurance Company, 5.758%, 8/1/1998 25,000,000
30,000,000 Transamerica Occidental Life Insurance Co., 5.729%, 8/1/1998 30,000,000
44,000,000 Travelers Insurance Company, 5.739%, 8/1/1998 44,000,000
Total 295,445,177
TOTAL VARIABLE RATE INSTRUMENTS 582,660,582
(A)TIME DEPOSIT--4.5%
BANKING--4.5%
35,000,000 Mellon Bank N.A., Pittsburgh, 5.687%, 8/3/1998 35,000,000
25,000,000 Royal Bank of Canada, Montreal, 5.687%, 8/3/1998 25,000,000
50,000,000 Toronto-Dominion Bank, 5.687%, 8/3/1998 50,000,000
TOTAL TIME DEPOSIT 110,000,000
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C>
(C) REPURCHASE AGREEMENTS--8.4%
$ 35,800,000 ABN AMRO Chicago Corp., 5.690%, dated 7/31/1998, due 8/3/1998 $ 35,800,000
10,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.620%, dated 7/31/1998, due 8/3/1998 10,000,000
10,000,000 First Union Capital Markets, 5.630%, dated 7/31/1998, due 8/3/1998 10,000,000
50,000,000 Goldman Sachs Group, LP, 5.700%, dated 7/31/1998, due 8/3/1998 50,000,000
50,000,000 HSBC Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 50,000,000
50,000,000 Salomon Brothers, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 50,000,000
TOTAL REPURCHASE AGREEMENTS 205,800,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $2,423,951,832
</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 subjected to restrictions on resale
under Federal Securities laws. At July 31, 1998, these securities amounted
to $203,330,506 which represents 8.3% of net assets.
Note: The categories of investments are shown as a percentage of net assets
($2,437,816,049) at July 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation FSA --Financial Security
Assurance IFA --Industrial Finance Authority LLC --Limited Liability Corporation
LOC --Letter of Credit LP --Limited Partnership MBIA --Municipal Bond Investors
Assurance 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, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments in repurchase agreements $ 205,800,000
Investments in securities 2,218,151,832
Total investments in securities, at amortized cost and value $2,423,951,832
Cash 367,772
Income receivable 9,449,946
Receivable for shares sold 9,318,856
Prepaid expenses 116,099
Total assets 2,443,204,505
LIABILITIES:
Payable for shares redeemed 533,082
Income distribution payable 3,979,841
Accrued expenses 875,533
Total liabilities 5,388,456
NET ASSETS for 2,437,816,049 shares outstanding $2,437,816,049
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SERVICE SHARES:
$1,734,061,104 / 1,734,061,104 shares outstanding $1.00
CASH II SHARES:
$703,754,945 / 703,754,945 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, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $131,156,654
EXPENSES:
Investment advisory fee $11,464,630 Administrative personnel and services fee
1,729,582 Custodian fees 156,339 Transfer and dividend disbursing agent fees and
expenses 867,245 Directors'/Trustees' fees 18,202 Auditing fees 12,798 Legal
fees 12,056 Portfolio accounting fees 166,265 Distribution services fee--Cash II
Shares 1,862,209 Shareholder services fee--Institutional Service Shares
3,870,106 Shareholder services fee--Cash II Shares 1,862,209 Share registration
costs 200,931 Printing and postage 127,777 Insurance premiums 70,445
Miscellaneous 38,079 Total expenses 22,458,873 Waivers-- Waiver of investment
advisory fee $(6,807,192) Waiver of distribution services fee--Cash II Shares
(648,049) Waiver of shareholder services fee--Institutional Service Shares
(108,363) Total waivers (7,563,604) Net expenses 14,895,269 Net investment
income $116,261,385 </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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 116,261,385 $ 91,687,662
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Service Shares (79,466,314) (67,586,616)
Cash II Shares (36,795,071) (24,101,046)
Change in net assets resulting from distributions to shareholders (116,261,385) (91,687,662)
SHARE TRANSACTIONS--
Proceeds from sale of shares 12,100,055,296 10,582,198,767
Net asset value of shares issued to shareholders in payment of distributions declared 83,205,547 63,190,890
Cost of shares redeemed (11,849,693,675) (9,815,560,140)
Change in net assets resulting from share transactions 333,567,168 829,829,517
Change in net assets 333,567,168 829,829,517
NET ASSETS:
Beginning of period 2,104,248,881 1,274,419,364
End of period $ 2,437,816,049 $ 2,104,248,881
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1998
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, 1998 is
as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Associates Corp. of North America, 5.710% 12/8/1997 $39,979,200
Liquid Asset Backed Securities Trust, Series 1996-3, 5.676% 8/15/1996 60,000,000
Liquid Asset Backed Securities Trust, Series 1997-1, 5.656% 2/19/1997 20,988,923
Liquid Asset Backed Securities Trust, Series 1997-3, 5.658% 6/27/1997 46,945,177
Rabobank Optional Redemption Trust, Series 1997-101, 5.688% 4/17/1997 30,404,683
Triangle Funding Ltd., 5.687% 11/4/1997 5,000,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1998, capital paid-in aggregated
$2,437,816,049. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 7,692,911,743 7,323,418,360
Shares issued to shareholders in payment of distributions declared 48,454,343 41,494,370
Shares redeemed (7,386,286,934) (7,260,350,142)
Net change resulting from Institutional Service Share transactions 355,079,152 104,562,588
<CAPTION>
CASH II SHARES YEAR ENDED PERIOD ENDED
<S> <C> <C>
JULY 31, JULY 31,
1998 1997(a)
Shares sold 4,407,143,553 3,258,780,407
Shares issued to shareholders in payment of distributions declared 34,751,204 21,696,520
Shares redeemed (4,463,406,741) (2,555,209,998)
Net change resulting from Cash II Share transactions (21,511,984) 725,266,929
Net change resulting from share transactions 333,567,168 829,829,517
</TABLE>
(a) For the period from September 27, 1996 (date of initial public investment)
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, Inc. 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 Class 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely
affected if the computer systems used by the Fund's service providers do not
properly process and calculate date-related information and data from and
after January 1, 2000. The Fund's Adviser and Administrator are taking
measures that they believe are reasonably designed to address the Year 2000
issue with respect to computer systems that they use and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's other
service providers. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact to the Fund.
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 port
folio of Money Market Obligations Trust, a Massachusetts business trust),
including the schedule of portfolio investments, as of
July 31, 1998, 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 unquali
fied 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 misstate
ment. 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,
1998, by correspondence with the custodian and brokers. As to
confirmation replies not received, we carried out alternative auditing
procedures. 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, 1998, 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 25, 1998
[GRAPHIC]
Automated Cash Management Trust
(A Portfolio of Money Market Obligations Trust)
Cash II Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management Investment Company
AUTOMATED CASH MANAGEMENT TRUST
CASH II SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N831
G00554-03-CII (9/98)
[GRAPHIC]
Automated Cash Management Trust
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
The Institutional Service Shares of Automated Cash Management Trust (the "Fund")
offered by this prospectus represent interests in a portfolio of Money Market
Obligations Trust (the "Trust"), an open-end management investment company (a
mutual fund). The Fund invests in short-term money market securities to provide
stability of principal and current income consistent with stability of
principal.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK AND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE FUND
ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE
NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.
This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated September
30, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights-Institutional Service Shares 2
General Information 3
Year 2000 Statement 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 6
Supplemental Payments to Financial Institutions 6
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
Redeeming Shares by Mail 8
Special Redemption Features 9
Account and Share Information 9
Dividends 9
Capital Gains 9
Account Activity 9
Accounts with Low Balances 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 10
Other Classes of Shares 10
Performance Information 10
Last Meeting of Shareholders 11
Financial Highlights-Cash II Shares 12
Financial Statements 13
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 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) 0.20%
12b-1 Fee None
Total Other Expenses 0.39%
Shareholder Services Fee (after waiver)(2) 0.24%
Total Operating Expenses(3) 0.59%
</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 0.89% 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.
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 $ 6
3 Years $19
5 Years $33
10 Years $74
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
AUTOMATED CASH MANAGEMENT TRUST
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on the inside
back cover.
<TABLE>
<CAPTION>
Three
Months
Ended
Year Ended July 31, July 31, Year Ended April 30,
1998 1997 1996 1995(a) 1994 1993 1992 1991 1990
1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
NET ASSET
VALUE
BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.05 0.05 0.05 0.01 0.03 0.03 0.05 0.07 0.08
0.08 0.07
LESS
DISTRIBUTIONS
Distributions
from net
investment
income (0.05) (0.05) (0.05) (0.01) (0.03) (0.03) (0.05) (0.07) (0.08)
(0.08) (0.07)
NET ASSET
VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
TOTAL RETURN(B) 5.25% 5.09% 5.20% 1.42% 2.84% 3.11% 5.02% 7.52% 8.69%
8.20% 6.72%
RATIOS TO
AVERAGE NET
ASSETS
Expenses 0.59% 0.58% 0.57% 0.57%* 0.57% 0.56% 0.56% 0.55% 0.55%
0.55% 0.55%
Net investment
income 5.13% 4.97% 5.08% 5.60%* 2.80% 3.07% 4.88% 7.23% 8.32%
7.93% 6.53%
Expense
waiver/
reimbursement
(c) 0.30% 0.33% 0.31% 0.40%* 0.07% 0.04% 0.03% 0.12% 0.09%
0.10% 0.04%
SUPPLEMENTAL
DATA
Net assets,
end of period
(000 omitted) $1,734,061 $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
</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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator, and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing, and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide 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, Prime-1 by Moody's Investors
Service, Inc., or F-1 by Fitch IBCA, Inc., 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
As a matter of operating policy, the Fund may invest in restricted securities.
Restricted securities are any securities in which the Fund may invest pursuant
to its investment objective and policies, but which are subject to restrictions
on resale under federal securities law. Under criteria established by the
Trustees certain restricted securities are determined to be liquid. To the
extent that restricted securities are not determined to be liquid, the Fund will
limit their purchase, together with other illiquid securities, including
repurchase agreements providing for settlement in more than seven days after
notice, to 10% of its net assets.
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, Inc. All of the Class A (voting) shares of
Federated Investors, Inc. are owned by a trust, the trust ees of which are John
F. Donahue, Chairman and Director of Federated Investors, Inc., Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across more than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. 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 approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. 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, Jr. 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 ("ACH"). The shareholder's bank, which must be an ACH
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 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 redemption requests received
after that time include that day's dividend, but will be wired the following
business day. 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.
ACCOUNT ACTIVITY
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
Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers another class of shares. Cash II 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.
Both 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 Cash II Shares, 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders of Money Market Obligations Trust was
held on April 23, 1998. On February 24, 1998, the record date for shareholders
voting at the meeting, there were 28,912,813,604 total outstanding shares. The
following items were considered by shareholders of the Trust and the results of
their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., JD., S.J.D. 17,187,671,030 90,196,459
On February 24, 1998, the record date for shareholders of Automated Cash
Management Trust voting at the meeting, there were 28,912,813,604 total
outstanding shares. The following items were considered by shareholders of the
Fund and the results of their voting were as follows:
AGENDA ITEM 2: To approve or disprove an amendment in the Fund's fundamental
investment policy on diversification of its investments.
The results of shareholders voting were as follows:
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
1,065,215,819 76,204,328 32,578,757 13,056,789
AGENDA ITEM 3: To approve or disapprove amending and changing from fundamental
to an operating policy the Fund's ability to invest in restricted securities.
The results of shareholders voting were as follows:
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
1,049,128,458 90,756,639 34,113,806 13,056,790
AGENDA ITEM 4: To approve or disapprove removing the Fund's fundamental
investment policy on investing in new issuers.
The results of shareholders voting were as follows:
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
1,051,095,975 88,245,518 34,657,411 13,056,789
AGENDA ITEM 5: To approve or disapprove removing the Fund's fundamental
investment policy on investing in options.
The results of shareholders voting were as follows:
SHARES VOTED FOR SHARES VOTED AGAINST SHARES ABSTAIN BROKER NON-VOTE
1,026,930,114 111,516,885 35,551,904 13,056,790
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS--CASH II SHARES
AUTOMATED CASH MANAGEMENT TRUST
(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 PERIOD ENDED
JULY 31, JULY 31,
1998 1997(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.04
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.04)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.07% 4.14%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.76% 0.75%*
Net investment income 4.94% 4.84%*
Expense waiver/reimbursement(c) 0.38% 0.41%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $703,755 $725,267
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from September 27, 1996 (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
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) COMMERCIAL PAPER--45.9%
BANKING--14.4%
$ 50,000,000 Aspen Funding Corp., (Guaranteed by Deutsche Bank, AG), 5.550% - 5.687%,
8/3/1998 - 8/24/1998 $ 49,951,903
26,000,000 Commonwealth Bank of Australia, Sydney, 5.645%, 11/12/1998 25,591,605
40,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal de Belgique, Brussles),
5.500%- 5.515%, 11/9/1998 - 11/17/1998 39,350,872
123,300,000 Gotham Funding Corp., 5.680% - 5.720%, 8/7/1998 - 8/26/1998 123,015,880
20,000,000 J.P. Morgan & Co., Inc., 5.450%, 12/31/1998 19,539,778
15,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska Handelsbanken, Stockholm), 5.645%,
11/12/1998 14,764,388
80,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of Switzerland, Zurich),
5.450% - 5.520%, 8/7/1998 - 12/31/1998 78,489,211
Total 350,703,637
BROKERAGE--4.9%
42,000,000 Credit Suisse First Boston, Inc., 5.510% - 5.520%, 8/20/1998 - 9/17/1998 41,783,474
35,000,000 Merrill Lynch & Co., Inc., 5.520%, 8/24/1998 34,876,567
44,000,000 Morgan Stanley Group, Inc., 5.520%, 8/31/1998 43,797,600
Total 120,457,641
CONSUMER PRODUCTS--1.2%
30,000,000 Diageo Capital PLC, 5.450%, 12/29/1998 29,318,750
FINANCE - AUTOMOTIVE--2.4%
35,000,000 Chrysler Financial Corp., 5.530%, 9/14/1998 34,763,439
25,000,000 General Motors Acceptance Corp., 5.512%, 10/27/1998 24,666,983
Total 59,430,422
FINANCE - COMMERCIAL--17.7%
13,000,000 Asset Securitization Cooperative Corp., 5.520%, 10/30/1998 12,820,600
25,000,000 CIT Group Holdings, Inc., 5.520%, 8/17/1998 24,938,667
25,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.520%, 10/23/1998 24,681,833
110,000,000 General Electric Capital Corp., 5.380% - 5.680%, 8/3/1998 - 2/4/1999 109,060,081
78,425,000 Greenwich Funding Corp., 5.520% - 5.540%, 8/25/1998 - 9/14/1998 78,088,507
15,000,000 Falcon Asset Securitization Corp., 5.550%, 8/21/1998 14,953,750
40,000,000 PREFCO-Preferred Receivables Funding Co., 5.550% - 5.570%, 8/17/1998 - 9/3/1998 39,855,579
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) COMMERCIAL PAPER--CONTINUED
FINANCE - COMMERCIAL--CONTINUED
$ 15,000,000 Receivables Capital Corp., 5.550%, 8/25/1998 $ 14,944,500
111,000,000 Sheffield Receivables Corp., 5.525% - 5.600%, 8/3/1998 - 9/3/1998 110,648,260
Total 429,991,777
FINANCE - RETAIL--4.4%
25,000,000 Associates Corp. of North America, 5.600%, 8/3/1998 24,992,222
12,725,000 CommoLoCo, (Guaranteed by American General Finance Corp.), 5.470%, 10/15/1998 12,579,988
50,000,000 Household Finance Corp., 5.690%, 8/3/1998 49,984,194
20,000,000 New Center Asset Trust, A1+/P1 Series, 5.500%, 8/11/1998 19,969,444
Total 107,525,848
INSURANCE--0.9%
23,000,000 CXC, Inc., 5.520%, 8/10/1998 22,968,260
TOTAL COMMERCIAL PAPER 1,120,396,335
SHORT-TERM NOTES--7.6%
BANKING--1.4%
4,500,000 SALTS II Cayman Islands Corp., (Bankers Trust International, PLC), 5.737%, 6/17/1999 4,500,000
30,000,000 SALTS III Cayman Island Corp., (Bankers Trust International, PLC), 5.818% - 5.850%,
12/18/98- 1/23/1999 30,000,000
Total 34,500,000
BROKERAGE--0.8%
20,000,000 Goldman Sachs Group, LP, 5.687%, 10/26/1998 20,000,000
FINANCE - AUTOMOTIVE--2.0%
5,658,426 Chase Manhattan Auto Owner Trust 1998-B, Class A-1, 5.578%, 5/10/1999 5,658,426
11,686,827 Chase Manhattan Auto Owner Trust 1998-C, Class A-1, 5.588%, 7/9/1999 11,685,618
6,000,000 Compass Auto Receivables Trust 1998-A, Class A-1, 5.659%, 7/15/1999 6,000,000
25,000,000 Ford Credit Auto Owner Trust 1998-C, Class A-2, 5.670%, 6/15/1999 25,000,000
120,186 MMCA Auto Owner Trust 1997-1, Class A-1, 5.630%, 11/15/1998 120,179
Total 48,464,223
FINANCE - COMMERCIAL--0.8%
15,000,000 Beta Finance, Inc., 5.790%, 4/8/1999 14,998,973
5,000,000 (e)Triangle Funding Ltd., 5.687%, 11/16/1998 5,000,000
Total 19,998,973
FINANCE - EQUIPMENT--0.6%
2,089,824 Caterpillar Financial Asset Trust 1997-B, Class A-1, 5.805%, 11/25/1998 2,089,824
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
FINANCE - EQUIPMENT--CONTINUED
$3,651,026 Capita Equipment Receivables Trust 1997-1, Class A-1, 5.800%,
12/15/1998 $3,650,762 7,501,199 Green Tree Lease Finance 1997-1 LLC, Class
A-1, 5.906%, 1/20/1999 7,501,199
Total 13,241,785
INSURANCE--1.5%
11,422,869 ContiMortgage Home Equity Loan Trust 1998-2, Class A-1, (Guaranteed by MBIA), 5.648%,
6/15/1999 11,422,869
12,864,404 WFS Financial 1998-A Owner Trust, Class A-1, (Guaranteed by FSA), 5.618%, 2/20/1999 12,864,404
13,200,000 WFS Financial 1998-B Owner Trust, Class A-1, (Guaranteed by FSA), 5.658%, 7/20/1999 13,200,000
Total 37,487,273
RECREATION--0.5%
11,492,809 GreenTree Recreational, Equipment & Consumer Trust 1998-B, Class
A-1, 5.668%,
7/15/1999 11,492,809
TOTAL SHORT-TERM NOTES 185,185,063
CERTIFICATE OF DEPOSIT--7.8%
BANKING--7.8%
28,000,000 Bankers Trust Co., New York, 5.610% - 5.880%, 10/13/1998 - 5/21/1999 27,998,251
30,000,000 Bank of Nova Scotia, Toronto, 5.870%, 4/29/1999 29,985,080
10,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.800%, 4/1/1999 9,996,175
10,000,000 Rabobank Nederland, Utrecht, 5.700%, 1/7/1999 9,994,704
10,000,000 Svenska Handelsbanken, Stockholm, 5.800%, 4/6/1999 9,997,074
101,000,000 Societe Generale, Paris, 5.690% - 5.970%, 8/13/1998 - 4/28/1999 100,982,340
TOTAL CERTIFICATE OF DEPOSIT 188,953,624
LOAN PARTICIPATION--1.3%
FINANCE - EQUIPMENT--1.3%
31,000,000 PITNEY BOWES CREDIT CORP., 5.675%, 8/10/1998 30,956,228
(B)VARIABLE RATE INSTRUMENTS--23.9%
BANKING--8.0%
48,000,000 Bankers Trust Co., New York, 5.690%, 8/3/1998 47,972,421
6,000,000 Beverly California Corp., (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 6,000,000
4,600,000 Development Authority of Richmond Cty., GA, (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 4,600,000
20,988,923 (e)Liquid Asset Backed Securities Trust, Series 1997-1, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.656%, 8/19/1998 20,988,923
60,000,000 (e)Liquid Asset Backed Securities Trust, Series 1996-3, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.676%, 8/15/1998 60,000,000
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(B)VARIABLE RATE INSTRUMENTS - CONTINUED
BANKING--CONTINUED
$ 10,000,000 Long Lane Master Trust III, Series 1997-C, 5.749%, 8/3/1998 $
10,000,000
6,500,000 Massachusetts IFA, (Kendell Square), (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 6,500,000
30,404,684 (e)Rabobank Optional Redemption Trust, Series 1997-101, 5.688%, 10/15/1998 30,404,684
2,701,000 Vista Funding Corp., Series 1996-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 2,701,000
5,250,000 Wendys of Las Vegas and San Antonio, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 5,250,000
Total 194,417,028
ELECTRICAL EQUIPMENT--0.9%
2,625,609 Marta Leasing Ltd., (Guaranteed by General Electric Co.), 5.639%, 8/3/1998 2,625,609
20,181,046 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.639%, 8/3/1998 20,181,046
Total 22,806,655
FINANCE - RETAIL--2.9%
40,000,000 (e)Associates Corp. of North America, 5.710%, 8/3/1998 39,991,722
30,000,000 Carco Auto Loan Master Trust 1993-2, Class A1, 5.605%, 8/17/1998 30,000,000
Total 69,991,722
INSURANCE--12.1%
94,500,000 General American Life Insurance Co., 5.850%, 8/23/1998 94,500,000
30,000,000 Jackson National Life Insurance Co., 5.758%, 8/1/1998 30,000,000
46,945,177 (e)Liquid Asset Backed Securities Trust, Series 1997-3 Senior Notes, (Guaranteed by
AMBAC), 5.658%, 9/28/1998 46,945,177
25,000,000 Peoples Security Life Insurance Company, 5.840%, 8/1/1998 25,000,000
25,000,000 SunAmerica Life Insurance Company, 5.758%, 8/1/1998 25,000,000
30,000,000 Transamerica Occidental Life Insurance Co., 5.729%, 8/1/1998 30,000,000
44,000,000 Travelers Insurance Company, 5.739%, 8/1/1998 44,000,000
Total 295,445,177
TOTAL VARIABLE RATE INSTRUMENTS 582,660,582
(A)TIME DEPOSIT--4.5%
BANKING--4.5%
35,000,000 Mellon Bank N.A., Pittsburgh, 5.687%, 8/3/1998 35,000,000
25,000,000 Royal Bank of Canada, Montreal, 5.687%, 8/3/1998 25,000,000
50,000,000 Toronto-Dominion Bank, 5.687%, 8/3/1998 50,000,000
TOTAL TIME DEPOSIT 110,000,000
</TABLE>
AUTOMATED CASH MANAGEMENT TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C) REPURCHASE AGREEMENTS - 8.4%
$ 35,800,000 ABN AMRO Chicago Corp., 5.690%, dated 7/31/1998, due 8/3/1998 $
35,800,000
10,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.620%, dated 7/31/1998, due 8/3/1998 10,000,000
10,000,000 First Union Capital Markets, 5.630%, dated 7/31/1998, due 8/3/1998 10,000,000
50,000,000 Goldman Sachs Group, LP, 5.700%, dated 7/31/1998, due 8/3/1998 50,000,000
50,000,000 HSBC Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 50,000,000
50,000,000 Salomon Brothers, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 50,000,000
TOTAL REPURCHASE AGREEMENTS 205,800,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(D) $2,423,951,832
</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 subjected to restrictions on resale
under Federal Securities laws. At July 31, 1998, these securities amounted to
$203,330,506 which represents 8.3% of net assets.
Note: The categories of investments are shown as a percentage of net assets
($2,437,816,049) at July 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC - American Municipal Bond Assurance Corporation FSA - Financial Security
Assurance IFA - Industrial Finance Authority LLC - Limited Liability Corporation
LOC - Letter of Credit LP - Limited Partnership MBIA - Municipal Bond Investors
Assurance 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, 1998
<TABLE>
<S> <C> <C>
ASSETS
Investments in repurchase agreements $ 205,800,000
Investments in securities 2,218,151,832
Total investments in securities, at amortized cost and value $2,423,951,832
Cash 367,772
Income receivable 9,449,946
Receivable for shares sold 9,318,856
Prepaid expenses 116,099
Total assets 2,443,204,505
LIABILITIES:
Payable for shares redeemed 533,082
Income distribution payable 3,979,841
Accrued expenses 875,533
Total liabilities 5,388,456
NET ASSETS for 2,437,816,049 shares outstanding $2,437,816,049
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SERVICE SHARES:
$1,734,061,104 / 1,734,061,104 shares outstanding $1.00
CASH II SHARES:
$703,754,945 / 703,754,945 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $131,156,654
EXPENSES:
Investment advisory fee $11,464,630
Administrative personnel and services fee 1,729,582
Custodian fees 156,339
Transfer and dividend disbursing agent fees and expenses 867,245
Directors'/Trustees' fees 18,202
Auditing fees 12,798
Legal fees 12,056
Portfolio accounting fees 166,265
Distribution services feeCash II Shares 1,862,209
Shareholder services feeInstitutional Service Shares 3,870,106
Shareholder services feeCash II Shares 1,862,209
Share registration costs 200,931
Printing and postage 127,777
Insurance premiums 70,445
Miscellaneous 38,079
Total expenses 22,458,873
Waivers
Waiver of investment advisory fee $(6,807,192)
Waiver of distribution services feeCash II Shares (648,049)
Waiver of shareholder services feeInstitutional Service Shares (108,363)
Total waivers (7,563,604)
Net expenses 14,895,269
Net investment income $116,261,385
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 116,261,385 $ 91,687,662
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Service Shares (79,466,314) (67,586,616)
Cash II Shares (36,795,071) (24,101,046)
Change in net assets resulting from distributions to shareholders (116,261,385) (91,687,662)
SHARE TRANSACTIONS--
Proceeds from sale of shares 12,100,055,296 10,582,198,767
Net asset value of shares issued to shareholders in payment of distributions declared 83,205,547 63,190,890
Cost of shares redeemed (11,849,693,675) (9,815,560,140)
Change in net assets resulting from share transactions 333,567,168 829,829,517
Change in net assets 333,567,168 829,829,517
NET ASSETS:
Beginning of period 2,104,248,881 1,274,419,364
End of period $ 2,437,816,049 $ 2,104,248,881
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
AUTOMATED CASH MANAGEMENT TRUST
JULY 31, 1998
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, 1998 is as
follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Associates Corp. of North America, 5.710% 12/8/1997 $ 39,979,200
Liquid Asset Backed Securities Trust, Series 1996-3, 5.676% 8/15/1996 60,000,000
Liquid Asset Backed Securities Trust, Series 1997-1, 5.656% 2/19/1997 20,988,923
Liquid Asset Backed Securities Trust, Series 1997-3, 5.658% 6/27/1997 46,945,177
Rabobank Optional Redemption Trust, Series 1997-101, 5.688% 4/17/1997 30,404,683
Triangle Funding Ltd., 5.687% 11/4/1997 5,000,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1998, capital paid-in aggregated $2,437,816,049.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 7,692,911,743 7,323,418,360
Shares issued to shareholders in payment of distributions declared 48,454,343 41,494,370
Shares redeemed (7,386,286,934) (7,260,350,142)
Net change resulting from Institutional Service Share transactions 355,079,152 104,562,588
<CAPTION>
YEAR ENDED PERIOD ENDED
JULY 31, JULY 31,
CASH II SHARES 1998 1997(A)
<S> <C> <C>
Shares sold 4,407,143,553 3,258,780,407
Shares issued to shareholders in payment of distributions declared 34,751,204 21,696,520
Shares redeemed (4,463,406,741) (2,555,209,998)
Net change resulting from Cash II Share transactions (21,511,984) 725,266,929
Net change resulting from share transactions 333,567,168 829,829,517
</TABLE>
(a) For the period from September 27, 1996 (date of initial public investment)
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, Inc. 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 Class 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, by correspondence with the custodian and brokers. As to confirmation
replies not received, we carried out alternative auditing procedures. 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, 1998, 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 the periods presented,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
September 25, 1998
(graphic)
Automated Cash Management Trust
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management
Investment Company
AUTOMATED CASH MANAGEMENT TRUST
INSTITUTIONAL SERVICE SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
[Graphic]
Cusip 60934N864
G00554-01-SS (9/98)
[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, 1998. 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.
AUTOMATED CASH MANAGEMENT TRUST
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
Statement dated September 30, 1998
(graphic)
Federated Investors
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N864
Cusip 60934N831
G00554-02 (9/98)
(graphic)
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
Reverse Repurchase Agreements 2
Credit Enhancement 2
Restricted and Illiquid Securities 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 2
Investing in Commodities, Minerals, or Real Estate 3
Underwriting 3
Concentration of Investments 3
Acquiring Securities 3
Investing in Issuers Whose Securities are Owned
by Officers and Trustees 3
Investing in Restricted and Illiquid Securities 3
Regulatory Compliance 3
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT 4
Share Ownership 7
Trustee Compensation 8
Trustee Liability 8
INVESTMENT ADVISORY SERVICES 8
Investment Adviser 8
Advisory Fees 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 9
Fund Administration 9
Custodian and Portfolio Accountant 9
Transfer Agent 9
Independent Public Accountants 9
Distribution Plan and 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, INC. 12
Mutual Fund Market 13
Institutional Clients 13
Bank Marketing 13
Broker/Dealers and Bank Broker/
Dealer Subsidiaries 13
FUND HISTORY
Effective July 30, 1994, Automated Cash Management Trust was reorganized into an
investment portfolio of Money Market Obligations Trust. The Trust is registered
under the Investment Company Act of 1940 as 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 ("S&P"), Prime-1 by Moody's Investors Service, Inc.
("Moody's"), or F-1 (+ or -) by Fitch IBCA, 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.
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.
The following policy is non-fundamental and may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this policy becomes effective.
RESTRICTED AND ILLIQUID SECURITIES
The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission staff
position set forth in the adopting release for Rule 144A under the Securities
Act of 1933. The Trustees consider the following criteria in determining the
liquidity of certain restricted securities:
* the frequency of trades and quotes for the security;
* the number of dealers willing to purchase or sell the security and the number
of other potential buyers;
* dealer undertakings to make a market in the security; and
* the nature of the security and the nature of the marketplace trades.
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.
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.
The following limitation can be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change becomes
effective.
INVESTING IN RESTRICTED AND ILLIQUID SECURITIES
The Trust 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.
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
Chief Executive Officer and Director or Trustee of the
Funds; Chairman and Director, Federated Investors, Inc.;
Chairman and Trustee, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research
Corp.; Chairman, Passport Research, Ltd.; Mr. Donahue is the
father of J. Christopher Donahue, Executive Vice President
of the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director or Trustee of the Funds; Director, Member of Executive Committee,
Children's Hospital of Pittsburgh; formerly, Senior Partner, Ernst & Young LLP;
Director, MED 3000 Group, Inc.; Director, Member of Executive Committee,
University of Pittsburgh.
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
Director or Trustee of the Funds; 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.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director or Trustee of the Funds; 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, United Refinery;
Chairman, Pittsburgh Foundation; Director, Forbes Fund; Chairman, Pittsburgh
Civic Light Opera.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President or Executive Vice President of the Funds;
President and Director, Federated Investors, Inc.; President
and Trustee, 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; Director or
Trustee of some of the Funds. Mr. Donahue is the son of John
F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd, Esq.
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Director or Trustee of the Funds; Attorney-at-law; Director,
The Emerging Germany Fund, Inc.; formerly, President, Boston
Stock Exchange, Inc.; Regional Administrator, United States
Securities and Exchange Commission.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Director or Trustee of the Funds; Professor of Medicine, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; formerly, Member, National Board of Trustees, Leukemia Society of
America.
Edward L. Flaherty, Jr., Esq. @
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Director or Trustee of the Funds; Attorney, of Counsel, Miller, Ament, Henny &
Kochuba; Director, Eat'N Park Restaurants, Inc.; formerly, Counsel, Horizon
Financial, F.A., Western Region; Partner, Meyer and Flaherty.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Director or Trustee of the Funds; formerly, Representative, Commonwealth of
Massachusetts General Court; President, State Street Bank and Trust Company and
State Street Corporation; Director, VISA USA and VISA International; Chairman
and Director, Massachusetts Banker Association; Director, Depository Trust
Corporation.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
Director or Trustee of the Funds; President, Law Professor, Duquesne University;
Consulting Partner, Mollica & Murray; formerly, Dean and Professor of Law,
University of Pittsburgh School of Law; Dean and Professor of Law, Villanova
University School of Law.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Director or Trustee of the Funds; President, World Society for Ekistics, Athens;
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; formerly, Professor, United States
Military Academy; Professor, United States Air Force Academy.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Director or Trustee of the Funds; Public Relations/ Marketing/Conference
Planning; formerly, National Spokesperson, Aluminum Company of America; business
owner.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Trustee or Director of some of the Funds; President, Executive Vice President
and Treasurer of some of the Funds; Vice Chairman, Federated Investors, Inc.;
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.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds; Executive Vice
President, Secretary, and Director, Federated Investors, Inc.; 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.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
President or Vice President of some of the Funds; Director or
Trustee of some of the Funds; Executive Vice President,
Federated Investors, Inc.; Chairman and Director, Federated
Securities Corp.
* 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 3, 1998, 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 224,078,198 shares
(13.57%); and Fiduciary Trust Company International, New York, New York owned
approximately 157,803,000 shares (9.55%); Stephens, Inc., Little Rock, Arkansas
owned approximately 94,673,113 shares (5.73%); Var & Co., St. Paul, Minnesota,
owned approximately 87,236,299 shares (5.28%);
As of September 3, 1998, no shareholder of record owned 5% or more of the
outstanding Cash II Shares of the Fund.
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, AGGREGATE
POSITION WITH COMPENSATION TOTAL COMPENSATION PAID
TRUST FROM TRUST*# FROM FUND COMPLEX+
<S> <C> <C>
John F. Donahue
Chairman and Trustee $0 $0 for the Trust and
56 other investment companies in the Fund Complex
Thomas G. Bigley
Trustee $18,351 $111,222 for the Trust and
56 other investment companies in the Fund Complex
John T. Conroy, Jr.
Trustee $20,189 $122,362 for the Trust and
56 other investment companies in the Fund Complex
William J. Copeland
Trustee $20,189 $122,362 for the Trust and
56 other investment companies in the Fund Complex
J. Christopher Donahue
President and Trustee $0 $0 for the Trust and
18 other investment companies in the Fund Complex
James E. Dowd, Esq.
Trustee $20,189 $122,362 for the Trust and
56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D.
Trustee $18,351 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr., Esq.
Trustee $20,189 $122,362 for the Trust and
56 other investment companies in the Fund Complex
Peter E. Madden
Trustee $18,351 $111,222 for the Trust and
56 other investment companies in the Fund Complex
John E. Murray, Jr., J.D., S.J.D.
Trustee $18,351 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Wesley W. Posvar
Trustee $18,351 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Marjorie P. Smuts
Trustee $18,351 $111,222 for the Trust and
56 other investment companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1998.
# 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, Inc.. All the voting securities of Federated Investors,
Inc. 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,
1998, 1997, and 1996, the adviser earned $11,464,630, $9,287,875, and
$6,308,051, respectively, of which $6,807,192, $5,899,812, and $3,773,437,
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, 1998, 1997, and 1996, the Fund paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, Inc., 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, Inc., 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, 1998, 1997, and 1996, the Administrators earned $1,729,582, $1,402,868
and $954,191, 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, 1998, payments for Cash II Shares in the
amount of $1,862,209 were made pursuant to the Plan, $1,214,160 of which was
paid to financial institutions. In addition, for the fiscal year ended July 31,
1998, the Fund paid shareholder service fees on behalf of Institutional Service
Shares and Cash II Shares in the amounts of $3,870,106 and $1,862,209,
respectively, $3,761,743 and $1,862,209 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;
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, 1998, the yield for Cash II Shares was
4.95%, and the yield for Institutional Service Shares was 5.12%.
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, 1998, the effective yield for Cash II
Shares was 5.07%, and the effective yield for Institutional Service Shares was
5.25%.
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, 1998, were 5.25%,
4.79%, and 5.53%, respectively.
The average annual total returns for the Cash II Shares of the Fund for the
one-year period ended July 31, 1998, and for the period from September 27, 1996
(date of initial public investment) through July 31, 1998, were 5.07% and 5.00%,
respectively.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:
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 Fund portfolio managers and their views and analysis on how such
developments could affect the Funds. In addition, advertising and sales
literature may quote statistics and give general information about the mutual
fund industry, including the growth of the industry, from sources such as the
Investment Company Institute.
ABOUT FEDERATED INVESTORS, INC.
Federated Investors, Inc. 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, Inc. 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, 1997, Federated Investors, Inc. managed more than $63.1 billion in
assets across 51 money market funds, including 18 government, 11 prime, and 22
municipal with assets approximating $35 billion, $17.1 billion, and $10.9
billion, respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated Investors, Inc. are: equity and high
yield-J. Thomas Madden; U.S. fixed income-William D. Dawson, III; and global
equities and fixed income-Henry A. Frantzen. The Chief Investment Officers
are Executive Vice Presidents of the Federated advisory companies.
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 $4.4 trillion to the more than 6,700 funds available.*
Federated Investors, Inc., through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors, Inc. meets the needs of approximately 900 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 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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights -- Institutional Shares 2
General Information 3
Year 2000 Statement 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 6
Net Asset Value 6
How to Purchase Shares 6
Purchasing Shares by Wire 6
Purchasing Shares by Check 6
Invest-by-Phone 6
How to Redeem Shares 7
Redeeming Shares by Telephone 7
Redeeming Shares by Mail 7
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Account Activity 8
Accounts with Low Balances 8
Voting Rights 8
Tax Information 8
Federal Income Tax 8
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Last Meeting of Shareholders 9
Financial Highlights -- Institutional Service Shares 10
Financial Statements 11
Report of Independent Public Accountants 19
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a
percentage of offering price) None Contingent Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
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(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 "Trust Information" and "How to
Purchase Shares." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.
<TABLE>
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
GOVERNMENT OBLIGATIONS FUND
(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,
1998 1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT
OPERATIONS
Net
investment
income 0.05 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) (0.05) (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 $ 1.00
TOTAL
RETURN(B) 5.59% 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 % 0.20%*
Net
investment
income 5.45% 5.32% 5.41% 5.58% 3.38% 3.16% 4.55% 6.77% 8.24%*
Expense
waiver/
reimbursement(c) 0.35% 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) $3,707,106 $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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's
service providers (among them, the adviser, distributor, administrator and
transfer agent) must ensure that their computer systems are adjusted to
properly process and calculate date-related information from and after
January 1, 2000. Many software programs and, to a lesser extent, the
computer hardware in use today cannot distinguish the year 2000 from the year
1900. Such a design flaw could have a negative impact in the handling of
securities trades, pricing and accounting services. The Fund and its service
providers are actively working on necessary changes to computer systems to
deal with the year 2000 issue and believe that systems will be year 2000
compliant when required. Analysis continues regarding the financial impact
of instituting a year 2000 compliant program on the Fund's operations.
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 instrumen-
talities which receive or have access to federal funding; and
* notes, bonds, and discount notes of other U.S. government instrumentali-
ties 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 obliga-
tions 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, Inc. All of the Class A (voting)
shares of Federated Investors, Inc. are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Director of Federated Investors,
Inc., Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who
is President and Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc.
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 $120 billion invested across more
than 300 funds under management and/or administration by its subsidiaries, as
of December 31, 1997, Federated Investors, Inc. 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 approximately
4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc.,
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, Inc. specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
<C> <S>
0.150% 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
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its
fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net
asset value per share is determined by subtracting liabilities attributable
to Institutional Shares from the value of Fund assets attributable to
Institutional Shares, and dividing the remainder by the number of
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, Jr. 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) 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: 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. 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.
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 capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive periodic statements reporting all account
activity, including dividends paid. The Fund will not issue share
certificates.
ACCOUNT ACTIVITY
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.
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
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers another class. Institutional Service 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.
Both 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On
February 24, 1998, the record date for shareholders voting at the meeting,
there were 28,912,813,604 total outstanding shares. The following items were
considered by shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Esq.,
Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
GOVERNMENT OBLIGATIONS FUND
(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,
<S> <C> <C> <C> <C>
1998 1997 1996 1995(A)
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 0.05
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.05 )
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.33% 5.16% 5.29% 5.31 %
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45%*
Net investment income 5.23% 5.06% 5.14% 5.63%*
Expense waiver/reimbursement(c) 0.10% 0.10% 0.11% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,672,417 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS--37.9%
$ 51,000,000 Federal Farm Credit Bank Notes--1.0%
5.500% - 5.600%, 10/1/1998 - 4/1/1999 $ 50,965,352
81,000,000 (a)Federal Farm Credit Bank, Floating Rate Notes--1.5%
5.372% - 5.468%, 8/1/1998 80,982,239
161,900,000 Federal Home Loan Bank Notes--3.0%
5.500% - 5.705%, 10/23/1998 - 7/13/1999 161,835,976
34,370,000 (b)Federal Home Loan Bank, Discount Notes--0.6%
5.390%, 11/4/1998 - 11/12/1998 33,859,934
56,000,000 (a)Federal Home Loan Bank, Floating Rate Notes--1.0%
5.548%, 8/5/1998 55,980,478
36,000,000 Federal Home Loan Mortgage Corp. Notes--0.7%
5.550% - 5.605%, 3/12/1999 - 4/29/1999 35,982,696
83,000,000 (b)Federal Home Loan Mortgage Corp., Discount Notes--1.5%
5.350% - 5.380%, 9/30/1998 - 12/2/1998 81,901,892
73,000,000 (a)Federal Home Loan Mortgage Corp., Floating Rate Notes--1.4%
5.446% - 5.456%, 8/19/1998 - 8/20/1998 72,965,999
205,285,000 Federal National Mortgage Association Notes--3.8%
5.360% - 6.250%, 8/14/1998 - 8/9/1999 205,202,030
472,800,000 (b)Federal National Mortgage Association, Discount Notes--8.7%
5.300% - 5.450%, 9/17/1998 - 1/4/1999 465,131,795
338,000,000 (a)Federal National Mortgage Association, Floating Rate Notes--6.3%
5.443% - 5.590%, 8/3/1998 - 8/28/1998 337,862,491
313,243,000 (a)Housing and Urban Development, Floating Rate Note--5.8%
5.899%, 8/1/1998 313,243,000
45,500,000 Student Loan Marketing Association Notes--0.8%
5.580% - 5.830%, 10/29/1998 - 3/11/1999 45,497,943
79,000,000 (a)Student Loan Marketing Association, Floating Rate Notes--1.5%
5.303% - 5.553%, 8/4/1998 - 8/6/1998 78,990,198
18,000,000 U.S. Treasury Note--0.3%
5.875%, 1/31/1999 18,028,171
TOTAL SHORT-TERM OBLIGATIONS 2,038,430,194
(C)REPURCHASE AGREEMENTS--62.5%
240,000,000 ABN AMRO Chicago Corp., 5.690%, dated 7/31/1998, due 8/3/1998 240,000,000
260,000,000 BT Securities Corp., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
260,000,000 Bear, Stearns and Co., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
400,000 Deutsche Bank Government Securities, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 400,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS--CONTINUED
$ 100,000,000 Deutsche Bank Government Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 $ 100,000,000
260,000,000 Greenwich Capital Markets, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
260,000,000 HSBC Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
130,000,000 NationsBank Capital Markets, 5.710%, dated 7/31/1998, due 8/3/1998 130,000,000
260,000,000 Prudential Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
260,000,000 Salomon Brothers, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
90,000,000 (d)Chase Government Securities, Inc., 5.560%, dated 7/28/1998, due 8/27/1998 90,000,000
60,000,000 (d)Goldman Sachs Group, LP, 5.540%, dated 7/1/1998, due 8/31/1998 60,000,000
115,000,000 (d)Goldman Sachs Group, LP, 5.540%, dated 7/9/1998, due 8/10/1998 115,000,000
55,000,000 (d)Goldman Sachs Group, LP, 5.550%, dated 7/14/1998, due 10/13/1998 55,000,000
125,000,000 (d)J.P. Morgan & Co., Inc., 5.540%, dated 6/16/1998, due 8/19/1998 125,000,000
119,000,000 (d)J.P. Morgan & Co., Inc., 5.550%, dated 5/8/1998, due 8/10/1998 119,000,000
100,000,000 (d)J.P. Morgan & Co., Inc., 5.550%, dated 7/6/1998, due 10/5/1998 100,000,000
167,000,000 (d)Lehman Brothers, Inc., 5.540%, dated 7/9/1998, due 9/8/1998 167,000,000
50,000,000 (d)Merrill Lynch, Pierce, Fenner and Smith, 5.530%, dated 7/14/1998, due 8/14/1998 50,000,000
138,000,000 (d)Merrill Lynch, Pierce, Fenner and Smith, 5.550%, dated 7/6/1998, due 8/5/1998 138,000,000
55,000,000 (d)Warburg Dillon Reed LLC, 5.530%, dated 7/14/1998, due 8/13/1998 55,000,000
100,000,000 (d)Warburg Dillon Reed LLC, 5.550%, dated 7/7/1998, due 10/5/1998 100,000,000
90,000,000 (d)Warburg Dillon Reed LLC, 5.600%, dated 7/27/1998, due 8/19/1998 90,000,000
70,000,000 Warburg Dillon Reed LLC, 5.610%, dated 7/31/1998, due 8/3/1998 70,000,000
TOTAL REPURCHASE AGREEMENTS 3,364,400,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $5,402,830,194
</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.
Note: The categories of investments are shown as a percentage of net assets
($5,379,523,041) at July 31, 1998.
The following acronyms are used throughout this portfolio:
LLC--Limited Liability Corporation
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $3,364,400,000
Investments in securities 2,038,430,194
Total investments in securities, at amortized cost and value $5,402,830,194
Cash 1,090,234
Income receivable 21,937,011
Receivable for shares sold 2,122,040
Total assets 5,427,979,479
LIABILITIES:
Payable for investments purchased 26,943,280
Payable for shares redeemed 4,300,002
Income distribution payable 16,403,997
Accrued expenses 809,159
Total liabilities 48,456,438
NET ASSETS for 5,379,523,041 shares outstanding $5,379,523,041
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,707,105,575 / 3,707,105,575 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$1,672,417,466 / 1,672,417,466 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $265,042,316 EXPENSES: Investment advisory fee $ 9,364,290
Administrative personnel and services fee 3,531,785 Custodian fees 243,774
Transfer and dividend disbursing agent fees and expenses 149,187
Directors'/Trustees' fees 28,022 Auditing fees 12,686 Legal fees 10,045
Portfolio accounting fees 371,866 Shareholder services feeInstitutional Shares
8,502,649 Shareholder services feeInstitutional Service Shares 3,202,713 Share
registration costs 482,969 Printing and postage 96,765 Insurance premiums 27,464
Miscellaneous 29,736 Total expenses 26,053,951 Waivers Waiver of investment
advisory fee $(4,778,285) Waiver of shareholder services feeInstitutional Shares
(8,502,649) Total waivers (13,280,934) Net expenses 12,773,017 Net investment
income $252,269,299 </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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS
Net investment income $ 252,269,299 $ 177,875,424
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income
Institutional Shares (185,207,877) (134,094,591)
Institutional Service Shares (67,061,422) (43,780,833)
Change in net assets resulting from distributions to shareholders (252,269,299) (177,875,424)
SHARE TRANSACTIONS
Proceeds from sale of shares 35,342,645,977 22,256,668,113
Net asset value of shares issued to shareholders in payment of distributions declared 76,651,916 55,759,597
Cost of shares redeemed (34,270,035,225) (20,967,440,251)
Change in net assets resulting from share transactions 1,149,262,668 1,344,987,459
Change in net assets 1,149,262,668 1,344,987,459
NET ASSETS:
Beginning of period 4,230,260,373 2,885,272,914
End of period $ 5,379,523,041 $ 4,230,260,373
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1998
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, 1998, capital paid-in aggregated
$5,379,523,041. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY31,
INSTITUTIONAL SHARES 1998 1997
<S> <C> <C>
Shares sold 24,848,661,392 17,018,052,623
Shares issued to shareholders in payment of distributions declared 49,306,799 37,459,828
Shares redeemed (24,484,254,216) (15,945,119,407)
Net change resulting from Institutional Share transactions 413,713,975 1,110,393,044
<CAPTION>
YEAR ENDED JULY31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 10,493,984,585 5,238,615,490
Shares issued to shareholders in payment of distributions declared 27,345,117 18,299,769
Shares redeemed (9,785,781,009) (5,022,320,844)
Net change resulting from Institutional Service Share transactions 735,548,693 234,594,415
Net change resulting from share transactions 1,149,262,668 1,344,987,459
</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.
AMINISTRATIVE 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, Inc. 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely
affected if the computer systems used by the Fund's service providers do not
properly process and calculate date-related information and data from and
after January 1, 2000. The Fund's Adviser and Administrator are taking
measures that they believe are reasonably designed to address the Year 2000
issue with respect to computer systems that they use and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's other
service providers. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, by correspondence with the custodian
and brokers. As to confirmation replies not received, we carried out
alternative auditing procedures. 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, 1998, 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 25, 1998
[GRAPHIC]
Government Obligations Fund
(Portfolios of Money Market Obligations Trust)
Institutional Shares
Prospectus
September 30, 1998
An Open-End, Diversified Management Investment Company
GOVERNMENT
OBLIGATIONS FUND
INSTITUTIONAL SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty 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
[GRAPHIC]
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N104
G01066-01 (9/98)
[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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights -- Institutional Service Shares 2
General Information 3
Year 2000 Statement 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 6
Net Asset Value 6
How to Purchase Shares 6
Purchasing Shares by Wire 6
Purchasing Shares by Check 6
Invest-by-Phone 6
How to Redeem Shares 7
Redeeming Shares by Telephone 7
Redeeming Shares by Mail 7
Account and Share Information 7
Dividends 7
Capital Gains 7
Confirmations and Account Statements 7
Account Activity 8
Accounts with Low Balances 8
Voting Rights 8
Tax Information 8
Federal Income Tax 8
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Last Meeting of Shareholders 9
Financial Highlights -- Institutional Shares 10
Financial Statements 11
Report of Independent Public Accountants 19
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a
percentage of offering price) None Contingent Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
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 0.35%
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 "Trust 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
GOVERNMENT OBLIGATIONS FUND
(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,
<S> <C> <C> <C> <C>
1998 1997 1996 1995(A)
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 0.05
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.05 )
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.33% 5.16% 5.29% 5.31 %
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45%*
Net investment income 5.23% 5.06% 5.14% 5.63%*
Expense waiver/reimbursement(c) 0.10% 0.10% 0.11% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $1,672,417 $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 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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's
service providers (among them, the adviser, distributor, administrator and
transfer agent) must ensure that their computer systems are adjusted to
properly process and calculate date-related information from and after
January 1, 2000. Many software programs and, to a lesser extent, the computer
hardware in use today cannot distinguish the year 2000 from the year 1900.
Such a design flaw could have a negative impact in the handling of securities
trades, pricing and accounting services. The Fund and its service providers
are actively working on necessary changes to computer systems to deal with
the year 2000 issue and believe that systems will be year 2000 compliant when
required. Analysis continues regarding the financial impact of instituting a
year 2000 compliant program on the Fund's operations.
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 instrumental
ities 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 obliga
tions 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, Inc. All of the Class A (voting)
shares of Federated Investors, Inc. are owned by a trust, the trustees of
which are John F. Donahue, Chairman and Director of Federated Investors,
Inc., Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who
is President and Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc.
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 $120 billion invested across more
than 300 funds under management and/or administration by its subsidiaries, as
of December 31, 1997, Federated Investors, Inc. 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 approximately 4,000
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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc.,
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, Inc. 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, Jr. 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 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) 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: Government Obligation 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 capital gains at least once every 12 months.
CONFIRMATIONS AND ACCOUNT STATEMENTS
Shareholders will receive detailed confirmations of transactions. addition,
shareholders will receive periodic statements reporting all account activity,
including dividends paid. The Fund will not issue share certificates.
ACCOUNT ACTIVITY
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.
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
Shareholders are urged to consult their own tax advisers regarding the status
of their accounts under state and local tax laws.
OTHER CLASSES OF SHARES
The Fund also offers another class. 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.
Both 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On
February 24, 1998, the record date for shareholders voting at the meeting,
there were 28,912,813,604 total outstanding shares. The following items were
considered by shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Esq.,
Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
GOVERNMENT OBLIGATIONS FUND
(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,
1998 1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT
OPERATIONS
Net
investment
income 0.05 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) (0.05) (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 $ 1.00
TOTAL
RETURN(B) 5.59% 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 % 0.20%*
Net
investment
income 5.45% 5.32% 5.41% 5.58% 3.38% 3.16% 4.55% 6.77% 8.24%*
Expense
waiver/
reimbursement(c) 0.35% 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) $3,707,106 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM OBLIGATIONS--37.9%
$ 51,000,000 Federal Farm Credit Bank Notes--1.0%
5.500% - 5.600%, 10/1/1998 - 4/1/1999 $ 50,965,352
81,000,000 (a)Federal Farm Credit Bank, Floating Rate Notes--1.5%
5.372% - 5.468%, 8/1/1998 80,982,239
161,900,000 Federal Home Loan Bank Notes--3.0%
5.500% - 5.705%, 10/23/1998 - 7/13/1999 161,835,976
34,370,000 (b)Federal Home Loan Bank, Discount Notes--0.6%
5.390%, 11/4/1998 - 11/12/1998 33,859,934
56,000,000 (a)Federal Home Loan Bank, Floating Rate Notes--1.0%
5.548%, 8/5/1998 55,980,478
36,000,000 Federal Home Loan Mortgage Corp. Notes--0.7%
5.550% - 5.605%, 3/12/1999 - 4/29/1999 35,982,696
83,000,000 (b)Federal Home Loan Mortgage Corp., Discount Notes--1.5%
5.350% - 5.380%, 9/30/1998 - 12/2/1998 81,901,892
73,000,000 (a)Federal Home Loan Mortgage Corp., Floating Rate Notes--1.4%
5.446% - 5.456%, 8/19/1998 - 8/20/1998 72,965,999
205,285,000 Federal National Mortgage Association Notes--3.8%
5.360% - 6.250%, 8/14/1998 - 8/9/1999 205,202,030
472,800,000 (b)Federal National Mortgage Association, Discount Notes--8.7%
5.300% - 5.450%, 9/17/1998 - 1/4/1999 465,131,795
338,000,000 (a)Federal National Mortgage Association, Floating Rate Notes--6.3%
5.443% - 5.590%, 8/3/1998 - 8/28/1998 337,862,491
313,243,000 (a)Housing and Urban Development, Floating Rate Note--5.8%
5.899%, 8/1/1998 313,243,000
45,500,000 Student Loan Marketing Association Notes--0.8%
5.580% - 5.830%, 10/29/1998 - 3/11/1999 45,497,943
79,000,000 (a)Student Loan Marketing Association, Floating Rate Notes--1.5%
5.303% - 5.553%, 8/4/1998 - 8/6/1998 78,990,198
18,000,000 U.S. Treasury Note--0.3%
5.875%, 1/31/1999 18,028,171
TOTAL SHORT-TERM OBLIGATIONS 2,038,430,194
(C)REPURCHASE AGREEMENTS---62.5%
240,000,000 ABN AMRO Chicago Corp., 5.690%, dated 7/31/1998, due 8/3/1998 240,000,000
260,000,000 BT Securities Corp., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
260,000,000 Bear, Stearns and Co., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
400,000 Deutsche Bank Government Securities, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 400,000
</TABLE>
GOVERNMENT OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)REPURCHASE AGREEMENTS--CONTINUED
$ 100,000,000 Deutsche Bank Government Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 $ 100,000,000
260,000,000 Greenwich Capital Markets, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
260,000,000 HSBC Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
130,000,000 NationsBank Capital Markets, 5.710%, dated 7/31/1998, due 8/3/1998 130,000,000
260,000,000 Prudential Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
260,000,000 Salomon Brothers, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 260,000,000
90,000,000 (d)Chase Government Securities, Inc., 5.560%, dated 7/28/1998, due 8/27/1998 90,000,000
60,000,000 (d)Goldman Sachs Group, LP, 5.540%, dated 7/1/1998, due 8/31/1998 60,000,000
115,000,000 (d)Goldman Sachs Group, LP, 5.540%, dated 7/9/1998, due 8/10/1998 115,000,000
55,000,000 (d)Goldman Sachs Group, LP, 5.550%, dated 7/14/1998, due 10/13/1998 55,000,000
125,000,000 (d)J.P. Morgan & Co., Inc., 5.540%, dated 6/16/1998, due 8/19/1998 125,000,000
119,000,000 (d)J.P. Morgan & Co., Inc., 5.550%, dated 5/8/1998, due 8/10/1998 119,000,000
100,000,000 (d)J.P. Morgan & Co., Inc., 5.550%, dated 7/6/1998, due 10/5/1998 100,000,000
167,000,000 (d)Lehman Brothers, Inc., 5.540%, dated 7/9/1998, due 9/8/1998 167,000,000
50,000,000 (d)Merrill Lynch, Pierce, Fenner and Smith, 5.530%, dated 7/14/1998, due 8/14/1998 50,000,000
138,000,000 (d)Merrill Lynch, Pierce, Fenner and Smith, 5.550%, dated 7/6/1998, due 8/5/1998 138,000,000
55,000,000 (d)Warburg Dillon Reed LLC, 5.530%, dated 7/14/1998, due 8/13/1998 55,000,000
100,000,000 (d)Warburg Dillon Reed LLC, 5.550%, dated 7/7/1998, due 10/5/1998 100,000,000
90,000,000 (d)Warburg Dillon Reed LLC, 5.600%, dated 7/27/1998, due 8/19/1998 90,000,000
70,000,000 Warburg Dillon Reed LLC, 5.610%, dated 7/31/1998, due 8/3/1998 70,000,000
TOTAL REPURCHASE AGREEMENTS 3,364,400,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $5,402,830,194
</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.
Note: The categories of investments are shown as a percentage of net assets
($5,379,523,041) at July 31, 1998.
The following acronyms are used throughout this portfolio:
LLC--Limited Liability Corporation
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $3,364,400,000
Investments in securities 2,038,430,194
Total investments in securities, at amortized cost and value $5,402,830,194
Cash 1,090,234
Income receivable 21,937,011
Receivable for shares sold 2,122,040
Total assets 5,427,979,479
LIABILITIES:
Payable for investments purchased 26,943,280
Payable for shares redeemed 4,300,002
Income distribution payable 16,403,997
Accrued expenses 809,159
Total liabilities 48,456,438
NET ASSETS for 5,379,523,041 shares outstanding $5,379,523,041
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,707,105,575 / 3,707,105,575 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$1,672,417,466 / 1,672,417,466 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, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $265,042,316
EXPENSES:
Investment advisory fee $ 9,364,290 Administrative personnel and services fee
3,531,785 Custodian fees 243,774 Transfer and dividend disbursing agent fees and
expenses 149,187 Directors'/Trustees' fees 28,022 Auditing fees 12,686 Legal
fees 10,045 Portfolio accounting fees 371,866 Shareholder services
fee--Institutional Shares 8,502,649 Shareholder services fee--Institutional
Service Shares 3,202,713 Share registration costs 482,969 Printing and postage
96,765 Insurance premiums 27,464 Miscellaneous 29,736 Total expenses 26,053,951
Waivers Waiver of investment advisory fee $(4,778,285) Waiver of shareholder
services fee--Institutional Shares (8,502,649) Total waivers (13,280,934) Net
expenses 12,773,017 Net investment income $252,269,299 </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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 252,269,299 $ 177,875,424
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income
Institutional Shares (185,207,877) (134,094,591)
Institutional Service Shares (67,061,422) (43,780,833)
Change in net assets resulting from distributions to shareholders (252,269,299) (177,875,424)
SHARE TRANSACTIONS--
Proceeds from sale of shares 35,342,645,977 22,256,668,113
Net asset value of shares issued to shareholders in payment of distributions declared 76,651,916 55,759,597
Cost of shares redeemed (34,270,035,225) (20,967,440,251)
Change in net assets resulting from share transactions 1,149,262,668 1,344,987,459
Change in net assets 1,149,262,668 1,344,987,459
NET ASSETS:
Beginning of period 4,230,260,373 2,885,272,914
End of period $ 5,379,523,041 $ 4,230,260,373
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS FUND
JULY 31, 1998
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, 1998, capital paid-in aggregated
$5,379,523,041. Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY31,
INSTITUTIONAL SHARES 1998 1997
<S> <C> <C>
Shares sold 24,848,661,392 17,018,052,623
Shares issued to shareholders in payment of distributions declared 49,306,799 37,459,828
Shares redeemed (24,484,254,216) (15,945,119,407)
Net change resulting from Institutional Share transactions 413,713,975 1,110,393,044
<CAPTION>
YEAR ENDED JULY31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 10,493,984,585 5,238,615,490
Shares issued to shareholders in payment of distributions declared 27,345,117 18,299,769
Shares redeemed (9,785,781,009) (5,022,320,844)
Net change resulting from Institutional Service Share transactions 735,548,693 234,594,415
Net change resulting from share transactions 1,149,262,668 1,344,987,459
</TABLE>
</R
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.
AMINISTRATIVE 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, Inc. 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely
affected if the computer systems used by the Fund's service providers do not
properly process and calculate date-related information and data from and
after January 1, 2000. The Fund's Adviser and Administrator are taking
measures that they believe are reasonably designed to address the Year 2000
issue with respect to computer systems that they use and to obtain reasonable
assurances that comparable steps are being taken by each of the Fund's other
service providers. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, by correspondence with the custodian
and brokers. As to confirmation replies not received, we carried out
alternative auditing procedures. 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, 1998, 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 25, 1998
Government Obligations Fund
(Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End, Diversified Management Investment Company
GOVERNMENT
OBLIGATIONS FUND
INSTITUTIONAL
SERVICE SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
[GRAPHIC]
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N807
G01066-02 (9/98)
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, 1998. 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.
GOVERNMENT OBLIGATIONS FUND
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
Statement dated September 30, 1998
(graphic)
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N104
Cusip 60934N807
G01066-03 (9/98)
(graphic)
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 8
Investment Adviser 8
Advisory Fees 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 9
Fund Administration 9
Custodian and Portfolio Accountant 9
Transfer Agent 9
Independent Public Accountants 9
Shareholder Services 10
DETERMINING NET ASSET VALUE 10
REDEMPTION IN KIND 10
MASSACHUSETTS PARTNERSHIP LAW 10
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, INC. 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
Chief Executive Officer and Director or Trustee of the
Funds; Chairman and Director, Federated Investors, Inc.;
Chairman and Trustee, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.; Mr. Donahue is the father
of J. Christopher Donahue, Executive Vice President of the
Company. Mr. Donahue is the father of J. Christopher Donahue,
President and Trustee of the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director or Trustee of the Funds; Director, Member of Executive Committee,
Children's Hospital of Pittsburgh; formerly, Senior Partner, Ernst & Young LLP;
Director, MED 3000 Group, Inc.; Director, Member of Executive Committee,
University of Pittsburgh.
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
Director or Trustee of the Funds; 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.
William J. Copeland
One PNC Plaza--23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director or Trustee of the Funds; 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, United Refinery;
Chairman, Pittsburgh Foundation; Director, Forbes Fund;
Chairman, Pittsburgh Civic Light Opera.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President or Executive Vice President of the Funds;
President and Director, Federated Investors, Inc.; President
and Trustee, 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; Director or
Trustee of some of the Funds. Mr. Donahue is the son of John
F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd, Esq.
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Director or Trustee of the Funds; Attorney-at-law; Director,
The Emerging Germany Fund, Inc.; formerly, President, Boston
Stock Exchange, Inc.; Regional Administrator, United States
Securities and Exchange Commission.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Director or Trustee of the Funds; Professor of Medicine, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center--Downtown;
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
formerly, Member, National Board of Trustees, Leukemia Society of America.
Edward L. Flaherty, Jr., Esq.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Director or Trustee of the Funds; Attorney, Of Counsel, Miller, Ament, Henny &
Kochuba; Director, Eat'N Park Restaurants, Inc.; formerly, Counsel, Horizon
Financial, F.A., Western Region; Partner, Meyer and Flaherty.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Director or Trustee of the Funds; formerly, Representative, Commonwealth of
Massachusetts General Court; President, State Street Bank and Trust Company and
State Street Corporation; Director, VISA USA and VISA International; Chairman
and Director, Massachusetts Banker Association; Director, Depository Trust
Corporation.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
Director or Trustee of the Funds; President, Law Professor, Duquesne University;
Consulting Partner, Mollica & Murray; formerly, Dean and Professor of Law,
University of Pittsburgh School of Law; Dean and Professor of Law, Villanova
University School of Law.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Director or Trustee of the Funds; President, World Society for Ekistics, Athens;
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; formerly, Professor, United States
Military Academy; Professor, United States Air Force Academy.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Director or Trustee of the Funds; Public Relations/ Marketing/Conference
Planning; formerly, National Spokesperson, Aluminum Company of America; business
owner.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Trustee or Director of some of the Funds; President, Executive Vice President
and Treasurer of some of the Funds; Vice Chairman, Federated Investors, Inc.;
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.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds; Executive Vice
President, Secretary, and Director, Federated Investors, Inc.; 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.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
President or Vice President of some of the Funds; Director or Trustee of some of
the Funds; Executive Vice President, Federated Investors, Inc.; Chairman and
Director, Federated Securities Corp.
* 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: Automated Government Money Trust; Blanchard
Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust
Series, Inc.; CCB Funds; 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 Core
Trust; 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.; 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; Regions Funds; RIGGS
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; WCT Funds; and World Investment Series,
Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 3, 1998, the following shareholders of record owned 5% or more
of the outstanding Institutional Shares of the Fund: America Online,
Incorporated, Dulles, Virginia, owned approximately 406,000,000, shares (9.08%),
and Fleet Securities, Corporation, New York, New York, owned approximately
242,592,879 shares (5.43%), and Fiduciary Trust Company International, New York,
New York, (as record owner holding Institutional Shares for its clients), owned
approximately 237,971,000 shares (5.32%)
As of September 4, 1998, the following shareholder(s) of record owned 5% or more
of the outstanding Institutional Services Shares of the Fund: County of San
Bernadino, San Bernadino, California, owned approximately 140,000,000, shares
(8.15%) and Hare and Company, New York, New York, owned approximately
102,875,991 shares (5.99%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, AGGREGATE
POSITION WITH COMPENSATION TOTAL COMPENSATION PAID
TRUST FROM 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 $18,351 $111,222 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John T. Conroy, Jr. $20,189 $122,362 for the Trust and
Trustee 56 other investment companies in the Fund Complex
William J. Copeland $20,189 $122,362 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, Esq. $20,189 $122,362 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D. $18,351 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr., Esq. $20,189 $122,362 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Peter E. Madden $18,351 $111,222 for the Trust and
Trustee 56 other investment companies in the Fund Complex
John E. Murray, Jr., J.D., S.J.D. $18,351 $111,222 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Wesley W. Posvar $18,351 $111,222 for the Trust and
Trustee 56 other investment companies in the Fund Complex
Marjorie P. Smuts $18,351 $111,222 for the Trust and
Trustee 56 other investment companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31,1998.
# 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, Inc. All the voting securities of Federated Investors,
Inc. 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,
1998, 1997, and 1996, the adviser earned $9,364,290, $6,777,523, and $5,061,781,
respectively, of which $4,778,285, $3,522,148, and $2,827,496, 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
year(s) ended July 31, 1998, 1997, and 1996, the Fund paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, Inc., 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, Inc., 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, 1998, 1997, and 1996, the Administrators earned $3,531,785, $2,559,413,
and $1,914,143, 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, 1998, the Fund earned shareholder service
fees on behalf of Institutional Shares and Institutional Service Shares in the
amounts of $8,502,649 and $3,202,713, respectively, of which $0 and $3,202,713,
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;
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, 1998, the yield for Institutional Shares
was 5.46%, and the yield for Institutional Service Shares was 5.21%.
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, 1998 the effective yield for
Institutional Shares was 5.61%, and the effective yield for Institutional
Service Shares was 5.34%.
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 period ended July 31, 1998, and for the period
from March 31, 1990 (date of initial public investment) through July 31, 1998,
the average annual total returns were 5.59%, 5.11%, and 5.21%, respectively, for
Institutional Shares.
For the one-year period ended July 31, 1998 and for the period from August 1,
1994 (date of initial public investment) to July 31, 1998, the average annual
total returns were 5.33% and 5.25%, 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, INC.
Federated Investors, Inc. 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, Inc. 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, 1997, Federated managed more than $63.1 billion in assets across 51
money market funds, including 18 government, 11 prime and 22 municipal with
assets approximating $35 billion, $17.1 billion and $10.9 billion, respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated Investors, Inc. are: U.S. equity and high
yield--J. Thomas Madden; U.S. fixed income--William D. Dawson, III; and
global equities and fixed income--Henry A. Frantzen. The Chief Investment
Officers are Executive Vice Presidents of the Federated advisory companies.
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 $4.4 trillion to the more than 6,700 funds available.*
Federated Investors, Inc., through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors, Inc. meets the needs of approximately 900 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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights-Institutional Shares 2
General Information 3
Year 2000 Statement 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 6
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
Account Activity 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
Last Meeting of Shareholders 9
Financial Highlights-Institutional Service Shares 10
Financial Statements 11
Report of Independent Public Accountants 18
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) 0.08% 12b-1 Fee
None Total Other Expenses 0.12% Shareholder Services Fee (after waiver)(2) 0.00%
Total Operating Expenses(3) 0.20%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary waiver
at any time at its sole discretion. The maximum management fee is 0.20%.
(2) The 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 0.57% absent the voluntary
waivers of a portion of the management fee and the shareholder services fee.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of the Trust will bear, either directly or
indirectly. For more complete descriptions of the various costs and expenses,
see "Trust Information" and "How to Purchase Shares." Wire- transferred
redemptions of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE
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
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 18.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995(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 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.49% 5.35% 5.50% 0.94%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20% 0.20% 0.17% 0.20%*
Net investment income 5.35% 5.26% 5.28% 5.78%*
Expense waiver/reimbursement(c) 0.37% 0.38% 0.44% 0.65%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $953,268 $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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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 instrumen
talities 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 obliga
tions 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, Inc. All of the Class A
(voting) shares of Federated Investors, Inc. are owned by a trust, the trustees
of which are John F. Donahue, Chairman and Director of Federated Investors,
Inc., Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Director of Federated Investors, Inc.
Federated Administrative Services and other subsidiaries of Federated Inves
tors, Inc. 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 $120 billion invested
across more than 300 funds under management and/or administration by its sub
sidiaries, as of December 31, 1997, Federated Investors, Inc. 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
approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. specified below:
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
0.150% on the first $250million
0.125% on the next $250million
0.100% on the next $250million
0.075% on assets in excess of $750million
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, Jr. 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) 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: 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. 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.
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 before 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 capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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
<R
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 another class of shares. 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.
Both 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 18.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995(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 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.23% 5.09% 5.23% 0.95%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.42% 0.45%*
Net investment income 5.11% 4.97% 5.00% 5.55%*
Expense waiver/reimbursement(c) 0.12% 0.13% 0.19% 0.40%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $830,652 $421,095 $322,698 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
VALUE VALUE
GOVERNMENT AGENCIES--100.4%
<C> <S> <C>
$ 21,000,000 Federal Farm Credit Bank, 5.500% - 5.700%, 9/2/1998 - 4/1/1999 $ 20,988,033
203,822,000 (a)Federal Farm Credit Bank, Discount Notes, 5.170% - 5.240%,
8/3/1998 - 12/11/1998 202,828,754 83,000,000 (b)Federal Farm Credit Bank,
Floating Rate Notes, 5.381% - 5.456%, 12/1/1998 - 6/1/1999 82,954,210
51,750,000 Federal Home Loan Bank, 5.540% - 5.705%, 10/2/1998 - 7/15/1999
51,733,101
836,317,000 (a)Federal Home Loan Bank, Discount Notes, 5.340% - 5.570%,
8/3/1998 - 1/13/1999 829,949,026 251,000,000 (b)Federal Home Loan Bank,
Floating Rate Notes, 5.401% - 5.590%, 8/18/1998 - 6/3/1999 250,920,341
45,500,000 Student Loan Marketing Association, 5.400% - 5.830%, 10/29/1998 - 8/11/1999 45,493,357
39,000,000 (a)Student Loan Marketing Association, Discount Notes, 5.540%, 8/3/1998 38,987,997
48,000,000 (b)Student Loan Marketing Association, Floating Rate Notes, 5.303% - 5.553%,
10/28/1998 11/25/1998 47,995,807
59,700,000 (b)Student Loan Marketing Association, Master Notes, 5.353%, 10/7/1998 59,700,000
160,000,000 (a)Tennessee Valley Authority Discount Notes, 5.380% - 5.411%, 8/14/1998 - 10/16/1998 159,010,310
TOTAL GOVERNMENT AGENCIES 1,790,560,936
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $1,790,560,936
</TABLE>
(a) The issue shows the rate of discount rate at time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,783,919,582) at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $1,790,560,936
Cash 2,521,946
Income receivable 4,750,317
Receivable for shares sold 1,046,727
Deferred organizational costs 14,478
Other assets 61,985
Total assets 1,798,956,389
LIABILITIES:
Payable for investments purchased $8,996,400 Payable for shares redeemed 797,553
Income distribution payable 4,828,435 Accrued expenses 414,419 Total liabilities
15,036,807 NET ASSETS for 1,783,919,582 shares outstanding $1,783,919,582 NET
ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$953,268,062 / 953,268,062 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$830,651,520 / 830,651,520 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $79,753,751
EXPENSES:
Investment advisory fee $ 2,869,299 Administrative personnel and services fee
1,082,093 Custodian fees 86,642 Transfer and dividend disbursing agent fees and
expenses 92,183 Directors'/Trustees' fees 7,394 Auditing fees 12,652 Legal fees
4,428 Portfolio accounting fees 184,172 Shareholder services fee--Institutional
Shares 1,877,773 Shareholder services fee--Institutional Service Shares
1,708,850 Share registration costs 281,374 Printing and postage 17,566 Insurance
premiums 8,211 Miscellaneous 11,630 Total expenses 8,244,267 Waivers-- Waiver of
investment advisory fee $ (1,725,248) Waiver of shareholder services
fee--Institutional Shares (1,877,773) Total waivers (3,603,021) Net expenses
4,641,246 Net investment income $75,112,505
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 75,112,505 $ 36,996,272
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (40,176,975) (15,718,201)
Institutional Service Shares (34,935,530) (21,278,071)
Change in net assets resulting from distributions to shareholders (75,112,505) (36,996,272)
SHARE TRANSACTIONS--
Proceeds from sale of shares 6,514,205,911 3,043,939,190
Net asset value of shares issued to shareholders in payment of distributions declared 25,262,402 9,152,302
Cost of shares redeemed (5,687,326,375) (2,653,254,346)
Change in net assets resulting from share transactions 852,141,938 399,837,146
Change in net assets 852,141,938 399,837,146
NET ASSETS:
Beginning of period 931,777,644 531,940,498
End of period $ 1,783,919,582 $ 931,777,644
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1998
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, 1998, capital paid-in aggregated $1,783,919,582.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C>
INSTITUTIONAL SHARES 1998 1997
Shares sold 2,745,127,545 1,062,116,399
Shares issued to shareholders in payment of distributions declared 17,109,018 5,995,666
Shares redeemed (2,319,651,358) (756,672,059)
Net change resulting from Institutional Share transactions 442,585,205 311,440,006
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES 1998 1997
Shares sold 3,769,078,366 1,981,822,791
Shares issued to shareholders in payment of distributions declared 8,153,384 3,156,636
Shares redeemed (3,367,675,017) (1,896,582,287)
Net change resulting from Institutional Service Share transactions 409,556,733 88,397,140
Net change resulting from share transactions 852,141,938 399,837,146
</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, Inc. 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.
ORGANIZATIONAL EXPENSES
Organizational expenses of $26,061 were borne initially by the Adviser. The Fund
has agreed to reimburse the Adviser for their expenses. These expenses have been
deferred and are being amortized over the five-year period following the Fund's
effective date. For the year ended July 31, 1998, the Fund expensed $5,212 of
organizational expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, 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, 1998, 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 25, 1998
(graphic)
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management Investment Company
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
INSTITUTIONAL SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Administrative Services
Federated Investors Tower
1001 Liberty Avenue
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
(graphic)
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N856
G01140-01-IS (9/98)
(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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights-Institutional Service Shares 2
General Information 3
Year 2000 Statement 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
Account Activity 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
Last Meeting of Shareholders 9
Financial Highlights-Institutional Shares 10
Financial Statements 11
Report of Independent Public Accountants 18
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a
percentage of offering price) None Contingent Deferred Sales Charge (as a
percentage of original purchase price or redemption proceeds, as applicable)
None Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C>
Management Fee (after waiver)(1) 0.08%
12b-1 Fee None
Total Other Expenses 0.37%
Shareholder Services Fee 0.25%
Total Operating Expenses(2) 0.45%
</TABLE>
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary waiver
at any time at its sole discretion. The maximum management fee is 0.20%.
(2) The total operating expenses would have been 0.57% absent the voluntary
waiver of a portion of the management fee.
The purpose of this table is to assist an investor in understanding the various
costs and expenses that a shareholder of Institutional Service Shares of the
Fund will bear, either directly or indirectly. For more complete descriptions of
the various costs and expenses, see "Trust Information" and "How to Purchase
Shares." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees. <TABLE> <CAPTION>
EXAMPLE
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
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 18.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995(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 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.23% 5.09% 5.23% 0.95%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.42% 0.45%*
Net investment income 5.11% 4.97% 5.00% 5.55%*
Expense waiver/reimbursement(c) 0.12% 0.13% 0.19% 0.40%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $830,652 $421,095 $322,698 $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 intermediares, 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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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 instrumen-
talities which receive orhave 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 obliga-
tions 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, Inc. All of the Class A
(voting) shares of Federated Investors, Inc. are owned by a trust, the trustees
of which are John F. Donahue, Chairman and Director of Federated Investors,
Inc., Mr. Donahue's wife, and Mr. Donahue's son, J. Christopher Donahue, who is
President and Director of Federated Inves tors, Inc.
Federated Administrative Services and other subsidiaries of Federated Inves
tors, Inc. 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 $120 billion invested
across more than 300 funds under management and/or administration by its
subsidiaries, as of December 31, 1997, Federated Investors, Inc. 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
approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. 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, Jr. 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) 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: 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.
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.
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 before 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 capital gains at least once every 12 months.
<R
ACCOUNT ACTIVITY
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
<R
The Fund will limit its investments to those which, if owned directly, pay
interest exempt from state personal income tax. However, under 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 another class of shares. Institutional Shares are sold at
net asset value primarily to financial institutions, financial intermediares,
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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 18.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995(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 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.49% 5.35% 5.50% 0.94%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.20% 0.20% 0.17% 0.20%*
Net investment income 5.35% 5.26% 5.28% 5.78%*
Expense waiver/reimbursement(c) 0.37% 0.38% 0.44% 0.65%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $953,268 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
VALUE VALUE
<C> <S> <C>
GOVERNMENT AGENCIES--100.4%
$ 21,000,000 Federal Farm Credit Bank, 5.500% - 5.700%, 9/2/1998 - 4/1/1999 $ 20,988,033
203,822,000 (a)Federal Farm Credit Bank, Discount Notes, 5.170% - 5.240%, 8/3/1998 - 12/11/1998 202,828,754
83,000,000 (b)Federal Farm Credit Bank, Floating Rate Notes, 5.381% - 5.456%, 12/1/1998 - 6/1/1999 82,954,210
51,750,000 Federal Home Loan Bank, 5.540% - 5.705%, 10/2/1998 - 7/15/1999 51,733,101
836,317,000 (a)Federal Home Loan Bank, Discount Notes, 5.340% - 5.570%,
8/3/1998 - 1/13/1999 829,949,026 251,000,000 (b)Federal Home Loan Bank,
Floating Rate Notes, 5.401% - 5.590%, 8/18/1998 - 6/3/1999 250,920,341
45,500,000 Student Loan Marketing Association, 5.400% - 5.830%, 10/29/1998 - 8/11/1999 45,493,357
39,000,000 (a)Student Loan Marketing Association, Discount Notes, 5.540%, 8/3/1998 38,987,997
48,000,000 (b)Student Loan Marketing Association, Floating Rate Notes, 5.303% - 5.553%,
10/28/199811/25/1998 47,995,807
59,700,000 (b)Student Loan Marketing Association, Master Notes, 5.353%, 10/7/1998 59,700,000
160,000,000 (a)Tennessee Valley Authority Discount Notes, 5.380% - 5.411%, 8/14/1998 - 10/16/1998 159,010,310
TOTAL GOVERNMENT AGENCIES 1,790,560,936
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $1,790,560,936
</TABLE>
(a) The issue shows the rate of discount rate at time of purchase.
(b) Current rate and next reset date shown.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,783,919,582) at July 31, 1998.
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $1,790,560,936
Cash 2,521,946
Income receivable 4,750,317
Receivable for shares sold 1,046,727
Deferred organizational costs 14,478
Other assets 61,985
Total assets 1,798,956,389
LIABILITIES:
Payable for investments purchased $8,996,400 Payable for shares redeemed 797,553
Income distribution payable 4,828,435 Accrued expenses 414,419 Total liabilities
15,036,807 NET ASSETS for 1,783,919,582 shares outstanding $1,783,919,582 NET
ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$953,268,062 / 953,268,062 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$830,651,520 / 830,651,520 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $79,753,751
EXPENSES:
Investment advisory fee $ 2,869,299 Administrative personnel and services fee
1,082,093 Custodian fees 86,642 Transfer and dividend disbursing agent fees and
expenses 92,183 Directors'/Trustees' fees 7,394 Auditing fees 12,652 Legal fees
4,428 Portfolio accounting fees 184,172 Shareholder services fee--Institutional
Shares 1,877,773 Shareholder services fee--Institutional Service Shares
1,708,850 Share registration costs 281,374 Printing and postage 17,566 Insurance
premiums 8,211 Miscellaneous 11,630 Total expenses 8,244,267 Waivers-- Waiver of
investment advisory fee $ (1,725,248) Waiver of shareholder services
fee--Institutional Shares (1,877,773) Total waivers (3,603,021) Net expenses
4,641,246 Net investment income $75,112,505
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 75,112,505 $ 36,996,272
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (40,176,975) (15,718,201)
Institutional Service Shares (34,935,530) (21,278,071)
Change in net assets resulting from distributions to shareholders (75,112,505) (36,996,272)
SHARE TRANSACTIONS--
Proceeds from sale of shares 6,514,205,911 3,043,939,190
Net asset value of shares issued to shareholders in payment of distributions declared 25,262,402 9,152,302
Cost of shares redeemed (5,687,326,375) (2,653,254,346)
Change in net assets resulting from share transactions 852,141,938 399,837,146
Change in net assets 852,141,938 399,837,146
NET ASSETS:
Beginning of period 931,777,644 531,940,498
End of period $ 1,783,919,582 $ 931,777,644
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
JULY 31, 1998
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, 1998, capital paid-in aggregated $1,783,919,582.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C>
INSTITUTIONAL SHARES 1998 1997
Shares sold 2,745,127,545 1,062,116,399
Shares issued to shareholders in payment of distributions declared 17,109,018 5,995,666
Shares redeemed (2,319,651,358) (756,672,059)
Net change resulting from Institutional Share transactions 442,585,205 311,440,006
<CAPTION>
YEAR ENDED JULY 31,
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES 1998 1997
Shares sold 3,769,078,366 1,981,822,791
Shares issued to shareholders in payment of distributions declared 8,153,384 3,156,636
Shares redeemed (3,367,675,017) (1,896,582,287)
Net change resulting from Institutional Service Share transactions 409,556,733 88,397,140
Net change resulting from share transactions 852,141,938 399,837,146
</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, Inc. 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.
ORGANIZATIONAL EXPENSES
Organizational expenses of $26,061 were borne initially by the Adviser. The Fund
has agreed to reimburse the Adviser for their expenses. These expenses have been
deferred and are being amortized over the five-year period following the Fund's
effective date. For the year ended July 31, 1998, the Fund expensed $5,212 of
organizational expenses.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, 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, 1998, 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 25, 1998
Government Obligations
Tax-Managed Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management Investment Company
GOVERNMENT OBLIGATIONS
TAX-MANAGED FUND
INSTITUTIONAL
SERVICE SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Administrative Services
Federated Investors Tower
1001 Liberty Avenue
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
(graphic)
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N849
G01140-02 (9/98)
(graphic)
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
(A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST)
INSTITUTIONAL SERVICE SHARES
INSTITUTIONAL 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, 1998. 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.
GOVERNMENT OBLIGATIONS TAX-MANAGED FUND
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
Statement dated September 30, 1998
(graphic)
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N856
Cusip 60934N849
G01140-03 (9/98)
(graphic)
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 1
Investing in Real Estate 2
Underwriting 2
Concentration of Investments 2
Diversification of Investments 2
Investing in Securities of Other Investment Companies 2
Investing in Restricted and Illiquid Securities 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 7
Investment Adviser 7
Advisory Fees 8
BROKERAGE TRANSACTIONS 8
OTHER SERVICES 8
Fund Administration 8
Custodian and Portfolio Accountant 8
Transfer Agent 8
Independent Public Accountants 8
Shareholder Services 9
DETERMINING NET ASSET VALUE 9
REDEMPTION IN KIND 9
MASSACHUSETTS PARTNERSHIP LAW 9
THE FUND'S TAX STATUS 10
PERFORMANCE INFORMATION 10
Yield 10
Effective Yield 10
Total Return 10
Performance Comparisons 11
Economic and Market Information 11
ABOUT FEDERATED INVESTORS, INC. 11
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 without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS
Some of the short-term U.S. government securities the Fund may purchase carry
variable interest rates. These securities have a rate of interest subject to
adjustment at least annually. This adjusted interest rate is ordinarily tied to
some objective standard, such as the 91-day U.S. Treasury bill rate. Variable
interest rates will reduce the changes in the market value of such securities
from their original purchase prices. Accordingly, the potential for capital
appreciation or capital depreciation should not be greater than that of fixed
interest rate U.S. government securities having maturities equal to the interest
rate adjustment dates of the variable rate U.S. government securities. The Fund
may purchase variable rate U.S. government securities upon the determination by
the Board of Trustees that the interest rate as adjusted will cause the
instrument to have a current market value that approximates its par value on the
adjustment date.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other than
normal transaction costs, are incurred. However, liquid assets of the Fund in a
dollar amount sufficient to make payment for the securities to be purchased are:
segregated on the Fund's records at the trade date; marked to market daily; and
maintained until the transaction is settled. The Fund does not intend to engage
in when-issued and delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its assets.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Fund transfers possession of a portfolio instrument in return for
a percentage of the instrument's market value in cash and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but does not ensure this result. However, liquid assets of the Fund, in a dollar
amount sufficient to make payment for the securities to be purchased, are:
segregated on the Fund's records at the trade date; marked to market daily; and
maintained until the transaction is settled.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on margin
but may obtain such short-term credits as are necessary for clearance of
transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow money
directly or through reverse repurchase agreements in amounts up to one-third of
the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is deemed
to be inconvenient or disadvantageous. The Fund will not purchase any securities
while borrowings in excess of 5% of the value of its total assets are
outstanding.
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 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
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; 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; and securities of other investment
companies) 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 SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not acquire more than 3% of the total outstanding securities of
other investment companies, except as part of a merger, consolidation, or other
acquisition.
INVESTING IN RESTRICTED AND ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
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
Chief Executive Officer and Director or Trustee of the
Funds; Chairman and Director, Federated Investors, Inc.;
Chairman and Trustee, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research Corp.;
Chairman, Passport Research, Ltd.; Mr. Donahue is the father
of J. Christopher Donahue, Executive Vice President of the
Company. Mr. Donahue is the father of J. Christopher Donahue,
President and Trustee of the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director or Trustee of the Funds; Director, Member of Executive Committee,
Children's Hospital of Pittsburgh; formerly, Senior Partner, Ernst & Young LLP;
Director, MED 3000 Group, Inc.; Director, Member of Executive Committee,
University of Pittsburgh.
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
Director or Trustee of the Funds; 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.
William J. Copeland
One PNC Plaza--23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director or Trustee of the Funds; 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, United Refinery;
Chairman, Pittsburgh Foundation; Director, Forbes Fund;
Chairman, Pittsburgh Civic Light Opera.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President or Executive Vice President of the Funds;
President and Director, Federated Investors, Inc.; President
and Trustee, 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; Director or
Trustee of some of the Funds. Mr. Donahue is the son of John
F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd, Esq.
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Director or Trustee of the Funds; Attorney-at-law; Director,
The Emerging Germany Fund, Inc.; formerly, President, Boston
Stock Exchange, Inc.; Regional Administrator, United States
Securities and Exchange Commission.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Director or Trustee of the Funds; Professor of Medicine, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center--Downtown;
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
formerly, Member, National Board of Trustees, Leukemia Society of America.
Edward L. Flaherty, Jr., Esq.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Director or Trustee of the Funds; Attorney, Of Counsel, Miller, Ament, Henny &
Kochuba; Director, Eat'N Park Restaurants, Inc.; formerly, Counsel, Horizon
Financial, F.A., Western Region; Partner, Meyer and Flaherty.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Director or Trustee of the Funds; formerly, Representative, Commonwealth of
Massachusetts General Court; President, State Street Bank and Trust Company and
State Street Corporation; Director, VISA USA and VISA International; Chairman
and Director, Massachusetts Banker Association; Director, Depository Trust
Corporation.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
Director or Trustee of the Funds; President, Law Professor, Duquesne University;
Consulting Partner, Mollica & Murray; formerly, Dean and Professor of Law,
University of Pittsburgh School of Law; Dean and Professor of Law, Villanova
University School of Law.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Director or Trustee of the Funds; President, World Society for Ekistics, Athens;
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; formerly, Professor, United States
Military Academy; Professor, United States Air Force Academy.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Director or Trustee of the Funds; Public Relations/ Marketing/Conference
Planning; formerly, National Spokesperson, Aluminum Company of America; business
owner.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Trustee or Director of some of the Funds; President, Executive Vice President
and Treasurer of some of the Funds; Vice Chairman, Federated Investors, Inc.;
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.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds; Executive Vice
President, Secretary, and Director, Federated Investors, Inc.; 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.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
President or Vice President of some of the Funds; Director or Trustee of some of
the Funds; Executive Vice President, Federated Investors, Inc.; Chairman and
Director, Federated Securities Corp.
* 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:
Automated Government Money Trust; Blanchard Funds; Blanchard Precious Metals
Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; 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 Core Trust; 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.; 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; Regions Funds; RIGGS 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;
WCT Funds; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 3, 1998, the following shareholders of record owned 5% or more
of the outstanding Institutional Shares of the Fund: Shaup & Co., Boston,
Massachusetts, owned approximately 131,354,314 shares (14.45%); Frost National
Bank, San Antonio, Texas, owned approximately 121,787,960 shares (13.40%);
Panabco, Newark, Ohio, owned approximately 92,547,020 shares (10.18%); BDG &
Co., Boston, Massachusetts, owned approximately 70,240,875 shares (7.73%); and
Santa Monica Bank, Santa Monica, California, owned approximately 63,358,349
shares (6.97%).
As of September 3, 1998, the following shareholders of record owned 5% or more
of the outstanding Institutional Service Shares of the Fund: Citizens Bank of
Rhode Island, Providence, Rhode Island, owned approximately 127,746,944 shares
(14.16%); Perry Baker & Co., Westerly, Rhode Island, owned approximately
71,977,227 shares (7.98%); Currier & Co., Salem, Massachusetts, owned
approximately 59,638,722 shares (6.61%); and Bowling Green Bank & Trust Co.,
Bowling Green, Kentucky, owned approximately 53,246,617 shares (5.90%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, AGGREGATE
POSITION WITH COMPENSATION TOTAL COMPENSATION PAID
TRUST FROM 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 $18,351 $111,222 for the Trust Trustee and 56
other investment
companies in the Fund Complex
John T. Conroy, Jr. $20,189 $122,362 for the Trust Trustee and 56
other investment
companies in the Fund Complex
William J. Copeland $20,189 $122,362 for the Trust Trustee and 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, Esq. $20,189 $122,362 for the Trust
Trustee and 56 other investment companies
in the Fund Complex
Lawrence D. Ellis, M.D. $18,351 $111,222 for the Trust Trustee and 56
other investment companies in the Fund Complex
Edward L. Flaherty, Jr., Esq. $20,189 $122,362 for the Trust
Trustee and 56 other investment companies
in the Fund Complex
Peter E. Madden $18,351 $111,222 for the Trust
Trustee and 56 other investment companies
in the Fund Complex
John E. Murray, Jr., J.D., S.J.D. $18,351 $111,222 for the Trust
Trustee and 56 other investment companies
in the Fund Complex
Wesley W. Posvar $18,351 $111,222 for the Trust
Trustee and 56 other investment companies
in the Fund Complex
Marjorie P. Smuts $18,351 $111,222 for the Trust
Trustee and 56 other investment companies
in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1998.
# 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, Inc. All the voting securities of Federated
Investors, Inc. are owned by a trust, the trustees of which are John F. Donahue,
his wife, and his son, J. Christopher Donahue.
The adviser shall not be liable to the Government Obligations Tax-Managed Fund,
the Fund, or any shareholder of the Fund for any losses that may be sustained in
the purchase, holding, or sale of any security or for anything done or omitted
by it, except acts or omissions involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties imposed upon it by its contract
with the Government Obligations Tax-Managed Fund.
ADVISORY FEES
For its advisory services, Federated Administrative Services receives an
annual investment advisory fee as described in the prospectus. For the fiscal
years ended July 31, 1998, 1997, and 1996, the adviser earned $2,869,299,
$1,452,990, and $692,278, respectively, of which $1,725,248, $923,964, and
$664,948, 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, 1998, 1997, and 1996, the Fund paid no brokerage
commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, Inc., 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, Inc., 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, 1998, 1997, and 1996, the Administrators earned
$1,082,093, $548,677, and $261,681, 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, 1998, the Fund earned shareholder service
fees on behalf of Institutional Shares and Institutional Service Shares in the
amounts of $1,877,773 and $1,708,850, respectively, $0 and $1,708,850 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;
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, 1998, the yields for Institutional
Shares and Institutional Service Shares were 5.33% and 5.08%, 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, 1998, the effective yields for
Institutional Shares and Institutional Service Shares were 5.47% and 5.20%,
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, 1998, and for the period from June 2,
1995 (date of initial public investment) through July 31, 1998, the average
annual total returns were 5.49% and 5.47%, respectively, for Institutional
Shares.
For the one-year period ended July 31, 1998, and for the period from May 30,
1995 (date of initial public investment) through July 31, 1998, the average
annual total returns were 5.23% and 5.21%, respectively, for Institutional
Service Shares.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of any
index used, prevailing market conditions, portfolio compositions of other funds,
and methods used to value portfolio securities and compute offering price. The
financial publications and/or indices which the Fund uses in advertising may
include:
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, INC.
Federated Investors, Inc. 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, Inc. 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, 1997, Federated managed more than $63.1 billion in assets across 51
money market funds, including 18 government, 11 prime, and 22 municipal with
assets approximating $35 billion, $17.1 billion, and $10.9 billion,
respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated Investors, Inc. are: U.S. equity and high
yield--J. Thomas Madden; U.S. fixed income--William D. Dawson, III; and global
equities and fixed income--Henry A. Frantzen. The Chief Investment Officers are
Executive Vice Presidents of the Federated advisory companies.
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 $4.4 trillion to the more than 6,700 funds available.*
Federated Investors, Inc., through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors, Inc. meets the needs of approximately 900 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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights-Institutional Shares 2
General Information 3 Year 2000 Statement 3 Investment Information 3 Investment
Objective 3 Investment Policies 3 Investment Risks 5 Investment Limitations 5
Fund Information 6 Management of the Fund 6
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 8
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Account and Share Information 8
Dividends 8
Capital Gains 9
Account Activity 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
Last Meeting of Shareholders 11
Financial Highlights-Institutional Service Shares 12
Financial Statements 13
Report of Independent Public Accountants 30
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<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)
<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(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
<TABLE>
<CAPTION>
<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
PRIME OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 30.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
INCOME FROM
INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.06 0.03 0.03 0.05 0.07 0.03
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (0.05) (0.05) (0.06) (0.03) (0.03) (0.05) (0.07) (0.03)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
TOTAL RETURN(B) 5.64% 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% 0.20%*
Net investment income 5.51% 5.35% 5.43% 5.60% 3.47% 3.20% 4.53% 6.54% 8.21%*
Expense waiver/
reimbursement(c) 0.35% 0.36% 0.36% 0.38% 0.14% 0.09% 0.10% 0.24% 0.68%*
SUPPLEMENTAL DATA
Net assets,
end of period
(000 omitted) $3,980,339 $3,588,082 $3,032,602 $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593 $34,777
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Board of
Trustees (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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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"), Canadian Time Deposits,
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, Inc. All of the Class A (voting) shares of
Federated Investors, Inc. are owned by a trust, the trustees of which are John
F. Donahue, Chairman and Director of Federated Investors, Inc., Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across more than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. 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 approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
<S> <C>
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
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to Institutional
Shares from the value of Fund assets attributable to Institutional Shares, and
dividing the remainder by the number of 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, Jr. 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) 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: 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. 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 ("ACH"). The shareholder's bank, which must be an ACH
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
received after that time include that day's dividend but will be wired the
following business day. Proceeds from redemption requests on holidays when wire
transfers are restricted will be wired the following business day. Questions
about telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares by Mail"
should be considered. If at any time the Fund shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, MA 02266-8600. If share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to the address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of 1934. The
Fund does not accept signatures guaranteed by a notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
5:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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
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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G. Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
PRIME OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 30.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.37% 5.19% 5.32% 5.38% 0.30%
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45% 0.34%*
Net investment income 5.24% 5.11% 5.13% 5.66% 4.68%*
Expense waiver/
reimbursement(c) 0.10% 0.11% 0.11% 0.13% 0.14%*
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $3,468,222 $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 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
PRIME OBLIGATIONS FUND
JULY 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CERTIFICATES OF DEPOSIT--7.3%
BANKING--7.3%
$189,000,000 Bankers Trust Co., New York, 5.640% - 6.010%, 9/9/1998 - 4/23/1999 $ 188,977,947
16,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.740% - 5.900%, 8/27/1998 - 4/1/1999 15,997,364
50,000,000 Credit Communal de Belgique, Brussles, 5.650%, 12/11/1998 50,000,000
30,000,000 Morgan Guaranty Trust Co., New York, 5.870%, 8/6/1998 29,999,882
27,000,000 Rabobank Nederland, Utrecht, 5.690%, 1/7/1999 26,985,702
219,500,000 Societe Generale, Paris, 5.630% - 5.940%, 8/6/1998 - 4/28/1999 219,409,298
15,000,000 Svenska Handelsbanken, Stockholm, 5.755%, 4/6/1999 14,995,611
TOTAL CERTIFICATES OF DEPOSIT 546,365,804
(A)COMMERCIAL PAPER--39.9%
BANKING--11.9%
130,000,000 Aspen Funding Corp., (Guaranteed by Deutsche Bank, AG), 5.375% - 5.687%, 8/3/1998
12/18/1998 128,661,514
20,865,000 Benedictine Health System, (Lasalle National Bank, Chicago LOC), 5.680%, 10/5/1998 20,651,018
20,000,000 Comerica, Inc., 5.530%, 8/27/1998 19,920,122
31,000,000 Commonwealth Bank of Australia, Sydney, 5.640%, 12/17/1998 30,349,982
60,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal de Belgique, Brussles),
5.500%, 11/9/1998 59,083,333
150,881,000 Gotham Funding Corp., 5.680% - 5.720%, 8/7/1998 - 8/25/1998 150,559,676
217,000,000 J.P. Morgan & Co., Inc., 5.450% - 5.490%, 11/16/1998 - 12/31/1998 212,635,788
25,000,000 Omnicom Finance, Inc., (ABN AMRO Bank N.V., Amsterdam LOC), 5.510%, 11/30/1998 24,537,007
149,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska Handelsbanken, Stockholm), 5.460%
- 5.520%, 11/6/1998 - 12/31/1998 145,802,273
33,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of Switzerland, Zurich),
5.450% - 5.520%, 8/7/1998 - 12/31/1998 32,682,076
63,500,000 Westpac Capital Corp., (Guaranteed by Westpac Banking Corp. Ltd., Sydney), 5.490%,
12/4/1998 62,289,531
Total 887,172,320
BROKERAGE--5.1%
27,000,000 Credit Suisse First Boston, Inc., 5.510% - 5.520%, 8/20/1998 - 10/14/1998 26,870,716
354,600,000 Merrill Lynch & Co., Inc., 5.500% - 5.530%, 9/11/1998 - 11/9/1998 350,741,551
Total 377,612,267
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
ELECTRIC POWER--0.1%
$ 10,000,000 Southern Electric Generating Co. (SEGCO), (Guaranteed by Alabama Power Co., Guaranteed
by Georgia Power Co.), 5.700%, 8/11/1998 $ 9,984,167
FINANCE - AUTOMOTIVE--1.5%
40,000,000 Chrysler Financial Corp., 5.540%, 8/19/1998 39,889,200
70,000,000 General Motors Acceptance Corp., 5.512%, 10/27/1998 69,067,553
Total 108,956,753
FINANCE - COMMERCIAL--16.5%
63,500,000 Asset Securitization Cooperative Corp., 5.520%, 10/30/1998 62,623,700
52,000,000 Beta Finance, Inc., 5.490% - 5.520%, 8/21/1998 - 9/30/1998 51,660,200
10,000,000 CXC, Inc., 5.520%, 8/10/1998 9,986,200
155,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.500% - 5.535%, 8/20/1998 - 10/20/1998 153,876,449
20,000,000 Falcon Asset Securitization Corp., 5.550%, 8/21/1998 19,938,333
340,000,000 General Electric Capital Corp., 5.380% - 5.680%, 8/3/1998 - 2/4/1999 337,527,033
154,000,000 Greenwich Funding Corp., 5.510% - 5.520%, 8/27/1998 - 10/5/1998 152,883,644
54,760,000 PREFCO-Preferred Receivables Funding Co., 5.550% - 5.570%, 8/19/1998 - 9/3/1998 54,556,799
27,159,000 Receivables Capital Corp., 5.525% - 5.550%, 8/21/1998 - 8/25/1998 27,063,026
357,630,000 Sheffield Receivables Corp., 5.520% - 5.600%, 8/3/1998 - 9/30/1998 356,202,812
Total 1,226,318,196
FINANCE - RETAIL--4.2%
100,000,000 Associates Corp. of North America, 5.600%, 8/3/1998 99,968,889
38,000,000 Associates First Capital Corp., 5.520%, 10/2/1998 37,638,747
75,000,000 Household Finance Corp., 5.690%, 8/3/1998 74,976,292
28,500,000 Island Finance, Puerto Rico, (Norwest Corp. Support Agreement) 5.520%, 9/14/1998 28,307,720
20,000,000 New Center Asset Trust, A1+/P1 Series, 5.500%, 8/11/1998 19,969,444
50,000,000 New Center Asset Trust, A1/P1 Series, 5.530%, 11/12/1998 49,208,903
Total 310,069,995
INSURANCE--0.6%
44,000,000 Marsh & McLennan Companies, Inc., 5.400% - 5.490%, 10/20/1998 - 12/14/1998 43,422,950
TOTAL COMMERCIAL PAPER 2,963,536,648
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--11.3%
BANKING--2.5%
$ 50,000,000 BankBoston, N.A., 5.650%, 11/9/1998 $ 50,000,000
95,540,000 SALTS II Cayman Islands Corp., (Guaranteed by Bankers Trust International, PLC),
5.737%, 6/17/1999 95,540,000
39,815,000 SALTS III Cayman Island Corp., (Guaranteed by Bankers Trust International, PLC),
5.850%, 1/23/1999 39,815,000
Total 185,355,000
BROKERAGE--1.3%
96,000,000 Goldman Sachs Group, LP, 5.687%, 10/26/1998 96,000,000
FINANCE - AUTOMOTIVE--2.0%
19,804,491 Chase Manhattan Auto Owner Trust 1998-B, Class A-1, 5.578%, 5/10/1999 19,804,491
33,808,320 Chase Manhattan Auto Owner Trust 1998-C, Class A1, 5.588%, 7/9/1999 33,804,824
41,000,000 Compass Auto Receivables Trust 1998-A, Class A-1, 5.659%, 7/15/1999 41,000,000
27,000,000 Ford Credit Auto Owner Trust 1998-C, Class A-1, 5.608%, 1/15/1999 27,000,000
25,000,000 Ford Credit Auto Owner Trust 1998-C, Class A-2, 5.670%, 6/15/1999 25,000,000
Total 146,609,315
FINANCE - COMMERCIAL--2.4%
80,000,000 Beta Finance, Inc., 5.690%-5.790%, 3/2/1999-4/8/1999 79,995,890
2,000,000 CIT Group Holdings, Inc., 6.125%, 9/1/1998 2,000,369
100,000,000 (b)Triangle Funding Ltd., 5.687%, 11/16/1998 100,000,000
Total 181,996,259
FINANCE - EQUIPMENT--1.5%
108,000,000 Pitney Bowes Credit Corp., 5.675%, 8/10/1998 107,847,504
INSURANCE--1.6%
4,124,541 Arcadia Automobile Receivables Trust 1998-A, (Guaranteed by FSA), Class A-1, 5.628%,
3/15/1999 4,124,541
7,352,548 ContiMortgage Home Equity Loan Trust 1998-1, Class A-1, (Guaranteed by MBIA), 5.647%,
3/15/1999 7,352,548
25,701,455 ContiMortgage Home Equity Loan Trust 1998-2, Class A-1, (Guaranteed by MBIA), 5.648%,
6/15/1999 25,701,455
20,000,000 Marsh & McLennan Companies, Inc., 5.650%, 10/23/1998 20,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
INSURANCE--CONTINUED
$ 26,388,522 WFS Financial 1998-A Owner Trust, Class A-1, (Guaranteed by FSA), 5.618%, 2/20/1999 $ 26,388,522
36,000,000 WFS Financial 1998-B Owner Trust, Class A-1, (Guaranteed by FSA), 5.658%, 7/20/1999 36,000,000
Total 119,567,066
TOTAL SHORT-TERM NOTES 837,375,144
(C)VARIABLE RATE INSTRUMENTS--22.3%
BANKING--13.5%
5,645,000 Abbott Foods, Series 1996, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 5,645,000
5,340,000 Alabama State IDA, Series 1994, Miltope Project, (Regions Bank, Alabama LOC), 5.690%,
8/6/1998 5,340,000
7,825,000 Alabama State IDA, (Wellborn Cabinet, Inc.), Tax Revenue Bonds, (Amsouth Bank N.A.,
Birmingham LOC), 5.740%, 8/5/1998 7,825,000
2,175,000 Alabama State IDA, Standard Furniture Project, Series 1995, (Amsouth Bank N.A.,
Birmingham LOC), 5.740%, 8/6/1998 2,175,000
7,510,000 Alexandria Executive Club LP, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 7,510,000
8,340,000 Arrow N.A., Inc., (Bank of America NT and SA, San Francisco LOC), 5.670%, 8/6/1998 8,340,000
7,000,000 Asset Holdings Corp. VII, (U.S. Bank, N.A., Minneapolis LOC), 5.670%, 8/6/1998 7,000,000
3,500,000 Asset Holdings V, (Bayerische Vereinsbank AG, Munich LOC), 5.670%, 8/6/1998 3,500,000
50,000 Associated Materials, Inc., (KeyBank, N.A. LOC), 5.700%, 8/7/1998 50,000
12,000,000 Association of American Medical Colleges, (Guaranteed by Chase Manhattan Bank N.A.,
New York), 5.690%, 8/5/1998 12,000,000
3,800,000 Balboa Investment Group V, Series 1997, (Amsouth Bank N.A., Birmingham LOC), 5.740%,
8/6/1998 3,800,000
4,000,000 Bardstown City, KY, (RJ Tower Project), Series 1995, (Comerica, Inc. LOC), 5.670%,
8/6/1998 4,000,000
8,000,000 Bethesda Country Club, Inc., Series 1997, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 8,000,000
19,085,000 Beverly Hills Nursing Center, Inc., Medilodge Project, Series 1996, (KeyBank, N.A.
LOC), 5.720%, 8/6/1998 19,085,000 1,612,790 Bowling Green Manor
LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 1,612,790
5,000,000 Brentlinger Enterprises, (Huntington National Bank, Columbus, OH
LOC), 5.720%,
8/6/1998 5,000,000
5,877,000 Capital One Funding Corp., Series 1994-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 5,877,000
13,596,000 Capital One Funding Corp., Series 1994-C, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 13,596,000
8,540,000 Capital One Funding Corp., Series 1994-D, (Bank One, Kentucky LOC), 5.670%, 8/6/1998 8,540,000
418,000 Capital One Funding Corp., Series 1995-A, (Bank One, Indianapolis, N.A. LOC), 5.670%,
8/6/1998 418,000
10,106,000 Capital One Funding Corp., Series 1995-B, (Bank One, Kentucky LOC), 5.670%, 8/6/1998 10,106,000
20,680,000 Capital One Funding Corp., Series 1995-F, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 20,680,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 9,500,000 Capital One Funding Corp., Series 1996-H, (Bank One, West Virginia, N.A. LOC), 5.670%,
8/6/1998 $ 9,500,000
1,065,000 Carpenter, Thomas E., Series 1998, (Huntington National Bank, Columbus, OH LOC),
5.720%, 8/6/1998 1,065,000 5,000,000 Carport, Inc., Series 1997,
(Amsouth Bank N.A., Birmingham LOC), 5.740%, 8/6/1998 5,000,000 5,950,000
Chestnut Hills Apartments, Ltd., (Huntington National Bank, Columbus, OH
LOC), 5.720%,
8/6/1998 5,950,000
3,900,000 Cleveland Sportsplex Ltd., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 3,900,000
4,000,000 Clinton County, NY IDA, Bombardier Project, Series 1998-B, (Marine Midland Bank N.A.,
Buffalo, NY LOC), 5.688%, 8/6/1998 4,000,000
8,300,000 Cloquet, MN, Series 1996-B, Potlach Corp., (Credit Suisse First Boston LOC), 5.700%,
8/5/1998 8,300,000
1,032,337 Clyde Manor LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 1,032,337
125,000 Colorado Health Facilities Authority, Arkansas Valley Project, Series 1998-E1, (Bank
One, Colorado LOC), 5.770%, 8/6/1998 125,000
505,000 Colorado Health Facilities Authority, Development Disabilities Center Project, Series
1998-F1, (Bank One, Colorado LOC), 5.770%, 8/6/1998 505,000
5,000,000 Colorado Health Facilities Authority, Development Disabilities Resource Center, Series
1998C1, (Bank One, Colorado LOC), 5.670%, 8/6/1998 5,000,000
3,000,000 Colorado Health Facilities Authority, Goodwill Industries of Denver Project, Series
1998-G1, (Bank One, Colorado LOC), 5.670%, 8/6/1998 3,000,000
2,780,000 Columbia County, GA Development Authority, Series 1993, (SunTrust Banks, Inc. LOC),
5.650%, 8/5/1998 2,780,000
8,000,000 Commercial Contractors, Inc., Series 1998, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 8,000,000
3,100,000 Cuyahoga County, OH IDR, Northstar Plastics, (Bank One, Ohio, N.A. LOC), 5.670%,
8/6/1998 3,100,000
2,000,000 Damascus Company Ltd., Series 1998, (Huntington National Bank, Columbus, OH LOC),
5.720%, 8/6/1998 2,000,000
8,810,000 Dewberry IV LP, Series 1997, (First National Bank of Maryland, Baltimore LOC), 5.640%,
8/4/1998 8,810,000
5,900,000 Die-Matic Corp., (Huntington National Bank, Columbus, OH LOC), 5.720%, 8/6/1998 5,900,000
4,500,000 Double H Plastics, Inc., Series 1998, (Corestates Bank N.A., Philadelphia, PA LOC),
5.650%, 8/5/1998 4,500,000
2,915,000 Douglas County, GA Development Authority, Heritage Bag Project, Series 1998-B,
(Wachovia Bank of NC, N.A., Winston-Salem LOC), 5.690%, 8/6/1998 2,915,000
90,000 ERC Real Estate LLC, (KeyBank, N.A. LOC), 5.670%, 8/6/1998 90,000
3,790,000 Eastwinds Investment, Ltd., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 3,790,000
6,805,000 Fort Craig Limited Partnership, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 6,805,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 1,375,000 Frederick County, MD, Thogar, LLC Facility, Series 1998-B, (First National Bank of
Maryland, Baltimore LOC), 5.640%, 8/4/1998 $ 1,375,000
4,000,000 G.M.H. Enterprises, Inc., Series 1995, (National City Bank, Ohio LOC), 5.670%,
8/6/1998 4,000,000
3,000,000 Gerken Materials, Inc., Series 1995, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 3,000,000
4,000,000 Gerken Materials, Inc., Series 1997, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 4,000,000
11,920,000 Grand Aire Express, Inc., Series 1997, (National City Bank, Ohio LOC), 5.670%, 8/6/1998 11,920,000
1,150,000 Great Lakes Brewing Co., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 1,150,000
2,190,000 Grote Family LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 2,190,000
11,860,000 Hunt Club Apartments, Inc., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 11,860,000
650,000 Illinois Development Finance Authority, Series 1996-B, Nimlok Co., Project, (Bank One,
Illinois, N.A. LOC), 5.820%, 8/6/1998 650,000
19,000,000 JFK Family Borrowing, LLP, Series 1997, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 19,000,000
4,500,000 Kendall Health Care Properties, Series 1998-A, (SunTrust Bank, Miami LOC), 5.750%,
8/5/1998 4,500,000
20,580,000 Kenny, Donald R. and Cheryl A., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 20,580,000
6,780,000 Kenny, Donald R. and Cheryl A., Series 1995-A, (National City Bank, Ohio LOC), 5.670%,
8/6/1998 6,780,000
7,750,000 Kenny, Donald R. and Cheryl A., Series 1995-B, (Huntington National Bank, Columbus, OH
LOC), 5.670%, 8/6/1998 7,750,000
4,300,000 Kings Creek Country Club, Inc., Series 1997, (Corestates Bank N.A., Philadelphia, PA
LOC), 5.700%, 8/5/1998 4,300,000
2,400,000 L.H. Kroh, Inc., Series 1998, (Corestates Bank N.A., Philadelphia, PA LOC), 5.700%,
8/5/1998 2,400,000
157,000,000 (b)Liquid Asset Backed Securities Trust, Series 1996-3, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.676%, 8/17/1998 157,000,000
48,694,302 (b)Liquid Asset Backed Securities Trust, Series 1997-1, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.656%, 8/17/1998 48,694,302
16,000,000 Long Lane Master Trust III, Series 1997-C, 5.749%, 8/3/1998 16,000,000
8,500,000 Mack Industries, Series 1998, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 8,500,000
23,000,000 Maryland EDC, Human Genome, Series 1997, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 23,000,000
6,200,000 Medford Convalescent & Nursing Center, Series 1997, (First National Bank of Maryland,
Baltimore LOC), 5.640%, 8/4/1998 6,200,000
3,130,000 Midwest Funding Corp., Series 1991-A, Class A-1, (Bank One, Ohio, N.A. LOC), 5.670%,
8/6/1998 3,130,000
3,320,000 Midwest Funding Corp., Series 1991-C, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 3,320,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 1,458,000 Midwest Funding Corp., Series 1992-B, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 $ 1,458,000
2,349,000 Midwest Funding Corp., Series 1992-C, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 2,349,000
4,720,000 Miller, James & Deborah, Series 1997, (First National Bank of Maryland, Baltimore LOC),
5.640%, 8/4/1998 4,720,000
11,400,000 Mississippi Business Finance Corp., Choctaw Foods, Inc, (Rabobank Nederland, Utrecht
LOC), 5.650%, 8/5/1998 11,400,000
5,800,000 Mississippi Business Finance Corp., Metalloy Project, (Comerica Bank, Detroit, MI
LOC), 5.570%, 8/6/1998 5,800,000
12,000,000 Mississippi Business Finance Corp., Series 1994, Georgia Gulf, (Wachovia Bank of NC,
N.A., Winston-Salem LOC), 5.610%, 8/5/1998 12,000,000
2,000,000 Mississippi Business Finance Corp., Series 1995, Plantation Pointe, LP Project,
(SunTrust Bank, Atlanta LOC), 5.690%, 8/6/1998 2,000,000
4,900,000 NUFUNDING, Inc., Series 1996, (Lasalle National Bank, Chicago LOC), 5.726%, 8/5/1998 4,900,000
2,800,000 Newbury Industrial Park, Series 1996, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 2,800,000
13,365,000 North Oaks Partnership, Series 1998, (Lasalle National Bank, Chicago LOC), 5.750%,
8/6/1998 13,365,000
5,500,000 Northampton County, PA IDA, Series 1998, (Dauphin Deposit Bank and Trust LOC), 5.740%,
8/5/1998 5,500,000
2,175,000 Nova University, Inc. Lease Revenue Bonds, Series 1993, Miami Dolphins Training
Facility, (SunTrust Bank, South Florida LOC), 5.650%, 8/5/1998 2,175,000
5,289,000 Oceana County Freezer Storage, Inc., Series 1998, (Huntington National Bank, Columbus,
OH LOC), 5.670%, 8/6/1998 5,289,000
2,145,000 Orangeburg Convalescent Care Center, Inc., Series 1995-A, (PNC Bank, Kentucky LOC),
5.639%, 8/3/1998 2,145,000
1,955,000 Port Authority of Saint Paul, MN, Bix Fruit Co., Series 1998-B, (Firstar Bank,
Milwaukee LOC), 5.910%, 8/6/1998 1,955,000
3,350,000 Port Authority of Saint Paul, MN, National Checking Co. Project, Series 1998-B, 5.810%,
8/6/1998 3,350,000
9,500,000 Primex Funding Corp., Series 1997-A, (Bank One, Indianapolis, N.A. LOC), 5.670%,
8/6/1998 9,500,000
71,915,014 (b)Rabobank Optional Redemption Trust, Series 1997-101, 5.688%, 10/15/1998 71,915,014
2,875,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 2,875,000
7,020,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 7,020,000
12,350,000 Rooker, J.W., (Wachovia Bank of NC, N.A., Winston-Salem LOC), 5.640%, 8/5/1998 12,350,000
2,600,000 San Jose, CA Multifamily Housing Revenue Bonds, Carlton Plaza of San Jose, Series 1998
A-T, (Commerzbank AG, Frankfurt LOC), 5.670%, 8/6/1998 2,600,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 200,000 Scranton Times, LP, (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 $ 200,000
1,020,000 Solon, OH, Custom Graphics, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 1,020,000
2,000,000 Souser Family Ltd. Partnership, Series 1998, (Dauphin Deposit Bank and Trust LOC),
5.740%, 8/5/1998 2,000,000
3,340,000 Spitzer Group, Series 1996-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 3,340,000
1,935,000 Spitzer Group, Series 1996-B, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 1,935,000
14,000,000 Spitzer Group, Series 1998-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 14,000,000
12,500,000 Spitzer Group, Series 1998-B, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 12,500,000
4,700,000 Springfield Limited, Series A, (Union Bank of Switzerland, Zurich LOC), 5.670%,
8/6/1998 4,700,000
2,000,000 Stark County, OH IDR, Shearer's Foods, Inc., Series 1997, (Bank One, Ohio, N.A. LOC),
5.670%, 8/6/1998 2,000,000
2,750,000 Stratford Properties, LP, Series 1998, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 2,750,000
3,250,000 Summit County, OH IDR, Series 1997, Malco Products, Inc, (Bank One, Ohio, N.A. LOC),
5.670%, 8/6/1998 3,250,000
4,715,000 TNT Co., Series 1998, (Huntington National Bank, Columbus, OH LOC), 5.720%, 8/6/1998 4,715,000
47,035,000 Terry Griffin Gate Partners, Ltd., Series 1995, (Bank One, Kentucky LOC), 5.670%,
8/5/1998 47,035,000
7,300,000 Tift County, GA Development Authority, Chickasha of Georgia Project, Series 1997,
(Bank of Tokyo-Mitsubishi Ltd. LOC), 5.760%, 8/5/1998 7,300,000
5,545,000 Van Dyne Crotty Co., Series 1996, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 5,545,000
5,000,000 Van Dyne Crotty Co., Series 1998, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 5,000,000
2,701,000 Vista Funding Corp., (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 2,701,000
3,989,000 Vista Funding Corp., Series 1994-A, (Fifth Third Bank of Northwestern OH LOC), 5.670%,
8/6/1998 3,989,000
1,368,000 Vista Funding Corp., Series 1995-B, (Fifth Third Bank of Northwestern OH LOC), 5.670%,
8/6/1998 1,368,000
9,622,000 Vista Funding Corp., Series 1995-D, (Fifth Third Bank of Northwestern OH LOC), 5.670%,
8/6/1998 9,622,000
5,696,000 Vista Funding Corp., Series 1995-E, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 5,696,000
7,311,000 Vista Funding Corp., Series 1998-B, (Fifth Third Bank of Northwestern OH LOC), 5.690%,
8/6/1998 7,311,000
5,055,000 Vulcan, Inc., (Amsouth Bank N.A., Birmingham LOC), 5.740%, 8/6/1998 5,055,000
981,431 Wauseon Manor II LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 981,431
2,960,000 Wexner Heritage House, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 2,960,000
7,250,000 Whetstone Care Center, LLC, Series 1998, (Fifth Third Bank, Cincinnati LOC), 5.750%,
8/6/1998 7,250,000
3,000,000 White Bear Lake, MN City of, Series 1993, (Norwest Bank Minnesota, N.A. LOC), 5.940%,
8/6/98 3,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 16,500,000 William Hill Manor, Inc., Series 1998, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 $ 16,500,000
3,425,000 Wood County, OH, IMCO Carbide Tool, Inc., Series 1998, (Huntington National Bank,
Columbus, OH LOC), 5.670%, 8/6/1998 3,425,000
2,250,000 YMCA of Central, OH, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 2,250,000
Total 1,004,330,874
ELECTRICAL EQUIPMENT--0.4%
32,674,483 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.639%, 8/3/1998 32,674,483
FINANCE - AUTOMOTIVE--1.3%
100,000,000 General Motors Acceptance Corp., Mortgage of PA, (Guaranteed by General Motors
Acceptance Corp.), 5.627%, 8/3/1998 99,046,516
FINANCE - RETAIL--1.7%
60,000,000 (b)Associates Corp. of North America, 5.710%, 8/3/1998 59,987,584
64,000,000 Carco Auto Loan Master Trust 1993-2, Class A1, 5.605%, 8/17/1998 64,000,000
Total 123,987,584
INSURANCE--5.4%
15,000,000 Allstate Life Insurance Co., 5.759%, 10/1/1998 15,000,000
50,000,000 First Allmerica Financial Life Insurance Co., 5.768%, 10/14/1998 50,000,000
30,000,000 Jackson National Life Insurance Co., 5.730%, 9/24/1998 30,000,000
14,000,000 Jackson National Life Insurance Co., 5.780%, 10/1/1998 14,000,000
80,477,447 (b)Liquid Asset Backed Securities Trust, Series 1997-3, Senior Notes, (Guaranteed by
AMBAC), 5.658%, 9/28/1998 80,477,447
35,000,000 Peoples Security Life Insurance Company, 5.780%, 8/3/1998 35,000,000
32,000,000 Peoples Security Life Insurance Company, 5.840%, 8/3/1998 32,000,000
25,000,000 Security Life of Denver Insurance Co., 5.738%, 8/3/1998 25,000,000
10,000,000 SunAmerica Life Insurance Company, 5.758%, 8/3/1998 10,000,000
70,000,000 Transamerica Life Insurance and Annuity Co., 5.759%, 10/1/1998 70,000,000
44,000,000 Travelers Insurance Company, 5.739%, 8/3/1998 44,000,000
Total 405,477,447
TOTAL VARIABLE RATE INSTRUMENTS 1,665,516,904
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
TIME DEPOSITS--6.9%
BANKING--6.9%
$ 175,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.687%, 8/3/1998 $ 175,000,000
150,000,000 Chase Manhattan Bank (USA) N.A., Wilmington, 5.687%, 8/3/1998 150,000,000
100,000,000 Deutsche Bank, AG, 5.687%, 8/3/1998 100,000,000
15,000,000 Mellon Bank N.A., Pittsburgh, 5.687%, 8/3/1998 15,000,000
75,000,000 Westdeutsche Landesbank Girozentrale, 5.687%, 8/3/1998 75,000,000
TOTAL TIME DEPOSITS 515,000,000
(D)REPURCHASE AGREEMENTS--12.2%
106,625,000 ABN AMRO Chicago Corp., 5.690%, dated 7/31/1998, due 8/3/1998 106,625,000
72,855,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.620%, dated 7/31/1998, due 8/3/1998 72,855,000
98,200,000 First Union Capital Markets, 5.630%, dated 7/31/1998, due 8/3/1998 98,200,000
69,000,000 Goldman Sachs Group, LP, 5.700%, dated 7/31/1998, due 8/3/1998 69,000,000
143,500,000 HSBC Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 143,500,000
300,000,000 Lehman Brothers, Inc., 5.630%, dated 7/31/1998, due 8/3/1998 300,000,000
50,000,000 Salomon Brothers, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 50,000,000
20,000,000 Societe Generale Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 20,000,000
50,000,000 Warburg Dillon Reed LLC, 5.610%, dated 7/31/1998, due 8/3/1998 50,000,000
TOTAL REPURCHASE AGREEMENTS 910,180,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 7,437,974,500
</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, 1998, these securities amounted to
$518,074,347 which represents 7.0% 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
($7,448,561,427) at July 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation EDC --Economic Development
Commission FSA --Financial Security Assurance IDA --Industrial Development
Authority IDR --Industrial Development Revenue LLC --Limited Liability
Corporation LOC --Letter of Credit LP --Limited Partnership MBIA --Municipal
Bond Investors Assurance 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, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 910,180,000
Investments in securities 6,527,794,500
Total investments in securities, at amortized cost and value $ 7,437,974,500
Cash 1,574,950
Income receivable 30,117,848
Receivable for shares sold 4,654,530
Prepaid expenses 362,706
Total assets 7,474,684,534
LIABILITIES:
Payable for shares redeemed 915,411
Income distribution payable 23,885,126
Accrued expenses 1,322,570
Total liabilities 26,123,107
NET ASSETS for 7,448,561,427 shares outstanding $ 7,448,561,427
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,980,339,187 / 3,980,339,187 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$3,468,222,240 / 3,468,222,240 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $408,069,509
EXPENSES:
Investment advisory fee $ 14,305,445
Administrative personnel and services fee 5,395,419
Custodian fees 429,093
Transfer and dividend disbursing agent fees and expenses 180,427
Directors'/Trustees' fees 47,000
Auditing fees 13,000
Legal fees 22,400
Portfolio accounting fees 527,951
Shareholder services fee--Institutional Shares 9,947,222
Shareholder services fee--Institutional Service Shares 7,934,584
Share registration costs 513,794
Printing and postage 20,000
Insurance premiums 210,897
Taxes 18,560
Miscellaneous 26,943
Total expenses 39,592,735
Waivers--
Waiver of investment advisory fee $(7,090,763)
Waiver of shareholder services fee--Institutional Shares (9,947,222)
Total waivers (17,037,985)
Net expenses 22,554,750
Net investment income $385,514,759
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 385,514,759 $ 264,242,252
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (219,104,923) (175,275,611)
Institutional Service Shares (166,409,836) (88,966,641)
Change in net assets resulting from distributions to shareholders (385,514,759) (264,242,252)
SHARE TRANSACTIONS--
Proceeds from sale of shares 81,194,972,477 57,987,041,825
Net asset value of shares issued to shareholders in payment of
distributions declared 107,652,252 78,154,545
Cost of shares redeemed (79,679,142,681) (56,569,738,161)
Change in net assets resulting from share transactions 1,623,482,048 1,495,458,209
Change in net assets 1,623,482,048 1,495,458,209
NET ASSETS:
Beginning of period 5,825,079,379 4,329,621,170
End of period $ 7,448,561,427 $ 5,825,079,379
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
PRIME OBLIGATIONS FUND
JULY 31, 1998
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.
At July 31, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $3,342, 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
2006 $3,342
Additionally, net capital losses of $9,477 attributable to security transactions
incurred after October 31, 1997, 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 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, 1998, is as
follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Associates Corp. of North America 12/3/1997 $ 59,968,800
Liquid Asset Backed Securities Trust, Series 1996-3 8/15/1996 157,000,000
Liquid Asset Backed Securities Trust, Series 1997-1 2/19/1997 48,694,302
Liquid Asset Backed Securities Trust, Series 1997-3 6/27/1997 80,477,447
Rabobank Optional Redemption Trust, Series 1997-101 04/17/1997-07/22/1998 71,915,014
Triangle Funding Ltd. 10/16/1997 100,000,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1998, capital paid-in aggregated $7,448,561,427.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1998 1997
<S> <C> <C>
Shares sold 55,022,265,485 41,776,217,888
Shares issued to shareholders in payment of distributions declared 69,275,080 53,083,360
Shares redeemed (54,699,283,688) (41,273,820,945)
Net change resulting from Institutional Share transactions 392,256,877 555,480,303
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 26,172,706,992 16,210,823,937
Shares issued to shareholders in payment of distributions declared 38,377,172 25,071,185
Shares redeemed (24,979,858,993) (15,295,917,216)
Net change resulting from Institutional Service Share transactions 1,231,225,171 939,977,906
Net change resulting from share transactions 1,623,482,048 1,495,458,209
</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, Inc. 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Prime Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1998, 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, 1998, by correspondence with the custodian and brokers. As to confirmation
replies not received, we carried out alternative auditing procedures. 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, 1998, 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 25, 1998
PRIME
OBLIGATIONS
FUND
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management
Investment Company
PRIME OBLIGATIONS FUND
INSTITUTIONAL SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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 PPG Place
Pittsburgh, PA 15222
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N203
601352-01 (9/98)
[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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights-Institutional Service Shares 2
General Information 3
Year 2000 Statement 3
Investment Information 3
Investment Objective 3
Investment Policies 3
Investment Risks 5
Investment Limitations 5
Fund Information 6
Management of the Fund 6
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 8
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Account and Share Information 8
Dividends 8
Capital Gains 9
Account Activity 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
Last Meeting of Shareholders 11
Financial Highlights-Institutional Shares 12
Financial Statements 13
Report of Independent Public Accountants 30
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)
<S> <C> <C>
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 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
PRIME OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 30.
<TABLE>
<CAPTION>
YEAR ENDED July 31,
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.37% 5.19% 5.32% 5.38% 0.30%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45% 0.34%*
Net investment income 5.24% 5.11% 5.13% 5.66% 4.68%*
Expense waiver/reimbursement(c) 0.10% 0.11% 0.11% 0.13% 0.14%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $3,468,222 $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 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 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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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"), Canadian Time Deposits, 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, Inc. All of the Class A
(voting) shares of Federated Investors, Inc. are owned by a trust, the trustees
of which are John F. Donahue, Chairman and
Director of Federated Investors, Inc., Mr. Donahue's wife, and Mr. Donahue's
son, J. Christopher Donahue, who is President and Director of Federated
Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across more than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. 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 approximately 4,000
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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. specified below:
<TABLE>
<CAPTION>
MAXIMUM
FEE AVERAGE AGGREGATE
DAILY NET ASSETS
<C> <S>
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
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to Institutional
Service Shares from the value of Fund assets attributable to Institutional
Service Shares, and dividing the remainder by the number of 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, Jr. 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
(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: 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. 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 ("ACH"). The shareholder's bank, which must be an ACH
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
received after that time include that day's dividend but will be wired the
following business day. Proceeds from redemption requests on holidays when wire
transfers are restricted will be wired the following business day. Questions
about telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares by Mail"
should be considered. If at any time the Fund shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, MA 02266- 8600. If share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to the address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of 1934. The
Fund does not accept signatures guaranteed by a notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
5:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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
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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS-INSTITUTIONAL SHARES
PRIME OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 30.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994 1993 1992 1991
1990(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.05 0.06 0.03 0.03 0.05
0.07 0.03
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (0.05) (0.05) (0.06) (0.03) (0.03) (0.05) (0.07)
(0.03)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
TOTAL RETURN(B) 5.64% 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% 0.20%*
Net investment income 5.51% 5.35% 5.43% 5.60% 3.47% 3.20% 4.53%
6.54% 8.21%*
Expense waiver/reimbursement(c) 0.35% 0.36% 0.36% 0.38% 0.14% 0.09% 0.10%
0.24% 0.68%*
SUPPLEMENTAL DATA
Net assets, end of period
(000omitted) $3,980,339 $3,588,082 $3,032,602 $2,457,797 $1,250,979 $1,098,159 $917,418 $473,593
$34,777
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 26, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
PORTFOLIO OF INVESTMENTS
PRIME OBLIGATIONS FUND
JULY 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CERTIFICATES OF DEPOSIT--7.3%
BANKING--7.3%
$189,000,000 Bankers Trust Co., New York, 5.640% - 6.010%, 9/9/1998 - 4/23/1999 $ 188,977,947
16,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.740% - 5.900%, 8/27/1998 - 4/1/1999 15,997,364
50,000,000 Credit Communal de Belgique, Brussles, 5.650%, 12/11/1998 50,000,000
30,000,000 Morgan Guaranty Trust Co., New York, 5.870%, 8/6/1998 29,999,882
27,000,000 Rabobank Nederland, Utrecht, 5.690%, 1/7/1999 26,985,702
219,500,000 Societe Generale, Paris, 5.630% - 5.940%, 8/6/1998 - 4/28/1999 219,409,298
15,000,000 Svenska Handelsbanken, Stockholm, 5.755%, 4/6/1999 14,995,611
TOTAL CERTIFICATES OF DEPOSIT 546,365,804
(a)COMMERCIAL PAPER--39.9%
BANKING--11.9%
130,000,000 Aspen Funding Corp., (Guaranteed by Deutsche Bank, AG), 5.375% - 5.687%,
8/3/1998 - 12/18/1998 128,661,514
20,865,000 Benedictine Health System, (Lasalle National Bank, Chicago LOC), 5.680%, 10/5/1998 20,651,018
20,000,000 Comerica, Inc., 5.530%, 8/27/1998 19,920,122
31,000,000 Commonwealth Bank of Australia, Sydney, 5.640%, 12/17/1998 30,349,982
60,000,000 Cregem North America, Inc., (Guaranteed by Credit Communal de Belgique, Brussles),
5.500%, 11/9/1998 59,083,333
150,881,000 Gotham Funding Corp., 5.680% - 5.720%, 8/7/1998 - 8/25/1998 150,559,676
217,000,000 J.P. Morgan & Co., Inc., 5.450% - 5.490%, 11/16/1998 - 12/31/1998 212,635,788
25,000,000 Omnicom Finance, Inc., (ABN AMRO Bank N.V., Amsterdam LOC), 5.510%, 11/30/1998 24,537,007
149,000,000 Svenska Handelsbanken, Inc., (Guaranteed by Svenska Handelsbanken, Stockholm), 5.460%
- 5.520%, 11/6/1998 - 12/31/1998 145,802,273
33,000,000 UBS Finance (Delaware), Inc., (Guaranteed by Union Bank of Switzerland, Zurich),
5.450% - 5.520%, 8/7/1998 - 12/31/1998 32,682,076
63,500,000 Westpac Capital Corp., (Guaranteed by Westpac Banking Corp. Ltd., Sydney), 5.490%,
12/4/1998 62,289,531
Total 887,172,320
BROKERAGE--5.1%
27,000,000 Credit Suisse First Boston, Inc., 5.510% - 5.520%, 8/20/1998 - 10/14/1998 26,870,716
354,600,000 Merrill Lynch & Co., Inc., 5.500% - 5.530%, 9/11/1998 - 11/9/1998 350,741,551
Total 377,612,267
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)COMMERCIAL PAPER-(CONTINUED)
ELECTRIC POWER--0.1%
$ 10,000,000 Southern Electric Generating Co. (SEGCO), (Guaranteed by Alabama Power Co., Guaranteed
by Georgia Power Co.), 5.700%, 8/11/1998 $ 9,984,167
FINANCE - AUTOMOTIVE--1.5%
40,000,000 Chrysler Financial Corp., 5.540%, 8/19/1998 39,889,200
70,000,000 General Motors Acceptance Corp., 5.512%, 10/27/1998 69,067,553
Total 108,956,753
FINANCE - COMMERCIAL--16.5%
63,500,000 Asset Securitization Cooperative Corp., 5.520%, 10/30/1998 62,623,700
52,000,000 Beta Finance, Inc., 5.490% - 5.520%, 8/21/1998 - 9/30/1998 51,660,200
10,000,000 CXC, Inc., 5.520%, 8/10/1998 9,986,200
155,000,000 Corporate Asset Funding Co., Inc. (CAFCO), 5.500% - 5.535%, 8/20/1998 - 10/20/1998 153,876,449
20,000,000 Falcon Asset Securitization Corp., 5.550%, 8/21/1998 19,938,333
340,000,000 General Electric Capital Corp., 5.380% - 5.680%, 8/3/1998 - 2/4/1999 337,527,033
154,000,000 Greenwich Funding Corp., 5.510% - 5.520%, 8/27/1998 - 10/5/1998 152,883,644
54,760,000 PREFCO-Preferred Receivables Funding Co., 5.550% - 5.570%, 8/19/1998 - 9/3/1998 54,556,799
27,159,000 Receivables Capital Corp., 5.525% - 5.550%, 8/21/1998 - 8/25/1998 27,063,026
357,630,000 Sheffield Receivables Corp., 5.520% - 5.600%, 8/3/1998 - 9/30/1998 356,202,812
Total 1,226,318,196
FINANCE - RETAIL--4.2%
100,000,000 Associates Corp. of North America, 5.600%, 8/3/1998 99,968,889
38,000,000 Associates First Capital Corp., 5.520%, 10/2/1998 37,638,747
75,000,000 Household Finance Corp., 5.690%, 8/3/1998 74,976,292
28,500,000 Island Finance, Puerto Rico, (Norwest Corp. Support Agreement) 5.520%, 9/14/1998 28,307,720
20,000,000 New Center Asset Trust, A1+/P1 Series, 5.500%, 8/11/1998 19,969,444
50,000,000 New Center Asset Trust, A1/P1 Series, 5.530%, 11/12/1998 49,208,903
Total 310,069,995
INSURANCE--0.6%
44,000,000 Marsh & McLennan Companies, Inc., 5.400% - 5.490%, 10/20/1998 - 12/14/1998 43,422,950
TOTAL COMMERCIAL PAPER 2,963,536,648
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES-11.3%
BANKING--2.5%
$ 50,000,000 BankBoston, N.A., 5.650%, 11/9/1998 $ 50,000,000
95,540,000 SALTS II Cayman Islands Corp., (Guaranteed by Bankers Trust International, PLC),
5.737%, 6/17/1999 95,540,000
39,815,000 SALTS III Cayman Island Corp., (Guaranteed by Bankers Trust International, PLC),
5.850%, 1/23/1999 39,815,000
Total 185,355,000
BROKERAGE--1.3%
96,000,000 Goldman Sachs Group, LP, 5.687%, 10/26/1998 96,000,000
FINANCE - AUTOMOTIVE--2.0%
19,804,491 Chase Manhattan Auto Owner Trust 1998-B, Class A-1, 5.578%, 5/10/1999 19,804,491
33,808,320 Chase Manhattan Auto Owner Trust 1998-C, Class A1, 5.588%, 7/9/1999 33,804,824
41,000,000 Compass Auto Receivables Trust 1998-A, Class A-1, 5.659%, 7/15/1999 41,000,000
27,000,000 Ford Credit Auto Owner Trust 1998-C, Class A-1, 5.608%, 1/15/1999 27,000,000
25,000,000 Ford Credit Auto Owner Trust 1998-C, Class A-2, 5.670%, 6/15/1999 25,000,000
Total 146,609,315
FINANCE - COMMERCIAL--2.4%
80,000,000 Beta Finance, Inc., 5.690% - 5.790%, 3/2/1999 - 4/8/1999 79,995,890
2,000,000 CIT Group Holdings, Inc., 6.125%, 9/1/1998 2,000,369
100,000,000 (b)Triangle Funding Ltd., 5.687%, 11/16/1998 100,000,000
Total 181,996,259
FINANCE - EQUIPMENT--1.5%
108,000,000 Pitney Bowes Credit Corp., 5.675%, 8/10/1998 107,847,504
INSURANCE--1.6%
4,124,541 Arcadia Automobile Receivables Trust 1998-A, Class A-1,
(Guaranteed by FSA) 5.628%,
3/15/1999 4,124,541
7,352,548 ContiMortgage Home Equity Loan Trust 1998-1, Class A-1, (Guaranteed by MBIA) 5.647%,
3/15/1999 7,352,548
25,701,455 ContiMortgage Home Equity Loan Trust 1998-2, Class A-1, (Guaranteed by MBIA), 5.648%,
6/15/1999 25,701,455
20,000,000 Marsh & McLennan Companies, Inc., 5.650%, 10/23/1998 20,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES--CONTINUED
INSURANCE--CONTINUED
$ 26,388,522 WFS Financial 1998-A Owner Trust, Class A-1, (Guaranteed by FSA), 5.618%, 2/20/1999 $ 26,388,522
36,000,000 WFS Financial 1998-B Owner Trust, Class A-1, (Guaranteed by FSA) 5.658%, 7/20/1999 36,000,000
Total 119,567,066
TOTAL SHORT-TERM NOTES 837,375,144
(C)VARIABLE RATE INSTRUMENTS--22.3%
BANKING--13.5%
5,645,000 Abbott Foods, Series 1996, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 5,645,000
5,340,000 Alabama State IDA, Series 1994, Miltope Project, (Regions Bank, Alabama LOC), 5.690%,
8/6/1998 5,340,000
7,825,000 Alabama State IDA, (Wellborn Cabinet, Inc.), Tax Revenue Bonds, (Amsouth Bank N.A.,
Birmingham LOC), 5.740%, 8/5/1998 7,825,000
2,175,000 Alabama State IDA, Standard Furniture Project, Series 1995, (Amsouth Bank N.A.,
Birmingham LOC), 5.740%, 8/6/1998 2,175,000
7,510,000 Alexandria Executive Club LP, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 7,510,000
8,340,000 Arrow N.A., Inc., (Bank of America NT and SA, San Francisco LOC), 5.670%, 8/6/1998 8,340,000
7,000,000 Asset Holdings Corp. VII, (U.S. Bank, N.A., Minneapolis LOC), 5.670%, 8/6/1998 7,000,000
3,500,000 Asset Holdings V, (Bayerische Vereinsbank AG, Munich LOC), 5.670%, 8/6/1998 3,500,000
50,000 Associated Materials, Inc., (KeyBank, N.A. LOC), 5.700%, 8/7/1998 50,000
12,000,000 Association of American Medical Colleges, (Guaranteed by Chase Manhattan Bank N.A.,
New York), 5.690%, 8/5/1998 12,000,000
3,800,000 Balboa Investment Group V, Series 1997, (Amsouth Bank N.A., Birmingham LOC), 5.740%,
8/6/1998 3,800,000
4,000,000 Bardstown City, KY, (RJ Tower Project), Series 1995, (Comerica, Inc. LOC), 5.670%,
8/6/1998 4,000,000
8,000,000 Bethesda Country Club, Inc., Series 1997, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 8,000,000
19,085,000 Beverly Hills Nursing Center, Inc., Medilodge Project, Series 1996, (KeyBank, N.A.
LOC), 5.720%, 8/6/1998 19,085,000 1,612,790 Bowling Green Manor
LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 1,612,790
5,000,000 Brentlinger Enterprises, (Huntington National Bank, Columbus, OH
LOC), 5.720%,
8/6/1998 5,000,000
5,877,000 Capital One Funding Corp., Series 1994-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 5,877,000
13,596,000 Capital One Funding Corp., Series 1994-C, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 13,596,000
8,540,000 Capital One Funding Corp., Series 1994-D, (Bank One, Kentucky LOC), 5.670%, 8/6/1998 8,540,000
418,000 Capital One Funding Corp., Series 1995-A, (Bank One, Indianapolis, N.A. LOC), 5.670%,
8/6/1998 418,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 10,106,000 Capital One Funding Corp., Series 1995-B, (Bank One, Kentucky LOC), 5.670%, 8/6/1998 $ 10,106,000
20,680,000 Capital One Funding Corp., Series 1995-F, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 20,680,000
9,500,000 Capital One Funding Corp., Series 1996-H, (Bank One, West Virginia, N.A. LOC), 5.670%,
8/6/1998 9,500,000
1,065,000 Carpenter, Thomas E., Series 1998, (Huntington National Bank, Columbus, OH LOC),
5.720%, 8/6/1998 1,065,000 5,000,000 Carport, Inc., Series 1997,
(Amsouth Bank N.A., Birmingham LOC), 5.740%, 8/6/1998 5,000,000 5,950,000
Chestnut Hills Apartments, Ltd., (Huntington National Bank, Columbus, OH
LOC), 5.720%,
8/6/1998 5,950,000
3,900,000 Cleveland Sportsplex Ltd., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 3,900,000
4,000,000 Clinton County, NY IDA, Bombardier Project, Series 1998-B, (Marine Midland Bank N.A.,
Buffalo, NY LOC), 5.688%, 8/6/1998 4,000,000
8,300,000 Cloquet, MN, Series 1996-B, Potlach Corp., (Credit Suisse First Boston LOC), 5.700%,
8/5/1998 8,300,000
1,032,337 Clyde Manor LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 1,032,337
125,000 Colorado Health Facilities Authority, Arkansas Valley Project, Series 1998-E1, (Bank
One, Colorado LOC), 5.770%, 8/6/1998 125,000
505,000 Colorado Health Facilities Authority, Development Disabilities Center Project,
Series 1998F1, (Bank One, Colorado LOC), 5.770%, 8/6/1998 505,000
5,000,000 Colorado Health Facilities Authority, Development Disabilities Resource Center,
Series 1998C1, (Bank One, Colorado LOC), 5.670%, 8/6/1998 5,000,000
3,000,000 Colorado Health Facilities Authority, Goodwill Industries of Denver Project, Series
1998-G1, (Bank One, Colorado LOC), 5.670%, 8/6/1998 3,000,000
2,780,000 Columbia County, GA Development Authority, Series 1993, (SunTrust Banks, Inc. LOC),
5.650%, 8/5/1998 2,780,000
8,000,000 Commercial Contractors, Inc., Series 1998, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 8,000,000
3,100,000 Cuyahoga County, OH IDR, Northstar Plastics, (Bank One, Ohio, N.A. LOC), 5.670%,
8/6/1998 3,100,000
2,000,000 Damascus Company Ltd., Series 1998, (Huntington National Bank, Columbus, OH LOC),
5.720%, 8/6/1998 2,000,000
8,810,000 Dewberry IV LP, Series 1997, (First National Bank of Maryland, Baltimore LOC), 5.640%,
8/4/1998 8,810,000
5,900,000 Die-Matic Corp., (Huntington National Bank, Columbus, OH LOC), 5.720%, 8/6/1998 5,900,000
4,500,000 Double H Plastics, Inc., Series 1998, (Corestates Bank N.A., Philadelphia, PA LOC),
5.650%, 8/5/1998 4,500,000
2,915,000 Douglas County, GA Development Authority, Heritage Bag Project, Series 1998-B,
(Wachovia Bank of NC, N.A., Winston-Salem LOC), 5.690%, 8/6/1998 2,915,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 90,000 ERC Real Estate LLC, (KeyBank, N.A. LOC), 5.670%, 8/6/1998 $ 90,000
3,790,000 Eastwinds Investment, Ltd., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 3,790,000
6,805,000 Fort Craig Limited Partnership, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 6,805,000
1,375,000 Frederick County, MD, Thogar, LLC Facility, Series 1998-B, (First National Bank of
Maryland, Baltimore LOC), 5.640%, 8/4/1998 1,375,000
4,000,000 G.M.H. Enterprises, Inc., Series 1995, (National City Bank, Ohio LOC), 5.670%,
8/6/1998 4,000,000
3,000,000 Gerken Materials, Inc., Series 1995, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 3,000,000
4,000,000 Gerken Materials, Inc., Series 1997, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 4,000,000
11,920,000 Grand Aire Express, Inc., Series 1997, (National City Bank, Ohio LOC), 5.670%, 8/6/1998 11,920,000
1,150,000 Great Lakes Brewing Co., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 1,150,000
2,190,000 Grote Family LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 2,190,000
11,860,000 Hunt Club Apartments, Inc., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 11,860,000
650,000 Illinois Development Finance Authority, Series 1996-B, Nimlok Co., Project, (Bank One,
Illinois, N.A. LOC), 5.820%, 8/6/1998 650,000
19,000,000 JFK Family Borrowing, LLP, Series 1997, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 19,000,000
4,500,000 Kendall Health Care Properties, Series 1998-A, (SunTrust Bank, Miami LOC), 5.750%,
8/5/1998 4,500,000
20,580,000 Kenny, Donald R. and Cheryl A., (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 20,580,000
6,780,000 Kenny, Donald R. and Cheryl A., Series 1995-A, (National City Bank, Ohio LOC), 5.670%,
8/6/1998 6,780,000
7,750,000 Kenny, Donald R. and Cheryl A., Series 1995-B, (Huntington National Bank, Columbus, OH
LOC), 5.670%, 8/6/1998 7,750,000
4,300,000 Kings Creek Country Club, Inc., Series 1997, (Corestates Bank N.A., Philadelphia, PA
LOC), 5.700%, 8/5/1998 4,300,000
2,400,000 L.H. Kroh, Inc., Series 1998, (Corestates Bank N.A., Philadelphia, PA LOC), 5.700%,
8/5/1998 2,400,000
157,000,000 (b)Liquid Asset Backed Securities Trust, Series 1996-3, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.676%, 8/17/1998 157,000,000
48,694,302 (b)Liquid Asset Backed Securities Trust, Series 1997-1, (Westdeutsche Landesbank
Girozentrale Swap Agreement), 5.656%, 8/17/1998 48,694,302
16,000,000 Long Lane Master Trust III, Series 1997-C, 5.749%, 8/3/1998 16,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 8,500,000 Mack Industries, Series 1998, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 $ 8,500,000
23,000,000 Maryland EDC, Human Genome, Series 1997, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 23,000,000
6,200,000 Medford Convalescent & Nursing Center, Series 1997, (First National Bank of Maryland,
Baltimore LOC), 5.640%, 8/4/1998 6,200,000
3,130,000 Midwest Funding Corp., Series 1991-A, Class A-1, (Bank One, Ohio, N.A. LOC), 5.670%,
8/6/1998 3,130,000
3,320,000 Midwest Funding Corp., Series 1991-C, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 3,320,000
1,458,000 Midwest Funding Corp., Series 1992-B, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 1,458,000
2,349,000 Midwest Funding Corp., Series 1992-C, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 2,349,000
4,720,000 Miller, James & Deborah, Series 1997, (First National Bank of Maryland, Baltimore LOC),
5.640%, 8/4/1998 4,720,000
11,400,000 Mississippi Business Finance Corp., Choctaw Foods, Inc, (Rabobank Nederland, Utrecht
LOC), 5.650%, 8/5/1998 11,400,000
5,800,000 Mississippi Business Finance Corp., Metalloy Project, (Comerica Bank, Detroit, MI
LOC), 5.570%, 8/6/1998 5,800,000
12,000,000 Mississippi Business Finance Corp., Series 1994, Georgia Gulf, (Wachovia Bank of NC,
N.A., Winston-Salem LOC), 5.610%, 8/5/1998 12,000,000
2,000,000 Mississippi Business Finance Corp., Series 1995, Plantation Pointe, LP Project,
(SunTrust Bank, Atlanta LOC), 5.690%, 8/6/1998 2,000,000
4,900,000 NUFUNDING, Inc., Series 1996, (Lasalle National Bank, Chicago LOC), 5.726%, 8/5/1998 4,900,000
2,800,000 Newbury Industrial Park, Series 1996, (Huntington National Bank, Columbus, OH LOC),
5.670%, 8/6/1998 2,800,000
13,365,000 North Oaks Partnership, Series 1998, (Lasalle National Bank, Chicago LOC), 5.750%,
8/6/1998 13,365,000
5,500,000 Northampton County, PA IDA, Series 1998, (Dauphin Deposit Bank and Trust LOC), 5.740%,
8/5/1998 5,500,000
2,175,000 Nova University, Inc. Lease Revenue Bonds, Series 1993, Miami Dolphins Training
Facility, (SunTrust Bank, South Florida LOC), 5.650%, 8/5/1998 2,175,000
5,289,000 Oceana County Freezer Storage, Inc., Series 1998, (Huntington National Bank, Columbus,
OH LOC), 5.670%, 8/6/1998 5,289,000
2,145,000 Orangeburg Convalescent Care Center, Inc., Series 1995-A, (PNC Bank, Kentucky LOC),
5.639%, 8/3/1998 2,145,000
1,955,000 Port Authority of Saint Paul, MN, Bix Fruit Co., Series 1998-B, (Firstar Bank,
Milwaukee LOC), 5.910%, 8/6/1998 1,955,000
3,350,000 Port Authority of Saint Paul, MN, National Checking Co. Project, Series 1998-B, 5.810%,
8/6/1998 3,350,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 9,500,000 Primex Funding Corp., Series 1997-A, (Bank One, Indianapolis, N.A. LOC), 5.670%,
8/6/1998 $ 9,500,000
71,915,014 (b)Rabobank Optional Redemption Trust, Series 1997-101, 5.688%, 10/15/1998 71,915,014
2,875,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 2,875,000
7,020,000 Roby Company Ltd. Partnership, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 7,020,000
12,350,000 Rooker, J.W., (Wachovia Bank of NC, N.A., Winston-Salem LOC), 5.640%, 8/5/1998 12,350,000
2,600,000 San Jose, CA Multifamily Housing Revenue Bonds, Carlton Plaza of San Jose, Series 1998
A-T, (Commerzbank AG, Frankfurt LOC), 5.670%, 8/6/1998 2,600,000
200,000 Scranton Times, LP, (PNC Bank, N.A. LOC), 5.639%, 8/3/1998 200,000
1,020,000 Solon, OH, Custom Graphics, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 1,020,000
2,000,000 Souser Family Ltd. Partnership, Series 1998, (Dauphin Deposit Bank and Trust LOC),
5.740%, 8/5/1998 2,000,000
3,340,000 Spitzer Group, Series 1996-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 3,340,000
1,935,000 Spitzer Group, Series 1996-B, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 1,935,000
14,000,000 Spitzer Group, Series 1998-A, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 14,000,000
12,500,000 Spitzer Group, Series 1998-B, (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 12,500,000
4,700,000 Springfield Limited, Series A, (Union Bank of Switzerland, Zurich LOC), 5.670%,
8/6/1998 4,700,000
2,000,000 Stark County, OH IDR, Shearer's Foods, Inc., Series 1997, (Bank One, Ohio, N.A. LOC),
5.670%, 8/6/1998 2,000,000
2,750,000 Stratford Properties, LP, Series 1998, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 2,750,000
3,250,000 Summit County, OH IDR, Series 1997, Malco Products, Inc, (Bank One, Ohio, N.A. LOC),
5.670%, 8/6/1998 3,250,000
4,715,000 TNT Co., Series 1998, (Huntington National Bank, Columbus, OH LOC), 5.720%, 8/6/1998 4,715,000
47,035,000 Terry Griffin Gate Partners, Ltd., Series 1995, (Bank One, Kentucky LOC), 5.670%,
8/5/1998 47,035,000
7,300,000 Tift County, GA Development Authority, Chickasha of Georgia Project, Series 1997,
(Bank of Tokyo-Mitsubishi Ltd. LOC), 5.760%, 8/5/1998 7,300,000
5,545,000 Van Dyne Crotty Co., Series 1996, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 5,545,000
5,000,000 Van Dyne Crotty Co., Series 1998, (Huntington National Bank, Columbus, OH LOC), 5.670%,
8/6/1998 5,000,000
2,701,000 Vista Funding Corp., (Bank One, Ohio, N.A. LOC), 5.670%, 8/6/1998 2,701,000
3,989,000 Vista Funding Corp., Series 1994-A, (Fifth Third Bank of Northwestern OH LOC), 5.670%,
8/6/1998 3,989,000
1,368,000 Vista Funding Corp., Series 1995-B, (Fifth Third Bank of Northwestern OH LOC), 5.670%,
8/6/1998 1,368,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
BANKING--CONTINUED
$ 9,622,000 Vista Funding Corp., Series 1995-D, (Fifth Third Bank of Northwestern OH LOC), 5.670%,
8/6/1998 $ 9,622,000
5,696,000 Vista Funding Corp., Series 1995-E, (Bank One, Ohio, N.A. LOC),
5.670%, 8/6/1998 5,696,000 7,311,000 Vista Funding Corp., Series 1998-B,
(Fifth Third Bank of Northwestern OH LOC), 5.690%,
8/6/1998 7,311,000
5,055,000 Vulcan, Inc., (Amsouth Bank N.A., Birmingham LOC), 5.740%, 8/6/1998 5,055,000
981,431 Wauseon Manor II LP, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 981,431
2,960,000 Wexner Heritage House, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 2,960,000
7,250,000 Whetstone Care Center, LLC, Series 1998, (Fifth Third Bank, Cincinnati LOC), 5.750%,
8/6/1998 7,250,000
3,000,000 White Bear Lake, MN City of, Series 1993, (Norwest Bank Minnesota, N.A. LOC), 5.940%,
8/6/1998 3,000,000
16,500,000 William Hill Manor, Inc., Series 1998, (First National Bank of Maryland, Baltimore
LOC), 5.640%, 8/4/1998 16,500,000
3,425,000 Wood County, OH, IMCO Carbide Tool, Inc., Series 1998, (Huntington National Bank,
Columbus, OH LOC), 5.670%, 8/6/1998 3,425,000
2,250,000 YMCA of Central, OH, (Huntington National Bank, Columbus, OH LOC), 5.670%, 8/6/1998 2,250,000
Total 1,004,330,874
ELECTRICAL EQUIPMENT--0.4%
32,674,483 Northwest Airlines, Inc., (Guaranteed by General Electric Co.), 5.639%, 8/3/1998 32,674,483
FINANCE - AUTOMOTIVE--1.3%
100,000,000 General Motors Acceptance Corp., Mortgage of PA, (Guaranteed by General Motors
Acceptance Corp.), 5.627%, 8/3/1998 99,046,516
FINANCE - RETAIL--1.7%
60,000,000 (b)Associates Corp. of North America, 5.710%, 8/3/1998 59,987,584
64,000,000 Carco Auto Loan Master Trust 1993-2, Class A1, 5.605%, 8/17/1998 64,000,000
Total 123,987,584
INSURANCE--5.4%
15,000,000 Allstate Life Insurance Co., 5.759%, 10/1/1998 15,000,000
50,000,000 First Allmerica Financial Life Insurance Co., 5.768%, 10/14/1998 50,000,000
30,000,000 Jackson National Life Insurance Co., 5.730%, 9/24/1998 30,000,000
14,000,000 Jackson National Life Insurance Co., 5.780%, 10/1/1998 14,000,000
80,477,447 (b)Liquid Asset Backed Securities Trust, Series 1997-3, Senior Notes, (Guaranteed by
AMBAC), 5.658%, 9/28/1998 80,477,447
35,000,000 Peoples Security Life Insurance Company, 5.780%, 8/3/1998 35,000,000
32,000,000 Peoples Security Life Insurance Company, 5.840%, 8/3/1998 32,000,000
</TABLE>
PRIME OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(C)VARIABLE RATE INSTRUMENTS--CONTINUED
INSURANCE--CONTINUED
$ 25,000,000 Security Life of Denver Insurance Co., 5.738%, 8/3/1998 $ 25,000,000
10,000,000 SunAmerica Life Insurance Company, 5.758%, 8/3/1998 10,000,000
70,000,000 Transamerica Life Insurance and Annuity Co., 5.759%, 10/1/1998 70,000,000
44,000,000 Travelers Insurance Company, 5.739%, 8/3/1998 44,000,000
Total 405,477,447
TOTAL VARIABLE RATE INSTRUMENTS 1,665,516,904
TIME DEPOSITS--6.9%
BANKING--6.9%
175,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.687%, 8/3/1998 175,000,000
150,000,000 Chase Manhattan Bank (USA) N.A., Wilmington, 5.687%, 8/3/1998 150,000,000
100,000,000 Deutsche Bank, AG, 5.687%, 8/3/1998 100,000,000
15,000,000 Mellon Bank N.A., Pittsburgh, 5.687%, 8/3/1998 15,000,000
75,000,000 Westdeutsche Landesbank Girozentrale, 5.687%, 8/3/1998 75,000,000
TOTAL TIME DEPOSITS 515,000,000
(D)REPURCHASE AGREEMENTS--12.2%
106,625,000 ABN AMRO Chicago Corp., 5.690%, dated 7/31/1998, due 8/3/1998 106,625,000
72,855,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.620%, dated 7/31/1998, due 8/3/1998 72,855,000
98,200,000 First Union Capital Markets, 5.630%, dated 7/31/1998, due 8/3/1998 98,200,000
69,000,000 Goldman Sachs Group, LP, 5.700%, dated 7/31/1998, due 8/3/1998 69,000,000
143,500,000 HSBC Securities, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 143,500,000
300,000,000 Lehman Brothers, Inc., 5.630%, dated 7/31/1998, due 8/3/1998 300,000,000
50,000,000 Salomon Brothers, Inc., 5.690%, dated 7/31/1998, due 8/3/1998 50,000,000
20,000,000 Societe Generale Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 20,000,000
50,000,000 Warburg Dillon Reed LLC, 5.610%, dated 7/31/1998, due 8/3/1998 50,000,000
TOTAL REPURCHASE AGREEMENTS 910,180,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(E) $ 7,437,974,500
</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, 1998, these securities amounted to
$518,074,347 which represents 7.0% 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
($7,448,561,427) at July 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC - American Municipal Bond Assurance Corporation EDC - Economic Development
Commission FSA - Financial Security Assurance IDA - Industrial Development
Authority IDR - Industrial Development Revenue LLC - Limited Liability
Corporation LOC - Letter of Credit LP - Limited Partnership MBIA - Municipal
Bond Investors Assurance 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, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 910,180,000
Investments in securities 6,527,794,500
Total investments in securities, at amortized cost and value $ 7,437,974,500
Cash 1,574,950
Income receivable 30,117,848
Receivable for shares sold 4,654,530
Prepaid expenses 362,706
Total assets 7,474,684,534
LIABILITIES:
Payable for shares redeemed 915,411
Income distribution payable 23,885,126
Accrued expenses 1,322,570
Total liabilities 26,123,107
NET ASSETS for 7,448,561,427 shares outstanding $ 7,448,561,427
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$3,980,339,187 / 3,980,339,187 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$3,468,222,240 / 3,468,222,240 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, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $408,069,509
EXPENSES:
Investment advisory fee $ 14,305,445
Administrative personnel and services fee 5,395,419
Custodian fees 429,093
Transfer and dividend disbursing agent fees and expenses 180,427
Directors'/Trustees' fees 47,000
Auditing fees 13,000
Legal fees 22,400
Portfolio accounting fees 527,951
Shareholder services fee--Institutional Shares 9,947,222
Shareholder services fee--Institutional Service Shares 7,934,584
Share registration costs 513,794
Printing and postage 20,000
Insurance premiums 210,897
Taxes 18,560
Miscellaneous 26,943
Total expenses 39,592,735
Waivers--
Waiver of investment advisory fee $(7,090,763)
Waiver of shareholder services feeInstitutional Shares (9,947,222)
Total waivers (17,037,985)
Net expenses 22,554,750
Net investment income $385,514,759
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 385,514,759 $ 264,242,252
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (219,104,923) (175,275,611)
Institutional Service Shares (166,409,836) (88,966,641)
Change in net assets resulting from distributions to shareholders (385,514,759) (264,242,252)
SHARE TRANSACTIONS--
Proceeds from sale of shares 81,194,972,477 57,987,041,825
Net asset value of shares issued to shareholders in payment of
distributions declared 107,652,252 78,154,545
Cost of shares redeemed (79,679,142,681) (56,569,738,161)
Change in net assets resulting from share transactions 1,623,482,048 1,495,458,209
Change in net assets 1,623,482,048 1,495,458,209
NET ASSETS:
Beginning of period 5,825,079,379 4,329,621,170
End of period $ 7,448,561,427 $ 5,825,079,379
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
PRIME OBLIGATIONS FUND
JULY 31, 1998
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.
At July 31, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $3,342, which will reduce the Fund's taxable income arising from
future net realized gain on investments, if any, to the extent permitted by the
Code, and thus will reduce the amount of the distributions to shareholders which
would otherwise be necessary to relieve the Fund of any liability for federal
tax. Pursuant to the Code, such capital loss carryforward will expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2006 $3,342
</TABLE>
Additionally, net capital losses of $9,477 attributable to security transactions
incurred after October 31, 1997, 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 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, 1998, is as
follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <S> <C>
Associates Corp. of North America 12/31/1997 $ 59,968,800
Liquid Asset Backed Securities Trust, Series 1996-3 8/15/1996 157,000,000
Liquid Asset Backed Securities Trust, Series 1997-1 2/19/1997 48,694,302
Liquid Asset Backed Securities Trust, Series 1997-3 6/27/1997 80,477,447
Rabobank Optional Redemption Trust, Series 1997-101 4/17/1997 - 7/22/1998 71,915,014
Triangle Funding Ltd. 10/16/1997 100,000,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1998, capital paid-in aggregated $7,448,561,427.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SHARES 1998 1997
<S> <C> <C>
Shares sold 55,022,265,485 41,776,217,888
Shares issued to shareholders in payment of distributions declared 69,275,080 53,083,360
Shares redeemed (54,699,283,688) (41,273,820,945)
Net change resulting from Institutional Share transactions 392,256,877 555,480,303
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 26,172,706,992 16,210,823,937
Shares issued to shareholders in payment of distributions declared 38,377,172 25,071,185
Shares redeemed (24,979,858,993) (15,295,917,216)
Net change resulting from Institutional Service Share transactions 1,231,225,171 939,977,906
Net change resulting from share transactions 1,623,482,048 1,495,458,209
</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 Inc. 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
MONEY MARKET OBLIGATIONS TRUST
(Prime Obligations Fund):
We have audited the accompanying statement of assets and liabilities of Prime
Obligations Fund (an investment portfolio of Money Market Obligations Trust, a
Massachusetts business trust), including the schedule of portfolio investments,
as of July 31, 1998, 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, 1998, by correspondence with the custodian and brokers. As to confirmation
replies not received, we carried out alternative auditing procedures. 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, 1998, 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 25, 1998
Prime Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management Investment Company
PRIME OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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 PPG Place
Pittsburgh, PA 15222
(graphic)
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N708
601352-02 (9/98)
(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, 1998. 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.
PRIME OBLIGATIONS FUND
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
Statement dated September 30, 1998
(graphic)
FEDERATED INVESTORS
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N203
Cusip 60934N708
G01352-03 (9/98)
(graphic)
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 9
Investment Adviser 9
Advisory Fees 10
Brokerage Transactions 10
Other Services 10
Fund Administration 10
Custodian and Portfolio Accountant 10
Transfer Agent 10
Independent Public Accountants 10
Shareholder Services 11 Determining Net Asset Value 11 Redemption In Kind 11
Massachusetts Partnership Law 11 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,
INC. 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 credit worthiness 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
A nationally recognized statistical rating organization's ("NRSRO") 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, Prime-1 by
Moody's Investors Service, Inc., or F-1 (+ or -) by Fitch IBCA, Inc. 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 issued by any one issuer (other than cash;
cash items; securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such securities) if as a result more than 5% of the value of
its total assets would be invested in the securities of that issuer.
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 will also determine the effective maturity of its investments,
as well as its ability to consider a security as having received the requisite
short-term ratings by NRSROs, according to Rule 2a-7. The Fund may change these
operational policies to reflect changes in the laws and regulations without the
approval of its shareholders.
MONEY MARKET OBLIGATIONS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with Money Market Obligations Trust, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chief Executive Officer and Director or Trustee of the
Funds; Chairman and Director, Federated Investors, Inc.;
Chairman and Trustee, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research
Corp.; Chairman, Passport Research, Ltd.; Mr. Donahue is the
father of J. Christopher Donahue, President and Trustee of
the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director or Trustee of the Funds; Director, Member of Executive Committee,
Children's Hospital of Pittsburgh; formerly, Senior Partner, Ernst & Young LLP;
Director, MED 3000 Group, Inc.; Director, Member of Executive Committee,
University of Pittsburgh.
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
Director or Trustee of the Funds; 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.
William J. Copeland
One PNC Plaza--23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director or Trustee of the Funds; 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, United Refinery;
Chairman, Pittsburgh Foundation; Director, Forbes Fund;
Chairman, Pittsburgh Civic Light Opera.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President or Executive Vice President of the Funds;
President and Director, Federated Investors, Inc.; President
and Trustee, 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; Director or
Trustee of some of the Funds. Mr. Donahue is the son of John
F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd, Esq.
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Director or Trustee of the Funds; Attorney-at-law; Director,
The Emerging Germany Fund, Inc.; formerly, President, Boston
Stock Exchange, Inc.; Regional Administrator, United States
Securities and Exchange Commission.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Director or Trustee of the Funds; Professor of Medicine, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center Downtown;
Hematologist, Oncologist, and Internist, Presbyterian and Montefiore Hospitals;
formerly, Member, National Board of Trustees, Leukemia Society of America.
Edward L. Flaherty, Jr., Esq. @
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Director or Trustee of the Funds; Attorney, of Counsel, Miller, Ament, Henny &
Kochuba; Director, Eat'N Park Restaurants, Inc.; formerly, Counsel, Horizon
Financial, F.A., Western Region; Partner, Meyer and Flaherty.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Director or Trustee of the Funds; formerly, Representative, Commonwealth of
Massachusetts General Court; President, State Street Bank and Trust Company and
State Street Corporation; Director, VISA USA and VISA International; Chairman
and Director, Massachusetts Banker Association; Director, Depository Trust
Corporation.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
Director or Trustee of the Funds; President, Law Professor, Duquesne University;
Consulting Partner, Mollica & Murray; formerly, Dean and Professor of Law,
University of Pittsburgh School of Law; Dean and Professor of Law, Villanova
University School of Law.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Director or Trustee of the Funds; President, World Society for Ekistics, Athens;
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; formerly, Professor, United States
Military Academy; Professor, United States Air Force Academy.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Director or Trustee of the Funds; Public Relations/ Marketing/Conference
Planning; formerly, National Spokesperson, Aluminum Company of America; business
owner.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Trustee or Director of some of the Funds; President, Executive Vice President
and Treasurer of some of the Funds; Vice Chairman, Federated Investors, Inc.;
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.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary and Treasurer
Executive Vice President and Secretary of the Funds; Treasurer of some of the
Funds; Executive Vice President, Secretary, and Director, Federated Investors,
Inc.; 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.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
President or Vice President of some of the Funds; Director or Trustee of some of
the Funds; Executive Vice President, Federated Investors, Inc.; Chairman and
Director, Federated Securities Corp.
* 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: Automated Government Money Trust; Blanchard
Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust
Series, Inc.; CCB Funds; 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 Core
Trust; 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.; 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; Regions Funds; RIGGS
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; WCT Funds; and World Investment Series,
Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 3, 1998, the following shareholders of record owned 5% or more
of the outstanding Institutional Shares of the Fund: First Union Capital Markets
Corp., Charlotte, North Carolina owned approximately 295,525,674 (6.93%); Var &
Co., US Bank NA, St. Paul, Minnesota owned approximately 279,508,768 shares
(6.56%); and Star Bank, Cincinnati, Ohio owned approximately 233,813,823 shares
(5.49%).
As of September 3, 1998, the following shareholders of record owned 5% or more
of the outstanding Institutional Service Shares of the Fund: Laba & Co.,
Chicago, Illinois owned approximately 1,057,328,427 shares (26.02%); Var & Co.,
U.S. Bank NA, St. Paul, Minnesota owned approximately 561,737,217 shares
(13.83%); Morand & Company, Chicago, Illinois owned approximately 343,281,125
(8.45%); and Peoples Bank, Bridgeport, Connecticut owned approximately
219,305,540 shares (5.40%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, AGGREGATE
POSITION WITH COMPENSATION TOTAL COMPENSATION PAID
TRUST FROM TRUST* FROM FUND COMPLEX +
<S> <C> <S>
John F. Donahue
Chairman and Trustee $0 $0 for the Trust and
56 other investment companies in the Fund Complex
Thomas G. Bigley
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
John T. Conroy, Jr.
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
William J. Copeland
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
J. Christopher Donahue
President and Trustee $0 $0 for the Trust and
18 other investment companies in the Fund Complex
James E. Dowd, Esq.
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D.
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr.,
Esq.
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
Peter E. Madden
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
John E. Murray, Jr., J.D.,
S.J.D.
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Wesley W. Posvar
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Marjorie P. Smuts
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1998.
# 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, Inc. All the voting securities of Federated Investors,
Inc. 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 prospectuses. For the fiscal years ended July
31, 1998, 1997, and 1996, the adviser earned $14,305,445, $10,030,131, and
$7,504,715, respectively, of which $7,090,763, $5,562,429, and $4,114,750,
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 1998, 1997, 1996, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from those of
the other accounts managed by the adviser, investments of the type the Fund may
make may also be made by those other accounts. When the Fund and one or more
other accounts managed by the adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained or disposed of by the Fund. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, Inc., 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, Inc., 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, 1998, 1997, and 1996, the Administrators earned $5,395,419, $3,787,706,
and $2,837,919, 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, 1998, the Fund earned shareholder service
fees on behalf of Institutional Shares and Institutional Service Shares in the
amounts of $9,947,222 and $7,934,584, respectively, $0 and $7,934,584 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;
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, 1998, the yield for Institutional Shares
and Institutional Service Shares was 5.50%, and 5.25%, 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, 1998, the effective yield for
Institutional Shares and Institutional Service Shares was 5.65%, and 5.39%,
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, 1998, and for the period from May 26, 1990,
(start of performance) to July 31, 1998, the average annual total returns were
5.64%, 5.15%, and 5.27%, respectively, for Institutional Shares.
For the one-year period ended July 31, 1998, and for the period from July 5,
1994, (date of initial public offering) through July 31, 1998, the average
annual total returns were 5.37% and 5.30%, 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, INC.
Federated Investors, Inc. 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, Inc. 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, 1997, Federated managed more than $63.1 billion in assets across 51
money market funds, including 18 government, 11 prime and 22 municipal with
assets approximating $35 billion, $17.1 billion, and $10.9 billion,
respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated Investors, Inc. are: U.S. equity and high
yield --J. Thomas Madden; U.S. fixed income--William D. Dawson, III; and
global equities and fixed income--Henry A. Frantzen. The Chief Investment
Officers are Executive Vice Presidents of the Federated advisory companies.
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 $4.4 trillion to the more than 6,700 funds available.*
Federated Investors, Inc., through its subsidiaries, distributes mutual funds
for a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors, Inc. meets the needs of approximately 900 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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights - Institutional Shares 2
General Information 3
Year 2000 Statement 3
Investment Information 3
Investment Objective 3
Investment Policies 3
Municipal Securities 5
Investment Risks 5
Investment Limitations 6
Fund Information 6
Management of the Fund 6
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 8
Invest-by-Phone 8
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Account and Share Information 9
Dividends 9
Capital Gains 9
Account Activity 9
Accounts with Low Balances 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 10
Other Classes of Shares 10
Performance Information 10
Last Meeting of Shareholders 11
Financial Highlights - Institutional Service Shares 12
Financial Statements 13
Report of Independent Public Accountants 43
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(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 "Trust 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
TAX-FREE OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 43.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.03 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) (0.03) (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 $ 1.00
TOTAL RETURN(B) 3.50% 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% 0.20%*
Net investment income 3.45% 3.43% 3.46% 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%*
Expense waiver/
reimbursement(c) 0.35% 0.35% 0.36% 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%*
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $2,279,770 $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)
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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator, and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing, and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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 insti
tutions 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 invest ment
as exempt from federal income tax. The Fund invests in these participa tion
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 obli gations
may be subject to periodic appropriation. Municipal leases are sub ject 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, Inc. All of the Class A (voting) shares of
Federated Investors, Inc. are owned by a trust, the trust ees of which are John
F. Donahue, Chairman and Director of Federated Inves tors, Inc., Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across ^ore than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. 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 approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. 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, Jr. 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) 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: 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. 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.
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. 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 12:00 noon (Eastern time). Proceeds from redemption
requests on holidays when wire transfers are restricted will be wired the
followng 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 capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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.
As of September 3, 1998, Naidot & Co.organized in the state of New Jersey owned
34.90% of the voting securities of the Institutional Service Shares 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.
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
Because interest received by the Fund may not be exempt from all state and local
income taxes, shareholders may be required to pay state and local taxes on
dividends received from the Fund. Shareholders are urged to consult their own
tax advisers regarding the status of their accounts under state and local tax
laws.
OTHER CLASSES OF SHARES
The Fund also offers another class of shares. 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.
Both 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
Thomas G. Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SERVICE SHARES
TAX-FREE OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 43.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.03 0.002
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.002)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 3.25% 3.24% 3.29% 3.39% 0.18%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45% 0.39%*
Net investment income 3.20% 3.19% 3.22% 3.48% 3.04%*
Expense waiver/reimbursement(c) 0.10% 0.10% 0.11% 0.14% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $940,516 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--101.3%
ALABAMA--4.1%
$ 3,770,000 Alabama HFA, 1995 (Series E) Weekly VRDNs (Royal Gardens Apartments
Project)/(SouthTrust Bank of Alabama, Birmingham LOC) $ 3,770,000
7,215,000 Anniston, AL, IDB (Series 1989-A) Weekly VRDNs (Union Foundry Co.)/(Amsouth Bank N.A.,
Birmingham LOC) 7,215,000
3,650,000 Arab, AL IDB, (Series 1989) Weekly VRDNs (SCI Manufacturing, Inc.)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 3,650,000
1,100,000 Arab, AL IDB, Revenue Refunding Bonds (Series 1989) Weekly VRDNs (SCI Manufacturing,
Inc.)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 1,100,000
5,000,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly VRDNs
(S.P. Hotel Company)/(Amsouth Bank N.A., Birmingham LOC) 5,000,000
3,500,000 Birmingham, AL Medical Clinic Board, Medical Clinic Revenue Bonds (Series 1996)
WeeklyVRDNs (St. Martin's In The Pines)/(Regions Bank, Alabama LOC) 3,500,000
2,995,000 Birmingham, AL Special Care Facilities Financing Authority, Capital Improvement
Revenue Bonds (Series 1995) Weekly VRDNs (Methodist Home for the Aging
(AL))/(SouthTrust Bank of Alabama, Birmingham LOC) 2,995,000
15,910,000 Columbia, AL IDB, CDC Municipal Products, Inc. (Series 1997I) Weekly VRDNs (Alabama
Power Co.)/(AMBAC INS)/(CDC Municipal Products, Inc. LIQ) 15,910,000
3,000,000 Decatur, AL IDB, Revenue Refunding Bonds (Series 1993) Weekly VRDNs (Allied-Signal,
Inc.) 3,000,000
3,300,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn (Homewood AL))/(SouthTrust Bank of
Alabama, Birmingham LOC) 3,300,000
4,000,000 Hoover, AL Board of Education, Warrant Anticipation Notes (Series 1998-A), 3.80% BANs,
2/1/1999 4,000,000
1,406,000 Irondale, AL IDB, Revenue Bonds (Series 1989) Weekly VRDNs (Collateral Mortgage,
Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) 1,406,000
8,500,000 Jefferson County, AL, GO Warrants (Series 1996) Weekly VRDNs (Bayerische Landesbank
Girozentrale LOC) 8,500,000
2,260,000 Madison, AL IDA (Series A) Weekly VRDNs (Executive Inn)/(Amsouth Bank N.A.,
BirminghamLOC) 2,260,000
6,690,000 Marshall County, AL, Special Obligation School Refunding Warrant (Series 1994)
WeeklyVRDNs (Marshall County, AL Board of Education)/(Regions Bank, Alabama LOC) 6,690,000
2,500,000 Mobile, AL IDA Weekly VRDNs (McRae's Industries, Inc.)/(Nationsbank, N.A., Charlotte
LOC) 2,500,000
500,000 Mobile, AL IDB, PCR (Series 1993A) Weekly VRDNs (Alabama Power Co.)/
(Alabama Power Co. GTD) 500,000
10,000,000 Mobile, AL IDB, PCR (Series 1993B) Weekly VRDNs (Alabama Power Co.)/
(Alabama Power Co. GTD) 10,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
ALABAMA--CONTINUED
$ 1,000,000 Mobile, AL IDB, Pollution Control Refunding Revenue Bonds (Series 1992) Weekly VRDNs
(AirProducts & Chemicals, Inc.)/(Air Products & Chemicals, Inc. GTD) $ 1,000,000
400,000 Montgomery, AL IDB, (Series 1988A) Weekly VRDNs (Smith
Industries)/(SunTrust Bank,
Atlanta LOC) 400,000
24,500,000 Montgomery, AL IDB Pollution Control & Solid Disposal Revenue, 3.65% CP
(General Electric Co.), Mandatory Tender 8/5/1998 24,500,000
14,995,000 The Board of Trustees of the University of Alabama (Series A) Weekly VRDNs
(Bank of America NT and SA, San Francisco LIQ) 14,995,000
1,290,000 Tuscaloosa County, AL Port Authority (Series 1989A) Weekly VRDNs
(Capstone Hotel Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) 1,290,000
730,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) Weekly VRDNs
(Harco, Inc.)/(Amsouth Bank N.A., Birmingham LOC) 730,000
4,695,000 Vincent, AL IDB Weekly VRDNs (Headquarters Partnership Project)/(National Australia
Bank,Ltd., Melbourne LOC) 4,695,000
Total 132,906,000
ALASKA--0.7%
14,300,000 (b)Alaska International Airports System (Series 1998A), 4.36% BANs,
4/1/1999 14,333,020 7,205,000 (b)Alaska State Housing Finance Corp., PT-202,
3.70% TOBs (Bayerische Vereinsbank AG,
Munich LIQ), Optional Tender 5/20/1999 7,205,000
Total 21,538,020
ARIZONA--1.7%
9,830,000 Apache County, AZ IDA, 1983 (Series A) Weekly VRDNs (Tucson Electric Power Co.)/
(Toronto-Dominion Bank LOC) 9,830,000
3,700,000 Arizona Health Facilities Authority Weekly VRDNs (University Physicians, Inc.)/(Bank
One, Arizona N.A. LOC) 3,700,000
6,350,000 Arizona Health Facilities Authority, Pooled Loan Program Revenue Bonds (Series 1985B)
Weekly VRDNs (FGIC INS)/(Chase Manhattan Bank N.A., New York LIQ)
6,350,000 13,060,000 Chandler, AZ IDA Weekly VRDNs (SMP II Limited
Partnership)/(Bank One, Arizona N.A. LOC) 13,060,000
3,700,000 Gila County, AZ IDA Weekly VRDNs (Cobre Valley Hospital)/(Bank One, Arizona N.A. LOC) 3,700,000
5,330,000 Glendale, AZ IDA, Variable Rate Senior Living Facilities Revenue Bonds Weekly VRDNs
(Friendship Retirement Corporation)/(Norwest Bank Minnesota, N.A. LOC) 5,330,000
3,500,000 Maricopa County, AZ Pollution Control Corp. (Series 1994F) Daily VRDNs (Arizona Public
Service Co. - Palo Verde)/(Bank of America NT and SA, San Francisco LOC) 3,500,000
1,700,000 Pima County, AZ IDA Weekly VRDNs (Tucson Electric Power Co.)/
(Toronto-Dominion Bank LOC) 1,700,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
ARIZONA--CONTINUED
$ 7,810,000 Tolleson, AZ Municipal Finance Corporation, Revenue Refunding Bonds (Series of 1998)
Weekly VRDNs (Citizens Utilities Co.) $ 7,810,000
Total 54,980,000
ARKANSAS--0.1%
2,000,000 Little Rock, AR Pulaski County School District (Series 1998), 4.25% TRANs, 12/30/1998 2,004,860
1,000,000 Sheridan, AR IDA (Series A) Weekly VRDNs (H.H. Robertson Co.)/(PNC Bank, N.A. LOC) 1,000,000
Total 3,004,860
CALIFORNIA--7.3%
6,000,000 Acalanes, CA Union High School District, 3.90% TRANs, 6/30/1999 6,010,539
20,000,000 (b)California Community College Financing Authority, Trust Receipts (Series 1998
FR/RI-A24), 3.60% TOBs (FSA INS)/(Bank of New York, New York LIQ),
Optional Tender
12/9/1998 20,000,000
51,175,000 (b)California Public Capital Improvements Financing Authority, Trust Receipts
(Series 1996 FR-3) Weekly VRDNs (MBIA INS)/(Bank of New York, New York LIQ) 51,175,000
53,800,000 (b)Los Angeles County, CA Unified School District, Trust Receipts FR/RI-A26, 3.60%
TOBs (Bank of New York, New York LIQ), Mandatory Tender 12/9/1998 53,800,000
25,000,000 Los Angeles County, CA (Series A), 4.50% TRANs, 6/30/1999 25,182,327
9,600,000 Northern California Transmission Agency, Trust Receipts (Series 1998 FR/RI-16)
WeeklyVRDNs (California-Oregon Transmission Project)/(MBIA INS)/(Bank of New York,
New York LIQ) 9,600,000
2,575,000 Roseville, CA City School District, 4.45% TRANs, 9/10/1998 2,576,491
2,780,000 Roseville, CA Joint Union High School District, 4.45% TRANs, 9/10/1998 2,781,610
36,000,000 San Diego, CA Area Local Governments, Trust Receipts (Series FR/RI-A25) Weekly VRDNs
(Bank of New York, New York LIQ) 36,000,000
7,500,000 San Mateo, CA Union High School District, 3.90% TRANs, 6/30/1999 7,513,174
4,000,000 Santa Barbara County, CA Schools Financing Authority, 4.50% TRANs, 6/30/1999 4,029,202
9,575,000 Stanislaus County, CA Office of Education, 4.50% TRANs, 7/30/1999 9,652,916
5,000,000 Sunnyvale, CA Elementary School District, 3.90% TRANs, 6/30/1999 5,008,782
Total 233,330,041
COLORADO--0.8%
2,650,000 Denver (City & County), CO, 4.15% TOBs (Blake Street
Compendium)/(Norwest Bank
Minnesota, N.A. LOC) 12/15/1998 2,650,000
13,660,000 Denver (City & County), CO, Merlot (Series 1997E) Weekly VRDNs (Department of Aviation
Airport System)/(MBIA INS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 13,660,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
COLORADO--CONTINUED
$ 9,000,000 Denver (City & County), CO, Trust Receipts (Series 1998 FR/RI-13) Weekly VRDNs
(MBIA INS)/(Bank of New York, New York LIQ) $ 9,000,000
Total 25,310,000
CONNECTICUT--1.1%
5,000,000 Connecticut State HEFA, (Series B) Weekly VRDNs (Edgehill)/(Paribas, Paris LOC) 5,000,000
30,050,000 Connecticut State HEFA, (Series T-1) Weekly VRDNs (Yale University) 30,050,000
Total 35,050,000
DISTRICT OF COLUMBIA--2.0%
2,070,000 District of Columbia Housing Finance Agency, Multifamily Housing, 3.85% TOBs
(ChastletonProject)/(Nationsbank, N.A., Charlotte LOC), Optional Tender 7/1/1999 2,070,000
5,000,000 District of Columbia (Series 1998C), 5.00% TRANs (Union Bank of Switzerland, Zurich
LOC), 9/30/1998 5,009,141
14,400,000 District of Columbia (Series B), 4.50% TRANs (Morgan Guaranty Trust Co., New York and
Union Bank of Switzerland, Zurich LOCs), 9/30/1998 14,414,337
3,575,000 District of Columbia, Revenue Bonds (Series 1997B) Weekly VRDNs (Association of
American Medical Colleges)/(AMBAC INS)/(Chase Manhattan Bank N.A., New York LIQ) 3,575,000
39,850,000 District of Columbia, Trust Receipts (Series 1998 FR/RI-A14) Weekly VRDNs
(MBIAINS)/(National Westminster Bank, PLC, London LIQ) 39,850,000
Total 64,918,478
FLORIDA--12.4%
17,995,000 ABN AMRO MuniTOPS Certificates Trust 1998-8 Weekly VRDNs (Dade County, FL Water & Sewer
System)/(FGIC INS)/(ABN AMRO Bank N.V., Amsterdam LIQ) 17,995,000
2,950,000 Brevard County, FL Weekly VRDNs (Greywater Investments)/(Huntington National Bank,
Columbus, OH LOC) 2,950,000
18,500,000 Broward County, FL HFA, (Series 1985) Daily VRDNs (Landings of Inverrary)/(PNC Bank,
N.A.LOC) 18,500,000
6,000,000 Broward County, FL HFA, (Series 1997) Weekly VRDNs (Jacaranda Village
Apartments)/(Marine Midland Bank N.A., Buffalo, NY LOC) 6,000,000
2,980,000 Broward County, FL Health Facility Authority, Revenue Bonds Weekly VRDNs (John Knox
Village of Florida)/(First Union National Bank, Charlotte, N.C. LOC) 2,980,000
20,000,000 Collier County, FL School District, 4.00% RANs, 4/30/1999 20,031,534
3,870,000 Dade County, FL IDA Weekly VRDNs (Futernick Associates, Inc.)/(First Union National
Bank, Charlotte, N.C. LOC) 3,870,000
49,900,000 Dade County, FL Water & Sewer System Weekly VRDNs (FGIC INS)/(Commerzbank AG, Frankfurt
LIQ) 49,900,000
55,000 Eustis Health Facilities Authority, FL (Series 1985) Weekly VRDNs (Waterman Medical
Center)/(SunTrust Bank, Central Florida LOC) 55,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 9,730,000 Eustis Health Facilities Authority, FL, Health Facilities Revenue Bonds (Series 1992)
Weekly VRDNs (Florida Hospital/Waterman, Inc. Project)/(SunTrust Bank, Central Florida
LOC) $ 9,730,000
1,400,000 Florida HFA, (Series 1989 E) Weekly VRDNs (Fairmont Oaks Project)/(Comerica Bank,
Detroit,MI LOC) 1,400,000
7,000,000 Florida HFA, Multi-Family Housing Revenue Bonds (1985 Series SS) Weekly VRDNs
(Woodlands Apartments)/(Northern Trust Co., Chicago, IL LOC) 7,000,000
5,120,000 Florida State Board of Education Administration, (CR55), (Series 1989A), 3.55% TOBs
(CitibankN.A., New York LIQ), Optional Tender 9/1/1998 5,120,000
11,200,000 Florida State Department of Environmental Protection, PT-166 Weekly VRDNs
(FSAINS)/(Banque Nationale de Paris LIQ) 11,200,000
10,450,000 Florida State Department of Environmental Protection, Trust Receipts FR/RI-A18
(Series1998) Weekly VRDNs (FGIC INS)/(National Westminster Bank, PLC, London LIQ) 10,450,000
5,860,000 Fort Lauderdale, FL Performing Arts Center Authority Weekly VRDNs (SunTrust Bank,
CentralFlorida LOC) 5,860,000
1,540,000 Fort Myers, FL, PA-180 (Series 1997A) Weekly VRDNs (AMBAC INS)/(Merrill Lynch Capital
Services, Inc. LIQ) 1,540,000
16,275,000 Gulf Breeze, FL, Variable Rate Demand Revenue Bonds (Series 1995A) Weekly VRDNs
(Florida Municipal Bond Fund)/(Barnett Bank, N.A. LOC) 16,275,000
2,650,000 Halifax Hospital Medical Center, FL, 4.00% TANs (Barnett Bank, N.A. LOC), 4/15/1999 2,656,287
32,000,000 Highlands County, FL Health Facilities (Series 1996A Accounts Receivable) Weekly VRDNs
(Adventist Health System)/(CapMAC Holdings, Inc. INS)/(First National Bank of Chicago
LIQ) 32,000,000
17,500,000 Highlands County, FL Health Facilities (Series 1996B Accounts Receivable) Weekly VRDNs
(Adventist Health System)/(CapMAC Holdings, Inc. INS)/(Canadian Imperial Bank of
Commerce, Toronto LIQ) 17,500,000
15,700,000 Highlands County, FL Health Facilities, Variable Rate Demand Revenue Bonds (Series
1996A) Weekly VRDNs (Adventist Health System)/(SunTrust Bank, Central Florida LOC) 15,700,000
7,000,000 Indian River County, FL Hospital District (Series 1985) Weekly VRDNs (KBC Bank N.V.,
Brussels LOC) 7,000,000
15,030,000 Jacksonville Electric Authority, Class A Certificates (Series 1997-2) Weekly VRDNs
(Bank of New York, New York LIQ) 15,030,000
7,570,000 Jacksonville Transportation Authority, PA-146 Weekly VRDNs (Florida State)/(Merrill
Lynch Capital Services, Inc. LIQ) 7,570,000
3,295,000 Jacksonville Transportation Authority, PA-163 Weekly VRDNs (Florida State)/(Merrill
Lynch Capital Services, Inc. LIQ) 3,295,000
2,580,000 Lee County, FL IDA (Series 1985) Weekly VRDNs (Christian & Missionary Alliance
Foundation)/(Paribas, Paris LOC) 2,580,000
5,635,000 Manatee County, FL HFA Weekly VRDNs (Carriage Club)/(Mellon Bank N.A., Pittsburgh LOC) 5,635,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 6,025,000 Manatee County, FL HFA, Weekly Adjustable/Fixed Rate Multifamily Housing Revenue
Refunding Bonds (1990 Series A) Weekly VRDNs (Harbour Pointe)/(Marine Midland Bank
N.A., Buffalo, NY LOC) $ 6,025,000
4,700,000 Miami, FL Health Facilities Authority, Health Facilities Revenue Bonds (Series 1992)
Weekly VRDNs (Miami Jewish Home and Hospital for the Aged, Inc.)/(SunTrust Bank, Miami
LOC) 4,700,000
12,700,000 Miami, FL Health Facilities Authority, Health Facilities Revenue Bonds (Series 1996)
WeeklyVRDNs (Miami Jewish Home and Hospital for the Aged, Inc.)/(SunTrust Bank,
CentralFlorida LOC) 12,700,000
4,000,000 Mount Dora, FL Health Facility Authority (Series 1996A) Weekly VRDNs (Waterman Village
(Mount Dora, Fl))/(Barnett Bank of Central Florida, Orlando LOC) 4,000,000
5,000,000 Orange County, FL Educational Facilities Authority (Series 1998) Weekly VRDNs (Rollins
College)/(Barnett Bank, N.A. LOC) 5,000,000
4,000,000 Orange County, FL Educational Facilities Authority, Revenue Bonds (Series 1997) Weekly
VRDNs (Rollins College)/(Barnett Bank, N.A. LOC) 4,000,000
9,900,000 Orange County, FL HFA, Variable Rate Certificates (Series 1997G) Weekly VRDNs
(GNMACOL)/(Bank of America NT and SA, San Francisco LIQ) 9,900,000
6,200,000 Orlando, FL (City of), Capital Improvement Commerial Paper Notes (1994 Series-A),
3.70% CP, Mandatory Tender 10/16/1998 6,200,000
4,000,000 Pinellas County Industry Council, FL Weekly VRDNs (Loulourgas Properties)/(First Union
National Bank, Charlotte, N.C. LOC) 4,000,000
1,940,000 Pinellas County Industry Council, FL, Variable/Fixed Rate Development Revenue Bonds
(Series 1997) Weekly VRDNs (Boyd Industries, Inc.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 1,940,000
5,525,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs (IMC Fertilizer, Inc.
Project)/(Rabobank Nederland, Utrecht LOC) 5,525,000
2,795,000 Port St. Lucie, FL (Series 1997A) Weekly VRDNs (AMBAC INS)/(Merrill Lynch Capital
Services, Inc. LIQ) 2,795,000
3,970,000 Sarasota, FL, Educational Facilities Revenue Bonds (Series 1996) Weekly VRDNs
(Ringling School of Art and Design, Inc.)/(SunTrust Bank, Central Florida LOC) 3,970,000
4,200,000 Seminole County, FL Health Facility Authority IDA (Series 1991) Weekly VRDNs (Florida
Living Nursing Center)/(Barnett Bank, N.A. LOC) 4,200,000
7,430,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs (Savannahs
Hospital)/(Nationsbank, N.A., Charlotte LOC) 7,430,000
4,465,000 St. Petersburg, FL HFA, Refunding Revenue and Revenue Bonds (Series 1997) Weekly VRDNs
(Manorah Manor)/(SunTrust Bank, Central Florida LOC) 4,465,000
7,450,000 Sunshine State Governmental Finance Commission, FL, 3.50% CP (AMBAC INS)/(Toronto-
Dominion Bank and Union Bank of Switzerland, Zurich LIQs), Mandatory Tender 8/11/1998 7,450,000
5,855,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/(Mellon Bank N.A.,
PittsburghLOC) 5,855,000
Total 399,977,821
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--3.4%
$ 8,000,000 (b)Bibb County, GA, PT-199, 3.70% TOBs (Georgia State GTD)/(Bayerische Vereinsbank AG,
Munich LIQ), Optional Tender 5/20/1999 $ 8,000,000
22,000,000 Burke County, GA Development Authority (Series 1996), 3.80% TOBs (Oglethorpe Power
Corp.), Optional Tender 11/2/1998 22,000,000
42,500,000 Burke County, GA Development Authority, PCR Bonds (Fourth Series 1994) Daily VRDNs
(Georgia Power Co.) 42,500,000
4,725,000 Burke County, GA Development Authority, Pollution Control Revenue Bonds (Series 1995)
DailyVRDNs (Georgia Power Co.) 4,725,000
2,000,000 Clayton County, GA Housing Authority, Revenue Refunding Bonds (Series 1992) Weekly
VRDNs (Oxford Townhomes Project)/(Amsouth Bank N.A., Birmingham LOC) 2,000,000
10,000,000 Clayton County, GA (Series 1998), 4.25% Bonds, 8/1/1999 10,048,406
1,500,000 De Kalb County, GA Development Authority (Series 1992) Weekly VRDNs (American Cancer
Society, GA)/(SunTrust Bank, Atlanta LOC) 1,500,000
4,950,000 Douglas County, GA School District, 3.90% TANs, 12/31/1998 4,955,971
12,145,000 Georgia State (Series 1995C) PA-249 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 12,145,000
Total 107,874,377
ILLINOIS--6.3%
12,000,000 Chicago, IL Board of Education, Merlots (Series 1997E) Weekly VRDNs
(AMBACINS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 12,000,000
20,000,000 Chicago, IL Board of Education, Variable Rate Certificates (Series 1996BB) Weekly
VRDNs (MBIA INS)/(Bank of America NT and SA, San Francisco LIQ) 20,000,000
2,800,000 Chicago, IL Weekly VRDNs (Canadian Imperial Bank of Commerce, Toronto LOC) 2,800,000
20,000,000 Chicago, IL, MERLOTs (Series 1997 V) Weekly VRDNs (Chicago, IL Water Revenue
Bonds)/(FGIC INS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 20,000,000
9,905,000 Chicago, IL, Water Revenue Bonds (PT-129) Weekly VRDNs (FGIC INS)/(Merrill Lynch
Capital Services, Inc. LIQ) 9,905,000
350,000 Darien, IL IDA (Series 1989C) Weekly VRDNs (KinderCare Learning Centers, Inc.)/
(Toronto-Dominion Bank LOC) 350,000
3,800,000 Galesburg, IL (Series 1996) Weekly VRDNs (Knox College Project)/(Lasalle National
Bank, Chicago LOC) 3,800,000
12,500,000 Hopedale Village, IL (Series 1998) Weekly VRDNs (Hopedale Medical Foundation)/(Bank
One, Illinois, N.A. LOC) 12,500,000
11,900,000 Illinois Development Finance Authority Weekly VRDNs (Lyric Opera of Chicago)/(Caisse
Nationale De Credit Agricole, Paris, Harris Trust & Savings Bank, Chicago, NBD Bank,
Michigan and Northern Trust Co., Chicago, IL LOCs) 11,900,000
3,000,000 Illinois Development Finance Authority Weekly VRDNs (Newlywed Food)/(Mellon Bank N.A.,
Pittsburgh LOC) 3,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
ILLINOIS--CONTINUED
$ 2,600,000 Illinois Development Finance Authority (Series 1997) Weekly VRDNs (Ada S. McKinley
Community Services, Inc.)/(Harris Trust & Savings Bank, Chicago LOC) $ 2,600,000
6,000,000 (b)Illinois Development Finance Authority, PT-131 (Series 1995A), 3.95% TOBs
(CatholicHealthPartners Services)/(Connie Lee INS)/(Credit Suisse First Boston LIQ),
Mandatory Tender 10/1/1998 6,000,000
5,000,000 Illinois Educational Facilities Authority, Revenue Bonds (Series 1995) Weekly VRDNs
(Ravinia Festival Association (IL))/(NBD Bank, Michigan LOC) 5,000,000
21,100,000 Illinois Health Facilities Authority Weekly VRDNs (OSF Health Care Systems) 21,100,000
15,000,000 Illinois Health Facilities Authority (Series 1998), 3.70% TOBs (Evanston Northwestern
Healthcare Corp.), Mandatory Tender 6/1/1999 15,000,000
35,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series 1985B) Weekly VRDNs (OSF
Health Care Systems)/(Bank of America Illinois and Rabobank Nederland, Utrecht LIQs) 35,000,000
20,700,000 Illinois Health Facilities Authority, Revenue Refunding Bonds (Series 1997B) Weekly
VRDNs (Advocate Health Care Network)/(First National Bank of Chicago, Harris Trust &
Savings Bank, Chicago and Northern Trust Co., Chicago, IL LIQs) 20,700,000
1,000,000 Illinois Health Facilities Authority, Revolving Fund Pooled Financing Program (Series
1985F) Weekly VRDNs (NBD Bank, Michigan LOC) 1,000,000
Total 202,655,000
INDIANA--2.2%
665,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/(National City Bank, Kentucky LOC) 665,000
5,000,000 Hamilton, IN Southeastern Schools, Temporary Loan Warrants, 3.80% TRANs, 12/31/1998 5,002,217
5,000,000 Hammond Local Public Improvement Bond Bank, Advance Funding Program Notes
(Series A-2), 4.30% TANs (Bank One, Indianapolis, N.A. LOC), 1/7/1999 5,010,484
32,000,000 Indiana Bond Bank, Advance Funding Program Notes (Series 1998 A-2), 4.00% TANs (Lasalle
National Bank, Chicago LOC), 1/20/1999 32,058,324
1,355,000 Indiana Health Facilities Finance Authority Rehabilitation Center Weekly VRDNs
(Crossroads Rehabilitation Center)/(Bank One, Indianapolis, N.A. LOC) 1,355,000
5,500,000 Indianapolis, IN Local Public Improvement Bond Bank, 4.25% TANs, 1/11/1999 5,514,422
4,735,000 Indianapolis, IN, Variable Rate Demand Economic Development Revenue Bonds (Series
1995) Weekly VRDNs (Pleasant Run Children's Homes, Inc.)/(Fifth Third Bank, Cincinnati
LOC) 4,735,000
4,900,000 Lafayette School Corp., IN, 4.20% TANs, 12/30/1998 4,906,242
2,045,000 St. Joseph County, IN, Multi-Mode Variable Rate Economic Development Revenue Bonds
(Series 1998) Weekly VRDNs (South Bend Heritage Foundation, Inc.)/(KeyBank, N.A. LOC) 2,045,000
9,500,000 Vigo County, IN School Corporation, Temporary Loan Warrants, 3.80% TRANs, 12/30/1998 9,504,199
Total 70,795,888
IOWA--1.3%
32,000,000 Iowa School Corporations (1998-99 Series A), 4.50% TRANs (FSA INS), 6/25/1999 32,235,801
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
IOWA--CONTINUED
$ 10,000,000 Iowa School Corporations (Series 1997-98B), 4.25% TRANs (FSA INS), 1/28/1999 $ 10,033,337
Total 42,269,138
KENTUCKY--1.6%
1,110,000 Boone County, KY, Revenue Refunding Bonds Weekly VRDNs (Spring Meadow
Associates)/(Huntington National Bank, Columbus, OH LOC) 1,110,000
6,835,000 Jefferson County, KY (Series 1997) Weekly VRDNs (First Trust Restoration Partners)/
(Bank One, Kentucky LOC) 6,835,000
7,500,000 Jefferson County, KY, Adjustable Rate Industrial Building Revenue Refunding Bonds
(Series 1997) Weekly VRDNs (Kosmos Cement Co. Partnership)/(Societe Generale, Paris
LOC) 7,500,000
35,000,000 Owensboro, KY (Series 1996) Weekly VRDNs (Owensboro Mercy Health System, Inc.
Project)/(Bank of America Illinois LOC) 35,000,000
Total 50,445,000
LOUISIANA--0.5%
800,000 Calcasieu Parish, LA, IDB, PCR Bonds Weekly VRDNs (Citgo Petroleum
Corp.)/(Westdeutsche Landesbank Girozentrale LOC) 800,000 6,950,000
Louisiana PFA (Series 1985A) Weekly VRDNs (FGIC INS)/(Societe Generale, Paris
LIQ) 6,950,000 4,000,000 Louisiana PFA (Series 1997D), 4.40% TRANs (Orleans
Parish, LA School Board)/(Louisiana
State GTD), 12/10/1998 4,007,874
5,000,000 New Orleans, LA, Class A Certificates (Series 1998-1) Weekly VRDNs (AMBAC INS)/(Bank of
New York, New York LIQ) 5,000,000
Total 16,757,874
MARYLAND--5.2%
4,300,000 Anne Arundel County, MD (Series 1988) Weekly VRDNs (Oakland Hills L. P.
Facility)/(First National Bank of Maryland, Baltimore LOC) 4,300,000
55,700,000 Baltimore County, MD IDA, Variable Rate Demand Acquisition Program (Series 1986)
WeeklyVRDNs (Baltimore Capital Acquisition)/(Bayerische Landesbank Girozentrale LOC) 55,700,000
1,900,000 Baltimore County, MD Port Facility Monthly VRDNs (Occidental Petroleum Corp.)/(Morgan
Guaranty Trust Co., New York LOC) 1,900,000
3,700,000 Baltimore, MD PCR Weekly VRDNs (SCM Plants, Inc.)/(Barclays Bank PLC, London LOC) 3,700,000
2,000,000 Baltimore, MD, Variable Rate Demand/Fixed Rate Refunding Bond (1988 Issue) Weekly
VRDNs (University West LP)/(First National Bank of Maryland, Baltimore LOC) 2,000,000
910,000 Elkton, MD, Revenue Refunding Bonds (Series 1992) Weekly VRDNs (Highway Service
Ventures, Inc. Facility)/(First Union National Bank, Charlotte, N.C. LOC) 910,000
2,350,000 Harford County, MD (Series 1988) Weekly VRDNs (1001 Partnership Facility)/(First
National Bank of Maryland, Baltimore LOC) 2,350,000
5,660,000 Howard County, MD (Series 1995) Weekly VRDNs (Bluffs at Clarys Forest
Apartments)/(First National Bank of Maryland, Baltimore LOC) 5,660,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MARYLAND--CONTINUED
$ 200,000 Maryland EDC, Pooled Financing Revenue Bonds (Series 1995) Weekly VRDNs (Maryland
Municipal Bond Fund)/(Nationsbank, N.A., Charlotte LOC) $ 200,000
3,000,000 Maryland EDC, Variable Rate Demand/Fixed Rate Refunding Revenue Bonds (1997 Issue)
Weekly VRDNs (Jenkins Memorial Nursing Home, Inc. Facility)/(First National Bank of
Maryland, Baltimore LOC) 3,000,000
5,400,000 Maryland Health & Higher Educational Facilities Authority (Series 1985B) Weekly VRDNs
(First National Bank of Chicago LOC) 5,400,000
4,000,000 Maryland Health & Higher Educational Facilities Authority (Series 1998A) Weekly VRDNs
(Charlestown Community)/(First Union National Bank, Charlotte, N.C. LOC) 4,000,000
12,800,000 Maryland Health & Higher Educational Facilities Authority, Revenue Bonds (Series 1994)
Weekly VRDNs (University Physicians, Inc.)/(First National Bank of Maryland, Baltimore
LOC) 12,800,000
3,895,000 Maryland State Community Development Administration, (PA-170) Weekly VRDNs (Merrill
Lynch Capital Services, Inc. LIQ) 3,895,000
23,820,000 (b)Maryland State Community Development Administration (Series 1997), PT-123, 3.65%
TOBs (Commerzbank AG, Frankfurt LIQ), Optional Tender 12/10/1998 23,820,000
19,655,000 Maryland State (Series 1998) PA-256 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 19,655,000
4,000,000 Montgomery County, MD, EDR Weekly VRDNs (Howard Hughes Medical Center) 4,000,000
11,200,000 Montgomery County, MD, EDR Weekly VRDNs (U.S. Pharmacopeial Convention
Facility)/(Chase Manhattan Bank N.A., New York LOC) 11,200,000
3,755,000 Prince George County, MD (1997 Issue) Weekly VRDNs (Mona Branch Avenue Ltd.
Partnership)/(First National Bank of Maryland, Baltimore LOC) 3,755,000
Total 168,245,000
MASSACHUSETTS--2.3%
27,133,862 Clipper Tax Exempt Trust (Series A) Weekly VRDNs (Massachusetts State Lottery
Commission)/(AMBAC INS)/(State Street Bank and Trust Co. LIQ) 27,133,862
10,000,000 Framingham, MA, 4.00% BANs, 2/5/1999 10,017,281
6,500,000 Holden, MA, 4.00% BANs, 10/1/1998 6,503,169
800,000 Massachusetts HEFA (Series I) Weekly VRDNs (Harvard University) 800,000
9,590,000 Massachusetts Turnpike Authority, Refunded-Guaranteed BANs (Series A), 5.00% Bonds
(United States Treasury PRF), 6/1/1999 9,682,614
9,495,000 Massachusetts Turnpike Authority, Variable Rate Certificates (Series 1997N)
WeeklyVRDNs (MBIA INS)/(Bank of America NT and SA, San Francisco LIQ) 9,495,000
3,100,000 North Reading, MA, 4.25% BANs, 9/30/1998 3,101,814
6,000,000 Pittsfield, MA, 4.10% BANs, 9/17/1998 6,001,337
Total 72,735,077
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--3.8%
$ 4,670,000 Clarkston Community Schools, MI, PA-175 Weekly VRDNs (MBIA INS)/(Merrill Lynch Capital
Services, Inc. LIQ) $ 4,670,000
800,000 Detroit, MI Water Supply System, Water Supply System Revenue and Revenue Refunding
Bonds (Series 1993) Weekly VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ) 800,000
2,000,000 Garden City, MI HFA, Hospital Revenue Bonds (Series 1996A) Weekly VRDNs (Garden City
Hospital, Osteopathic)/(First of America Bank, N.A. LOC) 2,000,000
2,100,000 Grand Rapids, MI EDR, Floating/Fixed Rate Demand Bonds (Series 1983-B) Weekly VRDNs
(Amway Grand Plaza Hotel Facilities)/(Old Kent Bank & Trust Co., Grand Rapids LOC) 2,100,000
2,800,000 Grand Rapids, MI Water Supply System (Series 1993) Weekly VRDNs (FGIC INS)/(Societe
Generale, Paris LIQ) 2,800,000
2,100,000 Kent Hospital Finance Authority, MI (Series 1991A) Weekly VRDNs (Butterworth
Hospital)/(Rabobank Nederland, Utrecht LOC) 2,100,000
925,000 Michigan Higher Education Facilities Authority, Variable Rate Demand Limited
Obligation Revenue Bonds (Series 1997) Weekly VRDNs (Davenport College of
Business)/(Old Kent Bank& Trust Co., Grand Rapids LOC) 925,000
10,000,000 Michigan State Building Authority (Series 1), 3.70% CP (Canadian Imperial Bank of
Commerce, Toronto LOC), Mandatory Tender 10/1/1998 10,000,000
2,200,000 Michigan State Hospital Finance Authority (Series A) Weekly VRDNs (First of America
Bank,N.A. LOC) 2,200,000
16,000,000 Michigan State Hospital Finance Authority (Series A) Weekly VRDNs (OSF Health
CareSystems) 16,000,000
3,000,000 Michigan State Hospital Finance Authority, Hospital Equipment Loan Program Bonds
(SeriesA) Weekly VRDNs (First of America Bank, N.A. LOC) 3,000,000
19,650,000 Michigan State Hospital Finance Authority, MERLOTs (Series 1997A) Weekly VRDNs
(Detroit Medical Center Obligated Group)/(AMBAC INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ) 19,650,000
3,000,000 Michigan State Housing Development Authority (Series 1991) Weekly VRDNs (Regency
Square Apartments)/(National Australia Bank, Ltd., Melbourne LOC) 3,000,000
15,451,800 Michigan State Housing Development Authority, MERLOTs (Series G) Weekly VRDNs
(MBIA INS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 15,451,800
15,000,000 Michigan State, GO UT, 4.50% TRANs, 9/30/1998 15,020,905
11,000,000 Michigan Strategic Fund, Limited Obligation PCR Bonds (Series 1993) Weekly VRDNs
(Allied-Signal, Inc.) 11,000,000
890,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1991) Weekly VRDNs
(Martin Luther Memorial Home, Inc.)/(Bank One, Indianapolis, N.A. LOC) 890,000
2,800,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs
(Wellness Plan Project)/(NBD Bank, Michigan LOC) 2,800,000
2,000,000 Michigan Strategic Fund, PA-334 (Collateralized Series 1998AA) Weekly VRDNs
(Detroit Edison Co.)/(MBIA INS)/(Merrill Lynch Capital Services, Inc. LIQ) 2,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--CONTINUED
$ 2,000,000 Michigan Strategic Fund, Variable Rate Demand Limited Obligation Revenue Bonds
(Series1997B) Weekly VRDNs (NSF International)/(First of America Bank, N.A. LOC) $ 2,000,000
2,695,000 Ottawa County, MI Economic Development Corp., Limited Obligation Revenue Bonds
(Series1995B) Weekly VRDNs (Sunset Manor, Inc. Project)/(Old Kent Bank & Trust Co.,
GrandRapids LOC) 2,695,000
Total 121,102,705
MINNESOTA--4.5%
14,400,000 Becker, MN, PCR (Series 1993-B), 3.60% CP (Northern States Power
Co.),
MandatoryTender11/12/1998 14,400,000
10,300,000 Burnsville, MN, Variable Rate Demand Revenue Bonds (Series 1996) Weekly VRDNs
(YMCAProjects)/(Norwest Bank Minnesota, N.A. LOC) 10,300,000
3,300,000 DDSB Municipal Securities Trusts (Series 1994O) Weekly VRDNs (Richfield, MN
ISD280)/(U.S. Bank, N.A., Minneapolis LIQ) 3,300,000
6,390,000 DDSB Municipal Securities Trusts (Series 1994T Weekly VRDNs (Osseo, MN ISD 279)/
(U.S. Bank, N.A., Minneapolis LIQ) 6,390,000
11,000,000 DDSB Municipal Securities Trusts (Series 1994V) Weekly VRDNs (St. Louis Park
Healthsystem, MN)/(Norwest Bank Minnesota, N.A. LIQ) 11,000,000
7,000,000 East Grand Forks, MN ISD 595, 3.90% Bonds (Minnesota State GTD), 6/30/1999 7,009,188
3,200,000 Hennepin Co. MN (Series 1995C) Weekly VRDNs 3,200,000
4,250,000 MN Municipal Securities Trust (Series 1996F), Floating Rate Certificates Weekly VRDNs
(Lakeville, MN ISD 194)/(Norwest Bank Minnesota, N.A. LIQ) 4,250,000
11,735,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) Weekly VRDNs (Walker Methodist
Health Center, Inc. Project)/(U.S. Bank, N.A., Minneapolis LOC) 11,735,000
5,500,000 Minneapolis, MN (Series 1993) Weekly VRDNs (Market Square Real Estate, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 5,500,000
6,000,000 Minneapolis, MN, Variable Rate Housing Revenue Bonds Weekly VRDNs (One Ten Grant
Project)/(U.S. Bank, N.A., Minneapolis LOC) 6,000,000
12,000,000 Minneapolis, MN, Various Purpose Bonds (Series 1996) Weekly VRDNs (Bayerische
Vereinsbank AG, Munich LIQ) 12,000,000
15,500,000 Minneapolis/St. Paul, MN Metropolitan Airports Commission MuniTOPS (Series 1998-6)
Weekly VRDNs (AMBAC INS)/(ABN AMRO Bank N.V., Amsterdam LOC) 15,500,000
1,000,000 Norman County, MN ISD No. 2854, 4.00% Bonds (Minnesota State GTD), 7/1/1999 1,001,827
6,500,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo Foundation)/(Rabobank
Nederland, Utrecht LIQ) 6,500,000
13,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo Foundation)/(Rabobank
Nederland, Utrecht LIQ) 13,000,000
13,500,000 Rosemount, MN, PCR (Series 1984) Weekly VRDNs (Koch Refining Co.) 13,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MINNESOTA--CONTINUED
$ 100,000 St. Paul, MN Port Authority (Series 1991) Weekly VRDNs (West Gate Office)/(U.S. Bank,
N.A., Minneapolis LOC) $ 100,000
Total 144,686,015
MISSISSIPPI--0.1%
1,482,500 Hinds County, MS (Series 1991) Weekly VRDNs (North State St. Project)/(Amsouth Bank
N.A., Birmingham LOC) 1,482,500
MISSOURI--1.6%
1,025,000 Little Blue Valley Sewer District, MO, Sewer System Revenue Bonds (Series 1998B), 3.75%
Bonds (AMBAC INS), 10/1/1998 1,025,000
1,580,000 Little Blue Valley Sewer District, MO, Sewer System Revenue Bonds (Series 1998), 3.75%
Bonds (AMBAC INS), 10/1/1998 1,580,000
5,000,000 Missouri State HEFA Weekly VRDNs (Barnes Hospital)/(Morgan Guaranty Trust Co.,
New York LOC) 5,000,000
15,000,000 Missouri State HEFA (Series 1997N), 4.50% TRANs (St. Louis, MO School District),
9/14/1998 15,010,391
3,000,000 Missouri State HEFA, Health Facilities Revenue Bonds (Series 1989A) Weekly VRDNs
(Sisters of Mercy Health Corp. (Michigan & Iowa))/(ABN AMRO Bank N.V., Amsterdam,
Credit Suisse First Boston and Rabobank Nederland, Utrecht LIQs) 3,000,000
11,100,000 Missouri State HEFA, Health Facilities Revenue Bonds (Series 1989C) Weekly VRDNs
(Sisters of Mercy Health Corp. (Michigan & Iowa))/(ABN AMRO Bank N.V., Amsterdam,
Credit Suisse First Boston and Rabobank Nederland, Utrecht LIQs) 11,100,000
11,000,000 Missouri State HEFA, Health Facilities Revenue Bonds (Series 1996A) Weekly VRDNs
(Deaconess Long Term Care of Missouri)/(Bank One, Texas N.A. LOC) 11,000,000
4,200,000 Poplar Bluff, MO IDA (Series 1987) Weekly VRDNs (Gates Rubber Co.)/(NBD Bank,
MichiganLOC) 4,200,000
455,000 Springfield, MO Public Building Corp., Leasehold Revenue Refunding and Improvement
Bonds (Series 1998), 3.70% Bonds (Springfield-Branson Regional Airport)/(AMBAC INS),
3/1/1999 455,000
Total 52,370,391
MULTI STATE--2.4%
14,556,245 ABN AMRO Chicago Corp. 1997-1 LeaseTOPS Trust Weekly VRDNs (Lasalle National Bank,
Chicago LIQ)/(Lasalle National Bank, Chicago LOC) 14,556,245
35,299,000 Clipper Tax Exempt Trust (Non-AMT Multistate), (Series A) Weekly VRDNs
(MBIAINS)/(State Street Bank and Trust Co. LIQ) 35,299,000
19,081,010 Equity Trust II, (1996 Series) Weekly VRDNs (Republic National Bank of New York LOC) 19,081,010
7,417,000 PBCC LeaseTOPS Trust (Multistate Non-AMT) (Series 1998-2) Weekly
VRDNs
(AMBACINS)/(Pitney Bowes Credit Corp. LIQ) 7,417,000
Total 76,353,255
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
NEVADA--0.2%
$ 7,500,000 ABN AMRO MuniTOPS Certificates Trust 1998-1, (Multistate Non-AMT) Weekly VRDNs (Nevada
State)/(MBIA INS)/(ABN AMRO Bank N.V., Amsterdam LIQ) $ 7,500,000
NEW JERSEY--4.1%
764,500 Clark Township, NJ, 3.95% BANs, 3/25/1999 765,452
2,000,000 Clark Township, NJ, 3.95% TANs, 3/25/1999 2,002,490
7,500,000 Essex County, NJ Improvement Authority, Project Revenue Bonds (Series 1995)
WeeklyVRDNs (Essex County, NJ)/(AMBAC INS)/(Morgan Guaranty Trust Co., New York LIQ) 7,500,000
10,500,000 New Jersey EDA Weekly VRDNs (Center-For-Aging--Applewood Estates)/(Fleet National
Bank, Springfield, MA LOC) 10,500,000
7,530,000 New Jersey State Educational Facilities Authority (Series 1998) FR/RI-A33 Trust
Receipts Weekly VRDNs (AMBAC INS)/(National Westminster Bank, PLC, London LIQ) 7,530,000
11,760,000 New Jersey State Transportation Trust Fund Agency, Trust Receipts FR/RI-A37
WeeklyVRDNs (AMBAC INS)/(National Westminster Bank, PLC, London LIQ) 11,760,000
13,675,000 New Jersey State (Series 1998) FR/RI-A34 Trust Receipts Weekly VRDNs
(NationalWestminster Bank, New Jersey LIQ) 13,675,000
12,295,000 New Jersey State, (Series D) PA-262 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 12,295,000
13,000,000 New Jersey State, PA-265 Weekly VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 13,000,000
44,300,000 New Jersey State, Trust Receipts (Series 1998 FR/RI-A8) Weekly VRDNs (Bayerische
Hypotheken-Und Wechsel-Bank AG LIQ) 44,300,000
4,950,000 Pennsauken Township, NJ (Series A, 1997), 4.00% BANs, 8/3/1998 4,950,026
3,500,000 Springfield Township, NJ, 3.80% BANs, 3/5/1999 3,502,991
Total 131,780,959
NEW YORK--1.8%
1,430,000 Metropolitan Transportation Authority, New York, Trust Receipts (Series 1997 FR/RI-9)
Weekly VRDNs (FGIC INS)/(Bank of New York, New York LIQ) 1,430,000
500,000 New York City Municipal Water Finance Authority, Trust Receipts (Series 1997 FR/RI-6)
Weekly VRDNs (MBIA INS)/(Bank of New York, New York LIQ) 500,000
10,000,000 New York City Municipal Water Finance Authority, Trust Receipts (Series 1998 FR/RI-10)
Weekly VRDNs (FSA INS)/(Bank of New York, New York LIQ) 10,000,000
16,960,000 New York City Municipal Water Finance Authority, Trust Receipts (Series 1998 FR/RI-11)
Weekly VRDNs (FSA INS)/(Bank of New York, New York LIQ) 16,960,000
11,200,000 New York City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds
(Series 1995 A) Daily VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ) 11,200,000
11,780,000 (b)New York State Dormitory Authority, PT-192, 3.75% TOBs (Cornell University)/(Banco
Santander SA LIQ), Optional Tender 5/13/1999 11,780,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
NEW YORK--CONTINUED
$ 695,000 New York State Medical Care Facilities Finance Agency (Series 1992 B PT-100)
DailyVRDNs (FHA INS)/(Credit Suisse First Boston LIQ) $ 695,000
4,995,000 (b)New York State Mortgage Agency, PT-164, 3.675% TOBs (Banque Nationale de Paris LIQ),
Optional Tender 3/18/1999 4,995,000
Total 57,560,000
NORTH CAROLINA--2.5%
9,000,000 Clipper, NC Tax-Exempt Trust Weekly VRDNs (North Carolina State)/(State Street Bank
and Trust Co. LIQ) 9,000,000
15,000,000 Martin County, NC IFA (Series 1993) Weekly VRDNs (Weyerhaeuser Co.) 15,000,000
2,050,000 North Carolina Medical Care Commission, Revenue Bonds (Series 1993) Weekly VRDNs
(Moses H. Cone Memorial) 2,050,000
32,845,000 North Carolina State (Series 1998A) PA-342 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 32,845,000
20,000,000 Wake County, NC Industrial Facilities & PCFA (Series 1990A), 3.70% CP (Carolina Power
& Light Co.)/(First National Bank of Chicago LOC), Mandatory Tender 8/25/1998 20,000,000
Total 78,895,000
OHIO--3.6%
1,760,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs (Visiting Nurses)/(National City
Bank, Ohio LOC) 1,760,000
26,560,000 Banc One Capital Higher Education Tax-Exempt Income Trust (Series 2 Certificates of
Ownership) Weekly VRDNs (Bank One, Kentucky LOC) 26,560,000
2,000,000 Clark County, OH, Multifamily Housing Revenue Bonds (Series 1997) Weekly VRDNs (Ohio
Masonic Home)/(Huntington National Bank, Columbus, OH LOC) 2,000,000
3,400,000 Cuyahoga County, OH Hospital Authority (Series 1997D) Daily VRDNs
(Cleveland Clinic)/(Bank of America NT and SA, San Francisco LIQ) 3,400,000
8,635,000 Cuyahoga County, OH Hospital Authority (Series 1998B) Weekly VRDNs
(Cleveland Clinic)/(Chase Manhattan Bank N.A., New York LIQ) 8,635,000
2,000,000 Cuyahoga County, OH Hospital Authority (Series C) Weekly VRDNs (Cleveland
Clinic)/(Bank of America NT and SA, San Francisco LIQ) 2,000,000
185,000 Franklin County, OH Hospital Facility Authority (Series 1992) Weekly VRDNs
(Wesley Glenn, Inc.)/(Fifth Third Bank, Cincinnati LOC) 185,000
8,910,000 Greene County, OH, Various Purpose Limited Tax General Obligation Certificates of
Indebtedness (Series 1998C), 3.75% BANs, 3/25/1999 8,918,319
215,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs (Sunshine Children's
Home)/(National City Bank, Ohio LOC) 215,000
1,080,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995) Weekly VRDNs (Copeland Oaks
Project)/(Bank One, Ohio, N.A. LOC) 1,080,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 770,000 Marion County, OH Hospital Authority (Series 1991) Weekly VRDNs (Marion County, OH
Pooled Hospital Program)/(Bank One, Ohio, N.A. LOC) $ 770,000
650,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex Venture)/(KeyBank, N.A. LOC) 650,000
1,835,000 Montgomery County, OH, Adjustable Rate Economic Development Revenue Refunding Bonds
(Series 1997) Weekly VRDNs (Cross Country Inns, Inc.)/(Bank One, Ohio, N.A. LOC) 1,835,000
4,720,000 Montgomery County, OH, Variable Rate Limited Obligation Revenue Bonds (Series 1996)
Weekly VRDNs (Society of St. Vincent De Paul)/(National City Bank, Ohio LOC) 4,720,000
1,585,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited Partnership)/(Huntington
National Bank, Columbus, OH LOC) 1,585,000
5,000,000 New Albany, OH Community Authority, Adjustable Rate Multi-Purpose Infrastructure
Improvement Bonds (Series A) Weekly VRDNs (Huntington National Bank, Columbus,OHLOC) 5,000,000
1,000,000 Ohio State Air Quality Development Authority (Series 1988A) Weekly VRDNs
(PPG Industries, Inc.) 1,000,000
10,000,000 Ohio State Water Development Authority, Pollution Control Revenue Refunding Bonds
(Series1997) Weekly VRDNs (Philip Morris Cos., Inc.) 10,000,000
16,500,000 Ottawa County, OH, 4.00% BANs, 8/6/1999 16,550,820
5,560,000 Ottawa County, OH, Regional Water System Improvement, 4.10% BANs, 8/6/1998 5,560,356
1,900,000 Rickenbacker, OH Port Authority (Series 1992) Weekly VRDNs (Rickenbacker
Holdings,Inc.)/(Bank One, Ohio, N.A. LOC) 1,900,000
8,295,000 Summit County, OH (Series A), 4.50% BANs, 6/3/1999 8,345,209
950,000 Twinsburg, OH IDA Weekly VRDNs (Carl J. Massara Project)/(KeyBank, N.A. LOC) 950,000
1,795,000 Wayne County, OH, Health Care Facility Revenue Bonds (Series 1995) Weekly VRDNs
(D & M Realty Project)/(Bank One, Ohio, N.A. LOC) 1,795,000
Total 115,414,704
OKLAHOMA--2.7%
30,000,000 Oklahoma State Industrial Authority, Flexible Rate Hospital Revenue Bonds (Series
1990B) Weekly VRDNs (Baptist Medical Center, OK)/(Morgan Guaranty Trust Co., New York
LIQ) 30,000,000
47,175,000 Oklahoma State Industrial Authority, Health System Revenue Bonds (Series 1995A) Weekly
VRDNs (Baptist Medical Center, OK)/(Morgan Guaranty Trust Co., New York LIQ) 47,175,000
10,940,000 Tulsa, OK International Airport, Variable Rate Certificates (Series 1997B-2) Weekly
VRDNs (MBIA INS)/(Bank of America NT and SA, San Francisco LIQ) 10,940,000
Total 88,115,000
OREGON--2.1%
3,235,000 Clackamas County, OR HFA (Series 1984), 3.75% TOBs (Kaiser Permanente Medical Care
Program), Optional Tender 10/1/1998 3,235,000
10,000,000 Multnomah County, OR School District (Series 1998), 4.25% TRANs, 6/30/1999 10,052,786
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
OREGON--CONTINUED
$ 10,875,000 Oregon State (Series 73F) Weekly VRDNs (Morgan Guaranty Trust Co., New York LOC) $ 10,875,000
30,000,000 Oregon State, Veteran's Welfare Bonds (Series 73E) Weekly VRDNs (Morgan Guaranty
TrustCo., New York LOC) 30,000,000
11,900,000 Oregon State, Veteran's Welfare Bonds (Series 73H) Weekly VRDNs (Morgan Guaranty
TrustCo., New York LOC) 11,900,000
Total 66,062,786
PENNSYLVANIA--9.0%
4,560,000 Allegheny County, PA IDA, Commercial Development Revenue Bonds (Series 1992) Weekly
VRDNs (Eleven Parkway Center Associates)/(Mellon Bank N.A., Pittsburgh LOC) 4,560,000
4,250,000 Beaver County, PA IDA, PCR Refunding Bonds (1992 Series-E), 3.80% CP (Toledo Edison
Co.)/(Toronto-Dominion Bank LOC), Mandatory Tender 12/1/1998 4,250,000
5,100,000 Beaver County, PA IDA, PCR Refunding Bonds (1994 Series), 3.60% CP (Duquesne Light
PowerCo.)/(Swiss Bank Corp., Basle LOC), Mandatory Tender 8/24/1998 5,100,000
3,000,000 Clinton County, PA, IDA Weekly VRDNs (Armstrong World Industries, Inc.)/(Mellon Bank
N.A., Pittsburgh LOC) 3,000,000
7,650,000 Commonwealth of Pennsylvania, PA-274 (1st Series of 1997) Weekly VRDNs
(AMBACINS)/(Merrill Lynch Capital Services, Inc. LIQ) 7,650,000
5,975,000 Commonwealth of Pennsylvania, Trust Receipts (Series 1998 FR/RI-A9) Weekly VRDNs (MBIA
INS)/(Bayerische Hypotheken-Und Wechsel-Bank Ag LIQ) 5,975,000
5,000,000 Cumberland County, PA Municipal Authority (Series 1994), 3.75% TOBs (United Methodist
Homes for the Aging)/(PNC Bank, N.A. LOC), Optional Tender 6/1/1999 5,000,000
4,000,000 Dallastown Area School District, PA, G.O. Bonds (Series 1998) Weekly VRDNs (FGIC INS)/
(FGIC Securities Purchase, Inc. LIQ) 4,000,000
7,500,000 Dauphin County, PA General Authority, (Education and Health Loan Program, Series 1997)
Weekly VRDNs (AMBAC INS)/(Chase Manhattan Bank N.A., New York LIQ) 7,500,000
4,500,000 Dauphin County, PA General Authority (Series A of 1997) Weekly VRDNs (Allhealth Pooled
Financing Program)/(FSA INS)/(Credit Suisse First Boston LIQ) 4,500,000
3,900,000 Delaware County Authority, PA, Hospital Revenue Bonds (Series of 1996) Weekly VRDNs
(Crozer-Chester Medical Center)/(KBC Bank N.V., Brussels LOC) 3,900,000
9,000,000 Doylestown Hospital Authority, PA, Doylestown Hospital Revenue Bonds Weekly VRDNs
(AMBAC INS)/(PNC Bank, N.A. LIQ) 9,000,000
10,000,000 East Hempfield Township, PA IDA (Series of 1997) Weekly VRDNs (Mennonite
Home)/(Dauphin Deposit Bank and Trust LOC) 10,000,000
1,500,000 Easton Area School District, PA (Series 1997) Weekly VRDNs (FGIC INS)/(FGIC Securities
Purchase, Inc. LIQ) 1,500,000
12,000,000 Erie County, PA Hospital Authority Weekly VRDNs (St. Vincent Health System)/(Mellon
BankN.A., Pittsburgh LOC) 12,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 18,000,000 Lancaster County, PA Hospital Authority, Health Center Revenue Bonds (Series 1996)
WeeklyVRDNs (Masonic Homes) $ 18,000,000
4,565,000 Lehigh County, PA General Purpose Authority, Revenue Bonds (Series 1990) Weekly VRDNs
(Phoebe Terrace, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) 4,565,000
4,875,000 Moon Township, PA IDA Weekly VRDNs (Airport Hotel Associates)/(National City,
Pennsylvania LOC) 4,875,000
2,150,000 New Castle, PA Area Hospital Authority (Series 1996) Weekly VRDNs (Jameson Memorial
Hospital)/(FSA INS)/(PNC Bank, N.A. LIQ) 2,150,000
4,900,000 North Lebanon Township, PA, Municipal Authority Mortgage Bonds Weekly VRDNs
(GraceCommunity, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) 4,900,000
3,000,000 North Penn Health, Hospital and Education Authority, PA, Hospital Revenue Bonds
(Series1998) Weekly VRDNs (North Penn Hospital, PA)/(First Union National Bank,
Charlotte,N.C. LOC) 3,000,000
2,500,000 Northampton County, PA Higher Education Authority, PA-176 Weekly VRDNs
(MBIAINS)/(Merrill Lynch Capital Services, Inc. LIQ) 2,500,000
18,705,000 Pennsylvania Housing Finance Authority, PT-119A (Series 1997-56C) Weekly VRDNs
(CreditSuisse First Boston LIQ) 18,705,000
2,000,000 Pennsylvania State Higher Education Facilities Authority (Series B1), 4.50% TOBs
(Allentown College of St. Francis de Sales)/(PNC Bank, N.A. LOC), Mandatory Tender
11/1/1998 2,003,047
3,000,000 Pennsylvania State Higher Education Facilities Authority (Series B2), 4.50% TOBs
(CarlowCollege)/(PNC Bank, N.A. LOC), Mandatory Tender 11/1/1998 3,004,571
3,245,000 (b)Pennsylvania State University, PT-157 (Series 1992), 3.75% TOBs (Rabobank
Nederland, Utrecht LIQ), Optional Tender 1/14/1999 3,245,000
33,900,000 Philadelphia, PA Gas Works (Series C), 3.60% CP (Canadian Imperial Bank of Commerce,
Toronto LOC), Mandatory Tender 9/17/1998 33,900,000 6,870,000
Philadelphia, PA IDA (Series 93) Weekly VRDNs (Sackett Development)/(Mellon
Bank N.A.,
Pittsburgh LOC) 6,870,000
15,100,000 Philadelphia, PA Redevelopment Authority, Multi-Family Revenue Bonds (Series 1985)
WeeklyVRDNs (Franklin Town Towers)/(Marine Midland Bank N.A., Buffalo, NY LOC) 15,100,000
22,000,000 Philadelphia, PA School District (Series B), 4.25% TRANs (PNC Bank, N.A. LOC),
6/30/1999 22,120,082
18,475,000 Philadelphia, PA Water & Wastewater System (Series 1997A) PT-1033 Weekly VRDNs (AMBAC
INS)/(Merrill Lynch Capital Services, Inc. LOC) 18,475,000
18,000,000 Philadelphia, PA, 4.25% TRANs, 6/30/1999 18,097,320
9,800,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of Pennsylvania)/
(AMBAC INS)/(Mellon Bank N.A., Pittsburgh LIQ) 9,800,000
6,000,000 Sayre, PA, Health Care Facilities Authority (Series F) Weekly VRDNs
(VHA of Pennsylvania)/(AMBAC INS)/(Mellon Bank N.A., Pittsburgh LIQ) 6,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 4,125,000 Washington County, PA Authority Weekly VRDNs (Eye & Ear Hospital)/(PNC Bank, N.A. LOC) $ 4,125,000
Total 289,370,020
PUERTO RICO--0.2%
7,500,000 Commonwealth of Puerto Rico, Municipal Securities Trust Receipts (Series 1998-CMC4)
Weekly VRDNs (MBIA INS)/(Chase Manhattan Corp. LIQ) 7,500,000
TENNESSEE--2.2%
25,000,000 Chattanooga, TN HEFA Weekly VRDNs (McCallie School)/(SunTrust Bank, Atlanta LOC) 25,000,000
6,100,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/(Nationsbank of Tennessee LOC) 6,100,000
1,800,000 Jackson County, TN IDB (Series B) Daily VRDNs (Esselte AB)/(Bank of America Illinois
LOC) 1,800,000
5,600,000 Knox County, TN Health Education & Housing Facilities Board, Adjustable Rate Hospital
Facilities Revenue Bonds (Series 1996A) Weekly VRDNs (Mercy Health Systems)/
(Credit Suisse First Boston LIQ) 5,600,000
5,150,000 Maury County, TN HEFA (Series 1996E) Weekly VRDNs (Southern Healthcare Systems,
Inc.)/(Bank One, Texas N.A. LOC) 5,150,000
8,775,000 Memphis, TN Center City Revenue Finance Corp. (Series 1996A) Weekly VRDNs
(SouthBluffs)/(National Bank of Commerce, Memphis, TN LOC) 8,775,000
2,700,000 Memphis, TN, General Improvement Refunding Bonds (Series 1995A) Weekly VRDNs
(Westdeutsche Landesbank Girozentrale LOC) 2,700,000
1,700,000 Metropolitan Government Nashville & Davidson County, TN HEFA (Series 1996)
WeeklyVRDNs (Dede Wallace Center Project)/(SunTrust Bank, Nashville LOC) 1,700,000
4,080,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Educational Facilities
Revenue Bonds (Series 1997) Weekly VRDNs (Belmont University Project)/
(SunTrust Bank, Nashville LOC) 4,080,000
3,000,000 Montgomery Co, TN Public Building Authority, Pooled Financing Revenue Bonds (Series
1996) Weekly VRDNs (Montgomery County Loan)/(Nationsbank, N.A., Charlotte LOC) 3,000,000
2,700,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil Fibers, Inc. Project)/(ABN AMRO
Bank N.V., Amsterdam LOC) 2,700,000
3,500,000 Sevier County, TN Public Building Authority, Local Government Public Improvement Bonds
(Series II-G-3) Weekly VRDNs (Maryville, TN)/(AMBAC INS)/(KBC Bank
N.V., Brussels LIQ) 3,500,000 1,825,000 Washington County, TN IDB, Revenue
Refunding Bonds (Series 1996) Weekly VRDNs
(Springbrook Properties Project)/(SunTrust Bank, Nashville LOC) 1,825,000
Total 71,930,000
TEXAS--3.9%
8,950,000 Aldine, TX Independent School District (Series 1997) SGB-29 Weekly VRDNs
(TexasPermanent School Fund Guarantee Program GTD)/(Societe Generale, Paris LIQ) 8,950,000
10,890,000 Aldine, TX Independent School District (Series 1997) SGB-30 Weekly VRDNs
(TexasPermanent School Fund Guarantee Program GTD)/(Societe Generale, Paris LIQ) 10,890,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$ 16,800,000 Austin, TX Utilities System (Series 1997) PT-127 Weekly VRDNs (FSA INS)/(Merrill Lynch
Capital Services, Inc. LIQ) $ 16,800,000
3,330,000 Dallas, TX (Series C), 3.70% TOBs, Optional Tender 6/15/1999 3,330,000
400,000 Grapevine, TX, IDC, SimuFlite Training International Project (Series 1993) Weekly
VRDNs (Southern Air Transport, Inc.)/(Bank of Montreal LOC) 400,000
600,000 Harris County, TX HFDC, Hospital Revenue Bonds (Series 1997) Daily VRDNs
(MethodistHospital, Harris County, TX) 600,000
19,140,000 Hurst-Euless-Bedford, TX Independent School District, PT-1050 Weekly VRDNs (Texas
Permanent School Fund Guarantee Program GTD)/(Merrill Lynch Capital Services, Inc.
LIQ) 19,140,000
1,620,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/(Nationsbank, N.A., Charlotte
LOC) 1,620,000
18,000,000 Plano ISD, TX, Variable Rate Unlimited Tax School Building Bonds (Series 1997), 3.55%
TOBs (Texas Permanent School Fund Guarantee Program GTD)/(Union Bank of Switzerland,
ZurichLIQ), Mandatory Tender 8/10/1998 18,000,000
4,970,000 TX Pooled Tax Exempt Trust, Certificates of Participation (Series 1996) Weekly VRDNs
(Bank One, Texas N.A. LOC) 4,970,000
33,745,000 Texas Small Business Industrial Development Corp. (Series 1986) Weekly VRDNs
(TexasPublic Facilities Capital Access Program)/(KBC Bank N.V., Brussels LOC) 33,745,000
8,500,000 Texas State (Series A), 4.75% TRANs, 8/31/1998 8,506,117
Total 126,951,117
VERMONT--0.0%
1,000,000 Vermont Educational and Health Buildings Financing Agency (Series 1995A) Weekly VRDNs
(KeyBank, N.A. LOC) 1,000,000
VIRGINIA--0.7%
6,420,000 Alexandria, VA Redevelopment and Housing Authority (Series 1996A) Weekly VRDNs (Glebe
Park Apartments Project)/(KBC Bank N.V., Brussels LOC) 6,420,000
3,800,000 Arlington County, VA Weekly VRDNs (Ballston Public Parking)/(Citibank NA, New York
LOC) 3,800,000
4,000,000 Fairfax County, VA EDA (Series 1995) Weekly VRDNs (American Society of Civil Engineers
Foundation, Inc. Project)/(Mellon Bank N.A., Pittsburgh LOC) 4,000,000
9,600,000 York County, VA IDA (Series 1985), 3.70% CP (Virginia Electric Power Co.), Mandatory
Tender10/16/1998 9,600,000
Total 23,820,000
WASHINGTON--0.1%
2,200,000 Port of Seattle, WA, IDR Bonds (Series 1985) Weekly VRDNs (Douglas
Management Co.
Project)/(Mellon Bank N.A., Pittsburgh LOC) 2,200,000
1,935,000 Washington State Housing Finance Commission (1997 Series 5N-S), 3.85% TOBs, Mandatory
Tender 12/15/1998 1,935,000
Total 4,135,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
WEST VIRGINIA--0.3%
$ 7,870,000 Cabell County Commission, WV, Life Care Facilities Multi-Option Revenue Bonds (Series
1995) Weekly VRDNs (Foster Foundation)/(Huntington National Bank, Columbus, OH LOC) $ 7,870,000
3,000,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG Industries, Inc.) 3,000,000
Total 10,870,000
WISCONSIN--2.4%
1,800,000 Appleton, WI Area School District, 4.05% BANs, 11/10/1998 1,800,372
3,250,000 Hancock, WI, Industrial Development Revenue Refunding Bonds (Series 1996) Weekly VRDNs
(Ore-Ida Foods, Inc.)/(Heinz (H.J.) Co. GTD) 3,250,000
5,175,000 Kettle Moraine, WI School District, 4.10% TRANs, 8/31/1998 5,175,656
6,700,000 Menomonee Falls, WI School District, 4.10% TRANs, 8/28/1998 6,700,714
28,100,000 Milwaukee, WI, Trust Receipts (Series 1998) Daily VRDNs (National Westminster Bank,
PLC, London LIQ) 28,100,000
7,900,000 New Berlin, WI, 4.10% TRANs, 8/27/1998 7,901,199
3,750,000 Verona, WI Area School District, 3.95% TRANs, 8/26/1998 3,750,048
21,590,000 Wisconsin Health and Educational Facilities Authority, MERLOTs (Series 1997B)
WeeklyVRDNs (Sinai Samaritan Medical Center, Inc.)/(MBIA INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ) 21,590,000
Total 78,267,989
WYOMING--0.1%
2,235,000 Douglas, WY, IDR Bonds, 3.80% TOBs (Safeway, Inc.)/(Bankers Trust Co., New York LOC),
Mandatory Tender 12/1/1998 2,235,000
1,125,000 Natrona County, WY, Hospital Revenue, 5.525% TOBs (Grainger (W.W.), Inc.), Optional
Tender 12/1/1998 1,125,000
Total 3,360,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $3,261,320,015
</TABLE>
(a) The Fund invests in securities rated in the highest short-term rating
category by one or more nationally recognized statistical rating organizations
("NRSROs") or unrated securities of comparable quality. 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, MIG-1 or
VMIG-1 by Moody's Investors Service, Inc., or F-1+ or F-1 by Fitch IBCA, Inc.
are all considered rated in the highest short-term rating category. Securities
rated in the highest short-term rating category (and unrated securities of
comparable quality) are identified as First 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 Tier security. At July 31, 1998, the portfolio securities
were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.0% 0%
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1998, these securities amounted to
$153,178,020 which represents 4.8% of net assets.
(c) Cost for federal tax purposes $3,261,457,294.
Note: The categories of investments are shown as a percentage of net assets
($3,220,286,184) at July 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation BANs --Bond Anticipation
Notes CAPMAC--Capital Municipal Assurance Corporation COL --Collateralized CP
- --Commercial Paper EDA --Economic Development Authority EDC --Economic
Development Commission EDR --Economic Development Revenue FGIC --Financial
Guaranty Insurance Company FHA --Federal Housing Administration FSA --Financial
Security Assurance GNMA --Government National Mortgage Association 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 ISD --Independent School District
LIQ --Liquidity Agreement LOCs --Letter(s) of Credit LOC --Letter of Credit LP
- --Limited Partnership MBIA --Municipal Bond Investors Assurance PCR --Pollution
Control Revenue PLC --Public Limited Company PRF --Prerefunded RANs --Revenue
Anticipation Notes SA --Support Agreement TANs --Tax Anticipation Notes TOBs
- --Tender Option Bonds TRANs --Tax and Revenue Anticipation Notes UT --Unlimited
Tax VHA --Veterans Housing Administration 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, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value (tax cost $3,261,457,294) $3,261,320,015
Cash 2,204,877
Income receivable 22,125,232
Prepaid expenses 110,018
Total assets 3,285,760,142
LIABILITIES:
Payable for investments purchased $57,429,740
Payable for shares redeemed 562,493
Income distribution payable 7,023,164
Accrued expenses 458,561
Total liabilities 65,473,958
NET ASSETS for 3,220,252,875 shares outstanding $3,220,286,184
NET ASSETS CONSIST OF:
Paid in capital $3,220,252,875
Undistributed net investment income (6,573)
Accumulated net realized gain on investments 39,882
Total net assets $3,220,286,184
NET ASSETS VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$2,279,769,954 / 2,279,756,872 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$940,516,230 / 940,496,003 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $94,553,456
EXPENSES:
Investment advisory fee $ 5,174,140 Administrative personnel and services fee
1,951,404 Custodian fees 1,923 Transfer and dividend disbursing agent fees and
expenses 72,461 Directors'/Trustees' fees 17,746 Auditing fees 13,842 Legal fees
32,982 Portfolio accounting fees 230,793 Shareholder services fee--Institutional
Shares 4,610,695 Shareholder services fee--Institutional Service Shares
1,856,980 Share registration costs 249,291 Printing and postage 76,487 Insurance
premiums 113,779 Taxes 12 Miscellaneous 15,006 Total expenses 14,417,541 Waivers
- -- Waiver of investment advisory fee $(2,661,895) Waiver of shareholder services
fee--Institutional Shares (4,610,695) Total waivers (7,272,590) Net expenses
7,144,951 Net investment income 87,408,505 Net realized gain on investments
131,365 Change in net assets resulting from operations $87,539,870 </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 July31,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 87,408,505 $ 72,319,761
Net realized gain (loss) on investments ($145,964 net gain and $107,581 net loss,
respectively, as computed for federal income tax purposes) 131,365 (9,927)
Change in net assets resulting from operations 87,539,870 72,309,834
DISTRUBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (63,605,236) (56,940,629)
Institutional Service Shares (23,803,270) (15,379,132)
Change in net assets resulting from distributions to shareholders (87,408,506) (72,319,761)
SHARE TRANSACTIONS--
Proceeds from sale of shares 16,237,569,274 12,978,635,504
Net asset value of shares issued to shareholders in payment of distributions declared 12,646,067 9,465,909
Cost of shares redeemed (15,092,223,527) (12,847,315,602)
Change in net assets resulting from share transactions 1,157,991,814 140,785,811
Change in net assets 1,158,123,178 140,775,884
NET ASSETS:
Beginning of period 2,062,163,006 1,921,387,122
End of period (including undistributed net investment income of
$0 and $24,515, respectively) $ 3,220,286,184 $ 2,062,163,006
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TAX-FREE OBLIGATIONS FUND
JULY 31, 1998
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)
ACCUMULATED UNDISTRIBUTED NET
NET REALIZED INVESTMENT
GAIN/LOSS INCOME
$31,087 $(31,087)
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, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $17,686, 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 in
2005
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees. The Fund will not incur any registration costs upon such
resales. Restricted securities are valued at amortized cost in accordance with
Rule 2a-7 under the Investment Company Act of 1940.
Additional information on each restricted security held at July 31, 1998, is as
follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Alaska International Airports System, (Series 1998A) 7/22/1998 $14,333,176
Alaska State Housing Finance Corp., PT-202 6/26/1998 7,205,000
Bibb County, GA, PT-199 6/19/1998 8,000,000
California Community College Financing Authority,
Trust Receipts (Series 1998 FR/RI-A24) 7/16/1998 20,000,000
Illinois Development Finance Authority, PT-131 (Series 1995A) 10/2/1997 6,000,000
Los Angeles County, CA Unified School District,
Trust Receipts, FR/RI-A26 7/1/1998 53,800,000
Maryland State Community Development Administration, (Series 1997) 1/13/1998 23,820,000
New York State Dormitory Authority, PT-192 6/5/1998 11,780,000
New York State Mortgage Agency, PT-164 3/25/1998 4,995,000
Pennsylvania State University, PT-157 (Series 1992) 1/29/1998 3,245,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1998, capital paid-in aggregated $3,220,252,875.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997
INSTITUTIONAL SHARES
<S> <C> <C>
Shares sold 12,763,472,990 11,143,842,232
Shares issued to shareholders in payment of distributions declared 8,791,413 7,389,962
Shares redeemed (11,966,763,689) (11,192,024,289)
Net change resulting from Institutional Share transactions 805,500,714 (40,792,095)
<CAPTION>
YEAR ENDED JULY 31,
1998 1997
INSTITUTIONAL SERVICE SHARE
<S> <C> <C>
Shares sold 3,474,096,284 1,834,793,272
Shares issued to shareholders in payment of distributions declared 3,854,654 2,075,947
Shares redeemed (3,125,459,838) (1,655,291,313)
Net change resulting from Institutional Service Share transactions 52,491,100 181,577,906
Net change resulting from share transactions 1,157,991,814 140,785,811
</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, Inc. 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, 1998, 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 $5,316,380,000 and $4,618,988,437,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, 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
Tax-Free Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1998, 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 25, 1998
Tax-Free
Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management
Investment Company
TAX-FREE
OBLIGATIONS FUND
INSTITUTIONAL SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
1-800-341-7400
www.federatedinvestors
Cusip 60934N401
9110207A-IS (9/98)
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 port-folio 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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights-Institutional Service Shares 2
General Information 3
Year 2000 Statement 3
Investment Information 3
Investment Objective 3
Investment Policies 3
Municipal Securities 5
Investment Risks 5
Investment Limitations 5
Fund Information 6
Management of the Fund 6
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 8
Invest-by-Phone 8
How to Redeem Shares 8
Redeeming Shares by Telephone 8
Redeeming Shares by Mail 8
Account and Share Information 9
Dividends 9
Capital Gains 9
Account Activity 9
Accounts with Low Balances 9
Voting Rights 9
Tax Information 9
Federal Income Tax 9
State and Local Taxes 10
Other Classes of Shares 10
Performance Information 10
Last Meeting of Shareholders 11
Financial Highlights-Institutional Shares 12
Financial Statements 13
Report of Independent Public Accountants 43
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of
offering price) None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
<CAPTION>
ANNUAL OPERATING EXPENSE
(As a percentage of average net asset)
<S> <C> <C>
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 "Trust 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
TAX-FREE OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 43.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.03 0.002
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.03) (0.03) (0.03) (0.002)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 3.25% 3.24% 3.29% 3.39% 0.18%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45% 0.39%*
Net investment income 3.20% 3.19% 3.22% 3.48% 3.04%*
Expense waiver/reimbursement(c) 0.10% 0.10% 0.11% 0.14% 0.15%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $940,516 $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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator, and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing, and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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, Inc. All of the Class A (voting) shares of
Federated Investors, Inc. are owned by a trust, the trust ees of which are John
F. Donahue, Chairman and Director of Federated Inves tors, Inc., Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across ^ore than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. is one of the largest mutual fund investment
managers in the United States. With more than 2,000 employ ees, Federated
continues to be led by the management who founded the company in 1955. Federated
funds are presently at work in and through approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. 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, Jr. 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) 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: 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. 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.
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. 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 12:00 noon (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
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 capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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.
As of September 3, 1998, Naidot & Co. organized in the state of New Jersey owned
34.90% of the voting securities of the Institutional Service Shares 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.
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
Because interest received by the Fund may not be exempt from all state and local
income taxes, shareholders may be required to pay state and local taxes on
dividends received from the Fund. Shareholders are urged to consult their own
tax advisers regarding the status of their accounts under state and local tax
laws.
OTHER CLASSES OF SHARES
The Fund also offers another class of shares. 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.
Both 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
TAX-FREE OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 43.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.03 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) (0.03) (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 $ 1.00
TOTAL RETURN(B) 3.50% 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% 0.20%*
Net investment income 3.45% 3.43% 3.46% 3.62% 2.41% 2.49% 3.58% 4.93% 5.75%*
Expense waiver/
reimbursement(c) 0.35% 0.35% 0.36% 0.39% 0.15% 0.14% 0.17% 0.26% 0.21%*
SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $2,279,770 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--101.3%
ALABAMA--4.1%
$ 3,770,000 Alabama HFA, 1995 (Series E) Weekly VRDNs (Royal Gardens Apartments
Project)/(SouthTrust Bank of Alabama, Birmingham LOC) $ 3,770,000
7,215,000 Anniston, AL, IDB (Series 1989-A) Weekly VRDNs (Union Foundry Co.)/(Amsouth Bank N.A.,
Birmingham LOC) 7,215,000
3,650,000 Arab, AL IDB, (Series 1989) Weekly VRDNs (SCI Manufacturing, Inc.)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 3,650,000
1,100,000 Arab, AL IDB, Revenue Refunding Bonds (Series 1989) Weekly VRDNs (SCI Manufacturing,
Inc.)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 1,100,000
5,000,000 Birmingham, AL IDA, Revenue Refunding Bonds Weekly VRDNs
(S.P. Hotel Company)/(Amsouth Bank N.A., Birmingham LOC) 5,000,000
3,500,000 Birmingham, AL Medical Clinic Board, Medical Clinic Revenue Bonds (Series 1996)
WeeklyVRDNs (St. Martin's In The Pines)/(Regions Bank, Alabama LOC) 3,500,000
2,995,000 Birmingham, AL Special Care Facilities Financing Authority, Capital Improvement
Revenue Bonds (Series 1995) Weekly VRDNs (Methodist Home for the Aging
(AL))/(SouthTrust Bank of Alabama, Birmingham LOC) 2,995,000
15,910,000 Columbia, AL IDB, CDC Municipal Products, Inc. (Series 1997I) Weekly VRDNs (Alabama
Power Co.)/(AMBAC INS)/(CDC Municipal Products, Inc. LIQ) 15,910,000
3,000,000 Decatur, AL IDB, Revenue Refunding Bonds (Series 1993) Weekly VRDNs (Allied-Signal,
Inc.) 3,000,000
3,300,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn (Homewood AL))/(SouthTrust Bank of
Alabama, Birmingham LOC) 3,300,000
4,000,000 Hoover, AL Board of Education, Warrant Anticipation Notes (Series 1998-A), 3.80% BANs,
2/1/1999 4,000,000
1,406,000 Irondale, AL IDB, Revenue Bonds (Series 1989) Weekly VRDNs (Collateral Mortgage,
Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) 1,406,000
8,500,000 Jefferson County, AL, GO Warrants (Series 1996) Weekly VRDNs (Bayerische Landesbank
Girozentrale LOC) 8,500,000
2,260,000 Madison, AL IDA (Series A) Weekly VRDNs (Executive Inn)/(Amsouth Bank N.A.,
BirminghamLOC) 2,260,000
6,690,000 Marshall County, AL, Special Obligation School Refunding Warrant (Series 1994)
WeeklyVRDNs (Marshall County, AL Board of Education)/(Regions Bank, Alabama LOC) 6,690,000
2,500,000 Mobile, AL IDA Weekly VRDNs (McRae's Industries, Inc.)/(Nationsbank, N.A., Charlotte
LOC) 2,500,000
500,000 Mobile, AL IDB, PCR (Series 1993A) Weekly VRDNs (Alabama Power Co.)/
(Alabama Power Co. GTD) 500,000
10,000,000 Mobile, AL IDB, PCR (Series 1993B) Weekly VRDNs (Alabama Power Co.)/
(Alabama Power Co. GTD) 10,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
ALABAMA--CONTINUED
$ 1,000,000 Mobile, AL IDB, Pollution Control Refunding Revenue Bonds (Series 1992) Weekly VRDNs
(AirProducts & Chemicals, Inc.)/(Air Products & Chemicals, Inc. GTD) $ 1,000,000
400,000 Montgomery, AL IDB, (Series 1988A) Weekly VRDNs (Smith
Industries)/(SunTrust Bank,
Atlanta LOC) 400,000
24,500,000 Montgomery, AL IDB Pollution Control & Solid Disposal Revenue, 3.65% CP
(General Electric Co.), Mandatory Tender 8/5/1998 24,500,000
14,995,000 The Board of Trustees of the University of Alabama (Series A) Weekly VRDNs
(Bank of America NT and SA, San Francisco LIQ) 14,995,000
1,290,000 Tuscaloosa County, AL Port Authority (Series 1989A) Weekly VRDNs
(Capstone Hotel Ltd.)/(SouthTrust Bank of Alabama, Birmingham LOC) 1,290,000
730,000 Tuscaloosa, AL IDB, Revenue Refunding Bonds (Series 1994) Weekly VRDNs
(Harco, Inc.)/(Amsouth Bank N.A., Birmingham LOC) 730,000
4,695,000 Vincent, AL IDB Weekly VRDNs (Headquarters Partnership Project)/(National Australia
Bank,Ltd., Melbourne LOC) 4,695,000
Total 132,906,000
ALASKA--0.7%
14,300,000 (b)Alaska International Airports System (Series 1998A), 4.36% BANs,
4/1/1999 14,333,020 7,205,000 (b)Alaska State Housing Finance Corp., PT-202,
3.70% TOBs (Bayerische Vereinsbank AG,
Munich LIQ), Optional Tender 5/20/1999 7,205,000
Total 21,538,020
ARIZONA--1.7%
9,830,000 Apache County, AZ IDA, 1983 (Series A) Weekly VRDNs (Tucson Electric Power Co.)/
(Toronto-Dominion Bank LOC) 9,830,000
3,700,000 Arizona Health Facilities Authority Weekly VRDNs (University Physicians, Inc.)/(Bank
One, Arizona N.A. LOC) 3,700,000
6,350,000 Arizona Health Facilities Authority, Pooled Loan Program Revenue Bonds (Series 1985B)
Weekly VRDNs (FGIC INS)/(Chase Manhattan Bank N.A., New York LIQ)
6,350,000 13,060,000 Chandler, AZ IDA Weekly VRDNs (SMP II Limited
Partnership)/(Bank One, Arizona N.A. LOC) 13,060,000
3,700,000 Gila County, AZ IDA Weekly VRDNs (Cobre Valley Hospital)/(Bank One, Arizona N.A. LOC) 3,700,000
5,330,000 Glendale, AZ IDA, Variable Rate Senior Living Facilities Revenue Bonds Weekly VRDNs
(Friendship Retirement Corporation)/(Norwest Bank Minnesota, N.A. LOC) 5,330,000
3,500,000 Maricopa County, AZ Pollution Control Corp. (Series 1994F) Daily VRDNs (Arizona Public
Service Co. - Palo Verde)/(Bank of America NT and SA, San Francisco LOC) 3,500,000
1,700,000 Pima County, AZ IDA Weekly VRDNs (Tucson Electric Power Co.)/
(Toronto-Dominion Bank LOC) 1,700,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
ARIZONA--CONTINUED
$ 7,810,000 Tolleson, AZ Municipal Finance Corporation, Revenue Refunding Bonds (Series of 1998)
Weekly VRDNs (Citizens Utilities Co.) $ 7,810,000
Total 54,980,000
ARKANSAS--0.1%
2,000,000 Little Rock, AR Pulaski County School District (Series 1998), 4.25% TRANs, 12/30/1998 2,004,860
1,000,000 Sheridan, AR IDA (Series A) Weekly VRDNs (H.H. Robertson Co.)/(PNC Bank, N.A. LOC) 1,000,000
Total 3,004,860
CALIFORNIA--7.3%
6,000,000 Acalanes, CA Union High School District, 3.90% TRANs, 6/30/1999 6,010,539
20,000,000 (b)California Community College Financing Authority, Trust Receipts (Series 1998
FR/RI-A24), 3.60% TOBs (FSA INS)/(Bank of New York, New York LIQ),
Optional Tender
12/9/1998 20,000,000
51,175,000 (b)California Public Capital Improvements Financing Authority, Trust Receipts
(Series 1996 FR-3) Weekly VRDNs (MBIA INS)/(Bank of New York, New York LIQ) 51,175,000
53,800,000 (b)Los Angeles County, CA Unified School District, Trust Receipts FR/RI-A26, 3.60%
TOBs (Bank of New York, New York LIQ), Mandatory Tender 12/9/1998 53,800,000
25,000,000 Los Angeles County, CA (Series A), 4.50% TRANs, 6/30/1999 25,182,327
9,600,000 Northern California Transmission Agency, Trust Receipts (Series 1998 FR/RI-16)
WeeklyVRDNs (California-Oregon Transmission Project)/(MBIA INS)/(Bank of New York,
New York LIQ) 9,600,000
2,575,000 Roseville, CA City School District, 4.45% TRANs, 9/10/1998 2,576,491
2,780,000 Roseville, CA Joint Union High School District, 4.45% TRANs, 9/10/1998 2,781,610
36,000,000 San Diego, CA Area Local Governments, Trust Receipts (Series FR/RI-A25) Weekly VRDNs
(Bank of New York, New York LIQ) 36,000,000
7,500,000 San Mateo, CA Union High School District, 3.90% TRANs, 6/30/1999 7,513,174
4,000,000 Santa Barbara County, CA Schools Financing Authority, 4.50% TRANs, 6/30/1999 4,029,202
9,575,000 Stanislaus County, CA Office of Education, 4.50% TRANs, 7/30/1999 9,652,916
5,000,000 Sunnyvale, CA Elementary School District, 3.90% TRANs, 6/30/1999 5,008,782
Total 233,330,041
COLORADO--0.8%
2,650,000 Denver (City & County), CO, 4.15% TOBs (Blake Street
Compendium)/(Norwest Bank
Minnesota, N.A. LOC) 12/15/1998 2,650,000
13,660,000 Denver (City & County), CO, Merlot (Series 1997E) Weekly VRDNs (Department of Aviation
Airport System)/(MBIA INS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 13,660,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
COLORADO--CONTINUED
$ 9,000,000 Denver (City & County), CO, Trust Receipts (Series 1998 FR/RI-13) Weekly VRDNs
(MBIA INS)/(Bank of New York, New York LIQ) $ 9,000,000
Total 25,310,000
CONNECTICUT--1.1%
5,000,000 Connecticut State HEFA, (Series B) Weekly VRDNs (Edgehill)/(Paribas, Paris LOC) 5,000,000
30,050,000 Connecticut State HEFA, (Series T-1) Weekly VRDNs (Yale University) 30,050,000
Total 35,050,000
DISTRICT OF COLUMBIA--2.0%
2,070,000 District of Columbia Housing Finance Agency, Multifamily Housing, 3.85% TOBs
(ChastletonProject)/(Nationsbank, N.A., Charlotte LOC), Optional Tender 7/1/1999 2,070,000
5,000,000 District of Columbia (Series 1998C), 5.00% TRANs (Union Bank of Switzerland, Zurich
LOC), 9/30/1998 5,009,141
14,400,000 District of Columbia (Series B), 4.50% TRANs (Morgan Guaranty Trust Co., New York and
Union Bank of Switzerland, Zurich LOCs), 9/30/1998 14,414,337
3,575,000 District of Columbia, Revenue Bonds (Series 1997B) Weekly VRDNs (Association of
American Medical Colleges)/(AMBAC INS)/(Chase Manhattan Bank N.A., New York LIQ) 3,575,000
39,850,000 District of Columbia, Trust Receipts (Series 1998 FR/RI-A14) Weekly VRDNs
(MBIAINS)/(National Westminster Bank, PLC, London LIQ) 39,850,000
Total 64,918,478
FLORIDA--12.4%
17,995,000 ABN AMRO MuniTOPS Certificates Trust 1998-8 Weekly VRDNs (Dade County, FL Water & Sewer
System)/(FGIC INS)/(ABN AMRO Bank N.V., Amsterdam LIQ) 17,995,000
2,950,000 Brevard County, FL Weekly VRDNs (Greywater Investments)/(Huntington National Bank,
Columbus, OH LOC) 2,950,000
18,500,000 Broward County, FL HFA, (Series 1985) Daily VRDNs (Landings of Inverrary)/(PNC Bank,
N.A.LOC) 18,500,000
6,000,000 Broward County, FL HFA, (Series 1997) Weekly VRDNs (Jacaranda Village
Apartments)/(Marine Midland Bank N.A., Buffalo, NY LOC) 6,000,000
2,980,000 Broward County, FL Health Facility Authority, Revenue Bonds Weekly VRDNs (John Knox
Village of Florida)/(First Union National Bank, Charlotte, N.C. LOC) 2,980,000
20,000,000 Collier County, FL School District, 4.00% RANs, 4/30/1999 20,031,534
3,870,000 Dade County, FL IDA Weekly VRDNs (Futernick Associates, Inc.)/(First Union National
Bank, Charlotte, N.C. LOC) 3,870,000
49,900,000 Dade County, FL Water & Sewer System Weekly VRDNs (FGIC INS)/(Commerzbank AG, Frankfurt
LIQ) 49,900,000
55,000 Eustis Health Facilities Authority, FL (Series 1985) Weekly VRDNs (Waterman Medical
Center)/(SunTrust Bank, Central Florida LOC) 55,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 9,730,000 Eustis Health Facilities Authority, FL, Health Facilities Revenue Bonds (Series 1992)
Weekly VRDNs (Florida Hospital/Waterman, Inc. Project)/(SunTrust Bank, Central Florida
LOC) $ 9,730,000
1,400,000 Florida HFA, (Series 1989 E) Weekly VRDNs (Fairmont Oaks Project)/(Comerica Bank,
Detroit,MI LOC) 1,400,000
7,000,000 Florida HFA, Multi-Family Housing Revenue Bonds (1985 Series SS) Weekly VRDNs
(Woodlands Apartments)/(Northern Trust Co., Chicago, IL LOC) 7,000,000
5,120,000 Florida State Board of Education Administration, (CR55), (Series 1989A), 3.55% TOBs
(CitibankN.A., New York LIQ), Optional Tender 9/1/1998 5,120,000
11,200,000 Florida State Department of Environmental Protection, PT-166 Weekly VRDNs
(FSAINS)/(Banque Nationale de Paris LIQ) 11,200,000
10,450,000 Florida State Department of Environmental Protection, Trust Receipts FR/RI-A18
(Series1998) Weekly VRDNs (FGIC INS)/(National Westminster Bank, PLC, London LIQ) 10,450,000
5,860,000 Fort Lauderdale, FL Performing Arts Center Authority Weekly VRDNs (SunTrust Bank,
CentralFlorida LOC) 5,860,000
1,540,000 Fort Myers, FL, PA-180 (Series 1997A) Weekly VRDNs (AMBAC INS)/(Merrill Lynch Capital
Services, Inc. LIQ) 1,540,000
16,275,000 Gulf Breeze, FL, Variable Rate Demand Revenue Bonds (Series 1995A) Weekly VRDNs
(Florida Municipal Bond Fund)/(Barnett Bank, N.A. LOC) 16,275,000
2,650,000 Halifax Hospital Medical Center, FL, 4.00% TANs (Barnett Bank, N.A. LOC), 4/15/1999 2,656,287
32,000,000 Highlands County, FL Health Facilities (Series 1996A Accounts Receivable) Weekly VRDNs
(Adventist Health System)/(CapMAC Holdings, Inc. INS)/(First National Bank of Chicago
LIQ) 32,000,000
17,500,000 Highlands County, FL Health Facilities (Series 1996B Accounts Receivable) Weekly VRDNs
(Adventist Health System)/(CapMAC Holdings, Inc. INS)/(Canadian Imperial Bank of
Commerce, Toronto LIQ) 17,500,000
15,700,000 Highlands County, FL Health Facilities, Variable Rate Demand Revenue Bonds (Series
1996A) Weekly VRDNs (Adventist Health System)/(SunTrust Bank, Central Florida LOC) 15,700,000
7,000,000 Indian River County, FL Hospital District (Series 1985) Weekly VRDNs (KBC Bank N.V.,
Brussels LOC) 7,000,000
15,030,000 Jacksonville Electric Authority, Class A Certificates (Series 1997-2) Weekly VRDNs
(Bank of New York, New York LIQ) 15,030,000
7,570,000 Jacksonville Transportation Authority, PA-146 Weekly VRDNs (Florida State)/(Merrill
Lynch Capital Services, Inc. LIQ) 7,570,000
3,295,000 Jacksonville Transportation Authority, PA-163 Weekly VRDNs (Florida State)/(Merrill
Lynch Capital Services, Inc. LIQ) 3,295,000
2,580,000 Lee County, FL IDA (Series 1985) Weekly VRDNs (Christian & Missionary Alliance
Foundation)/(Paribas, Paris LOC) 2,580,000
5,635,000 Manatee County, FL HFA Weekly VRDNs (Carriage Club)/(Mellon Bank N.A., Pittsburgh LOC) 5,635,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
FLORIDA--CONTINUED
$ 6,025,000 Manatee County, FL HFA, Weekly Adjustable/Fixed Rate Multifamily Housing Revenue
Refunding Bonds (1990 Series A) Weekly VRDNs (Harbour Pointe)/(Marine Midland Bank
N.A., Buffalo, NY LOC) $ 6,025,000
4,700,000 Miami, FL Health Facilities Authority, Health Facilities Revenue Bonds (Series 1992)
Weekly VRDNs (Miami Jewish Home and Hospital for the Aged, Inc.)/(SunTrust Bank, Miami
LOC) 4,700,000
12,700,000 Miami, FL Health Facilities Authority, Health Facilities Revenue Bonds (Series 1996)
WeeklyVRDNs (Miami Jewish Home and Hospital for the Aged, Inc.)/(SunTrust Bank,
CentralFlorida LOC) 12,700,000
4,000,000 Mount Dora, FL Health Facility Authority (Series 1996A) Weekly VRDNs (Waterman Village
(Mount Dora, Fl))/(Barnett Bank of Central Florida, Orlando LOC) 4,000,000
5,000,000 Orange County, FL Educational Facilities Authority (Series 1998) Weekly VRDNs (Rollins
College)/(Barnett Bank, N.A. LOC) 5,000,000
4,000,000 Orange County, FL Educational Facilities Authority, Revenue Bonds (Series 1997) Weekly
VRDNs (Rollins College)/(Barnett Bank, N.A. LOC) 4,000,000
9,900,000 Orange County, FL HFA, Variable Rate Certificates (Series 1997G) Weekly VRDNs
(GNMACOL)/(Bank of America NT and SA, San Francisco LIQ) 9,900,000
6,200,000 Orlando, FL (City of), Capital Improvement Commerial Paper Notes (1994 Series-A),
3.70% CP, Mandatory Tender 10/16/1998 6,200,000
4,000,000 Pinellas County Industry Council, FL Weekly VRDNs (Loulourgas Properties)/(First Union
National Bank, Charlotte, N.C. LOC) 4,000,000
1,940,000 Pinellas County Industry Council, FL, Variable/Fixed Rate Development Revenue Bonds
(Series 1997) Weekly VRDNs (Boyd Industries, Inc.)/(SouthTrust Bank of Alabama,
Birmingham LOC) 1,940,000
5,525,000 Polk County, FL IDA, PCR Refunding Bonds Weekly VRDNs (IMC Fertilizer, Inc.
Project)/(Rabobank Nederland, Utrecht LOC) 5,525,000
2,795,000 Port St. Lucie, FL (Series 1997A) Weekly VRDNs (AMBAC INS)/(Merrill Lynch Capital
Services, Inc. LIQ) 2,795,000
3,970,000 Sarasota, FL, Educational Facilities Revenue Bonds (Series 1996) Weekly VRDNs
(Ringling School of Art and Design, Inc.)/(SunTrust Bank, Central Florida LOC) 3,970,000
4,200,000 Seminole County, FL Health Facility Authority IDA (Series 1991) Weekly VRDNs (Florida
Living Nursing Center)/(Barnett Bank, N.A. LOC) 4,200,000
7,430,000 St. Lucie County, FL, IDR Bonds (Series 1985) Weekly VRDNs (Savannahs
Hospital)/(Nationsbank, N.A., Charlotte LOC) 7,430,000
4,465,000 St. Petersburg, FL HFA, Refunding Revenue and Revenue Bonds (Series 1997) Weekly VRDNs
(Manorah Manor)/(SunTrust Bank, Central Florida LOC) 4,465,000
7,450,000 Sunshine State Governmental Finance Commission, FL, 3.50% CP (AMBAC INS)/(Toronto-
Dominion Bank and Union Bank of Switzerland, Zurich LIQs), Mandatory Tender 8/11/1998 7,450,000
5,855,000 Volusia County, FL HFA Weekly VRDNs (Fisherman's Landing)/(Mellon Bank N.A.,
PittsburghLOC) 5,855,000
Total 399,977,821
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--3.4%
$ 8,000,000 (b)Bibb County, GA, PT-199, 3.70% TOBs (Georgia State GTD)/(Bayerische Vereinsbank AG,
Munich LIQ), Optional Tender 5/20/1999 $ 8,000,000
22,000,000 Burke County, GA Development Authority (Series 1996), 3.80% TOBs (Oglethorpe Power
Corp.), Optional Tender 11/2/1998 22,000,000
42,500,000 Burke County, GA Development Authority, PCR Bonds (Fourth Series 1994) Daily VRDNs
(Georgia Power Co.) 42,500,000
4,725,000 Burke County, GA Development Authority, Pollution Control Revenue Bonds (Series 1995)
DailyVRDNs (Georgia Power Co.) 4,725,000
2,000,000 Clayton County, GA Housing Authority, Revenue Refunding Bonds (Series 1992) Weekly
VRDNs (Oxford Townhomes Project)/(Amsouth Bank N.A., Birmingham LOC) 2,000,000
10,000,000 Clayton County, GA (Series 1998), 4.25% Bonds, 8/1/1999 10,048,406
1,500,000 De Kalb County, GA Development Authority (Series 1992) Weekly VRDNs (American Cancer
Society, GA)/(SunTrust Bank, Atlanta LOC) 1,500,000
4,950,000 Douglas County, GA School District, 3.90% TANs, 12/31/1998 4,955,971
12,145,000 Georgia State (Series 1995C) PA-249 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 12,145,000
Total 107,874,377
ILLINOIS--6.3%
12,000,000 Chicago, IL Board of Education, Merlots (Series 1997E) Weekly VRDNs
(AMBACINS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 12,000,000
20,000,000 Chicago, IL Board of Education, Variable Rate Certificates (Series 1996BB) Weekly
VRDNs (MBIA INS)/(Bank of America NT and SA, San Francisco LIQ) 20,000,000
2,800,000 Chicago, IL Weekly VRDNs (Canadian Imperial Bank of Commerce, Toronto LOC) 2,800,000
20,000,000 Chicago, IL, MERLOTs (Series 1997 V) Weekly VRDNs (Chicago, IL Water Revenue
Bonds)/(FGIC INS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 20,000,000
9,905,000 Chicago, IL, Water Revenue Bonds (PT-129) Weekly VRDNs (FGIC INS)/(Merrill Lynch
Capital Services, Inc. LIQ) 9,905,000
350,000 Darien, IL IDA (Series 1989C) Weekly VRDNs (KinderCare Learning Centers, Inc.)/
(Toronto-Dominion Bank LOC) 350,000
3,800,000 Galesburg, IL (Series 1996) Weekly VRDNs (Knox College Project)/(Lasalle National
Bank, Chicago LOC) 3,800,000
12,500,000 Hopedale Village, IL (Series 1998) Weekly VRDNs (Hopedale Medical Foundation)/(Bank
One, Illinois, N.A. LOC) 12,500,000
11,900,000 Illinois Development Finance Authority Weekly VRDNs (Lyric Opera of Chicago)/(Caisse
Nationale De Credit Agricole, Paris, Harris Trust & Savings Bank, Chicago, NBD Bank,
Michigan and Northern Trust Co., Chicago, IL LOCs) 11,900,000
3,000,000 Illinois Development Finance Authority Weekly VRDNs (Newlywed Food)/(Mellon Bank N.A.,
Pittsburgh LOC) 3,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
ILLINOIS--CONTINUED
$ 2,600,000 Illinois Development Finance Authority (Series 1997) Weekly VRDNs (Ada S. McKinley
Community Services, Inc.)/(Harris Trust & Savings Bank, Chicago LOC) $ 2,600,000
6,000,000 (b)Illinois Development Finance Authority, PT-131 (Series 1995A), 3.95% TOBs
(CatholicHealthPartners Services)/(Connie Lee INS)/(Credit Suisse First Boston LIQ),
Mandatory Tender 10/1/1998 6,000,000
5,000,000 Illinois Educational Facilities Authority, Revenue Bonds (Series 1995) Weekly VRDNs
(Ravinia Festival Association (IL))/(NBD Bank, Michigan LOC) 5,000,000
21,100,000 Illinois Health Facilities Authority Weekly VRDNs (OSF Health Care Systems) 21,100,000
15,000,000 Illinois Health Facilities Authority (Series 1998), 3.70% TOBs (Evanston Northwestern
Healthcare Corp.), Mandatory Tender 6/1/1999 15,000,000
35,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series 1985B) Weekly VRDNs (OSF
Health Care Systems)/(Bank of America Illinois and Rabobank Nederland, Utrecht LIQs) 35,000,000
20,700,000 Illinois Health Facilities Authority, Revenue Refunding Bonds (Series 1997B) Weekly
VRDNs (Advocate Health Care Network)/(First National Bank of Chicago, Harris Trust &
Savings Bank, Chicago and Northern Trust Co., Chicago, IL LIQs) 20,700,000
1,000,000 Illinois Health Facilities Authority, Revolving Fund Pooled Financing Program (Series
1985F) Weekly VRDNs (NBD Bank, Michigan LOC) 1,000,000
Total 202,655,000
INDIANA--2.2%
665,000 Dale, IN IDA Weekly VRDNs (Spencer Industries)/(National City Bank, Kentucky LOC) 665,000
5,000,000 Hamilton, IN Southeastern Schools, Temporary Loan Warrants, 3.80% TRANs, 12/31/1998 5,002,217
5,000,000 Hammond Local Public Improvement Bond Bank, Advance Funding Program Notes
(Series A-2), 4.30% TANs (Bank One, Indianapolis, N.A. LOC), 1/7/1999 5,010,484
32,000,000 Indiana Bond Bank, Advance Funding Program Notes (Series 1998 A-2), 4.00% TANs (Lasalle
National Bank, Chicago LOC), 1/20/1999 32,058,324
1,355,000 Indiana Health Facilities Finance Authority Rehabilitation Center Weekly VRDNs
(Crossroads Rehabilitation Center)/(Bank One, Indianapolis, N.A. LOC) 1,355,000
5,500,000 Indianapolis, IN Local Public Improvement Bond Bank, 4.25% TANs, 1/11/1999 5,514,422
4,735,000 Indianapolis, IN, Variable Rate Demand Economic Development Revenue Bonds (Series
1995) Weekly VRDNs (Pleasant Run Children's Homes, Inc.)/(Fifth Third Bank, Cincinnati
LOC) 4,735,000
4,900,000 Lafayette School Corp., IN, 4.20% TANs, 12/30/1998 4,906,242
2,045,000 St. Joseph County, IN, Multi-Mode Variable Rate Economic Development Revenue Bonds
(Series 1998) Weekly VRDNs (South Bend Heritage Foundation, Inc.)/(KeyBank, N.A. LOC) 2,045,000
9,500,000 Vigo County, IN School Corporation, Temporary Loan Warrants, 3.80% TRANs, 12/30/1998 9,504,199
Total 70,795,888
IOWA--1.3%
32,000,000 Iowa School Corporations (1998-99 Series A), 4.50% TRANs (FSA INS), 6/25/1999 32,235,801
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
IOWA--CONTINUED
$ 10,000,000 Iowa School Corporations (Series 1997-98B), 4.25% TRANs (FSA INS), 1/28/1999 $ 10,033,337
Total 42,269,138
KENTUCKY--1.6%
1,110,000 Boone County, KY, Revenue Refunding Bonds Weekly VRDNs (Spring Meadow
Associates)/(Huntington National Bank, Columbus, OH LOC) 1,110,000
6,835,000 Jefferson County, KY (Series 1997) Weekly VRDNs (First Trust Restoration Partners)/
(Bank One, Kentucky LOC) 6,835,000
7,500,000 Jefferson County, KY, Adjustable Rate Industrial Building Revenue Refunding Bonds
(Series 1997) Weekly VRDNs (Kosmos Cement Co. Partnership)/(Societe Generale, Paris
LOC) 7,500,000
35,000,000 Owensboro, KY (Series 1996) Weekly VRDNs (Owensboro Mercy Health System, Inc.
Project)/(Bank of America Illinois LOC) 35,000,000
Total 50,445,000
LOUISIANA--0.5%
800,000 Calcasieu Parish, LA, IDB, PCR Bonds Weekly VRDNs (Citgo Petroleum
Corp.)/(Westdeutsche Landesbank Girozentrale LOC) 800,000 6,950,000
Louisiana PFA (Series 1985A) Weekly VRDNs (FGIC INS)/(Societe Generale, Paris
LIQ) 6,950,000 4,000,000 Louisiana PFA (Series 1997D), 4.40% TRANs (Orleans
Parish, LA School Board)/(Louisiana
State GTD), 12/10/1998 4,007,874
5,000,000 New Orleans, LA, Class A Certificates (Series 1998-1) Weekly VRDNs (AMBAC INS)/(Bank of
New York, New York LIQ) 5,000,000
Total 16,757,874
MARYLAND--5.2%
4,300,000 Anne Arundel County, MD (Series 1988) Weekly VRDNs (Oakland Hills L. P.
Facility)/(First National Bank of Maryland, Baltimore LOC) 4,300,000
55,700,000 Baltimore County, MD IDA, Variable Rate Demand Acquisition Program (Series 1986)
WeeklyVRDNs (Baltimore Capital Acquisition)/(Bayerische Landesbank Girozentrale LOC) 55,700,000
1,900,000 Baltimore County, MD Port Facility Monthly VRDNs (Occidental Petroleum Corp.)/(Morgan
Guaranty Trust Co., New York LOC) 1,900,000
3,700,000 Baltimore, MD PCR Weekly VRDNs (SCM Plants, Inc.)/(Barclays Bank PLC, London LOC) 3,700,000
2,000,000 Baltimore, MD, Variable Rate Demand/Fixed Rate Refunding Bond (1988 Issue) Weekly
VRDNs (University West LP)/(First National Bank of Maryland, Baltimore LOC) 2,000,000
910,000 Elkton, MD, Revenue Refunding Bonds (Series 1992) Weekly VRDNs (Highway Service
Ventures, Inc. Facility)/(First Union National Bank, Charlotte, N.C. LOC) 910,000
2,350,000 Harford County, MD (Series 1988) Weekly VRDNs (1001 Partnership Facility)/(First
National Bank of Maryland, Baltimore LOC) 2,350,000
5,660,000 Howard County, MD (Series 1995) Weekly VRDNs (Bluffs at Clarys Forest
Apartments)/(First National Bank of Maryland, Baltimore LOC) 5,660,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MARYLAND--CONTINUED
$ 200,000 Maryland EDC, Pooled Financing Revenue Bonds (Series 1995) Weekly VRDNs (Maryland
Municipal Bond Fund)/(Nationsbank, N.A., Charlotte LOC) $ 200,000
3,000,000 Maryland EDC, Variable Rate Demand/Fixed Rate Refunding Revenue Bonds (1997 Issue)
Weekly VRDNs (Jenkins Memorial Nursing Home, Inc. Facility)/(First National Bank of
Maryland, Baltimore LOC) 3,000,000
5,400,000 Maryland Health & Higher Educational Facilities Authority (Series 1985B) Weekly VRDNs
(First National Bank of Chicago LOC) 5,400,000
4,000,000 Maryland Health & Higher Educational Facilities Authority (Series 1998A) Weekly VRDNs
(Charlestown Community)/(First Union National Bank, Charlotte, N.C. LOC) 4,000,000
12,800,000 Maryland Health & Higher Educational Facilities Authority, Revenue Bonds (Series 1994)
Weekly VRDNs (University Physicians, Inc.)/(First National Bank of Maryland, Baltimore
LOC) 12,800,000
3,895,000 Maryland State Community Development Administration, (PA-170) Weekly VRDNs (Merrill
Lynch Capital Services, Inc. LIQ) 3,895,000
23,820,000 (b)Maryland State Community Development Administration (Series 1997), PT-123, 3.65%
TOBs (Commerzbank AG, Frankfurt LIQ), Optional Tender 12/10/1998 23,820,000
19,655,000 Maryland State (Series 1998) PA-256 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 19,655,000
4,000,000 Montgomery County, MD, EDR Weekly VRDNs (Howard Hughes Medical Center) 4,000,000
11,200,000 Montgomery County, MD, EDR Weekly VRDNs (U.S. Pharmacopeial Convention
Facility)/(Chase Manhattan Bank N.A., New York LOC) 11,200,000
3,755,000 Prince George County, MD (1997 Issue) Weekly VRDNs (Mona Branch Avenue Ltd.
Partnership)/(First National Bank of Maryland, Baltimore LOC) 3,755,000
Total 168,245,000
MASSACHUSETTS--2.3%
27,133,862 Clipper Tax Exempt Trust (Series A) Weekly VRDNs (Massachusetts State Lottery
Commission)/(AMBAC INS)/(State Street Bank and Trust Co. LIQ) 27,133,862
10,000,000 Framingham, MA, 4.00% BANs, 2/5/1999 10,017,281
6,500,000 Holden, MA, 4.00% BANs, 10/1/1998 6,503,169
800,000 Massachusetts HEFA (Series I) Weekly VRDNs (Harvard University) 800,000
9,590,000 Massachusetts Turnpike Authority, Refunded-Guaranteed BANs (Series A), 5.00% Bonds
(United States Treasury PRF), 6/1/1999 9,682,614
9,495,000 Massachusetts Turnpike Authority, Variable Rate Certificates (Series 1997N)
WeeklyVRDNs (MBIA INS)/(Bank of America NT and SA, San Francisco LIQ) 9,495,000
3,100,000 North Reading, MA, 4.25% BANs, 9/30/1998 3,101,814
6,000,000 Pittsfield, MA, 4.10% BANs, 9/17/1998 6,001,337
Total 72,735,077
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--3.8%
$ 4,670,000 Clarkston Community Schools, MI, PA-175 Weekly VRDNs (MBIA INS)/(Merrill Lynch Capital
Services, Inc. LIQ) $ 4,670,000
800,000 Detroit, MI Water Supply System, Water Supply System Revenue and Revenue Refunding
Bonds (Series 1993) Weekly VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ) 800,000
2,000,000 Garden City, MI HFA, Hospital Revenue Bonds (Series 1996A) Weekly VRDNs (Garden City
Hospital, Osteopathic)/(First of America Bank, N.A. LOC) 2,000,000
2,100,000 Grand Rapids, MI EDR, Floating/Fixed Rate Demand Bonds (Series 1983-B) Weekly VRDNs
(Amway Grand Plaza Hotel Facilities)/(Old Kent Bank & Trust Co., Grand Rapids LOC) 2,100,000
2,800,000 Grand Rapids, MI Water Supply System (Series 1993) Weekly VRDNs (FGIC INS)/(Societe
Generale, Paris LIQ) 2,800,000
2,100,000 Kent Hospital Finance Authority, MI (Series 1991A) Weekly VRDNs (Butterworth
Hospital)/(Rabobank Nederland, Utrecht LOC) 2,100,000
925,000 Michigan Higher Education Facilities Authority, Variable Rate Demand Limited
Obligation Revenue Bonds (Series 1997) Weekly VRDNs (Davenport College of
Business)/(Old Kent Bank& Trust Co., Grand Rapids LOC) 925,000
10,000,000 Michigan State Building Authority (Series 1), 3.70% CP (Canadian Imperial Bank of
Commerce, Toronto LOC), Mandatory Tender 10/1/1998 10,000,000
2,200,000 Michigan State Hospital Finance Authority (Series A) Weekly VRDNs (First of America
Bank,N.A. LOC) 2,200,000
16,000,000 Michigan State Hospital Finance Authority (Series A) Weekly VRDNs (OSF Health
CareSystems) 16,000,000
3,000,000 Michigan State Hospital Finance Authority, Hospital Equipment Loan Program Bonds
(SeriesA) Weekly VRDNs (First of America Bank, N.A. LOC) 3,000,000
19,650,000 Michigan State Hospital Finance Authority, MERLOTs (Series 1997A) Weekly VRDNs
(Detroit Medical Center Obligated Group)/(AMBAC INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ) 19,650,000
3,000,000 Michigan State Housing Development Authority (Series 1991) Weekly VRDNs (Regency
Square Apartments)/(National Australia Bank, Ltd., Melbourne LOC) 3,000,000
15,451,800 Michigan State Housing Development Authority, MERLOTs (Series G) Weekly VRDNs
(MBIA INS)/(Corestates Bank N.A., Philadelphia, PA LIQ) 15,451,800
15,000,000 Michigan State, GO UT, 4.50% TRANs, 9/30/1998 15,020,905
11,000,000 Michigan Strategic Fund, Limited Obligation PCR Bonds (Series 1993) Weekly VRDNs
(Allied-Signal, Inc.) 11,000,000
890,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1991) Weekly VRDNs
(Martin Luther Memorial Home, Inc.)/(Bank One, Indianapolis, N.A. LOC) 890,000
2,800,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series 1995) Weekly VRDNs
(Wellness Plan Project)/(NBD Bank, Michigan LOC) 2,800,000
2,000,000 Michigan Strategic Fund, PA-334 (Collateralized Series 1998AA) Weekly VRDNs
(Detroit Edison Co.)/(MBIA INS)/(Merrill Lynch Capital Services, Inc. LIQ) 2,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--CONTINUED
$ 2,000,000 Michigan Strategic Fund, Variable Rate Demand Limited Obligation Revenue Bonds
(Series1997B) Weekly VRDNs (NSF International)/(First of America Bank, N.A. LOC) $ 2,000,000
2,695,000 Ottawa County, MI Economic Development Corp., Limited Obligation Revenue Bonds
(Series1995B) Weekly VRDNs (Sunset Manor, Inc. Project)/(Old Kent Bank & Trust Co.,
GrandRapids LOC) 2,695,000
Total 121,102,705
MINNESOTA--4.5%
14,400,000 Becker, MN, PCR (Series 1993-B), 3.60% CP (Northern States Power
Co.),
MandatoryTender11/12/1998 14,400,000
10,300,000 Burnsville, MN, Variable Rate Demand Revenue Bonds (Series 1996) Weekly VRDNs
(YMCAProjects)/(Norwest Bank Minnesota, N.A. LOC) 10,300,000
3,300,000 DDSB Municipal Securities Trusts (Series 1994O) Weekly VRDNs (Richfield, MN
ISD280)/(U.S. Bank, N.A., Minneapolis LIQ) 3,300,000
6,390,000 DDSB Municipal Securities Trusts (Series 1994T Weekly VRDNs (Osseo, MN ISD 279)/
(U.S. Bank, N.A., Minneapolis LIQ) 6,390,000
11,000,000 DDSB Municipal Securities Trusts (Series 1994V) Weekly VRDNs (St. Louis Park
Healthsystem, MN)/(Norwest Bank Minnesota, N.A. LIQ) 11,000,000
7,000,000 East Grand Forks, MN ISD 595, 3.90% Bonds (Minnesota State GTD), 6/30/1999 7,009,188
3,200,000 Hennepin Co. MN (Series 1995C) Weekly VRDNs 3,200,000
4,250,000 MN Municipal Securities Trust (Series 1996F), Floating Rate Certificates Weekly VRDNs
(Lakeville, MN ISD 194)/(Norwest Bank Minnesota, N.A. LIQ) 4,250,000
11,735,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) Weekly VRDNs (Walker Methodist
Health Center, Inc. Project)/(U.S. Bank, N.A., Minneapolis LOC) 11,735,000
5,500,000 Minneapolis, MN (Series 1993) Weekly VRDNs (Market Square Real Estate, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 5,500,000
6,000,000 Minneapolis, MN, Variable Rate Housing Revenue Bonds Weekly VRDNs (One Ten Grant
Project)/(U.S. Bank, N.A., Minneapolis LOC) 6,000,000
12,000,000 Minneapolis, MN, Various Purpose Bonds (Series 1996) Weekly VRDNs (Bayerische
Vereinsbank AG, Munich LIQ) 12,000,000
15,500,000 Minneapolis/St. Paul, MN Metropolitan Airports Commission MuniTOPS (Series 1998-6)
Weekly VRDNs (AMBAC INS)/(ABN AMRO Bank N.V., Amsterdam LOC) 15,500,000
1,000,000 Norman County, MN ISD No. 2854, 4.00% Bonds (Minnesota State GTD), 7/1/1999 1,001,827
6,500,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo Foundation)/(Rabobank
Nederland, Utrecht LIQ) 6,500,000
13,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs (Mayo Foundation)/(Rabobank
Nederland, Utrecht LIQ) 13,000,000
13,500,000 Rosemount, MN, PCR (Series 1984) Weekly VRDNs (Koch Refining Co.) 13,500,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
MINNESOTA--CONTINUED
$ 100,000 St. Paul, MN Port Authority (Series 1991) Weekly VRDNs (West Gate Office)/(U.S. Bank,
N.A., Minneapolis LOC) $ 100,000
Total 144,686,015
MISSISSIPPI--0.1%
1,482,500 Hinds County, MS (Series 1991) Weekly VRDNs (North State St. Project)/(Amsouth Bank
N.A., Birmingham LOC) 1,482,500
MISSOURI--1.6%
1,025,000 Little Blue Valley Sewer District, MO, Sewer System Revenue Bonds (Series 1998B), 3.75%
Bonds (AMBAC INS), 10/1/1998 1,025,000
1,580,000 Little Blue Valley Sewer District, MO, Sewer System Revenue Bonds (Series 1998), 3.75%
Bonds (AMBAC INS), 10/1/1998 1,580,000
5,000,000 Missouri State HEFA Weekly VRDNs (Barnes Hospital)/(Morgan Guaranty Trust Co.,
New York LOC) 5,000,000
15,000,000 Missouri State HEFA (Series 1997N), 4.50% TRANs (St. Louis, MO School District),
9/14/1998 15,010,391
3,000,000 Missouri State HEFA, Health Facilities Revenue Bonds (Series 1989A) Weekly VRDNs
(Sisters of Mercy Health Corp. (Michigan & Iowa))/(ABN AMRO Bank N.V., Amsterdam,
Credit Suisse First Boston and Rabobank Nederland, Utrecht LIQs) 3,000,000
11,100,000 Missouri State HEFA, Health Facilities Revenue Bonds (Series 1989C) Weekly VRDNs
(Sisters of Mercy Health Corp. (Michigan & Iowa))/(ABN AMRO Bank N.V., Amsterdam,
Credit Suisse First Boston and Rabobank Nederland, Utrecht LIQs) 11,100,000
11,000,000 Missouri State HEFA, Health Facilities Revenue Bonds (Series 1996A) Weekly VRDNs
(Deaconess Long Term Care of Missouri)/(Bank One, Texas N.A. LOC) 11,000,000
4,200,000 Poplar Bluff, MO IDA (Series 1987) Weekly VRDNs (Gates Rubber Co.)/(NBD Bank,
MichiganLOC) 4,200,000
455,000 Springfield, MO Public Building Corp., Leasehold Revenue Refunding and Improvement
Bonds (Series 1998), 3.70% Bonds (Springfield-Branson Regional Airport)/(AMBAC INS),
3/1/1999 455,000
Total 52,370,391
MULTI STATE--2.4%
14,556,245 ABN AMRO Chicago Corp. 1997-1 LeaseTOPS Trust Weekly VRDNs (Lasalle National Bank,
Chicago LIQ)/(Lasalle National Bank, Chicago LOC) 14,556,245
35,299,000 Clipper Tax Exempt Trust (Non-AMT Multistate), (Series A) Weekly VRDNs
(MBIAINS)/(State Street Bank and Trust Co. LIQ) 35,299,000
19,081,010 Equity Trust II, (1996 Series) Weekly VRDNs (Republic National Bank of New York LOC) 19,081,010
7,417,000 PBCC LeaseTOPS Trust (Multistate Non-AMT) (Series 1998-2) Weekly
VRDNs
(AMBACINS)/(Pitney Bowes Credit Corp. LIQ) 7,417,000
Total 76,353,255
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
NEVADA--0.2%
$ 7,500,000 ABN AMRO MuniTOPS Certificates Trust 1998-1, (Multistate Non-AMT) Weekly VRDNs (Nevada
State)/(MBIA INS)/(ABN AMRO Bank N.V., Amsterdam LIQ) $ 7,500,000
NEW JERSEY--4.1%
764,500 Clark Township, NJ, 3.95% BANs, 3/25/1999 765,452
2,000,000 Clark Township, NJ, 3.95% TANs, 3/25/1999 2,002,490
7,500,000 Essex County, NJ Improvement Authority, Project Revenue Bonds (Series 1995)
WeeklyVRDNs (Essex County, NJ)/(AMBAC INS)/(Morgan Guaranty Trust Co., New York LIQ) 7,500,000
10,500,000 New Jersey EDA Weekly VRDNs (Center-For-Aging--Applewood Estates)/(Fleet National
Bank, Springfield, MA LOC) 10,500,000
7,530,000 New Jersey State Educational Facilities Authority (Series 1998) FR/RI-A33 Trust
Receipts Weekly VRDNs (AMBAC INS)/(National Westminster Bank, PLC, London LIQ) 7,530,000
11,760,000 New Jersey State Transportation Trust Fund Agency, Trust Receipts FR/RI-A37
WeeklyVRDNs (AMBAC INS)/(National Westminster Bank, PLC, London LIQ) 11,760,000
13,675,000 New Jersey State (Series 1998) FR/RI-A34 Trust Receipts Weekly VRDNs
(NationalWestminster Bank, New Jersey LIQ) 13,675,000
12,295,000 New Jersey State, (Series D) PA-262 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 12,295,000
13,000,000 New Jersey State, PA-265 Weekly VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 13,000,000
44,300,000 New Jersey State, Trust Receipts (Series 1998 FR/RI-A8) Weekly VRDNs (Bayerische
Hypotheken-Und Wechsel-Bank AG LIQ) 44,300,000
4,950,000 Pennsauken Township, NJ (Series A, 1997), 4.00% BANs, 8/3/1998 4,950,026
3,500,000 Springfield Township, NJ, 3.80% BANs, 3/5/1999 3,502,991
Total 131,780,959
NEW YORK--1.8%
1,430,000 Metropolitan Transportation Authority, New York, Trust Receipts (Series 1997 FR/RI-9)
Weekly VRDNs (FGIC INS)/(Bank of New York, New York LIQ) 1,430,000
500,000 New York City Municipal Water Finance Authority, Trust Receipts (Series 1997 FR/RI-6)
Weekly VRDNs (MBIA INS)/(Bank of New York, New York LIQ) 500,000
10,000,000 New York City Municipal Water Finance Authority, Trust Receipts (Series 1998 FR/RI-10)
Weekly VRDNs (FSA INS)/(Bank of New York, New York LIQ) 10,000,000
16,960,000 New York City Municipal Water Finance Authority, Trust Receipts (Series 1998 FR/RI-11)
Weekly VRDNs (FSA INS)/(Bank of New York, New York LIQ) 16,960,000
11,200,000 New York City Municipal Water Finance Authority, Water and Sewer System Revenue Bonds
(Series 1995 A) Daily VRDNs (FGIC INS)/(FGIC Securities Purchase, Inc. LIQ) 11,200,000
11,780,000 (b)New York State Dormitory Authority, PT-192, 3.75% TOBs (Cornell University)/(Banco
Santander SA LIQ), Optional Tender 5/13/1999 11,780,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
NEW YORK--CONTINUED
$ 695,000 New York State Medical Care Facilities Finance Agency (Series 1992 B PT-100)
DailyVRDNs (FHA INS)/(Credit Suisse First Boston LIQ) $ 695,000
4,995,000 (b)New York State Mortgage Agency, PT-164, 3.675% TOBs (Banque Nationale de Paris LIQ),
Optional Tender 3/18/1999 4,995,000
Total 57,560,000
NORTH CAROLINA--2.5%
9,000,000 Clipper, NC Tax-Exempt Trust Weekly VRDNs (North Carolina State)/(State Street Bank
and Trust Co. LIQ) 9,000,000
15,000,000 Martin County, NC IFA (Series 1993) Weekly VRDNs (Weyerhaeuser Co.) 15,000,000
2,050,000 North Carolina Medical Care Commission, Revenue Bonds (Series 1993) Weekly VRDNs
(Moses H. Cone Memorial) 2,050,000
32,845,000 North Carolina State (Series 1998A) PA-342 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 32,845,000
20,000,000 Wake County, NC Industrial Facilities & PCFA (Series 1990A), 3.70% CP (Carolina Power
& Light Co.)/(First National Bank of Chicago LOC), Mandatory Tender 8/25/1998 20,000,000
Total 78,895,000
OHIO--3.6%
1,760,000 Akron, Bath & Copley, OH Joint Township Weekly VRDNs (Visiting Nurses)/(National City
Bank, Ohio LOC) 1,760,000
26,560,000 Banc One Capital Higher Education Tax-Exempt Income Trust (Series 2 Certificates of
Ownership) Weekly VRDNs (Bank One, Kentucky LOC) 26,560,000
2,000,000 Clark County, OH, Multifamily Housing Revenue Bonds (Series 1997) Weekly VRDNs (Ohio
Masonic Home)/(Huntington National Bank, Columbus, OH LOC) 2,000,000
3,400,000 Cuyahoga County, OH Hospital Authority (Series 1997D) Daily VRDNs
(Cleveland Clinic)/(Bank of America NT and SA, San Francisco LIQ) 3,400,000
8,635,000 Cuyahoga County, OH Hospital Authority (Series 1998B) Weekly VRDNs
(Cleveland Clinic)/(Chase Manhattan Bank N.A., New York LIQ) 8,635,000
2,000,000 Cuyahoga County, OH Hospital Authority (Series C) Weekly VRDNs (Cleveland
Clinic)/(Bank of America NT and SA, San Francisco LIQ) 2,000,000
185,000 Franklin County, OH Hospital Facility Authority (Series 1992) Weekly VRDNs
(Wesley Glenn, Inc.)/(Fifth Third Bank, Cincinnati LOC) 185,000
8,910,000 Greene County, OH, Various Purpose Limited Tax General Obligation Certificates of
Indebtedness (Series 1998C), 3.75% BANs, 3/25/1999 8,918,319
215,000 Lucas County, OH, Hospital Improvement Revenue Weekly VRDNs (Sunshine Children's
Home)/(National City Bank, Ohio LOC) 215,000
1,080,000 Mahoning County, OH, Housing Revenue Bonds (Series 1995) Weekly VRDNs (Copeland Oaks
Project)/(Bank One, Ohio, N.A. LOC) 1,080,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
OHIO--CONTINUED
$ 770,000 Marion County, OH Hospital Authority (Series 1991) Weekly VRDNs (Marion County, OH
Pooled Hospital Program)/(Bank One, Ohio, N.A. LOC) $ 770,000
650,000 Montgomery County, OH IDA Weekly VRDNs (Center-Plex Venture)/(KeyBank, N.A. LOC) 650,000
1,835,000 Montgomery County, OH, Adjustable Rate Economic Development Revenue Refunding Bonds
(Series 1997) Weekly VRDNs (Cross Country Inns, Inc.)/(Bank One, Ohio, N.A. LOC) 1,835,000
4,720,000 Montgomery County, OH, Variable Rate Limited Obligation Revenue Bonds (Series 1996)
Weekly VRDNs (Society of St. Vincent De Paul)/(National City Bank, Ohio LOC) 4,720,000
1,585,000 Montgomery, OH IDA Weekly VRDNs (Bethesda Two Limited Partnership)/(Huntington
National Bank, Columbus, OH LOC) 1,585,000
5,000,000 New Albany, OH Community Authority, Adjustable Rate Multi-Purpose Infrastructure
Improvement Bonds (Series A) Weekly VRDNs (Huntington National Bank, Columbus,OHLOC) 5,000,000
1,000,000 Ohio State Air Quality Development Authority (Series 1988A) Weekly VRDNs
(PPG Industries, Inc.) 1,000,000
10,000,000 Ohio State Water Development Authority, Pollution Control Revenue Refunding Bonds
(Series1997) Weekly VRDNs (Philip Morris Cos., Inc.) 10,000,000
16,500,000 Ottawa County, OH, 4.00% BANs, 8/6/1999 16,550,820
5,560,000 Ottawa County, OH, Regional Water System Improvement, 4.10% BANs, 8/6/1998 5,560,356
1,900,000 Rickenbacker, OH Port Authority (Series 1992) Weekly VRDNs (Rickenbacker
Holdings,Inc.)/(Bank One, Ohio, N.A. LOC) 1,900,000
8,295,000 Summit County, OH (Series A), 4.50% BANs, 6/3/1999 8,345,209
950,000 Twinsburg, OH IDA Weekly VRDNs (Carl J. Massara Project)/(KeyBank, N.A. LOC) 950,000
1,795,000 Wayne County, OH, Health Care Facility Revenue Bonds (Series 1995) Weekly VRDNs
(D & M Realty Project)/(Bank One, Ohio, N.A. LOC) 1,795,000
Total 115,414,704
OKLAHOMA--2.7%
30,000,000 Oklahoma State Industrial Authority, Flexible Rate Hospital Revenue Bonds (Series
1990B) Weekly VRDNs (Baptist Medical Center, OK)/(Morgan Guaranty Trust Co., New York
LIQ) 30,000,000
47,175,000 Oklahoma State Industrial Authority, Health System Revenue Bonds (Series 1995A) Weekly
VRDNs (Baptist Medical Center, OK)/(Morgan Guaranty Trust Co., New York LIQ) 47,175,000
10,940,000 Tulsa, OK International Airport, Variable Rate Certificates (Series 1997B-2) Weekly
VRDNs (MBIA INS)/(Bank of America NT and SA, San Francisco LIQ) 10,940,000
Total 88,115,000
OREGON--2.1%
3,235,000 Clackamas County, OR HFA (Series 1984), 3.75% TOBs (Kaiser Permanente Medical Care
Program), Optional Tender 10/1/1998 3,235,000
10,000,000 Multnomah County, OR School District (Series 1998), 4.25% TRANs, 6/30/1999 10,052,786
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
OREGON--CONTINUED
$ 10,875,000 Oregon State (Series 73F) Weekly VRDNs (Morgan Guaranty Trust Co., New York LOC) $ 10,875,000
30,000,000 Oregon State, Veteran's Welfare Bonds (Series 73E) Weekly VRDNs (Morgan Guaranty
TrustCo., New York LOC) 30,000,000
11,900,000 Oregon State, Veteran's Welfare Bonds (Series 73H) Weekly VRDNs (Morgan Guaranty
TrustCo., New York LOC) 11,900,000
Total 66,062,786
PENNSYLVANIA--9.0%
4,560,000 Allegheny County, PA IDA, Commercial Development Revenue Bonds (Series 1992) Weekly
VRDNs (Eleven Parkway Center Associates)/(Mellon Bank N.A., Pittsburgh LOC) 4,560,000
4,250,000 Beaver County, PA IDA, PCR Refunding Bonds (1992 Series-E), 3.80% CP (Toledo Edison
Co.)/(Toronto-Dominion Bank LOC), Mandatory Tender 12/1/1998 4,250,000
5,100,000 Beaver County, PA IDA, PCR Refunding Bonds (1994 Series), 3.60% CP (Duquesne Light
PowerCo.)/(Swiss Bank Corp., Basle LOC), Mandatory Tender 8/24/1998 5,100,000
3,000,000 Clinton County, PA, IDA Weekly VRDNs (Armstrong World Industries, Inc.)/(Mellon Bank
N.A., Pittsburgh LOC) 3,000,000
7,650,000 Commonwealth of Pennsylvania, PA-274 (1st Series of 1997) Weekly VRDNs
(AMBACINS)/(Merrill Lynch Capital Services, Inc. LIQ) 7,650,000
5,975,000 Commonwealth of Pennsylvania, Trust Receipts (Series 1998 FR/RI-A9) Weekly VRDNs (MBIA
INS)/(Bayerische Hypotheken-Und Wechsel-Bank Ag LIQ) 5,975,000
5,000,000 Cumberland County, PA Municipal Authority (Series 1994), 3.75% TOBs (United Methodist
Homes for the Aging)/(PNC Bank, N.A. LOC), Optional Tender 6/1/1999 5,000,000
4,000,000 Dallastown Area School District, PA, G.O. Bonds (Series 1998) Weekly VRDNs (FGIC INS)/
(FGIC Securities Purchase, Inc. LIQ) 4,000,000
7,500,000 Dauphin County, PA General Authority, (Education and Health Loan Program, Series 1997)
Weekly VRDNs (AMBAC INS)/(Chase Manhattan Bank N.A., New York LIQ) 7,500,000
4,500,000 Dauphin County, PA General Authority (Series A of 1997) Weekly VRDNs (Allhealth Pooled
Financing Program)/(FSA INS)/(Credit Suisse First Boston LIQ) 4,500,000
3,900,000 Delaware County Authority, PA, Hospital Revenue Bonds (Series of 1996) Weekly VRDNs
(Crozer-Chester Medical Center)/(KBC Bank N.V., Brussels LOC) 3,900,000
9,000,000 Doylestown Hospital Authority, PA, Doylestown Hospital Revenue Bonds Weekly VRDNs
(AMBAC INS)/(PNC Bank, N.A. LIQ) 9,000,000
10,000,000 East Hempfield Township, PA IDA (Series of 1997) Weekly VRDNs (Mennonite
Home)/(Dauphin Deposit Bank and Trust LOC) 10,000,000
1,500,000 Easton Area School District, PA (Series 1997) Weekly VRDNs (FGIC INS)/(FGIC Securities
Purchase, Inc. LIQ) 1,500,000
12,000,000 Erie County, PA Hospital Authority Weekly VRDNs (St. Vincent Health System)/(Mellon
BankN.A., Pittsburgh LOC) 12,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 18,000,000 Lancaster County, PA Hospital Authority, Health Center Revenue Bonds (Series 1996)
WeeklyVRDNs (Masonic Homes) $ 18,000,000
4,565,000 Lehigh County, PA General Purpose Authority, Revenue Bonds (Series 1990) Weekly VRDNs
(Phoebe Terrace, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) 4,565,000
4,875,000 Moon Township, PA IDA Weekly VRDNs (Airport Hotel Associates)/(National City,
Pennsylvania LOC) 4,875,000
2,150,000 New Castle, PA Area Hospital Authority (Series 1996) Weekly VRDNs (Jameson Memorial
Hospital)/(FSA INS)/(PNC Bank, N.A. LIQ) 2,150,000
4,900,000 North Lebanon Township, PA, Municipal Authority Mortgage Bonds Weekly VRDNs
(GraceCommunity, Inc.)/(Corestates Bank N.A., Philadelphia, PA LOC) 4,900,000
3,000,000 North Penn Health, Hospital and Education Authority, PA, Hospital Revenue Bonds
(Series1998) Weekly VRDNs (North Penn Hospital, PA)/(First Union National Bank,
Charlotte,N.C. LOC) 3,000,000
2,500,000 Northampton County, PA Higher Education Authority, PA-176 Weekly VRDNs
(MBIAINS)/(Merrill Lynch Capital Services, Inc. LIQ) 2,500,000
18,705,000 Pennsylvania Housing Finance Authority, PT-119A (Series 1997-56C) Weekly VRDNs
(CreditSuisse First Boston LIQ) 18,705,000
2,000,000 Pennsylvania State Higher Education Facilities Authority (Series B1), 4.50% TOBs
(Allentown College of St. Francis de Sales)/(PNC Bank, N.A. LOC), Mandatory Tender
11/1/1998 2,003,047
3,000,000 Pennsylvania State Higher Education Facilities Authority (Series B2), 4.50% TOBs
(CarlowCollege)/(PNC Bank, N.A. LOC), Mandatory Tender 11/1/1998 3,004,571
3,245,000 (b)Pennsylvania State University, PT-157 (Series 1992), 3.75% TOBs (Rabobank
Nederland, Utrecht LIQ), Optional Tender 1/14/1999 3,245,000
33,900,000 Philadelphia, PA Gas Works (Series C), 3.60% CP (Canadian Imperial Bank of Commerce,
Toronto LOC), Mandatory Tender 9/17/1998 33,900,000 6,870,000
Philadelphia, PA IDA (Series 93) Weekly VRDNs (Sackett Development)/(Mellon
Bank N.A.,
Pittsburgh LOC) 6,870,000
15,100,000 Philadelphia, PA Redevelopment Authority, Multi-Family Revenue Bonds (Series 1985)
WeeklyVRDNs (Franklin Town Towers)/(Marine Midland Bank N.A., Buffalo, NY LOC) 15,100,000
22,000,000 Philadelphia, PA School District (Series B), 4.25% TRANs (PNC Bank, N.A. LOC),
6/30/1999 22,120,082
18,475,000 Philadelphia, PA Water & Wastewater System (Series 1997A) PT-1033 Weekly VRDNs (AMBAC
INS)/(Merrill Lynch Capital Services, Inc. LOC) 18,475,000
18,000,000 Philadelphia, PA, 4.25% TRANs, 6/30/1999 18,097,320
9,800,000 Sayre, PA, Health Care Facilities Authority Weekly VRDNs (VHA of Pennsylvania)/
(AMBAC INS)/(Mellon Bank N.A., Pittsburgh LIQ) 9,800,000
6,000,000 Sayre, PA, Health Care Facilities Authority (Series F) Weekly VRDNs
(VHA of Pennsylvania)/(AMBAC INS)/(Mellon Bank N.A., Pittsburgh LIQ) 6,000,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
PENNSYLVANIA--CONTINUED
$ 4,125,000 Washington County, PA Authority Weekly VRDNs (Eye & Ear Hospital)/(PNC Bank, N.A. LOC) $ 4,125,000
Total 289,370,020
PUERTO RICO--0.2%
7,500,000 Commonwealth of Puerto Rico, Municipal Securities Trust Receipts (Series 1998-CMC4)
Weekly VRDNs (MBIA INS)/(Chase Manhattan Corp. LIQ) 7,500,000
TENNESSEE--2.2%
25,000,000 Chattanooga, TN HEFA Weekly VRDNs (McCallie School)/(SunTrust Bank, Atlanta LOC) 25,000,000
6,100,000 Chattanooga, TN HEFA Weekly VRDNs (Sisken Hospital)/(Nationsbank of Tennessee LOC) 6,100,000
1,800,000 Jackson County, TN IDB (Series B) Daily VRDNs (Esselte AB)/(Bank of America Illinois
LOC) 1,800,000
5,600,000 Knox County, TN Health Education & Housing Facilities Board, Adjustable Rate Hospital
Facilities Revenue Bonds (Series 1996A) Weekly VRDNs (Mercy Health Systems)/
(Credit Suisse First Boston LIQ) 5,600,000
5,150,000 Maury County, TN HEFA (Series 1996E) Weekly VRDNs (Southern Healthcare Systems,
Inc.)/(Bank One, Texas N.A. LOC) 5,150,000
8,775,000 Memphis, TN Center City Revenue Finance Corp. (Series 1996A) Weekly VRDNs
(SouthBluffs)/(National Bank of Commerce, Memphis, TN LOC) 8,775,000
2,700,000 Memphis, TN, General Improvement Refunding Bonds (Series 1995A) Weekly VRDNs
(Westdeutsche Landesbank Girozentrale LOC) 2,700,000
1,700,000 Metropolitan Government Nashville & Davidson County, TN HEFA (Series 1996)
WeeklyVRDNs (Dede Wallace Center Project)/(SunTrust Bank, Nashville LOC) 1,700,000
4,080,000 Metropolitan Government Nashville & Davidson County, TN HEFA, Educational Facilities
Revenue Bonds (Series 1997) Weekly VRDNs (Belmont University Project)/
(SunTrust Bank, Nashville LOC) 4,080,000
3,000,000 Montgomery Co, TN Public Building Authority, Pooled Financing Revenue Bonds (Series
1996) Weekly VRDNs (Montgomery County Loan)/(Nationsbank, N.A., Charlotte LOC) 3,000,000
2,700,000 Roane, TN IDB, (Series 1982) Monthly VRDNs (Fortafil Fibers, Inc. Project)/(ABN AMRO
Bank N.V., Amsterdam LOC) 2,700,000
3,500,000 Sevier County, TN Public Building Authority, Local Government Public Improvement Bonds
(Series II-G-3) Weekly VRDNs (Maryville, TN)/(AMBAC INS)/(KBC Bank
N.V., Brussels LIQ) 3,500,000 1,825,000 Washington County, TN IDB, Revenue
Refunding Bonds (Series 1996) Weekly VRDNs
(Springbrook Properties Project)/(SunTrust Bank, Nashville LOC) 1,825,000
Total 71,930,000
TEXAS--3.9%
8,950,000 Aldine, TX Independent School District (Series 1997) SGB-29 Weekly VRDNs
(TexasPermanent School Fund Guarantee Program GTD)/(Societe Generale, Paris LIQ) 8,950,000
10,890,000 Aldine, TX Independent School District (Series 1997) SGB-30 Weekly VRDNs
(TexasPermanent School Fund Guarantee Program GTD)/(Societe Generale, Paris LIQ) 10,890,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$ 16,800,000 Austin, TX Utilities System (Series 1997) PT-127 Weekly VRDNs (FSA INS)/(Merrill Lynch
Capital Services, Inc. LIQ) $ 16,800,000
3,330,000 Dallas, TX (Series C), 3.70% TOBs, Optional Tender 6/15/1999 3,330,000
400,000 Grapevine, TX, IDC, SimuFlite Training International Project (Series 1993) Weekly
VRDNs (Southern Air Transport, Inc.)/(Bank of Montreal LOC) 400,000
600,000 Harris County, TX HFDC, Hospital Revenue Bonds (Series 1997) Daily VRDNs
(MethodistHospital, Harris County, TX) 600,000
19,140,000 Hurst-Euless-Bedford, TX Independent School District, PT-1050 Weekly VRDNs (Texas
Permanent School Fund Guarantee Program GTD)/(Merrill Lynch Capital Services, Inc.
LIQ) 19,140,000
1,620,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/(Nationsbank, N.A., Charlotte
LOC) 1,620,000
18,000,000 Plano ISD, TX, Variable Rate Unlimited Tax School Building Bonds (Series 1997), 3.55%
TOBs (Texas Permanent School Fund Guarantee Program GTD)/(Union Bank of Switzerland,
ZurichLIQ), Mandatory Tender 8/10/1998 18,000,000
4,970,000 TX Pooled Tax Exempt Trust, Certificates of Participation (Series 1996) Weekly VRDNs
(Bank One, Texas N.A. LOC) 4,970,000
33,745,000 Texas Small Business Industrial Development Corp. (Series 1986) Weekly VRDNs
(TexasPublic Facilities Capital Access Program)/(KBC Bank N.V., Brussels LOC) 33,745,000
8,500,000 Texas State (Series A), 4.75% TRANs, 8/31/1998 8,506,117
Total 126,951,117
VERMONT--0.0%
1,000,000 Vermont Educational and Health Buildings Financing Agency (Series 1995A) Weekly VRDNs
(KeyBank, N.A. LOC) 1,000,000
VIRGINIA--0.7%
6,420,000 Alexandria, VA Redevelopment and Housing Authority (Series 1996A) Weekly VRDNs (Glebe
Park Apartments Project)/(KBC Bank N.V., Brussels LOC) 6,420,000
3,800,000 Arlington County, VA Weekly VRDNs (Ballston Public Parking)/(Citibank NA, New York
LOC) 3,800,000
4,000,000 Fairfax County, VA EDA (Series 1995) Weekly VRDNs (American Society of Civil Engineers
Foundation, Inc. Project)/(Mellon Bank N.A., Pittsburgh LOC) 4,000,000
9,600,000 York County, VA IDA (Series 1985), 3.70% CP (Virginia Electric Power Co.), Mandatory
Tender10/16/1998 9,600,000
Total 23,820,000
WASHINGTON--0.1%
2,200,000 Port of Seattle, WA, IDR Bonds (Series 1985) Weekly VRDNs (Douglas
Management Co.
Project)/(Mellon Bank N.A., Pittsburgh LOC) 2,200,000
1,935,000 Washington State Housing Finance Commission (1997 Series 5N-S), 3.85% TOBs, Mandatory
Tender 12/15/1998 1,935,000
Total 4,135,000
</TABLE>
TAX-FREE OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
WEST VIRGINIA--0.3%
$ 7,870,000 Cabell County Commission, WV, Life Care Facilities Multi-Option Revenue Bonds (Series
1995) Weekly VRDNs (Foster Foundation)/(Huntington National Bank, Columbus, OH LOC) $ 7,870,000
3,000,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG Industries, Inc.) 3,000,000
Total 10,870,000
WISCONSIN--2.4%
1,800,000 Appleton, WI Area School District, 4.05% BANs, 11/10/1998 1,800,372
3,250,000 Hancock, WI, Industrial Development Revenue Refunding Bonds (Series 1996) Weekly VRDNs
(Ore-Ida Foods, Inc.)/(Heinz (H.J.) Co. GTD) 3,250,000
5,175,000 Kettle Moraine, WI School District, 4.10% TRANs, 8/31/1998 5,175,656
6,700,000 Menomonee Falls, WI School District, 4.10% TRANs, 8/28/1998 6,700,714
28,100,000 Milwaukee, WI, Trust Receipts (Series 1998) Daily VRDNs (National Westminster Bank,
PLC, London LIQ) 28,100,000
7,900,000 New Berlin, WI, 4.10% TRANs, 8/27/1998 7,901,199
3,750,000 Verona, WI Area School District, 3.95% TRANs, 8/26/1998 3,750,048
21,590,000 Wisconsin Health and Educational Facilities Authority, MERLOTs (Series 1997B)
WeeklyVRDNs (Sinai Samaritan Medical Center, Inc.)/(MBIA INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ) 21,590,000
Total 78,267,989
WYOMING--0.1%
2,235,000 Douglas, WY, IDR Bonds, 3.80% TOBs (Safeway, Inc.)/(Bankers Trust Co., New York LOC),
Mandatory Tender 12/1/1998 2,235,000
1,125,000 Natrona County, WY, Hospital Revenue, 5.525% TOBs (Grainger (W.W.), Inc.), Optional
Tender 12/1/1998 1,125,000
Total 3,360,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $3,261,320,015
</TABLE>
(a) The Fund invests in securities rated in the highest short-term rating
category by one or more nationally recognized statistical rating organizations
("NRSROs") or unrated securities of comparable quality. 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, MIG-1 or
VMIG-1 by Moody's Investors Service, Inc., or F-1+ or F-1 by Fitch IBCA, Inc.
are all considered rated in the highest short-term rating category. Securities
rated in the highest short-term rating category (and unrated securities of
comparable quality) are identified as First 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 Tier security. At July 31, 1998, the portfolio securities
were rated as follows:
Tier Rating Based on Total Market Value (Unaudited)
FIRST TIER SECOND TIER
100.0% 0%
(b) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. At July 31, 1998, these securities amounted to
$153,178,020 which represents 4.8% of net assets.
(c) Cost for federal tax purposes $3,261,457,294.
Note: The categories of investments are shown as a percentage of net assets
($3,220,286,184) at July 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation BANs --Bond Anticipation
Notes CAPMAC--Capital Municipal Assurance Corporation COL --Collateralized CP
- --Commercial Paper EDA --Economic Development Authority EDC --Economic
Development Commission EDR --Economic Development Revenue FGIC --Financial
Guaranty Insurance Company FHA --Federal Housing Administration FSA --Financial
Security Assurance GNMA --Government National Mortgage Association 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 ISD --Independent School District
LIQ --Liquidity Agreement LOCs --Letter(s) of Credit LOC --Letter of Credit LP
- --Limited Partnership MBIA --Municipal Bond Investors Assurance PCR --Pollution
Control Revenue PLC --Public Limited Company PRF --Prerefunded RANs --Revenue
Anticipation Notes SA --Support Agreement TANs --Tax Anticipation Notes TOBs
- --Tender Option Bonds TRANs --Tax and Revenue Anticipation Notes UT --Unlimited
Tax VHA --Veterans Housing Administration 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, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value (tax cost $3,261,457,294) $3,261,320,015
Cash 2,204,877
Income receivable 22,125,232
Prepaid expenses 110,018
Total assets 3,285,760,142
LIABILITIES:
Payable for investments purchased $57,429,740
Payable for shares redeemed 562,493
Income distribution payable 7,023,164
Accrued expenses 458,561
Total liabilities 65,473,958
NET ASSETS for 3,220,252,875 shares outstanding $3,220,286,184
NET ASSETS CONSIST OF:
Paid in capital $3,220,252,875
Undistributed net investment income (6,573)
Accumulated net realized gain on investments 39,882
Total net assets $3,220,286,184
NET ASSETS VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$2,279,769,954 / 2,279,756,872 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$940,516,230 / 940,496,003 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $94,553,456
EXPENSES:
Investment advisory fee $ 5,174,140 Administrative personnel and services fee
1,951,404 Custodian fees 1,923 Transfer and dividend disbursing agent fees and
expenses 72,461 Directors'/Trustees' fees 17,746 Auditing fees 13,842 Legal fees
32,982 Portfolio accounting fees 230,793 Shareholder services fee--Institutional
Shares 4,610,695 Shareholder services fee--Institutional Service Shares
1,856,980 Share registration costs 249,291 Printing and postage 76,487 Insurance
premiums 113,779 Taxes 12 Miscellaneous 15,006 Total expenses 14,417,541 Waivers
- -- Waiver of investment advisory fee $(2,661,895) Waiver of shareholder services
fee--Institutional Shares (4,610,695) Total waivers (7,272,590) Net expenses
7,144,951 Net investment income 87,408,505 Net realized gain on investments
131,365 Change in net assets resulting from operations $87,539,870 </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 July31,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 87,408,505 $ 72,319,761
Net realized gain (loss) on investments ($145,964 net gain and $107,581 net loss,
respectively, as computed for federal income tax purposes) 131,365 (9,927)
Change in net assets resulting from operations 87,539,870 72,309,834
DISTRUBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (63,605,236) (56,940,629)
Institutional Service Shares (23,803,270) (15,379,132)
Change in net assets resulting from distributions to shareholders (87,408,506) (72,319,761)
SHARE TRANSACTIONS--
Proceeds from sale of shares 16,237,569,274 12,978,635,504
Net asset value of shares issued to shareholders in payment of distributions declared 12,646,067 9,465,909
Cost of shares redeemed (15,092,223,527) (12,847,315,602)
Change in net assets resulting from share transactions 1,157,991,814 140,785,811
Change in net assets 1,158,123,178 140,775,884
NET ASSETS:
Beginning of period 2,062,163,006 1,921,387,122
End of period (including undistributed net investment income of
$0 and $24,515, respectively) $ 3,220,286,184 $ 2,062,163,006
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TAX-FREE OBLIGATIONS FUND
JULY 31, 1998
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)
ACCUMULATED UNDISTRIBUTED
NET REALIZED NET INVESTMENT
GAIN/LOSS INCOME
$31,087 $(31,087)
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, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $17,686, 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 in
2005.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees. The Fund will not incur any registration costs upon such
resales. Restricted securities are valued at amortized cost in accordance with
Rule 2a-7 under the Investment Company Act of 1940.
Additional information on each restricted security held at July 31, 1998, is as
follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Alaska International Airports System, (Series 1998A) 7/22/1998 $14,333,176
Alaska State Housing Finance Corp., PT-202 6/26/1998 7,205,000
Bibb County, GA, PT-199 6/19/1998 8,000,000
California Community College Financing Authority, Trust Receipts
(Series 1998 FR/RI-A24) 7/16/1998 20,000,000
Illinois Development Finance Authority, PT-131 (Series 1995A) 10/2/1997 6,000,000
Los Angeles County, CA Unified School District, Trust Receipts, FR/RI-A26 7/1/1998 53,800,000
Maryland State Community Development Administration, (Series 1997) 1/13/1998 23,820,000
New York State Dormitory Authority, PT-192 6/5/1998 11,780,000
New York State Mortgage Agency, PT-164 3/25/1998 4,995,000
Pennsylvania State University, PT-157 (Series 1992) 1/29/1998 3,245,000
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses, and revenues reported in
the financial statements. Actual results could differ from those estimated.
OTHER
Investment transactions are accounted for on the trade date.
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, 1998, capital paid-in aggregated $3,220,252,875.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997
<S> <C> <C>
INSTITUTIONAL SHARES
Shares sold 12,763,472,990 11,143,842,232
Shares issued to shareholders in payment of distributions declared 8,791,413 7,389,962
Shares redeemed (11,966,763,689) (11,192,024,289)
Net change resulting from Institutional Share transactions 805,500,714 (40,792,095)
<CAPTION>
YEAR ENDED JULY 31,
1998 1997
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
Shares sold 3,474,096,284 1,834,793,272
Shares issued to shareholders in payment of distributions declared 3,854,654 2,075,947
Shares redeemed (3,125,459,838) (1,655,291,313)
Net change resulting from Institutional Service Share transactions 352,491,100 181,577,906
Net change resulting from share transactions 1,157,991,814 140,785,811
</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, Inc. 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, 1998, 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 $5,316,380,000 and $4,618,988,437,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, 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
Tax-Free Obligations Fund (an investment portfolio of Money Market Obligations
Trust) as of July 31, 1998, 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 25, 1998
Tax-Free
Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management
Investment Company
TAX-FREE
OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pa 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
[GRAPHIC]
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N880
9110207A-SS (9/98)
[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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights -- Institutional Capital Shares 2
General Information 3
Year 2000 Statement 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 5
Administration of the Fund 5
Net Asset Value 5
How to Purchase Shares 5
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
Account Activity 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
Last Meeting of Shareholders 9
Financial Highlights -- Institutional Shares 10
Financial Highlights -- Institutional Service Shares 11
Financial Statements 12
Report of Independent Public Accountants 20
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INSTITUTIONAL CAPITAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a
percentage of offering price) None Contingent Deferred Sales Charge (as a
percentage of original purchase price or redemption proceeds, as applicable)
None Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None <CAPTION> 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 0.20% 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.
<TABLE>
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 $ 3
3 Years $10
5 Years $17
10 Years $38
</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 CAPITAL SHARES
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.43% 1.58%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.30% 0.30%*
Net investment income 5.30% 5.42%*
Expense waiver/reimbursement(c) 0.25% 0.25%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $31,703 $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 Capital Shares, Institutional Shares, and Institutional Service
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 only 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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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, Inc. All of the Class A (voting) shares of
Federated Investors, Inc. are owned by a trust, the trustees of which are John
F. Donahue, Chairman and Director of Federated Investors, Inc., Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across more than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. 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 approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. 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, Jr. 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) 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: 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. 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 ("ACH"). The shareholder's bank, which must be an ACH
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
received after that time include that day's dividend but will be wired the
following business day. Proceeds from redemption requests on holidays when wire
transfers are restricted will be wired the following business day. Questions
about telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares by Mail"
should be considered. If at any time the Fund shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, MA 02266- 8600. If share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to the address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company, or savings association whose deposits are
insured by an organization which is administered by the Federal Deposit
Insurance Corporation; a member firm of a domestic stock exchange; or any other
"eligible guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
5:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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 3, 1998, American Bank, Rock Island, IL, owned 52.97% of the
voting securities of the Fund and St. Joseph's Hospital Gross Receipt Money
Advantage, Syracuse, NY, owned 33.37% 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
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 and 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
Thomas G. Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.03 0.03 0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from
net investment income (0.05) (0.05) (0.05) (0.05) (0.03) (0.03) (0.05) (0.07) (0.04)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.54% 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% 0.20%*
Net investment income 5.40% 5.24% 5.37% 5.42% 3.29% 3.11% 4.49% 6.65% 8.16%*
Expense waiver/
reimbursement(c) 0.35% 0.35% 0.36% 0.36% 0.10% 0.07% 0.08% 0.09% 0.15%*
SUPPLEMENTAL DATA
Net assets, end
of period
(000 omitted) $5,289,871 $4,814,583 $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037 $1,678,880 $576,048
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 23, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 1.00
TOTAL RETURN(B) 5.28% 5.10% 5.26% 5.23% 0.29%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45% 0.39%*
Net investment income 5.15% 5.03% 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.10% 0.10% 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $5,045,428 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY NOTES--13.9%
$1,434,000,000 5.000% - 8.875%, 11/15/1998-7/31/1999 $ 1,439,566,972
(A)REPURCHASE AGREEMENTS--86.2%
287,000,000 ABN AMRO Chicago Corp., 5.640%, dated 7/31/1998, due 8/3/1998 287,000,000
155,000,000 BA Securities, Inc., 5.630%, dated 7/31/1998, due 8/3/1998 155,000,000
350,000,000 BT Securities Corp., 5.640%, dated 7/31/1998, due 8/3/1998 350,000,000
452,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.650%, dated 7/31/1998, due 8/3/1998 452,000,000
100,000,000 Barclays de Zoete Wedd Securities, Inc., 5.500%, dated 7/31/1998, due 8/3/1998 100,000,000
510,000,000 Barclays de Zoete Wedd Securities, Inc., 5.650%, dated 7/31/1998, due 8/3/1998 510,000,000
252,000,000 Bear, Stearns and Co., 5.630%, dated 7/31/1998, due 8/3/1998 252,000,000
252,000,000 CIBC Wood Gundy Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 252,000,000
65,000,000 CIBC Wood Gundy Securities Corp., 5.640%, dated 7/31/1998, due 8/3/1998 65,000,000
226,000,000 Deutsche Bank Government Securities, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 226,000,000
492,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.620%, dated 7/31/1998, due 8/3/1998 492,000,000
155,000,000 First Chicago Capital Markets, Inc., 5.620%, dated 7/31/1998, due 8/3/1998 155,000,000
492,000,000 First Union Capital Markets, 5.630%, dated 7/31/1998, due 8/3/1998 492,000,000
514,000,000 (b)Goldman Sachs Group, LP, 5.480%, dated 6/30/1998, due 10/1/1998 514,000,000
66,000,000 (b)Goldman Sachs Group, LP, 5.480%, dated 7/1/1998, due 10/2/1998 66,000,000
500,000,000 Goldman Sachs Group, LP, 5.660%, dated 7/31/1998, due 8/3/1998 500,000,000
432,000,000 Greenwich Capital Markets, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 432,000,000
122,000,000 Harris Nesbitt Thomson, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 122,000,000
80,000,000 (b)J.P. Morgan & Co., Inc., 5.490%, dated 7/31/1998, due 9/29/1998 80,000,000
35,000,000 J.P. Morgan & Co., Inc., 5.550%, dated 7/31/1998, due 8/3/1998 35,000,000
340,000,000 (b)Merrill Lynch, Pierce, Fenner and Smith, 5.500%, dated 5/8/1998, due 8/10/1998 340,000,000
492,000,000 Salomon Brothers, Inc., 5.650%, dated 7/31/1998, due 8/3/1998 492,000,000
130,000,000 Societe Generale Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 130,000,000
492,000,000 Societe Generale, New York, 5.640%, dated 7/31/1998, due 8/3/1998 492,000,000
150,000,000 State Street Bank and Trust Co., 5.620%, dated 7/31/1998, due 8/3/1998 150,000,000
492,000,000 Toronto Dominion Securities (USA) Inc., 5.620%, dated 7/31/1998, due 8/3/1998 492,000,000
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)REPURCHASE AGREEMENTS--CONTINUED
$ 245,000,000 (b)UBS Securities, Inc., 5.450%, dated 6/17/1998, due 9/15/1998 $ 245,000,000
700,000,000 Warburg Dillon Reed LLC, 5.620%, dated 7/31/1998, due 8/3/1998 700,000,000
357,000,000 Westdeutsche Landesbank Girozentrale, 5.640%, dated 7/31/1998, due 8/3/1998 357,000,000
TOTAL REPURCHASE AGREEMENTS 8,935,000,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $10,374,566,972
</TABLE>
(a) 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.
(b) 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.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($10,367,001,889) at July 31, 1998.
The following acronyms are used throughout this portfolio:
LLC--Limited Liability Corporation
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TREASURY OBLIGATIONS FUND
JULY 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $8,935,000,000
Investments in securities 1,439,566,972
Total investments in securities, at amortized cost and value $10,374,566,972
Cash 2,153,988
Income receivable 27,855,466
Receivable for shares sold 797,993
Total assets 10,405,374,419
LIABILITIES:
Payable for shares redeemed 422,399
Income distribution payable 35,747,174
Accrued expenses 2,202,957
Total liabilities 38,372,530
NET ASSETS for 10,367,001,889 shares outstanding $10,367,001,889
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$5,289,870,944 / 5,289,870,944 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$5,045,428,127 / 5,045,428,127 shares outstanding $1.00
INSTITUTIONAL CAPITAL SHARES:
$31,702,818 / 31,702,818 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $541,436,483
EXPENSES:
Investment advisory fee $ 19,318,524
Administrative personnel and services fee 7,285,996
Custodian fees 496,306
Transfer and dividend disbursing agent fees and expenses 218,712
Directors'/Trustees' fees 64,970
Auditing fees 13,057
Legal fees 37,111
Portfolio accounting fees 693,672
Shareholder services feeInstitutional Shares 13,132,731
Shareholder services feeInstitutional Service Shares 10,908,834
Shareholder services feeInstitutional Capital Shares 106,590
Share registration costs 873,666
Printing and postage 192,668
Insurance premiums 50,195
Taxes 731
Miscellaneous 35,036
Total expenses 53,428,799
Waivers
Waiver of investment advisory fee $ (9,537,113)
Waiver of shareholder services feeInstitutional Shares (13,132,731)
Waiver of shareholder services feeInstitutional Capital Shares (63,954)
Total waivers (22,733,798)
Net expenses 30,695,001
Net investment income $510,741,482
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS
Net investment income $ 510,741,482 $ 359,583,153
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income
Institutional Shares (283,582,801) (254,552,990)
Institutional Service Shares (224,897,953) (104,840,770)
Institutional Capital Shares (2,260,728) (189,393)
Change in net assets resulting from distributions to shareholders (510,741,482) (359,583,153)
SHARE TRANSACTIONS
Proceeds from sale of shares 62,011,458,681 43,911,491,307
Net asset value of shares issued to shareholders in payment of distributions declared 122,517,950 84,240,302
Cost of shares redeemed (59,678,173,575) (42,251,242,453)
Change in net assets resulting from share transactions 2,455,803,056 1,744,489,156
Change in net assets 2,455,803,056 1,744,489,156
NET ASSETS:
Beginning of period 7,911,198,833 6,166,709,677
End of period $ 10,367,001,889 $ 7,911,198,833
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1998
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 1998 1997
<S> <C> <C>
Shares sold 29,392,382,133 27,254,234,550
Shares issued to shareholders in payment of distributions declared 45,925,317 50,228,539
Shares redeemed (28,963,019,841) (27,139,750,037)
Net change resulting from Institutional Share transactions 475,287,609 164,713,052
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 31,821,116,897 16,581,686,843
Shares issued to shareholders in payment of distributions declared 74,615,681 33,822,698
Shares redeemed (29,904,414,631) (15,078,238,755)
Net change resulting from Institutional Service Share transactions 1,991,317,947 1,537,270,786
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL CAPITAL SHARES 1998 1997(A)
<S> <C> <C>
Shares sold 797,959,651 75,569,914
Shares issued to shareholders in payment of distributions declared 1,976,952 189,065
Shares redeemed (810,739,103) (33,253,661)
Net change resulting from Institutional Capital Share transactions (10,802,500) 42,505,318
Net change resulting from share transactions 2,455,803,056 1,744,489,156
</TABLE>
(a) For the period from April 14, 1997 (date of initial public investment) to
July 31, 1997.
At July 31, 1998, capital paid-in aggregated $10,367,001,889.
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, Inc. 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, by correspondence with the custodian and brokers. As to confirmation
replies not received, we carried out alternative auditing procedures. 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, 1998, 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 25, 1998
(graphic)
Treasury Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Capital Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management
Investment Company
TREASURY OBLIGATIONS FUND
INSTITUTIONAL CAPITAL SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N823
G01353-01 (9/98)
(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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights - Institutional Service Shares 2
General Information 3
Year 2000 Statement 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 5
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
Account Activity 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 7
Federal Income Tax 7
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Last Meeting of Shareholders 9
Financial Highlights - Institutional Shares 10
Financial Highlights - Institutional Capital Shares 11
Financial Statements 12
Report of Independent Public Accountants 20
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)
<S> <C> <C>
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.
<TABLE>
<CAPTION>
EXAMPLE
<S> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.
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
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (0.05) (0.05) (0.05) (0.003 )
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.28% 5.10% 5.26% 5.23% 0.29 %
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45% 0.39%*
Net investment income 5.15% 5.03% 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.10% 0.10% 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $5,045,428 $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 Service Shares, Institutional 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 only 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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator, and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing, and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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
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, Inc. All of the Class A (voting) shares of
Federated Investors, Inc. are owned by a trust, the trust ees of which are John
F. Donahue, Chairman and Director of Federated Investors, Inc., Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across more than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. 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 approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. 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, Jr. 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, 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) 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: 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. 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 ("ACH"). The shareholder's bank, which must be an ACH
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
received after that time include that day's dividend but will be wired the
following business day. Proceeds from redemption requests on holidays when wire
transfers are restricted will be wired the following business day. Questions
about telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares by Mail"
should be considered. If at any time the Fund shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, MA 02266- 8600. If share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to the address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company, or savings association whose deposits are
insured by an organization which is administered by the Federal Deposit
Insurance Corporation; a member firm of a domestic stock exchange; or any other
"eligible guarantor institution," as defined in the Securities Exchange Act of
1934. The Fund does not accept signatures guaranteed by a notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
5:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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
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 and 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.03 0.03 0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03) (0.03) (0.05) (0.07) (0.04 )
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.54% 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% 0.20%*
Net investment income 5.40% 5.24% 5.37% 5.42% 3.29% 3.11% 4.49% 6.65% 8.16%*
Expense waiver/
reimbursement(c) 0.35% 0.35% 0.36% 0.36% 0.10% 0.07% 0.08% 0.09% 0.15%*
SUPPLEMENTAL DATA
Net assets, end
of period
(000 omitted) $5,289,871 $4,814,583 $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037 $1,678,880 $576,048
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 23, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
FINANCIAL HIGHLIGHTS - INSTITUTIONAL CAPITAL SHARES
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.02 )
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.43% 1.58 %
RATIOS TO AVERAGE NET ASSETS
Expenses 0.30% 0.30%*
Net investment income 5.30% 5.42%*
Expense waiver/reimbursement(c) 0.25% 0.25%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $31,703 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY NOTES--13.9%
$1,434,000,000 5.000% - 8.875%, 11/15/1998-7/31/1999 $ 1,439,566,972
(A)REPURCHASE AGREEMENTS--86.2%
287,000,000 ABN AMRO Chicago Corp., 5.640%, dated 7/31/1998, due 8/3/1998 287,000,000
155,000,000 BA Securities, Inc., 5.630%, dated 7/31/1998, due 8/3/1998 155,000,000
350,000,000 BT Securities Corp., 5.640%, dated 7/31/1998, due 8/3/1998 350,000,000
452,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.650%, dated 7/31/1998, due 8/3/1998 452,000,000
100,000,000 Barclays de Zoete Wedd Securities, Inc., 5.500%, dated 7/31/1998, due 8/3/1998 100,000,000
510,000,000 Barclays de Zoete Wedd Securities, Inc., 5.650%, dated 7/31/1998, due 8/3/1998 510,000,000
252,000,000 Bear, Stearns and Co., 5.630%, dated 7/31/1998, due 8/3/1998 252,000,000
252,000,000 CIBC Wood Gundy Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 252,000,000
65,000,000 CIBC Wood Gundy Securities Corp., 5.640%, dated 7/31/1998, due 8/3/1998 65,000,000
226,000,000 Deutsche Bank Government Securities, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 226,000,000
492,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.620%, dated 7/31/1998, due 8/3/1998 492,000,000
155,000,000 First Chicago Capital Markets, Inc., 5.620%, dated 7/31/1998, due 8/3/1998 155,000,000
492,000,000 First Union Capital Markets, 5.630%, dated 7/31/1998, due 8/3/1998 492,000,000
514,000,000 (b)Goldman Sachs Group, LP, 5.480%, dated 6/30/1998, due 10/1/1998 514,000,000
66,000,000 (b)Goldman Sachs Group, LP, 5.480%, dated 7/1/1998, due 10/2/1998 66,000,000
500,000,000 Goldman Sachs Group, LP, 5.660%, dated 7/31/1998, due 8/3/1998 500,000,000
432,000,000 Greenwich Capital Markets, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 432,000,000
122,000,000 Harris Nesbitt Thomson, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 122,000,000
80,000,000 (b)J.P. Morgan & Co., Inc., 5.490%, dated 7/31/1998, due 9/29/1998 80,000,000
35,000,000 J.P. Morgan & Co., Inc., 5.550%, dated 7/31/1998, due 8/3/1998 35,000,000
340,000,000 (b)Merrill Lynch, Pierce, Fenner and Smith, 5.500%, dated 5/8/1998, due 8/10/1998 340,000,000
492,000,000 Salomon Brothers, Inc., 5.650%, dated 7/31/1998, due 8/3/1998 492,000,000
130,000,000 Societe Generale Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 130,000,000
492,000,000 Societe Generale, New York, 5.640%, dated 7/31/1998, due 8/3/1998 492,000,000
150,000,000 State Street Bank and Trust Co., 5.620%, dated 7/31/1998, due 8/3/1998 150,000,000
492,000,000 Toronto Dominion Securities (USA) Inc., 5.620%, dated 7/31/1998, due 8/3/1998 492,000,000
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)REPURCHASE AGREEMENTS--CONTINUED
$ 245,000,000 (b)UBS Securities, Inc., 5.450%, dated 6/17/1998, due 9/15/1998 $ 245,000,000
700,000,000 Warburg Dillon Reed LLC, 5.620%, dated 7/31/1998, due 8/3/1998 700,000,000
357,000,000 Westdeutsche Landesbank Girozentrale, 5.640%, dated 7/31/1998, due 8/3/1998 357,000,000
TOTAL REPURCHASE AGREEMENTS 8,935,000,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 10,374,566,972
</TABLE>
(a) 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.
(b) 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.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($10,367,001,889) at July 31, 1998.
The following acronyms are used throughout this portfolio:
LLC--Limited Liability Corporation
LP --Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TREASURY OBLIGATIONS FUND
JULY 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $8,935,000,000
Investments in securities 1,439,566,972
Total investments in securities, at amortized cost and value $10,374,566,972
Cash 2,153,988
Income receivable 27,855,466
Receivable for shares sold 797,993
Total assets 10,405,374,419
LIABILITIES:
Payable for shares redeemed 422,399
Income distribution payable 35,747,174
Accrued expenses 2,202,957
Total liabilities 38,372,530
NET ASSETS for 10,367,001,889 shares outstanding $10,367,001,889
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$5,289,870,944 / 5,289,870,944 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$5,045,428,127 / 5,045,428,127 shares outstanding $1.00
INSTITUTIONAL CAPITAL SHARES:
$31,702,818 / 31,702,818 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, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $541,436,483
EXPENSES:
Investment advisory fee $ 19,318,524 Administrative personnel and services fee
7,285,996 Custodian fees 496,306 Transfer and dividend disbursing agent fees and
expenses 218,712 Directors'/Trustees' fees 64,970 Auditing fees 13,057 Legal
fees 37,111 Portfolio accounting fees 693,672 Shareholder services
fee--Institutional Shares 13,132,731 Shareholder services fee--Institutional
Service Shares 10,908,834 Shareholder services fee--Institutional Capital Shares
106,590 Share registration costs 873,666 Printing and postage 192,668 Insurance
premiums 50,195 Taxes 731 Miscellaneous 35,036 Total expenses 53,428,799
Waivers-- Waiver of investment advisory fee $ (9,537,113) Waiver of shareholder
services fee--Institutional Shares (13,132,731) Waiver of shareholder services
fee--Institutional Capital Shares (63,954) Total waivers (22,733,798) Net
expenses 30,695,001 Net investment income $510,741,482
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 510,741,482 $ 359,583,153
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Institutional Shares (283,582,801) (254,552,990)
Institutional Service Shares (224,897,953) (104,840,770)
Institutional Capital Shares (2,260,728) (189,393)
Change in net assets resulting from distributions to shareholders (510,741,482) (359,583,153)
SHARE TRANSACTIONS--
Proceeds from sale of shares 62,011,458,681 43,911,491,307
Net asset value of shares issued to shareholders in payment of
distributions declared 122,517,950 84,240,302
Cost of shares redeemed (59,678,173,575) (42,251,242,453)
Change in net assets resulting from share transactions 2,455,803,056 1,744,489,156
Change in net assets 2,455,803,056 1,744,489,156
NET ASSETS:
Beginning of period 7,911,198,833 6,166,709,677
End of period $ 10,367,001,889 $ 7,911,198,833
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1998
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 1998 1997
<S> <C> <C>
Shares sold 29,392,382,133 27,254,234,550
Shares issued to shareholders in payment of distributions declared 45,925,317 50,228,539
Shares redeemed (28,963,019,841) (27,139,750,037)
Net change resulting from Institutional Share transactions 475,287,609 164,713,052
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 31,821,116,8 97 16,581,686,8 43
Shares issued to shareholders in payment of distributions declared 74,615,681 33,822,698
Shares redeemed (29,904,414, 631) (15,078,238, 755)
Net change resulting from Institutional Service Share transactions 1,991,317,947 1,537,270,786
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL CAPITAL SHARES 1998 1997(A)
<S> <C> <C>
Shares sold 797,959,651 75,569,914
Shares issued to shareholders in payment of distributions declared 1,976,952 189,065
Shares redeemed (810,739,103) (33,253,661)
Net change resulting from Institutional Capital Share transactions (10,802,500) 42,505,318
Net change resulting from share transactions 2,455,803,056 1,744,489,156
</TABLE>
(a) For the period from April 14, 1997 (date of initial public investment) to
July 31, 1997.
At July 31, 1998, capital paid-in aggregated $10,367,001,889.
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, Inc. 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, by correspondence with the custodian and brokers. As to confirmation
replies not received, we carried out alternative auditing procedures. 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, 1998, 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 25, 1998
Treasury Obligations Fund
(A Portfolio of Money Market Obligations Trust)
Institutional Service Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management Investment Company
TREASURY OBLIGATIONS FUND
INSTITUTIONAL SERVICE SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
(graphic)
Federated Securities Corp., Distributor
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N872
9110208A-SS (9/98)
(graphic)
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, 1998, 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, 1998
TABLE OF CONTENTS
Summary of Fund Expenses 1
Financial Highlights - Institutional Shares 2
General Information 3 Year 2000 Statement 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 5
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 6
Account and Share Information 7
Dividends 7
Capital Gains 7
Account Activity 7
Accounts with Low Balances 7
Voting Rights 7
Tax Information 7
Federal Income Tax 7
State and Local Taxes 8
Other Classes of Shares 8
Performance Information 8
Last Meeting of Shareholders 9
Financial Highlights - Institutional Service Shares 10
Financial Highlights - Institutional Capital Shares 11
Financial Statements 12
Report of Independent Public Accountants 20
SUMMARY OF FUND EXPENSES
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) None Maximum Sales Charge Imposed on Reinvested Dividends (as a
percentage of offering price) None Contingent Deferred Sales Charge (as a
percentage of original purchase price or
redemption proceeds, as applicable) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<S> <C> <C>
Management Fee (after waiver)(1) 0.10%
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
<TABLE>
<CAPTION>
<S> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.
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
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.03 0.03 0.05 0.07 0.04
LESS DISTRIBUTIONS
Distributions from
net investment
income (0.05) (0.05) (0.05) (0.05) (0.03) (0.03) (0.05) (0.07) (0.04)
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.54% 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% 0.20%*
Net investment
income 5.40% 5.24% 5.37% 5.42% 3.29% 3.11% 4.49% 6.65% 8.16%*
Expense waiver/
reimbursement(c) 0.35% 0.35% 0.36% 0.36% 0.10% 0.07% 0.08% 0.09% 0.15%*
SUPPLEMENTAL DATA
Net assets, end
of period
(000 omitted) $5,289,871 $4,814,583 $4,649,870 $3,441,068 $2,582,975 $2,532,482 $2,432,037 $1,678,880 $576,048
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 23, 1990 (date of initial
public investment) to July 31, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated October 3, 1988. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
With respect to this Fund, as of the date of this prospectus, the Board of
Trustees (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 only 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.
YEAR 2000 STATEMENT
Like other mutual funds and business organizations worldwide, the Fund's service
providers (among them, the adviser, distributor, administrator, and transfer
agent) must ensure that their computer systems are adjusted to properly process
and calculate date-related information from and after January 1, 2000. Many
software programs and, to a lesser extent, the computer hardware in use today
cannot distinguish the year 2000 from the year 1900. Such a design flaw could
have a negative impact in the handling of securities trades, pricing, and
accounting services. The Fund and its service providers are actively working on
necessary changes to computer systems to deal with the year 2000 issue and
believe that systems will be year 2000 compliant when required. Analysis
continues regarding the financial impact of instituting a year 2000 compliant
program on the Fund's operations.
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, Inc. All of the Class A (voting) shares of
Federated Investors, Inc. are owned by a trust, the trust ees of which are John
F. Donahue, Chairman and Director of Federated Inves tors, Inc., Mr. Donahue's
wife, and Mr. Donahue's son, J. Christopher Donahue, who is President and
Director of Federated Investors, Inc.
Federated Management and other subsidiaries of Federated Investors, Inc. 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 $120 billion invested across more than 300 funds
under management and/or administration by its subsidiaries, as of December 31,
1997, Federated Investors, Inc. 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 approximately 4,000 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, Inc.
SHAREHOLDER SERVICES
The Fund has entered into a Shareholder Services Agreement with Federated
Shareholder Services, a subsidiary of Federated Investors, Inc., 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, Inc., 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, Inc. specified below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
FEE DAILY NET ASSETS
<C> <S>
0.150% on the first $250million
0.125% on the next $250million
0.100% on the next $250million
0.075% on assets in excess of $750million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
Federated Services Company may choose voluntarily to waive a portion of its fee.
NET ASSET VALUE
The Fund attempts to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by subtracting liabilities attributable to Institutional
Shares from the value of Fund assets attributable to Institutional Shares, and
dividing the remainder by the number of 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, Jr. 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 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) 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: 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. 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 ("ACH"). The shareholder's bank, which must be an ACH
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
received after that time include that day's dividend but will be wired the
following business day. Proceeds from redemption requests on holidays when wire
transfers are restricted will be wired the following business day. Questions
about telephone redemptions on days when wire transfers are restricted should be
directed to your shareholder services representative at the telephone number
listed on your account statement.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, "Redeeming Shares by Mail"
should be considered. If at any time the Fund shall determine it necessary to
terminate or modify the telephone redemption privilege, shareholders would be
promptly notified.
REDEEMING SHARES BY MAIL
Shares may be redeemed in any amount by mailing a written request to: Federated
Shareholder Services Company, P.O. Box 8600, Boston, MA 02266- 8600. If share
certificates have been issued, they should be sent unendorsed with the written
request by registered or certified mail to the address noted above.
The written request should state: the Fund name and the class designation; the
account name as registered with the Fund; the account number; and the number of
shares to be redeemed or the dollar amount requested. All owners of the account
must sign the request exactly as the shares are registered. Normally, a check
for the proceeds is mailed within one business day, but in no event more than
seven days, after the receipt of a proper written redemption request. Dividends
are paid up to and including the day that a redemption request is processed.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than to
the shareholder of record must have their signatures guaranteed by a commercial
or savings bank, trust company or savings association whose deposits are insured
by an organization which is administered by the Federal Deposit Insurance
Corporation; a member firm of a domestic stock exchange; or any other "eligible
guarantor institution," as defined in the Securities Exchange Act of 1934. The
Fund does not accept signatures guaranteed by a notary public.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by writing to the Fund. Shares purchased by wire before
5:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.
CAPITAL GAINS
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund will distribute in cash or additional shares any realized
net capital gains at least once every 12 months.
ACCOUNT ACTIVITY
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
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 and 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.
LAST MEETING OF SHAREHOLDERS
A Special Meeting of Trust shareholders was held on April 23, 1998. On February
24, 1998, the record date for shareholders voting at the meeting, there were
28,912,813,604 total outstanding shares. The following items were considered by
shareholders and the results of their voting were as follows:
AGENDA ITEM 1: To elect Trustees.*
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD AUTHORITY
<S> <C> <C>
Thomas G. Bigley 17,186,131,753 91,735,736
John T. Conroy, Jr. 17,186,450,467 91,417,022
Peter E. Madden 17,187,792,175 90,075,314
John E. Murray, Jr., J.D., S.J.D. 17,187,671,030 90,196,459
</TABLE>
* The following Trustees of the Trust continued their terms as Trustees of
the Trust: John F. Donahue, William J. Copeland, J. Christopher Donahue,
James E. Dowd, Esq., Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr.,
Esq., Wesley W. Posvar, and Marjorie P. Smuts.
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY31,
1998 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.003
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.003)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 5.28% 5.10% 5.26% 5.23% 0.29 %
RATIOS TO AVERAGE NET ASSETS
Expenses 0.45% 0.45% 0.45% 0.45% 0.39%*
Net investment income 5.15% 5.03% 5.12% 5.53% 4.26%*
Expense waiver/reimbursement(c) 0.10% 0.10% 0.11% 0.11% 0.10%*
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $5,045,428 $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
TREASURY OBLIGATIONS FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Report of Independent Public Accountants on page 20.
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
1998 1997(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
TOTAL RETURN(B) 5.43% 1.58%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.30% 0.30%*
Net investment income 5.30% 5.42%*
Expense waiver/reimbursement(c) 0.25% 0.25%*
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $31,703 $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, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM U.S. TREASURY NOTES -- 13.9%
$1,434,000,000 5.000% -- 8.875%, 11/15/1998-7/31/1999 $1,439,566,972
(A)REPURCHASE AGREEMENTS -- 86.2%
287,000,000 ABN AMRO Chicago Corp., 5.640%, dated 7/31/1998, due 8/3/1998 287,000,000
155,000,000 BA Securities, Inc., 5.630%, dated 7/31/1998, due 8/3/1998 155,000,000
350,000,000 BT Securities Corp., 5.640%, dated 7/31/1998, due 8/3/1998 350,000,000
452,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.650%, dated 7/31/1998, due 8/3/1998 452,000,000
100,000,000 Barclays de Zoete Wedd Securities, Inc., 5.500%, dated 7/31/1998, due 8/3/1998 100,000,000
510,000,000 Barclays de Zoete Wedd Securities, Inc., 5.650%, dated 7/31/1998, due 8/3/1998 510,000,000
252,000,000 Bear, Stearns and Co., 5.630%, dated 7/31/1998, due 8/3/1998 252,000,000
252,000,000 CIBC Wood Gundy Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 252,000,000
65,000,000 CIBC Wood Gundy Securities Corp., 5.640%, dated 7/31/1998, due 8/3/1998 65,000,000
226,000,000 Deutsche Bank Government Securities, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 226,000,000
492,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.620%, dated 7/31/1998, due 8/3/1998 492,000,000
155,000,000 First Chicago Capital Markets, Inc., 5.620%, dated 7/31/1998, due 8/3/1998 155,000,000
492,000,000 First Union Capital Markets, 5.630%, dated 7/31/1998, due 8/3/1998 492,000,000
514,000,000 (b)Goldman Sachs Group, LP, 5.480%, dated 6/30/1998, due 10/1/1998 514,000,000
66,000,000 (b)Goldman Sachs Group, LP, 5.480%, dated 7/1/1998, due 10/2/1998 66,000,000
500,000,000 Goldman Sachs Group, LP, 5.660%, dated 7/31/1998, due 8/3/1998 500,000,000
432,000,000 Greenwich Capital Markets, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 432,000,000
122,000,000 Harris Nesbitt Thomson, Inc., 5.640%, dated 7/31/1998, due 8/3/1998 122,000,000
80,000,000 (b)J.P. Morgan & Co., Inc., 5.490%, dated 7/31/1998, due 9/29/1998 80,000,000
35,000,000 J.P. Morgan & Co., Inc., 5.550%, dated 7/31/1998, due 8/3/1998 35,000,000
340,000,000 (b)Merrill Lynch, Pierce, Fenner and Smith, 5.500%, dated 5/8/1998, due 8/10/1998 340,000,000
492,000,000 Salomon Brothers, Inc., 5.650%, dated 7/31/1998, due 8/3/1998 492,000,000
130,000,000 Societe Generale Securities Corp., 5.625%, dated 7/31/1998, due 8/3/1998 130,000,000
492,000,000 Societe Generale, New York, 5.640%, dated 7/31/1998, due 8/3/1998 492,000,000
150,000,000 State Street Bank and Trust Co., 5.620%, dated 7/31/1998, due 8/3/1998 150,000,000
492,000,000 Toronto Dominion Securities (USA) Inc., 5.620%, dated 7/31/1998, due 8/3/1998 492,000,000
</TABLE>
TREASURY OBLIGATIONS FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(A)REPURCHASE AGREEMENTS -- CONTINUED
$ 245,000,000 (b)UBS Securities, Inc., 5.450%, dated 6/17/1998, due 9/15/1998 $ 245,000,000
700,000,000 Warburg Dillon Reed LLC, 5.620%, dated 7/31/1998, due 8/3/1998 700,000,000
357,000,000 Westdeutsche Landesbank Girozentrale, 5.640%, dated 7/31/1998, due 8/3/1998 357,000,000
TOTAL REPURCHASE AGREEMENTS 8,935,000,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $10,374,566,972
</TABLE>
(a) 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.
(b) 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.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($10,367,001,889) at July 31, 1998.
The following acronyms are used throughout this portfolio:
LLC -- Limited Liability Corporation
LP -- Limited Partnership
(See Notes which are an integral part of the Financial Statements)
STATEMENT OF ASSETS AND LIABILITIES
TREASURY OBLIGATIONS FUND
JULY 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $8,935,000,000
Investments in securities 1,439,566,972
Total investments in securities, at amortized cost and value $10,374,566,972
Cash 2,153,988
Income receivable 27,855,466
Receivable for shares sold 797,993
Total assets 10,405,374,419
LIABILITIES:
Payable for shares redeemed 422,399
Income distribution payable 35,747,174
Accrued expenses 2,202,957
Total liabilities 38,372,530
NET ASSETS for 10,367,001,889 shares outstanding $10,367,001,889
NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER SHARE:
INSTITUTIONAL SHARES:
$5,289,870,944/5,289,870,944 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$5,045,428,127/5,045,428,127 shares outstanding $1.00
INSTITUTIONAL CAPITAL SHARES:
$31,702,818/31,702,818 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, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $541,436,483
EXPENSES:
Investment advisory fee $ 19,318,524
Administrative personnel and services fee 7,285,996
Custodian fees 496,306
Transfer and dividend disbursing agent fees and expenses 218,712
Directors'/Trustees' fees 64,970
Auditing fees 13,057
Legal fees 37,111
Portfolio accounting fees 693,672
Shareholder services fee - Institutional Shares 13,132,731
Shareholder services fee -- Institutional Service Shares 10,908,834
Shareholder services fee -- Institutional Capital Shares 106,590
Share registration costs 873,666
Printing and postage 192,668
Insurance premiums 50,195
Taxes 731
Miscellaneous 35,036
Total expenses 53,428,799
Waivers --
Waiver of investment advisory fee $ (9,537,113)
Waiver of shareholder services fee -- Institutional Shares (13,132,731)
Waiver of shareholder services fee -- Institutional Capital Shares (63,954)
Total waivers (22,733,798)
Net expenses 30,695,001
Net investment income $510,741,482
</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,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS --
Net investment income $ 510,741,482 $ 359,583,153
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income
Institutional Shares (283,582,801) (254,552,990)
Institutional Service Shares (224,897,953) (104,840,770)
Institutional Capital Shares (2,260,728) (189,393)
Change in net assets resulting from distributions to shareholders (510,741,482) (359,583,153)
SHARE TRANSACTIONS --
Proceeds from sale of shares 62,011,458,681 43,911,491,307
Net asset value of shares issued to shareholders in payment
of distributions declared 122,517,950 84,240,302
Cost of shares redeemed (59,678,173,575) (42,251,242,453)
Change in net assets resulting from share transactions 2,455,803,056 1,744,489,156
Change in net assets 2,455,803,056 1,744,489,156
NET ASSETS:
Beginning of period 7,911,198,833 6,166,709,677
End of period $ 10,367,001,889 $ 7,911,198,833
</TABLE>
(See Notes which are an integral part of the Financial Statements)
NOTES TO FINANCIAL STATEMENTS
TREASURY OBLIGATIONS FUND
JULY 31, 1998
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 1998 1997
<S> <C> <C>
Shares sold 29,392,382,133 27,254,234,550
Shares issued to shareholders in payment of distributions declared 45,925,317 50,228,539
Shares redeemed (28,963,019,841) (27,139,750,037)
Net change resulting from Institutional Share transactions 475,287,609 164,713,052
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 31,821,116,8 97 16,581,686,843
Shares issued to shareholders in payment of distributions declared 74,615,681 33,822,698
Shares redeemed (29,904,414,631) (15,078,238,755)
Net change resulting from Institutional Service Share transactions 1,991,317,947 1,537,270,786
<CAPTION>
YEAR ENDED JULY 31,
INSTITUTIONAL CAPITAL SHARES 1998 1997(A)
<S> <C> <C>
Shares sold 797,959,651 75,569,914
Shares issued to shareholders in payment of distributions declared 1,976,952 189,065
Shares redeemed (810,739,103) (33,253,661)
Net change resulting from Institutional Capital Share transactions (10,802,500) 42,505,318
Net change resulting from share transactions 2,455,803,056 1,744,489,156
</TABLE>
(a) For the period from April 14, 1997 (date of initial public investment) to
July 31, 1997.
At July 31, 1998, capital paid-in aggregated $10,367,001,889.
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, Inc. 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.
YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
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, 1998, 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, 1998, by correspondence with the custodian and brokers. As to confirmation
replies not received, we carried out alternative auditing procedures. 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, 1998, 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 25, 1998
TREASURY
OBLIGATIONS FUND
(A Portfolio of Money Market Obligations Trust)
Institutional Shares
PROSPECTUS
SEPTEMBER 30, 1998
An Open-End Management
Investment Company
TREASURY OBLIGATIONS FUND
INSTITUTIONAL SHARES
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Federated Management
Federated Investors Tower
1001 Liberty Avenue
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
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N500
9110208A-IS (9/98)
[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, 1998. 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.
TREASURY OBLIGATIONS FUND
FEDERATED INVESTORS FUNDS
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237-7000
Statement dated September 30, 1998
(graphic)
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 60934N500
Cusip 60934N872
Cusip 60934N823
9110208B (9/98)
(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 7
INVESTMENT ADVISORY SERVICES 7
Investment Adviser 7
Advisory Fees 8
BROKERAGE TRANSACTIONS 8
OTHER SERVICES 8
Fund Administration 8
Custodian and Portfolio Accountant 8
Transfer Agent 8
Independent Public Accountants 8
DETERMINING NET ASSET VALUE 9
REDEMPTION IN KIND 9
MASSACHUSETTS PARTNERSHIP LAW 9
THE FUND'S TAX STATUS 10
PERFORMANCE INFORMATION 10
Yield 10
Effective Yield 10
Total Return 10
Performance Comparisons 11
Economic and Market Information 11
ABOUT FEDERATED INVESTORS, INC. 11
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 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 Declaration of
Trust.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited partnership
interests.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any
one industry, except that the Fund may invest 25% or more of the value of its
total assets in cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies, or instrumentalities and
repurchase agreements collateralized by such U.S. government securities.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising of 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other than
cash; cash items; 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; and securities of other
investment companies) 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
Chief Executive Officer and Director or Trustee of the
Funds; Chairman and Director, Federated Investors, Inc.;
Chairman and Trustee, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director,
Federated Research Corp. and Federated Global Research
Corp.; Chairman, Passport Research, Ltd.; Mr. Donahue is the father of
J. Christopher Donahue, President and Trustee of the Trust.
Thomas G. Bigley
15 Old Timber Trail
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director or Trustee of the Funds; Director, Member of Executive Committee,
Children's Hospital of Pittsburgh; formerly, Senior Partner, Ernst & Young LLP;
Director, MED 3000 Group, Inc.; Director, Member of Executive Committee,
University of Pittsburgh.
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
Director or Trustee of the Funds; 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.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director or Trustee of the Funds; 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, United Refinery;
Chairman, Pittsburgh Foundation; Director, Forbes Fund; Chairman, Pittsburgh
Civic Light Opera.
J. Christopher Donahue*
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
President and Trustee
President or Executive Vice President of the Funds;
President and Director, Federated Investors, Inc.; President
and Trustee, 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; Director or
Trustee of some of the Funds. Mr. Donahue is the son of John
F. Donahue, Chairman and Trustee of the Trust.
James E. Dowd, Esq.
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Director or Trustee of the Funds; Attorney-at-law; Director,
The Emerging Germany Fund, Inc.; formerly, President, Boston
Stock Exchange, Inc.; Regional Administrator, United States
Securities and Exchange Commission.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Director or Trustee of the Funds; Professor of Medicine, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
Hospitals; formerly, Member, National Board of Trustees, Leukemia Society of
America.
Edward L. Flaherty, Jr., Esq. @
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Director or Trustee of the Funds; Attorney, of Counsel, Miller, Ament, Henny &
Kochuba; Director, Eat'N Park Restaurants, Inc.; formerly, Counsel, Horizon
Financial, F.A., Western Region; Partner, Meyer and Flaherty.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Director or Trustee of the Funds; formerly, Representative, Commonwealth of
Massachusetts General Court; President, State Street Bank and Trust Company and
State Street Corporation; Director, VISA USA and VISA International; Chairman
and Director, Massachusetts Banker Association; Director, Depository Trust
Corporation.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
Director or Trustee of the Funds; President, Law Professor, Duquesne University;
Consulting Partner, Mollica & Murray; formerly, Dean and Professor of Law,
University of Pittsburgh School of Law; Dean and Professor of Law, Villanova
University School of Law.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Director or Trustee of the Funds; President, World Society for Ekistics, Athens;
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; formerly, Professor, United States
Military Academy; Professor, United States Air Force Academy.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Director or Trustee of the Funds; Public Relations/ Marketing/Conference
Planning; formerly, National Spokesperson, Aluminum Company of America; business
owner.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Executive Vice President
Trustee or Director of some of the Funds; President, Executive Vice President
and Treasurer of some of the Funds; Vice Chairman, Federated Investors, Inc.;
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.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President, Secretary, and Treasurer Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds; Executive Vice
President, Secretary, and Director, Federated Investors, Inc.; 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.
*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: Automated Government Money Trust; Blanchard
Funds; Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust
Series, Inc.; CCB Funds; 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 Core
Trust; 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.; 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; Regions Funds; RIGGS 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; WCT Funds; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund.
As of September 3, 1998, the following shareholders of record owned 5% or
more of the outstanding Institutional Shares of the Fund: State Street Bank
and Trust, North Quincy, Massachusetts owned approximately 895,585,881
shares (17.66%); Fleet Securities Corp., Rochester, New York owned
approximately 501,988,856 shares (9.90%); and Var & Co., U.S. Bank, N.A., St.
Paul, Minnesota owned approximately 364,988,371 shares (7.20%).
As of September 3, 1998, the following shareholders of record owned 5% or
more of the outstanding Institutional Service Shares of the Fund: Chase
Manhattan Bank, New York, New York owned approximately 403,898,150 shares
(7.64%); Trustman, SunTrust Bank, Atlanta, Georgia owned approximately
345,362,788 shares (6.54%); Relico, Relico Trust Company, Atlanta, Georgia
owned approximately 340,314,656 shares (6.44%); and District of Columbia
Corrections, Trustee/Construction & Repair, Washington, DC owned
approximately 310,277,141 shares (5.87%).
As of September 3, 1998, the following shareholders of record owned 5% or more
of the outstanding Institutional Capital Shares of the Fund: American Bank,
Rock Island, Illinois owned approximately 18,027,437 shares (52.97%); and St.
Joseph's Hospital Gross Receipt Money Advantage, Syracuse, New York owned
approximately 11,358,000 shares (33.37%).
TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, AGGREGATE
POSITION WITH COMPENSATION TOTAL COMPENSATION PAID
TRUST FROM TRUST*# FROM FUND COMPLEX+
<S> <C> <C>
John F. Donahue
Chairman and Trustee $0 $0 for the Trust and
56 other investment companies in the Fund Complex
Thomas G. Bigley
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
John T. Conroy, Jr.
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
William J. Copeland
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
J. Christopher Donahue
President and Trustee $0 $0 for the Trust and
18 other investment companies in the Fund Complex
James E. Dowd, Esq.
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
Lawrence D. Ellis, M.D.
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Edward L. Flaherty, Jr., Esq.
Trustee $20,189.07 $122,362 for the Trust and
56 other investment companies in the Fund Complex
Peter E. Madden
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
John E. Murray, Jr., J.D., S.J.D.
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Wesley W. Posvar
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
Marjorie P. Smuts
Trustee $18,351.07 $111,222 for the Trust and
56 other investment companies in the Fund Complex
</TABLE>
* Information is furnished for the fiscal year ended July 31, 1998.
# 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, Inc. All the voting securities of Federated Investors,
Inc. 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 prospectuses. For the fiscal
years ended July 31, 1998, 1997, and 1996, the adviser earned $19,318,524,
$13,886,919, and $11,303,978, respectively, of which $9,537,113, $6,879,101,
and $5,936,217, 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, 1998, 1997, and 1996, the Fund paid no brokerage commissions.
Although investment decisions for the Fund are made independently from those
of the other accounts managed by the adviser, investments of the type the
Fund may make may also be made by those other accounts. When the Fund and one
or more other accounts managed by the adviser are prepared to invest in, or
desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by the adviser
to be equitable to each. In some cases, this procedure may adversely affect
the price paid or received by the Fund or the size of the position obtained
or disposed of by the Fund. In other cases, however, it is believed that
coordination and the ability to participate in volume transactions will be to
the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, Inc.,
provides administrative personnel and services to the Fund for a fee as
described in the prospectuses. From March 1, 1994 to March 1, 1996, Federated
Administrative Services, a subsidiary of Federated Investors, Inc., 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, 1998, 1997, and 1996,
the Administrators earned $7,285,996, $5,244,250, and $4,274,511,
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, 1998, the Fund earned shareholder service
fees on behalf of the Institutional Shares, Institutional Service Shares, and
Institutional Capital Shares in the amounts of $13,132,731, $10,908,834, and
$106,590 of which $0, $10,908,834, and $42,636 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; 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, 1998, the yield for Institutional
Shares, Institutional Service Shares, and Institutional Capital Shares was
5.44%, 5.19%, and 5.34%, respectively.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base period
return by: adding 1 to the base period return; raising the sum to the 365/7th
power; and subtracting 1 from the result.
For the seven-day period ended July 31, 1998, the effective yield for
Institutional Shares, Institutional Service Shares, and Institutional
Capital Shares was 5.59%, 5.33%, and 5.48%, respectively.
TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is computed
by multiplying the number of shares owned at the end of the period by the net
asset value per share at the end of the period. The number of shares owned at
the end of the period is based on the number of shares purchased at the
beginning of the period with $1,000, adjusted over the period by any
additional shares, assuming the monthly reinvestment of all dividends and
distributions.
Prior to the creation of separate classes of shares, for the one-year and
five-year periods ended July 31, 1998 and for the period from December 12,
1989 (start of performance) to July 31, 1998, the average annual total
returns were 5.54%, 5.05%, and 5.24%, respectively for Institutional Shares.
For the one-year period ended July 31, 1998 and for the period from July 5,
1994 (date of initial public offering) through July 31, 1998, the average
annual total returns were 5.28% and 5.20%, respectively, for Institutional
Service Shares.
For the one-year period ended July 31, 1998, and the period from April 14,
1997 (date of initial public investment) through July 31, 1998, the average
annual returns were 5.43%, and 5.43%, respectively for Institutional Capital
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, INC.
Federated Investors, Inc. 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, Inc. 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, 1997, Federated managed more
than $63.1 billion in assets across 51 money market funds, including 18
government, 11 prime, and 22 municipal with assets approximating $35
billion, $17.1 billion, and $10.9 billion, respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated Investors, Inc. are: U.S. equity and high
yield--J. Thomas Madden; U.S. fixed income--William D. Dawson, III; and global
equities and fixed income--Henry A. Frantzen. The Chief Investment Officers
are Executive Vice Presidents of the Federated advisory companies.
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 $4.4 trillion to the more than 6,700 funds
available.*
Federated Investors, Inc., through its subsidiaries, distributes mutual
funds for a variety of investment applications. Specific markets include:
INSTITUTIONAL CLIENTS
Federated Investors, Inc. meets the needs of approximately 900 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
