1933 Act File No. 33-31602
1940 Act File No. 811-5950
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. ...............................
Post-Effective Amendment No. 34 ............................... X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 35 .............................................. X
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MONEY MARKET OBLIGATIONS TRUST
(Exact Name of Registrant as Specified in Charter)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7000
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
It is proposed that this filing will become effective:
_ immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(i) on _________________
pursuant to paragraph (a)(i) 75 days after filing pursuant to paragraph
(a)(ii) on _________________ pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Copies to: Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037
PROSPECTUS
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund
Government Obligations Tax-Managed Fund
Prime Obligations Fund
Tax-Free Obligations Fund
Treasury Obligations Fund
INSTITUTIONAL SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
CONTENTS
Risk/Return Summary
What are the Funds' Fees and Expenses?
What are Each Fund's Investment Strategies?
What are the Principal Securities in Which the Funds Invest?
What are the Specific Risks of Investing in the Funds?
What do Shares Cost?
How are the Funds Sold?
How to Purchase Shares
How to Redeem Shares
Account and Share Information
Who Manages the Funds?
Financial Information
Report of Independent Public Accountants
October 31, 1999
<PAGE>
RISK/RETURN SUMMARY
WHAT IS EACH FUND'S INVESTMENT OBJECTIVE?
Each Fund is a money market fund that seeks to maintain a stable net asset value
of $1.00 per Share.
FUND OBJECTIVE
Government Obligations Fund To provide current income consistent with stability
of (Government Fund) principal.
Government Obligations Tax-Managed Fund To provide current income consistent
with stability of (Government Tax-Managed Fund) principal and liquidity.
Prime Obligations Fund To provide current income consistent with stability of
(Prime Fund) principal.
Tax-Free Obligations Fund To provide dividend income exempt from federal regular
(Tax-Free Fund) income consistent with stability of prinicpal.
Treasury Obligations Fund To provide current income consistent with stability of
(Treasury Fund) principal.
While there is no assurance that a Fund will achieve its investment objective,
it endeavors to do so by following the strategies and policies described in this
prospectus.
WHAT ARE EACH FUND'S MAIN INVESTMENT STRATEGIES?
Each of the Funds invests in a portfolio of securities maturing in 397 days
or less. The portfolio of each Fund will have a dollar-weighted maturity of 90
days or less.
GOVERNMENT FUND
The Government Fund invests primarily in U.S. Treasury and government agency
securities. These investments include repurchase agreements collateralized
fully by U.S. Treasury and government agency securities.
GOVERNMENT TAX-MANAGED FUND
The Government Tax-Managed Fund invests primarily in U.S. Treasury and
government agency securities that pay interest exempt from state personal income
tax.
PRIME FUND
The Prime Fund invests primarily in high quality fixed income securities.
TAX-FREE FUND
The Tax-Free Fund invests primarily in tax exempt securities. At least 80%
of the Tax-Free Fund's annual interest income will be exempt from federal
regular income tax. Interest from the Fund's investments may be subject to the
federal alternative minimum tax for individuals and corporations (AMT).
TREASURY FUND
The Treasury Fund invests primarily in U.S. Treasury securities maturing in
397 days or less. These investments include repurchase agreements collateralized
fully by U.S. Treasury securities.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
All mutual funds take investment risks. Therefore, even though the Funds are
money market funds that seek to maintain a stable net asset value, it is
possible to lose money by investing in a Fund. 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.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - GOVERNMENT FUND
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Government Fund's Institutional Shares as of the
calendar year-end for each of eight years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and increasing
in increments of 1.00% up to 7.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Shares start of business through
the calendar year ended December 31, 1998. The light gray shaded chart features
eight distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Shares for each calendar year is stated directly at the top of
each respective bar, for the calendar years 1991 through 1998. The percentages
noted are: 6.08%, 3.79%, 3.13%, 4.17%, 5.93%, 5.36%, 5.54% and 5.45%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Shares
total returns on a calendar year-end basis.
The Fund's Institutional Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Shares total return for the nine-month period from
January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Shares
highest quarterly return was 1.68% (quarter ended March 31, 1991). Its lowest
quarterly return was 0.76% (quarter ended June 30, 1993).
AVERAGE ANNUAL TOTAL RETURN TABLE - GOVERNMENT FUND
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.45%
5 Years 5.29%
Start of 5.21%
Performance1
1 The Fund's Institutional Shares start of performance date was March 30, 1990.
The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was
4.91%. Investors may call the Fund at 1-800-341-7400 to acquire the current
7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - GOVERNMENT TAX-MANAGED FUND
The graphic presentation displayed here consists of a bar chart
representing the annual total returns of the Government Tax-Managed Fund's
Institutional Shares as of the calendar year-end for each of three years.
The `y' axis reflects the "% Total Return" beginning with "5.20%" and increasing
in increments of 0.05% up to 5.45%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Shares start of business through
the calendar year ended December 31, 1998. The light gray shaded chart features
three distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Shares for each calendar year is stated directly at the top of
each respective bar, for the calendar years 1996 through 1998. The percentages
noted are: 5.30%, 5.44% and 5.37%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Shares
total returns on a calendar year-end basis.
The Fund's Institutional Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Shares total return for the nine-month period from
January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Shares
highest quarterly return was 1.36% (quarter ended December 31, 1997). Its lowest
quarterly return was 1.26% (quarter ended December 31, 1998).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - GOVERNMENT TAX-MANAGED FUND
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.37%
Start of 5.44%
Performance1
1 The Fund's Institutional Shares start of performance date was June 2, 1995.
The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was
4.94%. Investors may call the Fund at 1-800-341-7400 to acquire the current
7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - PRIME FUND
The graphic presentation displayed here consists of a bar chart
representing the annual total returns of the Prime Fund's Institutional Shares
as of the calendar year-end for each of eight years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and
increasing in increments of 1.00% up to 10.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Shares start of business through
the calendar year ended December 31, 1998. The light gray shaded chart features
eight distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Shares for each calendar year is stated directly at the top of
each respective bar, for the calendar years 1991 through 1998. The percentages
noted are: 6.22%, 3.82%, 3.15%, 4.25%, 5.98%, 5.40%, 5.57% and 5.52%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Shares
total returns on a calendar year-end basis.
The Fund's Institutional Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Shares total return for the nine-month period from
January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Shares
highest quarterly return was 1.74% (quarter ended March 31, 1991). Its lowest
quarterly return was
0.77% (quarter ended June 30, 1993).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - PRIME FUND
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.52%
5 Years 5.34%
Start of 5.27%
Performance1
1 The Fund's Institutional Shares start of performance date was March 26, 1990.
The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was
5.07%. Investors may call the Fund at 1-800-341-7400 to acquire the current
7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - TAX-FREE FUND
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Tax-Free Fund's Institutional Shares as of the
calendar year-end for each of nine years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and increasing
in increments of 1.00% up to 6.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Shares start of business through
the calendar year ended December 31, 1998. The light gray shaded chart features
nine distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Shares for each calendar year is stated directly at the top of
each respective bar, for the calendar years 1990 through 1998. The percentages
noted are: 5.88%, 4.53%, 3.00%, 2.41%, 2.81%, 3.85%, 3.39%, 3.56% and 3.38%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Shares
total returns on a calendar year-end basis.
The Fund's Institutional Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Shares total return for the nine-month period from
January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Shares
highest quarterly return was 1.48% (quarter ended December 31, 1990). Its lowest
quarterly return was 0.55% (quarter ended March 31, 1994).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - TAX-FREE FUND
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 3.38%
5 Years 3.40%
Start of 3.66%
Performance1
1 The Fund's Institutional Shares start of performance date was December 12,
1989.
The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was
3.58%. Investors may call the Fund at 1-800-341-7400 to acquire the current
7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - TREASURY FUND
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Treasury Fund's Institutional Shares as of the
calendar year-end for each of nine years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and increasing
in increments of 1.00% up to 9.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Shares start of business through
the calendar year ended December 31, 1998. The light gray shaded chart features
nine distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Shares for each calendar year is stated directly at the top of
each respective bar, for the calendar years 1990 through 1998. The percentages
noted are: 8.15%, 5.98%, 3.72%, 3.06%, 4.11%, 5.89%, 5.31%, 5.48% and 5.37%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Shares
total returns on a calendar year-end basis.
The Fund's Institutional Shares are not sold subject to a sales charge (load).
The total returns displayed above are based upon net asset value.
The Fund's Institutional Shares total return for the nine-month period from
January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Shares
highest quarterly return was 2.02% (quarter ended September 30, 1990). Its
lowest quarterly return was 0.75% (quarter ended June 30, 1993).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - TREASURY FUND
The following table represents the Fund's Institutional Shares Average Annual
Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.37%
5 Years 5.23%
Start of 5.23%
Performance1
1 The Fund's Institutional Shares start of performance date was December 12,
1989.
The Fund's Institutional Shares 7-Day Net Yield as of December 31, 1998 was
4.75%. Investors may call the Fund at 1-800-341-7400 to acquire the current
7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<TABLE>
<CAPTION>
WHAT ARE THE FUNDS' FEES AND EXPENSES?
GOVERNMENT FUND - INSTITUTIONAL SHARES
FEES AND EXPENSES
<S> <C>
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Government Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waivers)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 3 0.25%
Other Expenses 0.10%
Total Annual Fund Operating Expenses 0.55%
1 Although not contractually obligated to do so, the adviser and shareholder service
provider waived certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended July 31, 1999.
Total Waiver of Fund Expenses 0.35%
Total Actual Annual Operating Expenses (after waivers) 0.20%
</TABLE>
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
3 The shareholder services fee has been voluntarily reduced. This voluntary
waiver can be terminated at any time. The shareholder services fee paid by the
Fund' s Institutional Shares (after the voluntary reduction) was 0.00% for the
year ended July 31, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Institutional Shares operating expenses are BEFORE
WAIVERS as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
Government Fund - Institutional Shares
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$56 $176 $307 $689
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT TAX-MANAGED FUND - INSTITUTIONAL SHARES
FEES AND EXPENSES
<S> <C>
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Government Tax-Managed Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waivers)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 3 0.25%
Other Expenses 0.12%
Total Annual Fund Operating Expenses 0.57%
1 Although not contractually obligated to do so, the adviser and shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended July 31, 1999.
Total Waiver of Fund Expenses 0.37%
Total Actual Annual Operating Expenses (after waivers) 0.20%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.08% for the year ended July 31,
1999.
</TABLE>
3 The shareholder services fee has been voluntarily reduced. This voluntary
reduction can terminate at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary reduction) was 0.00% for the
year ended July 31, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Institutional Shares operating expenses are BEFORE
WAIVERS as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
Government Tax-Managed Fund - Institutional Shares
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$58 $183 $318 $714
<TABLE>
<CAPTION>
PRIME FUND - INSTITUTIONAL SHARES
FEES AND EXPENSES
<S> <C>
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Prime Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waivers)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 3 0.25%
Other Expenses 0.11%
Total Annual Fund Operating Expenses 0.56%
1 Although not contractually obligated to do so, the adviser and shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended July 31, 1999.
Total Waiver of Fund Expenses 0.36%
Total Actual Annual Operating Expenses (after waivers) 0.20%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.09% for the year ended July 31,
1999.
</TABLE>
3 The shareholder services fee has been voluntarily reduced. This voluntary
reduction can terminate at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary reduction) was 0.00% for the
year ended July 31, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Institutional Shares operating expenses are BEFORE
WAIVERS as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
Prime Fund - Institutional Shares
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$57 $179 $313 $701
<PAGE>
TAX - FREE OBLIGATIONS FUND - INSTITUTIONAL SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Tax-Free Fund's Institutional Shares.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waivers)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 3 0.25%
Other Expenses 0.10%
Total Annual Fund Operating Expenses 0.55%
1 Although not contractually obligated to do so, the adviser and shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended July 31, 1999.
Total Waiver of Fund Expenses 0.35%
Total Actual Annual Operating Expenses (after waivers) 0.20%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
</TABLE>
3 The shareholder services fee has been voluntarily reduced. This voluntary
reduction can terminate at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary reduction) was 0.00% for the
year ended July 31, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Institutional Shares operating expenses are BEFORE
WAIVERS as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
Tax-Free Fund - Institutional Shares
1 YEAR 3 YEARS 5 YEARS 10 YEARS
56 $176 $307 $689
<TABLE>
<CAPTION>
TREASURY FUND - INSTITUTIONAL SHARES
FEES AND EXPENSES
<S> <C>
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Treasury Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waivers)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 3 0.25%
Other Expenses 0.10%
Total Annual Fund Operating Expenses 0.55%
1 Although not contractually obligated to do so, the adviser and shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended July 31, 1999.
Total Waiver of Fund Expenses 0.35%
Total Actual Annual Operating Expenses (after waivers) 0.20%
</TABLE>
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
3 The shareholder services fee has been voluntarily reduced. This voluntary
reduction can terminate at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary reduction) was 0.00% for the
year ended July 31, 1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Shares
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's Institutional Shares operating expenses are BEFORE
WAIVERS as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
Treasury Fund - Institutional Shares
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$56 $176 $307 $689
<PAGE>
WHAT ARE EACH FUND'S INVESTMENT STRATEGIES?
Each Fund's investment strategy is described earlier under "What are Each Fund's
Main Investment Strategies?" Following is additional information on the
investment strategies for the Funds.
The Adviser for each of the Funds targets a dollar-weighted average portfolio
maturity range based upon its interest rate outlook. The Adviser formulates its
interest rate outlook by analyzing a variety of factors, such as:
o current U.S. economic activity and the economic outlook,
o current short-term interest rates,
o the Federal Reserve Board's policies regarding short-term interest rates, and
o the potential effects of foreign economic activity on U.S. short term interest
rates.
The Adviser generally shortens the portfolio's dollar-weighted average maturity
when it expects interest rates to rise and extends the maturity when it expects
interest rates to fall. The Adviser selects securities used to shorten or extend
the portfolio's dollar-weighted average maturity by comparing the returns
currently offered by different investments to their historical and expected
returns.
PRIME FUND AND TAX-FREE FUND
The Adviser performs a fundamental credit analysis to develop an approved list
of issuers and securities that meet the Adviser's standard for minimal credit
risk. The Adviser monitors the credit risks of all portfolio securities on an
ongoing basis by reviewing periodic financial data and ratings of nationally
recognized rating services.
TAX-FREE FUND
In targeting a dollar-weighted average portfolio maturity range, the Adviser
also will consider the tax exempt securities available. In addition, the Adviser
may invest in securities subject to AMT in an attempt to further enhance yield
and provide diversification.
INDUSTRY CONCENTRATION
The Prime Fund may invest 25% or more of its assets in commercial paper issued
by finance companies.
TEMPORARY DEFENSIVE INVESTMENTS
The Tax-Free Fund may temporarily depart from its principal investment
strategies by investing its assets in securities subject to federal income tax.
It may do this to minimize potential losses and maintain liquidity to meet
shareholder redemptions during adverse market conditions. This may cause the
Fund to receive and distribute taxable income to investors.
WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUNDS INVEST?
GOVERNMENT FUND
The Government Fund invests primarily in Fixed Income Securities, including
U.S. Treasury Securities, Agency Securities and Repurchase Agreements.
GOVERNMENT TAX-MANAGED FUND
The Government Tax-Managed Fund invests primarily in Fixed Income
Securities, including U.S. Treasury Securities and Agency Securities.
PRIME FUND
The Prime Fund invests primarily in Fixed Income Securities, including
Corporate Debt Securities, Commercial Paper, Demand Instruments, Bank
Instruments, Asset Backed Securities and Repurchase Agreements. Certain of
these Fixed Income Securities may be subject to Credit Enhancement.
TAX-FREE FUND
The Tax-Free Fund invests primarily in Tax Exempt Securities, a type of Fixed
Income Security, including Variable Rate Demand Instruments and Municipal
Notes. Certain of these Tax Exempt Securities may be subject to Credit
Enhancement.
TREASURY FUND
The Treasury Fund invests primarily in Fixed Income Securities, including
U.S. Treasury Securities and Repurchase Agreements.
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time.
U.S. TREASURY SECURITIES
U.S. Treasury Securities are direct obligations of the federal government
of the United States.
AGENCY SECURITIES
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have
not explicit financial support, but are regarded as having implied support
because the federal government sponsors their activities.
CORPORATE DEBT SECURITIES
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Funds may also purchase interests in bank loans
to companies. The credit risks of corporate debt securities vary widely among
issuers.
COMMERCIAL PAPER
Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or bank loans) to repay maturing paper. If
the issuer cannot continue to obtain liquidity in this fashion, its
commercial paper may default.
DEMAND INSTRUMENTS
Demand instruments are corporate debt securities that the issuer must
repay upon demand. Other demand instruments require a third party, such
as a dealer or bank, to repurchase the security for its face value upon
demand. The Funds treats demand instruments as short-term securities,
even though their stated maturity may extend beyond one year.
BANK INSTRUMENTS
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S. dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.
ASSET BACKED SECURITIES
Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial debts
with maturities of less than ten years. However, almost any type of fixed
income assets (including other fixed income securities) may be used to create
an asset backed security. Asset backed securities may take the form of
commercial paper, notes, or pass through certificates.
TAX EXEMPT SECURITIES
Tax exempt securities are fixed income securities that pay interest that is
not subject to regular federal income taxes. Typically, states, counties,
cities and other political subdivisions and authorities issue tax exempt
securities. The market categorizes tax exempt securities by their source of
repayment.
VARIABLE RATE DEMAND INSTRUMENTS
Variable rate demand instruments are tax exempt securities that require
the issuer or a third party, such as a dealer or bank, to repurchase the
security for its face value upon demand. The securities also pay
interest at a variable rate intended to cause the securities to trade at
their face value. The Funds treat demand instruments as short-term
securities, because their variable interest rate adjusts in response to
changes in market rates, even though their stated maturity may extend
beyond thirteen months.
MUNICIPAL NOTES
Municipal notes are short-term tax exempt securities. Many
municipalities issue such notes to fund their current operations before
collecting taxes or other municipal revenues. Municipalities may also
issue notes to fund capital projects prior to issuing long-term bonds.
The issuers typically repay the notes at the end of their fiscal year,
either with taxes, other revenues or proceeds from newly issued notes or
bonds.
CREDIT ENHANCEMENT
Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security if the issuer defaults. In some cases
the company providing credit enhancement makes all payments directly to the
security holders and receives reimbursement from the issuer. Normally, the
credit enhancer has greater financial resources and liquidity than the issuer.
For this reason, the Adviser usually evaluates the credit risk of a fixed
income security based solely upon its credit enhancement.
Common types of credit enhancement include guarantees, letters of credit, bond
insurance and surety bonds. Credit enhancement also includes arrangements
where securities or other liquid assets secure payment of a fixed income
security. If a default occurs, these assets may be sold and the proceeds paid
to security's holders. Either form of credit enhancement reduces credit risks
by providing another source of payment for a fixed income security.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which a Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest
rate on the underlying security. A Fund will enter into repurchase agreements
only with banks and other recognized financial institutions, such as
securities dealers, deemed creditworthy by the Adviser.
Repurchase agreements are subject to credit risks.
INVESTMENT RATINGS
The money market instruments in which the Prime Fund and the Tax-Free Fund
invest must be rated in the highest short-term rating category by one or more
nationally recognized statistical rating organizations or be of comparable
quality to securities having such ratings.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUNDS?
Each of the Funds is subject to Interest Rate Risks. In addition, certain
of the Funds may be subject to other risks, as described below
GOVERNMENT FUND
The Government Fund is subject to Credit Risk.
GOVERNMENT TAX-MANAGED FUND
The Government Tax-Managed Fund is subject to Credit Risk and Sector Risk.
PRIME FUND
The Prime Fund is subject to Credit Risk and Sector Risk.
TREASURY FUND
The Treasury Fund is subject to Credit Risk.
INTERESTS RATE RISKS
Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as demand
for particular fixed income securities, may cause the price of certain fixed
income securities to fall while the prices of other securities rise or remain
unchanged.
Interest rate changes have a greater effect on the price of fixed income
securities with longer maturities. Money market funds try to minimize this risk
by purchasing short-term securities.
CREDIT RISKS
PRIME FUND AND TAX-FREE FUND
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a Fund
will lose money. Money market funds try to minimize this risk by purchasing
higher quality securities.
Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, a Fund must rely entirely on the Adviser's credit
assessment.
GOVERNMENT FUND, PRIME FUND AND TREASURY FUND
Credit risk includes the possibility that a party to a transaction involving a
Fund will fail to meet its obligations. This could cause a Fund to lose the
benefit of the transaction or prevent a Fund from selling or buying other
securities to implement its investment strategy.
SECTOR RISKS
A substantial part of the Prime Fund's portfolio may be comprised of securities
issued by finance companies or companies with similar characteristics. In
addition, a substantial part of the Prime Fund's and the Tax-Free Fund's
portfolio may be comprised of securities credit enhanced by banks or companies
with similar characteristics. As a result, the Prime Fund and Tax-Free Fund will
be more susceptible to any economic, business, political or other developments
which generally affect these entities.
WHAT DO SHARES COST?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. The Funds attempt to stabilize the net asset value (NAV) of their Shares
at $1.00 by valuing the portfolio securities using the amortized cost method. A
Fund cannot guarantee that its NAV will always remain at $1.00 per Share. The
Funds do not charge a front-end sales charge. The NAV of the Tax-Free Fund is
determined at 12:00 noon and 3:00 p.m. (Eastern time) and as of the end of
regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The
NAV of the Government Tax-Managed Fund is determined at 1:00 p.m. (Eastern time)
and as of the end of regular trading (normally 4:00 p.m. Eastern time) each day
the NYSE is open. The NAV of the Government Fund, the Prime Fund and the
Treasury Fund is determined at 5:00 p.m. (Eastern time) each day the NYSE is
open.
The required minimum initial investment for each Fund is $1,000,000. There is no
required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $1,000,000 minimum
is reached within one year. An institutional investor's minimum investment is
calculated by combining all accounts it maintains with the Fund. Accounts
established through investment professionals may be subject to a smaller minimum
investment amount. Keep in mind that investment professionals may charge you
fees for their services in connection with your Share transactions.
HOW ARE THE FUNDS SOLD?
The Funds offer two share classes: Institutional Shares and Institutional
Service Shares, each representing interests in a single portfolio of securities.
The Treasury Fund also offers a third share class: Institutional Capital Shares.
This prospectus relates only to Institutional Shares. Each share class has
different expenses, which affect their performance. Contact your investment
professional or call 1-800-341-7400 for more information concerning the other
classes.
The Funds' Distributor, Federated Securities Corp., markets the Shares described
in this prospectus to entities holding Shares in an agency or fiduciary
capacity, financial institutions, financial intermediaries, institutional
investors or individuals, directly or through investment professionals. The
Tax-Free Fund may not be a suitable investment for retirement plans because it
invests in municipal securities.
The Distributor and its affiliates may pay out of their assets other
amounts (including items of material value) to investment professionals for
marketing and servicing Shares. The Distributor is a subsidiary of Federated
Investors, Inc. (Federated).
HOW TO PURCHASE SHARES
You may purchase Shares through an investment professional or directly from the
Funds. The Funds reserve the right to reject any request to purchase Shares.
THROUGH AN INVESTMENT PROFESSIONAL
o Establish an account with the investment professional; and
o Submit your purchase order for Shares of the Government Tax-Managed Fund to
the investment professional before 2:00 p.m. (Eastern time). You will
receive that day's dividend if the investment professional forwards the
order to the Fund and the Fund receives payment by 2:00 p.m. (Eastern
time). You will become the owner of Shares and receive dividends when the
Fund receives your payment.
o Submit your purchase order for Shares of the Tax-Free Fund to the
investment professional before 3:00 p.m. (Eastern time). You will receive
that day's dividend if the investment professional forwards the order to
the Fund and the Fund receives payment by 3:00 p.m. (Eastern time). You
will become the owner of Shares and receive dividends when the Fund
receives your payment.
o Submit your purchase order for Shares of the Government Fund, the Prime
Fund and the Treasury Fund to the investment professional before 5:00 p.m.
(Eastern time). You will receive that day's dividend if the investment
professional forwards the order to the Fund and the Fund receives payment
by 5:00 p.m. (Eastern time). You will become the owner of Shares and
receive dividends when the Fund receives your payment.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUNDS
o Establish your account with a Fund by submitting a completed New Account
Form; and
o Send your payment to the Fund by Federal Reserve wire or check.
You will become the owner of Shares after the Fund receives your wire or your
check. If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its transfer agent incurs.
An institution may establish an account and place an order by calling the Fund
and will become a shareholder after the Fund receives the order.
BY WIRE Send your wire to:
State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
BY CHECK
Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds). 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.
BY INVEST-BY-PHONE
Once you establish an account, you may use the Funds' Invest-By-Phone privilege
for future Share purchases if you have an account with a bank that is an
Automated Clearinghouse member. To apply, call the Funds for an authorization
form. You may use Invest-By-Phone to purchase Shares approximately two weeks
from the date you file the form with Federated Shareholder Services Company.
HOW TO REDEEM SHARES
You should redeem Shares:
o through an investment professional if you purchased Shares through an
investment professional; or
o directly from a Fund if you purchased Shares directly from the Fund.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). Investment
professionals are responsible for promptly submitting redemption requests and
providing proper written redemption instructions as outlined below.
DIRECTLY FROM THE FUNDS
BY TELEPHONE
You may redeem Shares by calling a Fund once you have completed the appropriate
authorization form for telephone transactions. If you call before 12:00 noon
(Eastern time) with respect to the Tax-Free Fund, 2:00 p.m. (Eastern time) with
respect to the Government Tax-Managed Fund and 5:00 p.m. (Eastern time) with
respect to the Government Fund, the Prime Fund and the Treasury Fund, your
redemption will be wired to you the same day. You will not receive that day's
dividend.
If you call after 12:00 noon (Eastern time) with respect to the Tax-Free Fund,
after 2:00 p.m. (Eastern time) with respect to the Government Tax-Managed Fund
and after 5:00 p.m. (Eastern time) with respect to the Government Fund, the
Prime Fund and the Treasury Fund, your redemption will be wired to you the
following business day. You will receive that day's dividend. With respect to
the Tax-Free Fund and the Government Tax-Managed Fund, under limited
circumstances, arrangements may be made with the Distributor for same-day
payment of redemption proceeds, without that day's dividend, for redemption
requests received before 12:00 noon (Eastern time) and 2:00 p.m.
(Eastern time), respectively.
BY MAIL
You may redeem Shares by mailing a written request to a Fund.
Your redemption request will be processed on the day the Fund receives your
written request in proper form. Dividends are paid up to and including the day
that a redemption request is processed.
Send requests by mail to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317 All requests must include:
o Fund Name and Share Class, account number and account registration;
o amount to be redeemed; and
o signatures of all shareholders exactly as registered.
Call your investment professional or the Funds if you need special instructions.
SIGNATURE GUARANTEES Signatures must be guaranteed if:
o your redemption will be sent to an address other than the address of
record;
o your redemption will be sent to an address of record that was changed
within the last 30 days; or
o a redemption is payable to someone other than the shareholder(s) of record.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
o an electronic transfer to your account at a financial institution that is
an ACH member; or
o wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.
REDEMPTION IN KIND
Although each Fund intend to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day
after receiving a request in proper form. Payment may be delayed up to seven
days:
o to allow your purchase to clear;
o during periods of market volatility; or
o when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to the Fund.
ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS
The Funds will record your telephone instructions. If a Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
SHARE CERTIFICATES
The Funds no longer issue share certificates. If you are redeeming Shares
represented by certificates previously issued by a Fund, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.
ACCOUNT AND SHARE INFORMATION
ACCOUNT ACTIVITY
You will receive periodic statements reporting all account activity, including
dividends and capital gains paid.
DIVIDENDS AND CAPITAL GAINS
The Funds declare any dividends daily and pay them monthly to shareholders. If
you purchase Shares by wire, you begin earning dividends on the day your wire is
received. If you purchase Shares by check, you begin earning dividends on the
business day after a Fund receives your check. In either case, you earn
dividends through the day your redemption request is received.
The Funds do 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 Funds pay any capital gains at least annually. Your dividends and
capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.
TAX INFORMATION
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Funds. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.
Fund distributions are expected to be primarily dividends. Redemptions are
taxable sales. Please consult your tax adviser regarding your federal, state,
and local tax liability.
The Tax-Free Fund sends an annual statement of your account activity to assist
you in completing your federal, state and local tax returns. It is anticipated
that Fund distributions will be primarily dividends that are exempt from federal
income tax, although a portion of the Fund's dividends may not be exempt.
Dividends may be subject to state and local taxes. Capital gains and non-exempt
dividends are taxable whether paid in cash or reinvested in the Fund.
Redemptions are taxable sales. Please consult your tax adviser regarding your
federal, state and local tax liability.
WHO MANAGES THE FUNDS?
The Board of Trustees governs the Funds. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the Funds'
assets, including buying and selling portfolio securities. The Adviser's address
is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Adviser and other subsidiaries of Federated advise approximately 175 mutual
funds and separate accounts, which totaled approximately $111 billion in assets
as of December 31, 1998. Federated was established in 1955 and is one of the
largest mutual fund investment managers in the United States with approximately
1,900 employees.
More than 4,000 investment professionals make Federated Funds available to their
customers.
ADVISORY FEES
The Adviser receives an annual investment advisory fee of 0.20% of each
Fund's average daily net assets. The Adviser may voluntarily waive a portion of
its fee or reimburse the Funds for certain operating expenses.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds, that rely on computers.
While it is impossible to determine in advance all of the risks to the Funds,
the Funds could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Funds' service providers are making changes to their computer systems
to fix any Year 2000 problems. In addition, they are working to gather
information from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Funds' investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Funds
may purchase. The financial impact of these issues for the Funds is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Funds.
<PAGE>
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The Financial Highlights will help you understand each Fund's financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.
This information has been audited by Deloitte & Touche LLP, whose report, along
with each Fund's audited financial statements, is included in the Annual Report.
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund
Government Obligations Tax-Managed Fund
Prime Obligations Fund
Tax-Free Obligations Fund
Treasury Obligations Fund
INSTITUTIONAL SHARES
A Statement of Additional Information (SAI) dated October 31, 999, is
incorporated by reference into this prospectus. Additional information about the
Funds and their investments is contained in the Funds' SAI, Annual and
Semi-Annual Reports to shareholders as they become available. The Annual Reports
discuss market conditions and investment strategies that significantly affected
the Funds' performance during their last fiscal year. To obtain the SAI, the
Annual Report, the Semi-Annual Report and other information without charge, and
make inquiries, call your investment professional or the Funds at
1-800-341-7400.
You can obtain information about the Funds (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.
INVESTMENT COMPANY ACT FILE NO. 811-5950
CUSIP 60934N104
CUSIP 60934N856
CUSIP 60934N203
CUSIP 60934N401
CUSIP 60934N500
G02705-01 (10/99)
STATEMENT OF ADDITIONAL INFORMATION
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund (Government Fund)
Government Obligations Tax-Managed Fund (Government Tax-Managed Fund)
Prime Obligations Fund (Prime Fund)
Tax-Free Obligations Fund (Tax-Free Fund)
Treasury Obligations Fund (Treasury Fund)
INSTITUTIONAL SHARES
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Institutional Shares of the Funds,
dated October 31, 1999. This SAI incorporates by reference the Funds' Annual
Reports. Obtain the prospectus or the Annual Reports without charge by calling
1-800-341-7400.
october 31, 1999
CONTENTS
How are the Funds Organized?
Securities in Which the Funds Invest
What do Shares Cost?
How are the Funds Sold?
Subaccounting Services
Redemption in Kind
Massachusetts Partnership Law
Account and Share Information
Tax Information
Who Manages and Provides Services to the Funds?
How Do the Funds Measure Performance?
Who is Federated Investors, Inc.?
Financial Information
Investment Ratings
Addresses
CUSIP 60934N104
CUSIP 60934N856
CUSIP 60934N203
CUSIP 60934N401
CUSIP 60934N500
G02705-03 (10/99)
<PAGE>
HOW ARE THE FUNDS ORGANIZED?
Each Fund is a diversified portfolio of Money Market Obligations Trust (Trust).
The Trust is an open-end, management investment company that was established
under the laws of the Commonwealth of Massachusetts on October 3, 1988. The
Trust may offer separate series of shares representing interests in separate
portfolios of securities.
The Board of Trustees (the Board) has established two classes of shares of the
Funds, known as Institutional Shares and Institutional Service Shares (Shares).
The Treasury Fund also offers a third share class: Institutional Capital Shares.
This SAI relates to Institutional Shares. The Funds' investment adviser is
Federated Investment Management Company (Adviser). Effective March 31, 1999,
Federated Management, former Adviser to the Funds (except the Government
Tax-Managed Fund) and Federated Administrative Services, former Adviser to the
Government Tax-Managed Fund, became Federated Investment Management Company
(formerly, Federated Advisers).
SECURITIES IN WHICH THE FUNDS INVEST
In pursuing its investment strategy, a Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
SECURITIES DESCRIPTIONS AND TECHNIQUES
The Funds' principal securities are described in the prospectus. In pursuing
their investment strategies, the Funds may invest in such securities, or the
securities described below, for any purpose that is consistent with their
investment objectives.
SPECIAL TRANSACTIONS
DELAYED DELIVERY TRANSACTIONS
Delayed delivery transactions, including when issued transactions, are
arrangements in which a Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by a Fund to the issuer
and no interest accrues to a Fund. A Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into
these transactions so that the market values of the securities bought may vary
from the purchase prices. Therefore, delayed delivery transactions create
interest rate risks for a Fund. Delayed delivery transactions also involve
credit risks in the event of a counterparty default.
SECURITIES LENDING
A Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, a Fund receives cash or liquid securities from the
borrower as collateral. The borrower must furnish additional collateral if the
market value of the loaned securities increases. Also, the borrower must pay a
Fund the equivalent of any dividends or interest received on the loaned
securities.
A Fund will reinvest cash collateral in securities that qualify as an
acceptable investment for a Fund. However, a Fund must pay interest to the
borrower for the use of cash collateral.
Loans are subject to termination at the option of a Fund or the borrower. A
Fund will not have the right to vote on securities while they are on loan, but
it will terminate a loan in anticipation of any important vote. A Fund may pay
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker.
The Prime Fund has no present intention to engage in securities lending.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
special transactions, a Fund will either own the underlying assets, enter into
an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless a Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations without entering into an offsetting derivative contract or
terminating a special transaction. This may cause a Fund to miss favorable
trading opportunities or to realize losses on derivative contracts or special
transactions.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Funds may invest their assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash.
In addition, a Fund may invest in the securities to the extent described below.
PRIME FUND
MUNICIPAL SECURITIES
Municipal securities are issued by states, counties, cities and other
political subdivisions and authorities. Although many municipal securities are
exempt from federal income tax, the Fund may invest in taxable municipal
securities.
INSURANCE CONTRACTS
Insurance contracts include guaranteed investment contracts, funding
agreements and annuities. The Fund treats these contracts as fixed income
securities.
FOREIGN SECURITIES
Foreign securities are securities of issuers based outside the United States.
The Fund considers an issuer to be based outside the United States if:
o it is organized under the laws of, or has a principal office located in,
another country;
o the principal trading market for its securities is in another country; or
o it (or its subsidiaries) derived in its most current fiscal year at least
50% of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.
Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type,
foreign securities are subject to currency risks and risks of foreign
investing.
The Prime Fund also may invest in U.S. Treasury securities and agency
securities, which are described in the prospectus.
TAX-FREE FUND
GENERAL OBLIGATION BONDS
General obligation bonds are supported by the issuer's power to exact property
or other taxes. The issuer must impose and collect taxes sufficient to pay
principal and interest on the bonds. However, the issuer's authority to impose
additional taxes may be limited by its charter or state law.
SPECIAL REVENUE BONDS
Special revenue bonds are payable solely from specific revenues received by
the issuer such as specific taxes, assessments, tolls, or fees. Bondholders
may not collect from the municipality's general taxes or revenues. For
example, a municipality may issue bonds to build a toll road, and pledge the
tolls to repay the bonds. Therefore, a shortfall in the tolls normally would
result in a default on the bonds.
PRIVATE ACTIVITY BONDS
Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new factory
to improve its local economy. The municipality would lend the proceeds from
its bonds to the company using the factory, and the company would agree to
make loan payments sufficient to repay the bonds. The bonds would be payable
solely from the company's loan payments, not from any other revenues of the
municipality. Therefore, any default on the loan normally would result in a
default on the bonds.
The interest on many types of private activity bonds is subject to the
federal alternative minimum tax (AMT). The Fund may invest in bonds subject to
AMT.
MUNICIPAL LEASES
Municipalities may enter into leases for equipment or facilities. In order to
comply with state public financing laws, these leases are typically subject to
annual appropriation. In other words, a municipality may end a lease, without
penalty, by not providing for the lease payments in its annual budget. After
the lease ends, the lessor can resell the equipment or facility but may lose
money on the sale.
The Fund may invest in securities supported by pools of municipal leases. The
most common type of lease backed securities are certificates of participation
(COPs). However, the Fund may also invest directly in individual leases.
TEMPORARY DEFENSIVE INVESTMENTS
The Tax-Free Fund may make temporary defensive investments in the following
taxable securities, which are described in the prospectus or herein: U.S.
Treasury securities, agency securities, bank instruments, corporate debt
securities, commercial paper, repurchase agreements and reverse repurchase
agreements.
GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, PRIME FUND AND TREASURY FUND
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred to
as a coupon payment). Investors buy zero coupon securities at a price below
the amount payable at maturity. The difference between the purchase price and
the amount paid at maturity represents interest on the zero coupon security.
Investors must wait until maturity to receive interest and principal, which
increases the market and credit risks of a zero coupon security.
There are many forms of zero coupon securities. Some are issued at a discount
and are referred to as zero coupon or capital appreciation bonds.
GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, PRIME FUND AND TAX-FREE FUND
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are repurchase agreements in which the Fund is
the seller (rather than the buyer) of the securities, and agrees to repurchase
them at an agreed upon time and price. A reverse repurchase agreement may be
viewed as a type of borrowing by the Fund. Reverse repurchase agreements are
subject to credit risks. In addition, reverse repurchase agreements create
leverage risks because the Fund must repurchase the underlying security at a
higher price, regardless of the market value of the security at the time of
repurchase.
INVESTMENT RATINGS
The Prime Fund and the Tax-Free Fund invest in money market instruments that are
either rated in the two highest short-term rating categories or the three
highest long-term rating categories by one or more nationally recognized
statistical rating organizations or are of comparable quality to securities
having such ratings.
INVESTMENT RISKS
There are many factors which may affect an investment in the Funds. The
Funds' principal risks are described in its prospectus. Additional risk factors
are outlined below.
GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, PRIME FUND AND TAX-FREE FUND
LEVERAGE RISKS
Leverage risk is creatd when an investment exposes the Funds to a level of
risk that exceeds the amount invested. Changes in the value of such an
investment magnify the Fund's risk of loss and potential for gain.
TAX-FREE FUND
TAX RISKS
In order to be tax exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest
received and distributed by the Fund to shareholders to be taxable.
Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.
PRIME FUND
CURRENCY RISKS
Exchange rates for currencies fluctuate daily. The combination of currency
risk and interest rate risks tends to make securities traded in foreign
markets more volatile than securities traded exclusively in the U.S.
RISKS OF FOREIGN INVESTING
Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the U.S. Securities in foreign
markets may also be subject to taxation policies that reduce returns for U.S.
investors.
FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES
FUND OBJECTIVE
Government Fund To provide current income
consistent with stability of
principal.
Government Tax-Managed Fund To provide current
income consistent with stability of
principal and liquidity.
Prime Fund To provide current income
consistent with stability of
principal.
Tax-Free Fund To provide dividend income
exempt from federal regular income
consistent with stability of
prinicpal.
Treasury Fund To provide current income consistent with stability of principal.
The investment objective of each Fund may not be changed by the Fund's Trustees
without shareholder approval.
As a matter of investment policy which cannot be changed without shareholder
approval, at least 80% of the Tax-Free Fund's annual interest income will be
exempt from federal regular income tax.
INVESTMENT LIMITATIONS
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, a
Fund will not purchase securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the government of the U.S. 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
securities of that issuer, or the Fund would own more than 10% of the
outstanding voting securities of that issuer.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
A Fund may borrow money, directly or indirectly, and issue senior securities to
the maximum extent permitted under the 1940 Act.
INVESTING IN REAL ESTATE
A Fund may not purchase or sell real estate, provided that this restriction does
not prevent the Fund from investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests therein, or investing in
securities that are secured by real estate or interests therein. A Fund may
exercise its rights under agreements relating to such securities, including the
right to enforce security interests and to hold real estate acquired by reason
of such enforcement until that real estate can be liquidated in an orderly
manner.
INVESTING IN COMMODITIES
A Fund may not purchase or sell physical commodities, provided that the Fund may
purchase securities of companies that deal in commodities. For purposes of this
limitation, the Funds do not consider financial futures contracts to be
commodities.
UNDERWRITING
A Fund may not underwrite the securities of other issuers, except that the Fund
may engage in transactions involving the acquisition, disposition or resale of
its portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933.
LENDING CASH OR SECURITIES
A Fund may not make loans, provided that this restriction does not prevent the
Fund from purchasing debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.
CONCENTRATION OF INVESTMENTS
A Fund (with the exception of the Prime Fund) will not make investments that
will result in the concentration of its investments in the securities of issuers
primarily engaged in the same industry. Government securities, municipal
securities and bank instruments will not be deemed to constitute an industry. To
conform to the current view of the SEC that only domestic bank instruments may
be excluded from industry concentration limitations, as a matter of
non-fundamental policy, a Fund will not exclude foreign bank instruments from
industry concentration limits as long as the policy of the SEC remains in
effect. As a non-fundamental operating policy, a Fund will consider
concentration to be the investment of more than 25% of the value of its total
assets in any one industry.
The Prime Fund will not make investments that will result in the concentration
of its investments in the securities of issuers primarily engaged in the same
industry, except that the Prime Fund may invest 25% or more of the value of its
total assets in the commercial paper issued by finance companies. Government
securities, municipal securities and bank instruments will not be deemed to
constitute an industry. To conform to the current view of the SEC that only
domestic bank instruments may be excluded from industry concentration
limitations, as a matter of non-fundamental policy, the Prime Fund will not
exclude foreign bank instruments from industry concentration limits as long as
the policy of the SEC remains in effect.
THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD OF
TRUSTEES AND BY THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING SECURITIES,"
AS DEFINED BY THE INVESTMENT COMPANY ACT. THE FOLLOWING LIMITATIONS, HOWEVER,
MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE
NOTIFIED BEFORE ANY MATERIAL CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.
PLEDGING ASSETS
A Fund will not mortgage, pledge, or hypothecate any of its assets, provided
that this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
BUYING ON MARGIN
A Fund will not purchase securities on margin, provided that a Fund may obtain
short-term credits necessary for the clearance of purchases and sales of
securities.
INVESTING IN ILLIQUID SECURITIES
A Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits maturing
in more than seven days, if immediately after and as a result, the value of such
securities would exceed, in the aggregate, 10% of a Fund's net assets.
For purposes of the above limitations, the Funds consider 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.
For purposes of the concentration limitation, (a) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (b)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (c) asset-backed
securities will be classified according to the underlying assets securing such
securities.
REGULATORY COMPLIANCE
The Funds may follow non-fundamental operational policies that are more
restrictive than their 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 Funds will comply
with the various requirements of Rule 2a-7 (the Rule), which regulates money
market mutual funds. The Funds will determine the effective maturity of their
investments according to the Rule. The Funds may change these operational
policies to reflect changes in the laws and regulations without the approval of
their shareholders.
DETERMINING MARKET VALUE OF SECURITIES
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
Funds 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 Funds' use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in the Rule. 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 each
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.
WHAT DO SHARES COST?
Each Fund's net asset value (NAV) per Share fluctuates and is based on the
market value of all securities and other assets of the Fund. The NAV for each
class of Shares may differ due to the variance in daily net income realized by
each class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.
HOW ARE THE FUNDS SOLD?
Under the Distributor's Contract with the Funds, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
SHAREHOLDER SERVICES
The Funds may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of a Fund's assets).
The Distributor and/or Federated Shareholder Services Company may be reimbursed
by the Adviser or its affiliates.
Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Funds or other
special events at recreational-type facilities, or items of material value.
These payments will be based upon the amount of Shares the investment
professional sells or may sell and/or upon the type and nature of sales or
marketing support furnished by the investment professional.
In addition, the Distributor may pay investment professionals 0.25% of the
purchase price of $1 million or more of Shares that its customer has not
redeemed over the first year.
SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity 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 that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
REDEMPTION IN KIND
Although the Funds intend to pay Share redemptions in cash, they reserve the
right, as described below, to pay the redemption price in whole or in part by a
distribution of a Fund's portfolio securities.
Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Funds are obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Funds' Board determines that payment should be in kind. In such a
case, the Funds will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Funds determine their NAV.
The portfolio securities will be selected in a manner that the Funds' Board
deems fair and equitable and, to the extent available, such securities will be
readily marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
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.
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.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each Share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund or
class, only Shares of that Fund or class are entitled to vote.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of a Trust's outstanding Share of
all series entitled to vote.
As of October xx, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Institutional Shares of the
Funds: (To be filed by amendment.)
Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
TAX INFORMATION
FEDERAL INCOME TAX
Each Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Trust is comprised of six
funds and the Federated Fund Complex is comprised of 54 investment companies,
whose investment advisers are affiliated with the Funds' Adviser.
As of October xx, 1999, the Trust's Board and Officers as a group owned less
than 1% of the Trust's outstanding Institutional Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings.
<TABLE>
<CAPTION>
NAME
BIRTH DATE AGGREGATE TOTAL COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND FUND
POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST COMPLEX
<S> <C> <C> <C>
JOHN F. DONAHUE*#+ Chief Executive Officer and Director or $0 $0 for the Trust
Birth Date: July 28, Trustee of the Federated Fund Complex; and 54
1924 Chairman and Director, Federated Investors, other investment
Federated Investors Inc.; Chairman and Trustee, Federated companies in the
Tower Investment Management Company; Chairman and Fund Complex
1001 Liberty Avenue Director, Federated Investment Counseling,
Pittsburgh, PA and Federated Global Investment Management
CHAIRMAN AND TRUSTEE Corp.; Chairman, Passport Research, Ltd.
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: February 3, Complex; Director, Member of Executive Trust
1934 Committee, Children's Hospital of Pittsburgh; and 54 other
15 Old Timber Trail Director, Robroy Industries, Inc. (coated investment
Pittsburgh, PA steel conduits/computer storage equipment); companies in the
TRUSTEE formerly: Senior Partner, Ernst & Young LLP; Fund Complex
Director, MED 3000 Group, Inc. (physician
practice management); Director, Member of
Executive Committee, University of Pittsburgh.
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $ $125,264.48 for the
Birth Date: June 23, Complex; President, Investment Properties Trust
1937 Corporation; Senior Vice President, and 54 other
Wood/Commercial Dept. John R. Wood and Associates, Inc., Realtors; investment
John R. Wood Partner or Trustee in private real estate companies in the
Associates, Inc. ventures in Southwest Florida; formerly: Fund Complex
Realtors President, Naples Property Management, Inc.
3255 Tamiami Trail and Northgate Village Development Corporation.
North
Naples, FL
TRUSTEE
JOHN F. CUNNINGHAM Director or Trustee of some of the Federated $ $0 for the Trust
Birth Date: March 5, Fund Complex; Chairman, President and Chief and 40
1943 Executive Officer, Cunningham & Co., Inc. other investment
353 El Brillo Way (strategic business consulting) ; Trustee companies in the
Palm Beach, FL Associate, Boston College; Director, EMC Fund Complex
TRUSTEE Corporation (computer storage systems);
formerly: Director, Redgate Communications.
Previous Positions: Chairman of the Board and
Chief Executive Officer, Computer Consoles,
Inc.; President and Chief Operating Officer,
Wang Laboratories; Director, First National
Bank of Boston; Director, Apollo Computer,
Inc.
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: October 11, Complex; Professor of Medicine, University of Trust
1932 Pittsburgh; Medical Director, University of and 54 other
3471 Fifth Avenue Pittsburgh Medical Center - Downtown; investment
Suite 1111 Hematologist, Oncologist, and Internist, companies in the
Pittsburgh, PA University of Pittsburgh Medical Center; Fund Complex
TRUSTEE Member, National Board of Trustees, Leukemia
Society of America.
PETER E. MADDEN Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: March 16, Complex; formerly: Representative, Trust
1942 Commonwealth of Massachusetts General Court; and 54 other
One Royal Palm Way President, State Street Bank and Trust investment
100 Royal Palm Way Company and State Street Corporation. companies in the
Palm Beach, FL Fund Complex
TRUSTEE Previous Positions: Director, VISA USA and
VISA International; Chairman and Director,
Massachusetts Bankers Association; Director,
Depository Trust Corporation; Director, The
Boston Stock Exchange.
CHARLES F. MANSFIELD, Director or Trustee of some of the Federated $ $0 for the Trust
JR. Fund Complex; Management Consultant. and 43
Birth Date: April 10, other investment
1945 Previous Positions: Chief Executive Officer, companies in the
80 South Road PBTC International Bank; Partner, Arthur Fund Complex
Westhampton Beach, NY Young & Company (now Ernst & Young LLP);
TRUSTEE Chief Financial Officer of Retail Banking
Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice
President, Citibank; Assistant Professor of
Banking and Finance, Frank G. Zarb School of
Business, Hofstra University.
JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $ $113,860.22 for the
J.D., S.J.D. Complex; President, Law Professor, Duquesne Trust
Birth Date: December University; Consulting Partner, Mollica & and54 other
20, 1932 Murray; Director, Michael Baker Corp. investment
President, Duquesne (engineering, construction, operations, and companies in the
University technical services). Fund Complex
Pittsburgh, PA
TRUSTEE Previous Positions: Dean and Professor of
Law, University of Pittsburgh School of Law;
Dean and Professor of Law, Villanova
University School of Law.
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: June 21, Complex; Public Trust
1935 Relations/Marketing/Conference Planning. and 54 other
4905 Bayard Street investment
Pittsburgh, PA Previous Positions: National Spokesperson, companies in the
TRUSTEE Aluminum Company of America; television Fund Complex
producer; business owner.
JOHN S. WALSH Director or Trustee of some of the Federated $ $0 for the Trust
Birth Date: November Fund Complex; President and Director, Heat and 41
28, 1957 Wagon, Inc. (manufacturer of construction other investment
2007 Sherwood Drive temporary heaters); President and Director, companies in the
Valparaiso, IN Manufacturers Products, Inc. (distributor of Fund Complex
TRUSTEE portable construction heaters); President,
Portable Heater Parts, a division of
Manufacturers Products, Inc.; Director, Walsh
& Kelly, Inc. (heavy highway contractor);
formerly: Vice President, Walsh & Kelly, Inc.
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of the $0 $0 for the Trust
Birth Date: April 11, Federated Fund Complex; Director or Trustee and 16
1949 of some of the Funds in the Federated Fund other investment
Federated Investors Complex; President and Director, Federated companies in the
Tower Investors, Inc.; President and Trustee, Fund Complex
1001 Liberty Avenue Federated Investment Management Company;
Pittsburgh, PA President and Director, Federated Investment
PRESIDENT Counseling and Federated Global Investment
Management Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director,
Federated Services Company.
<PAGE>
EDWARD C. GONZALES Trustee or Director of some of the Funds in $0 $0 for the Trust
Birth Date: October the Federated Fund Complex; President, and 1
22, 1930 Executive Vice President and Treasurer of other investment
Federated Investors some of the Funds in the Federated Fund company in the
Tower Complex; Vice Chairman, Federated Investors, Fund Complex
1001 Liberty Avenue Inc.; Vice President, Federated Investment
Pittsburgh, PA Management Company and Federated Investment
EXECUTIVE VICE PRESIDENT Counseling, Federated Global Investment
Management Corp. and Passport Research, Ltd.;
Executive Vice President and Director,
Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.
JOHN W. MCGONIGLE Executive Vice President and Secretary of the $0 $0 for the Trust
Birth Date: October 26, Federated Fund Complex; Executive Vice and 54
1938 President, Secretary, and Director, Federated other investment
Federated Investors Investors, Inc.; Trustee, Federated companies in the
Tower Investment Management Company; Director, Fund Complex
1001 Liberty Avenue Federated Investment Counseling and Federated Pittsburgh, PA
Global Investment Management Corp.; Director, EXECUTIVE VICE Federated Services
Company; Director, PRESIDENT AND SECRETARY Federated Securities Corp.
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; Vice $0 $0 for the Trust
Birth Date: June 17, President - Funds Financial Services and 54
1954 Division, Federated Investors, Inc.; other investment
Federated Investors formerly: various management positions within companies in the
Tower Funds Financial Services Division of Fund Complex
1001 Liberty Avenue Federated Investors, Inc.
Pittsburgh, PA
TREASURER
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the Trust
Birth Date: May 17, 1923 Funds in the Federated Fund Complex; Director and 6
Federated Investors or Trustee of some of the Funds in the other investment
Tower Federated Fund Complex; Executive Vice companies in the
1001 Liberty Avenue President, Federated Investors, Inc.; Fund Complex
Pittsburgh, PA Chairman and Director, Federated Securities
VICE PRESIDENT Corp.
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the Trust
Birth Date: March 3, various other Funds in the Federated Fund and 41
1949 Complex; Executive Vice President, Federated other investment
Federated Investors Investment Counseling, Federated Global companies in the
Tower Investment Management Corp., Federated Fund Complex
1001 Liberty Avenue Investment Management Company and Passport
Pittsburgh, PA Research, Ltd.; Registered Representative,
CHIEF INVESTMENT OFFICER Federated Securities Corp.; Portfolio
Manager, Federated Administrative Services;
Vice President, Federated Investors, Inc.;
formerly: Executive Vice President and Senior
Vice President, Federated Investment
Counseling Institutional Portfolio Management
Services Division; Senior Vice President,
Federated Investment Management Company and
Passport Research, Ltd.
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the Trust
Birth Date: September the Trust. Ms. Cunningham joined Federated and 6
15, 1959 in 1981 and has been a Senior Portfolio other investment
Federated Investors Manager and a Senior Vice President of the companies in the
Tower Funds' Adviser since 1997. Ms. Cunningham Fund Complex
1001 Liberty Avenue served as a Portfolio Manager and a Vice
Pittsburgh, PA President of the Adviser from 1993 until
VICE PRESIDENT 1996. Ms. Cunnin gham is a Chartered
Financial Analyst and received her M.S.B.A.
in Finance from Robert Morris College.
MARY JO OCHSON Mary Jo Ochson is Vice President of the $0 $0 for the Trust
Birth Date: September Trust. Ms. Ochson joined Federated in 1982 and 7
12, 1953 and has been a Senior Portfolio Manager and a other investment
Federated Investors Senior Vice President of the Funds' Adviser companies in the
Tower since 1996. From 1988 through 1995, Ms. Fund Complex
1001 Liberty Avenue Ochson served as a Portfolio Manager and a
Pittsburgh, PA Vice President of the Funds' Adviser. Ms.
VICE PRESIDENT Ochson is a Chartered Financial Analyst and
received her M.B.A. in Finance from the
University of Pittsburgh.
</TABLE>
+ MR. DONAHUE IS THE FATHER OF J. CHRISTOPHER DONAHUE, PRESIDENT OF THE TRUST.
++ MESSRS. CUNNINGHAM, MANSFIELD AND WALSH BECAME MEMBERS OF THE BOARD ON
JANUARY 1, 1999. THEY DID NOT EARN ANY FEES FOR SERVING THE FUND COMPLEX SINCE
THESE FEES ARE REPORTED AS OF THE END OF THE LAST CALENDAR YEAR. THEY DID NOT
RECEIVE ANY FEES AS OF THE FISCAL YEAR END OF THE TRUST.
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Funds.
The Adviser is a wholly owned subsidiary of Federated.
The Adviser shall not be liable to the Trust or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
OTHER RELATED SERVICES
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.
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. 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 may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Funds
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Funds' Board.
RESEARCH SERVICES
Research services 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 may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
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 those 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.
For the fiscal year ended, July 31, 1999, the Funds' Adviser directed brokerage
transactions to certain brokers due to research services they provided. The
total amount of these transactions was $xxxxxx for which the Funds paid $xxxxxx
in brokerage commissions.
On July 31, 1999, the Funds owned securities of the following regular
broker/dealers:
Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When a Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Funds and the account(s) in
a manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Funds. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets of
all Federated Funds as specified below:
MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE FEDERATED
FEE FUNDS
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% 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 voluntarily waive a portion of its fee and may
reimburse the Funds for expenses.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Funds' portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Funds. Foreign instruments purchased by the Funds are
held by foreign banks participating in a network coordinated by State Street
Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pay the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountant for the Funds, Deloitte and Touche LLP, plans
and performs its audit so that it may provide an opinion as to whether the
Funds' financial statements and financial highlights are free of material
misstatement.
<TABLE>
<CAPTION>
FEES PAID BY THE FUNDS FOR SERVICES
ADVISORY FEE
ADVISORY FEE REDUCTION BROKERAGE COMMISSIONS ADMINISTRATIVE FEE
FOR THE YEAR ENDED JULY 31, 1999 1998 1997 1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Government Fund $ $9,364,290 $6,777,523 $ $0 $0 $ $3,531,785 $2,559,413
$ $4,778,285 $3,522,148
- --------------------------------------------------------------------------------------------------------------------
Government Tax-Managed Fund $ $2,869,299 $1,452,990 $ $0 $0 $ $1,082,093 $548,677
$ $1,725,248 $923,964
- --------------------------------------------------------------------------------------------------------------------
Prime Fund $ $14,305,445 $10,030,131 $ $0 $0 $ $5,395,419 $3,787,706
$ $7,090,763 $5,562,429
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Fund $ $5,174,140 $4,284,365 $ $0 $0 $ 1,951,404 $1,617,952
$ $2,661,895 $2,116,877
- --------------------------------------------------------------------------------------------------------------------
Treasury Fund $ $19,318,524 $13,886,919 $ $0 $0 $ $7,285,996 $5,244,250
$ $9,537,113 $6,879,101
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
SHAREHOLDER SERVICES FEE
FOR THE YEAR ENDED JULY 31, 1999
Government Fund $
Government Tax-Managed Fund $
Prime Fund $
Tax-Free Fund $
Treasury Fund $
Fees are allocated among classes based on their pro rata share of Fund assets,
except for shareholder services fees, which are borne only by the applicable
class of Shares.
HOW DO THE FUNDS MEASURE PERFORMANCE?
The Funds may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Funds' or any class of Shares'
expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS AND YIELD
Total returns given for the one-year, five-year or Start of Performance periods
ended July 31, 1999.
Yield, Effective Yield and Tax-Equivalent Yield given for the 7-day period ended
July 31, 1999.
<TABLE>
<CAPTION>
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR MARCH 31, 1990
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % % %
Yield % -- -- --
Effective Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR JUNE 2, 1995
- -----------------------------------------------------------------------------------------------------
GOVERNMENT TAX-MANAGED FUND
- ------------------------------------------------------------------------------------------------------------
Total Return -- % -- %
Yield % -- -- --
Effective Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR MAY 26, 1990
- -----------------------------------------------------------------------------------------------------
PRIME FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % % %
Yield % -- -- --
Effective Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR DECEMBER 12, 1989
- -----------------------------------------------------------------------------------------------------
TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % % %
Yield % -- -- --
Effective Yield % -- -- --
Tax-Equivalent Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR DECEMBER 12, 1989
- -----------------------------------------------------------------------------------------------------
TREASURY FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % % %
Yield % -- -- --
Effective Yield % -- -- --
</TABLE>
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.
The average annual total return for Shares 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 NAV 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, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
YIELD
The yield of Shares is based upon the seven days ending on the day of the
calculation, called the "base period." This yield is calculated 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. The effective yield is calculated by compounding the unannualized
base-period return by: adding one to the base-period return, raising the sum to
the 365/7th power; and subtracting one from the result. The tax-equivalent yield
of Shares is calculated similarly to the yield, but is adjusted to reflect the
taxable yield that Shares would have had to earn to equal the actual yield,
assuming a specific tax rate.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
TAX EQUIVALENCY TABLE
With regard to the Tax-Free Fund, set forth below is a sample of a
tax-equivalency table that may be used in advertising and sales literature. This
table is for illustrative purposes only and is not representative of past or
future performance of the Tax-Free Fund. The interest earned by the municipal
securities owned by the Tax-Free Fund generally remains free from federal
regular income tax and is often free from state and local taxes as well.
However, some of the Tax-Free Fund's income may be subject to the federal
alternative minimum tax and state and/or local taxes.
<TABLE>
<CAPTION>
TAX EQUIVALENCY TABLE
TAXABLE YIELD EQUIVALENT FOR 1999 MULTISTATE MUNICIPAL FUND
<S> <C> <C> <C> <C> <C>
FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60%
Joint Return $1-43,050 $43,051-104,05$104,051-158,550$158,551-283,150 Over
283,150
Single Return $1-25,750 $25,751-62,450$62,451-130,250 $130,251-283,150 Over
283,150
TAX EXEMPT YIELD: TAXABLE YIELD EQUIVALENT:
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
</TABLE>
NOTE:THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN CALCULATING THE
TAXABLE YIELD EQUIVALENT.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
o charts, graphs and illustrations using the Funds' returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and
o information about the mutual fund industry from sources such as the
Investment Company Institute.
The Funds may compare their performance, or performance for the types of
securities in which they invest, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.
The Funds may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete
view of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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 Funds use 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.
BANK RATE MONITOR(C) NATIONAL INDex, 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.
WHO IS FEDERATED INVESTORS, INC.?
Federated is dedicated to meeting investor needs by making structured,
straightforward and consistent investment decisions. Federated investment
products have a history of competitive performance and have gained the
confidence of thousands of financial institutions and individual investors.
Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state-of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.
FEDERATED FUNDS OVERVIEW
MUNICIPAL FUNDS
In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.
EQUITY FUNDS
In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.
CORPORATE BOND FUNDS
In the corporate bond sector, as of December 31, 1998, Federated managed 9 money
market funds and 15 bond funds with assets approximating $22.8 billion and $7.1
billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset backed securities market, a market
totaling more than $209 billion.
GOVERNMENT FUNDS
In the government sector, as of December 31, 1998, Federated manages 9 mortgage
backed, 5 government/agency and 19 government money market mutual funds, with
assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively.
Federated trades approximately $425 million in U.S. government and mortgage
backed securities daily and places approximately $25 billion in repurchase
agreements each day. Federated introduced the first U.S. government fund to
invest in U.S. government bond securities in 1969. Federated has been a major
force in the short- and intermediate-term government markets since 1982 and
currently manages approximately $43.2 billion in government funds within these
maturity ranges.
MONEY MARKET FUNDS
In the money market sector, Federated 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,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated 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 $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.
FEDERATED CLIENTS OVERVIEW
Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:
INSTITUTIONAL CLIENTS
Federated meets the needs of approximately 900 institutional clients nationwide
by managing and servicing separate accounts and mutual funds for a variety of
purposes, 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 advisers. The marketing effort
to these institutional clients is headed by John B. Fisher, President,
Institutional Sales Division, Federated Securities Corp.
BANK MARKETING
Other institutional clients include 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, Broker/Dealer Sales Division, Federated Securities Corp.
FINANCIAL INFORMATION
The Financial Statements for the Funds for the fiscal year ended July 31,
1999 are incorporated herein by reference to the Annual Reports to Shareholders
of the Funds dated July 31, 1999.
<PAGE>
INVESTMENT RATINGS
STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS
A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market
access risks unique to notes.
SP-1--Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a variable rate demand feature. The first rating (long-term rating)
addresses the likelihood of repayment of principal and interest when due, and
the second rating (short-term rating) describes the demand characteristics.
Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the
long-term and the short-term ratings are provided below.)
COMMERCIAL PAPER (CP) RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest-rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
MOODY'S INVESTORS SERVICE, INC., SHORT-TERM MUNICIPAL OBLIGATION RATINGS
Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or
VMIG ratings is to provide investors with a simple system by which the relative
investment qualities of short-term obligations may be evaluated.
MIG1--This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated broad
based access to the market for refinancing.
MIG2--This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. In this case, two ratings are usually assigned, (for example,
Aaa/VMIG-1); the first representing an evaluation of the degree of risk
associated with scheduled principal and interest payments, and the second
representing an evaluation of the degree of risk associated with the demand
feature. The VMIG rating can be assigned a 1 or 2 designation using the same
definitions described above for the MIG rating.
<PAGE>
COMMERCIAL PAPER (CP) RATINGS
P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structure with moderate reliance on debt
and ample asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
LONG-TERM DEBT RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
NR--Indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's with respect to short-term indebtedness.
However, management considers them to be of comparable quality to securities
rated A-1 or P-1.
NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AAA by S&P or Aaa by Moody's.
NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AA by S&P or Aa by Moody's.
NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
A by S&P or Moody's.
FITCH INVESTORS SERVICE, L.P. SHORT-TERM DEBT RATING DEFINITIONS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment, only slightly less in degree than issues rated
F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.
<PAGE>
57
ADDRESSES
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund
Government Obligations Tax-Managed Fund
Prime Obligations Fund
Tax-Free Obligations Fund
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 Investment Management Company
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
Deloitte & Touche LLP
225 Franklin Street
Boston, MA 02110-2812
PROSPECTUS
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund
Government Obligations Tax-Managed Fund
Prime Obligations Fund
Tax-Free Obligations Fund
Treasury Obligations Fund
INSTITUTIONAL SERVICE SHARES
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
CONTENTS
Risk/Return Summary
What are the Funds' Fees and Expenses?
What are Each Fund's Investment Strategies?
What are the Principal Securities in Which the Funds Invest?
What are the Specific Risks of Investing in the Funds?
What do Shares Cost?
How are the Funds Sold?
How to Purchase Shares
How to Redeem Shares
Account and Share Information
Who Manages the Funds?
Financial Information
Report of Independent Public Accountants
october 31, 1999
<PAGE>
RISK/RETURN SUMMARY
WHAT IS EACH FUND'S INVESTMENT OBJECTIVE?
Each Fund is a money market fund that seeks to maintain a stable net asset value
of $1.00 per Share.
FUND OBJECTIVE
Government Obligations Fund To provide current income consistent with stability
of (Government Fund) principal.
Government Obligations Tax-Managed Fund To provide current income consistent
with stability of (Government Tax-Managed Fund) principal and liquidity.
Prime Obligations Fund To provide current income consistent with stability of
(Prime Fund) principal.
Tax-Free Obligations Fund To provide dividend income exempt from federal regular
(Tax-Free Fund) income consistent with stability of prinicpal.
Treasury Obligations Fund To provide current income consistent with stability of
(Treasury Fund) principal.
While there is no assurance that a Fund will achieve its investment objective,
it endeavors to do so by following the strategies and policies described in this
prospectus.
WHAT ARE EACH FUND'S MAIN INVESTMENT STRATEGIES?
Each of the Funds invests in a portfolio of securities maturing in 397 days
or less. The portfolio of each Fund will have a dollar-weighted maturity of 90
days or less.
GOVERNMENT FUND
The Government Fund invests primarily in U.S. Treasury and government agency
securities. These investments include repurchase agreements collateralized
fully by U.S. Treasury and government agency securities.
GOVERNMENT TAX-MANAGED FUND
The Government Tax-Managed Fund invests primarily in U.S. Treasury and
government agency securities that pay interest exempt from state personal income
tax.
PRIME FUND
The Prime Fund invests primarily in high quality fixed income securities.
TAX-FREE FUND
The Tax-Free Fund invests primarily in tax exempt securities. At least 80% of
the Tax-Free Fund's annual interest income will be exempt from federal regular
income tax. Interest from the Fund's investments may be subject to the federal
alternative minimum tax for individuals and corporations (AMT).
TREASURY FUND
The Treasury Fund invests primarily in U.S. Treasury securities maturing in
397 days or less. These investments include repurchase agreements collateralized
fully by U.S. Treasury securities.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
All mutual funds take investment risks. Therefore, even though the Funds are
money market funds that seek to maintain a stable net asset value, it is
possible to lose money by investing in a Fund. 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.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - GOVERNMENT FUND
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Government Fund's Institutional Service Shares as of
the calendar year-end for each of four years.
The `y' axis reflects the "% Total Return" beginning with "4.80%" and increasing
in increments of 0.10% up to 5.70%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Service Shares start of business
through the calendar year ended December 31, 1998. The light gray shaded chart
features four distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Service Shares for each calendar year is stated directly at the
top of each respective bar, for the calendar years 1995 through 1998. The
percentages noted are: 5.67%, 5.10%, 5.27% and 5.19%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Service
Shares total returns on a calendar year-end basis.
The Fund's Institutional Service Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Service Shares total return for the nine-month period
from January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Service
Shares highest quarterly return was 1.43% (quarter ended June 30, 1995). Its
lowest quarterly return was 1.19% (quarter ended December 31, 1998).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - GOVERNMENT FUND
The following table represents the Fund's Institutional Service Shares Average
Annual Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.19%
Start of 5.23%
Performance1
1 The Fund's Institutional Service Shares start of performance date was
August 1, 1994.
The Fund's Institutional Service Shares 7-Day Net Yield as of December 31,
1998 was 4.66%. Investors may call the Fund at 1-800-341-7400 to acquire the
current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - GOVERNMENT TAX-MANAGED FUND
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Government Tax-Managed Fund's Institutional Service
Shares as of the calendar year-end for each of three years.
The `y' axis reflects the "% Total Return" beginning with "4.95%" and increasing
in increments of 0.05% up to 5.20%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Service Shares start of business
through the calendar year ended December 31, 1998. The light gray shaded chart
features three distinct vertical bars, each shaded in charcoal, and each
visually representing by height the total return percentages for the calendar
year stated directly at its base. The calculated total return percentage for the
Fund's Institutional Service Shares for each calendar year is stated directly at
the top of each respective bar, for the calendar years 1996 through 1998. The
percentages noted are: 5.03%, 5.18% and 5.11%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Service
Shares total returns on a calendar year-end basis.
The Fund's Institutional Service Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Service Shares total return for the nine-month period
from January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Service
Shares highest quarterly return was 1.30% (quarter ended December 31, 1997). Its
lowest quarterly
return was 1.19% (quarter ended December 31, 1998).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - GOVERNMENT TAX-MANAGED FUND
The following table represents the Fund's Institutional Service Shares Average
Annual Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.11%
Start of 5.18%
Performance1
1 The Fund's Institutional Service Shares start of performance date was May 30,
1995.
The Fund's Institutional Service Shares 7-Day Net Yield as of December 31,
1998 was 4.69%. Investors may call the Fund at 1-800-341-7400 to acquire the
current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - PRIME FUND
The graphic presentation displayed here consists of a bar chart
representing the annual total returns of the Prime Fund's Institutional Service
Shares as of the calendar year-end for each of four years.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and increasing
in increments of 1.00% up to 10.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Service Shares start of business
through the calendar year ended December 31, 1998. The light gray shaded chart
features four distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Service Shares for each calendar year is stated directly at the
top of each respective bar, for the calendar years 1995 through 1998. The
percentages noted are: 5.72%, 5.14%, 5.30% and 5.26%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Service
Shares total returns on a calendar year-end basis.
The Fund's Institutional Service Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Service Shares total return for the nine-month period
from January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Service
Shares highest quarterly return was 1.44% (quarter ended June 30, 1995). Its
lowest quarterly return was 1.24% (quarter ended December 31, 1998).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - PRIME FUND
The following table represents the Fund's Institutional Service Shares Average
Annual Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.26%
Start of 5.28%
Performance1
1 The Fund's Institutional Service Shares start of performance date was
July 5, 1994.
The Fund's Institutional Service Shares 7-Day Net Yield as of December 31,
1998 was 4.82%. Investors may call the Fund at 1-800-341-7400 to acquire the
current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - TAX-FREE FUND
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Tax-Free Fund's Institutional Service Shares as of
the calendar year-end for each of four years.
The `y' axis reflects the "% Total Return" beginning with "2.80%" and increasing
in increments of 0.10% up to 3.60%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Service Shares start of business
through the calendar year ended December 31, 1998. The light gray shaded chart
features four distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Service Shares for each calendar year is stated directly at the
top of each respective bar, for the calendar years 1995 through 1998. The
percentages noted are: 3.59%, 3.13%, 3.30% and 3.12%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Service
Shares total returns on a calendar year-end basis.
The Fund's Institutional Service Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Service Shares total return for the nine-month period
from January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Service
Shares highest quarterly return was 0.94% (quarter ended June 30, 1995). Its
lowest quarterly return was 0.73% (quarter ended March 31, 1997).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - TAX-FREE FUND
The following table represents the Fund's Institutional Service Shares Average
Annual Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 3.12%
Start of 3.25%
Performance1
1 The Fund's Institutional Service Shares start of performance date was July 5,
1994.
The Fund's Institutional Service Shares 7-Day Net Yield as of December 31,
1998 was 3.33%. Investors may call the Fund at 1-800-341-7400 to acquire the
current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
RISK/RETURN BAR CHART AND TABLE - TREASURY FUND
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Treasury Fund's Institutional Service Shares as of
the calendar year-end for each of four years.
The `y' axis reflects the "% Total Return" beginning with "4.70%" and increasing
in increments of 0.10% up to 5.70%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Service Shares start of business
through the calendar year ended December 31, 1998. The light gray shaded chart
features four distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Service Shares for each calendar year is stated directly at the
top of each respective bar, for the calendar years 1995 through 1998. The
percentages noted are: 5.63%, 5.05%, 5.21% and 5.11%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Service
Shares total
returns on a calendar year-end basis.
The Fund's Institutional Service Shares are not sold subject to a sales charge
(load). The total returns displayed above are based upon net asset value.
The Fund's Institutional Service Shares total return for the nine-month period
from January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Service
Shares highest quarterly return was 1.42% (quarter ended June 30, 1995). Its
lowest quarterly return was 1.15% (quarter ended December 31, 1998).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE - TREASURY FUND
The following table represents the Fund's Institutional Service Shares Average
Annual Total Returns for the calendar periods ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD SHARES
1 Year 5.11%
Start of 5.17%
Performance1
1 The Fund's Institutional Service Shares start of performance date was July 5,
1994.
The Fund's Institutional Service Shares 7-Day Net Yield as of December 31,
1998 was 4.50%. Investors may call the Fund at 1-800-341-7400 to acquire the
current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
WHAT ARE THE FUNDS' FEES AND EXPENSES?
GOVERNMENT FUND - INSTITUTIONAL SERVICE SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Service Shares of the Government Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waiver)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses 0.35%
Total Annual Fund Operating Expenses 0.80%
1 Although not contractually obligated to do so, the adviser waived certain
amounts.
These are shown below along with the net expenses the Fund ACTUALLY PAID for
the fiscal year ended July 31, 1999.
Total Waiver of Fund Expenses 0.10%
Total Actual Annual Operating Expenses (after waiver) 0.70%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Service Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Service
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's Institutional Service Shares operating
expenses are BEFORE WAIVERS as shown in the table and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Government Fund - Institutional Service $82 $255 $444 $990
Shares
<PAGE>
GOVERNMENT TAX-MANAGED FUND - INSTITUTIONAL SERVICE SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Service Shares of the Government Tax-Managed Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waiver)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses 0.12%
Total Annual Fund Operating Expenses 0.57%
1 Although not contractually obligated to do so, the adviser waived certain amounts.
These are shown below along with the net expenses the Fund ACTUALLY PAID for
the fiscal year ended April 30, 1999.
Total Waiver of Fund Expenses 0.12%
Total Actual Annual Operating Expenses (after waiver) 0.45%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Service Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's institutional Service
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's Institutional Service Shares operating
expenses are BEFORE WAIVERS as shown in the table and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Government Tax-Managed Fund - Institutional $58 $183 $318 $714
Service Shares
<PAGE>
PRIME FUND - INSTITUTIONAL SERVICE SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Service Shares of the Prime Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waiver)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses 0.35%
Total Annual Fund Operating Expenses 0.80%
1 Although not contractually obligated to do so, the adviser waived certain amounts.
These are shown below along with the net expenses the Fund ACTUALLY PAID for
the fiscal year ended April 30, 1999.
Total Waiver of Fund Expenses 0.10%
Total Actual Annual Operating Expenses (after waiver) 0.70%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Service Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's institutional Service
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's Institutional Service Shares operating
expenses are BEFORE WAIVERS as shown in the table and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Prime Fund - Institutional Service Shares $82 $255 $444 $990
<PAGE>
TAX- FREE FUND - INSTITUTIONAL SERVICE SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Tax-Free Fund's Institutional Service Shares.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waiver)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses 0.35%
Total Annual Fund Operating Expenses 0.80%
1 Although not contractually obligated to do so, the adviser waived certain amounts.
These are shown below along with the net expenses the Fund ACTUALLY PAID for
the fiscal year ended April 30, 1999.
Total Waiver of Fund Expenses 0.10%
Total Annual Operating Expenses (after waiver) 0.70%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Service Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's institutional Service
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's Institutional Service Shares operating
expenses are BEFORE WAIVERS as shown in the table and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Tax-Free Fund - Institutional Service Shares $82 $255 $444 $990
<PAGE>
TREASURY FUND - INSTITUTIONAL SERVICE SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Service Shares of the Treasury Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waiver)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses 0.10%
Total Annual Fund Operating Expenses 0.55%
1 Although not contractually obligated to do so, the adviser waived certain amounts.
These are shown below along with the net expenses the Fund ACTUALLY PAID for
the fiscal year ended April 30, 1999.
Total Waiver of Fund Expenses 0.10%
Total Actual Annual Operating Expenses (after waiver) 0.45%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Service Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's institutional Service
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's Institutional Service Shares operating
expenses are BEFORE WAIVERS as shown in the table and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Treasury Fund - Institutional Service Shares
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$56 $176 $307 $689
WHAT ARE EACH FUND'S INVESTMENT STRATEGIES?
Each Fund's investment strategy is described earlier under "What are Each Fund's
Main Investment Strategies?" Following is additional information on the
investment strategies for the Funds.
The Adviser for each of the Funds targets a dollar-weighted average portfolio
maturity range based upon its interest rate outlook. The Adviser formulates its
interest rate outlook by analyzing a variety of factors, such as:
o current U.S. economic activity and the economic outlook,
o current short-term interest rates,
o the Federal Reserve Board's policies regarding short-term interest rates, and
o the potential effects of foreign economic activity on U.S. short term interest
rates.
The Adviser generally shortens the portfolio's dollar-weighted average maturity
when it expects interest rates to rise and extends the maturity when it expects
interest rates to fall. The Adviser selects securities used to shorten or extend
the portfolio's dollar-weighted average maturity by comparing the returns
currently offered by different investments to their historical and expected
returns.
PRIME FUND AND TAX-FREE FUND
The Adviser performs a fundamental credit analysis to develop an approved list
of issuers and securities that meet the Adviser's standard for minimal credit
risk. The Adviser monitors the credit risks of all portfolio securities on an
ongoing basis by reviewing periodic financial data and ratings of nationally
recognized rating services.
TAX-FREE FUND
In targeting a dollar-weighted average portfolio maturity range, the Adviser
also will consider the tax exempt securities available. In addition, the Adviser
may invest in securities subject to AMT in an attempt to further enhance yield
and provide diversification.
INDUSTRY CONCENTRATION
The Prime Fund may invest 25% or more of its assets in commercial paper issued
by finance companies.
TEMPORARY DEFENSIVE INVESTMENTS
The Tax-Free Fund may temporarily depart from its principal investment
strategies by investing its assets in securities subject to federal income tax.
It may do this to minimize potential losses and maintain liquidity to meet
shareholder redemptions during adverse market conditions. This may cause the
Fund to receive and distribute taxable income to investors.
WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUNDS INVEST?
GOVERNMENT FUND
The Government Fund invests primarily in Fixed Income Securities, including
U.S. Treasury Securities, Agency Securities and Repurchase Agreements.
GOVERNMENT TAX-MANAGED FUND
The Government Tax-Managed Fund invests primarily in Fixed Income
Securities, including U.S. Treasury Securities and Agency Securities.
PRIME FUND
The Prime Fund invests primarily in Fixed Income Securities, including
Corporate Debt Securities, Commercial Paper, Demand Instruments, Bank
Instruments, Asset Backed Securities and Repurchase Agreements. Certain of
these Fixed Income Securities may be subject to Credit Enhancement.
TAX-FREE FUND
The Tax-Free Fund invests primarily in Tax Exempt Securities, a type of Fixed
Income Security, including Variable Rate Demand Instruments and Municipal
Notes. Certain of these Tax Exempt Securities may be subject to Credit
Enhancement.
TREASURY FUND
The Treasury Fund invests primarily in Fixed Income Securities, including
U.S. Treasury Securities and Repurchase Agreements.
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time.
U.S. TREASURY SECURITIES
U.S. Treasury Securities are direct obligations of the federal government
of the United States.
AGENCY SECURITIES
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have
not explicit financial support, but are regarded as having implied support
because the federal government sponsors their activities.
CORPORATE DEBT SECURITIES
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Funds may also purchase interests in bank loans
to companies. The credit risks of corporate debt securities vary widely among
issuers.
COMMERCIAL PAPER
Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or bank loans) to repay maturing paper. If
the issuer cannot continue to obtain liquidity in this fashion, its
commercial paper may default.
DEMAND INSTRUMENTS
Demand instruments are corporate debt securities that the issuer must
repay upon demand. Other demand instruments require a third party, such
as a dealer or bank, to repurchase the security for its face value upon
demand. The Funds treats demand instruments as short-term securities,
even though their stated maturity may extend beyond one year.
BANK INSTRUMENTS
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S. dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.
ASSET BACKED SECURITIES
Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial debts
with maturities of less than ten years. However, almost any type of fixed
income assets (including other fixed income securities) may be used to create
an asset backed security. Asset backed securities may take the form of
commercial paper, notes, or pass through certificates.
TAX EXEMPT SECURITIES
Tax exempt securities are fixed income securities that pay interest that is
not subject to regular federal income taxes. Typically, states, counties,
cities and other political subdivisions and authorities issue tax exempt
securities. The market categorizes tax exempt securities by their source of
repayment.
VARIABLE RATE DEMAND INSTRUMENTS
Variable rate demand instruments are tax exempt securities that require
the issuer or a third party, such as a dealer or bank, to repurchase the
security for its face value upon demand. The securities also pay
interest at a variable rate intended to cause the securities to trade at
their face value. The Funds treat demand instruments as short-term
securities, because their variable interest rate adjusts in response to
changes in market rates, even though their stated maturity may extend
beyond thirteen months.
MUNICIPAL NOTES
Municipal notes are short-term tax exempt securities. Many
municipalities issue such notes to fund their current operations before
collecting taxes or other municipal revenues. Municipalities may also
issue notes to fund capital projects prior to issuing long-term bonds.
The issuers typically repay the notes at the end of their fiscal year,
either with taxes, other revenues or proceeds from newly issued notes or
bonds.
CREDIT ENHANCEMENT
Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security if the issuer defaults. In some cases
the company providing credit enhancement makes all payments directly to the
security holders and receives reimbursement from the issuer. Normally, the
credit enhancer has greater financial resources and liquidity than the issuer.
For this reason, the Adviser usually evaluates the credit risk of a fixed
income security based solely upon its credit enhancement.
Common types of credit enhancement include guarantees, letters of credit, bond
insurance and surety bonds. Credit enhancement also includes arrangements
where securities or other liquid assets secure payment of a fixed income
security. If a default occurs, these assets may be sold and the proceeds paid
to security's holders. Either form of credit enhancement reduces credit risks
by providing another source of payment for a fixed income security.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which a Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest
rate on the underlying security. A Fund will enter into repurchase agreements
only with banks and other recognized financial institutions, such as
securities dealers, deemed creditworthy by the Adviser.
Repurchase agreements are subject to credit risks.
INVESTMENT RATINGS
The money market instruments in which the Prime Fund and the Tax-Free Fund
invest must be rated in the highest short-term rating category by one or more
nationally recognized statistical rating organizations or be of comparable
quality to securities having such ratings.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUNDS?
Each of the Funds is subject to Interest Rate Risks. In addition, certain
of the Funds may be subject to other risks, as described below
GOVERNMENT FUND
The Government Fund is subject to Credit Risk.
GOVERNMENT TAX-MANAGED FUND
The Government Tax-Managed Fund is subject to Credit Risk and Sector Risk.
PRIME FUND
The Prime Fund is subject to Credit Risk and Sector Risk.
TREASURY FUND
The Treasury Fund is subject to Credit Risk.
INTERESTS RATE RISKS
Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as demand
for particular fixed income securities, may cause the price of certain fixed
income securities to fall while the prices of other securities rise or remain
unchanged.
Interest rate changes have a greater effect on the price of fixed income
securities with longer maturities. Money market funds try to minimize this risk
by purchasing short-term securities.
CREDIT RISKS
PRIME FUND AND TAX-FREE FUND
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a Fund
will lose money. Money market funds try to minimize this risk by purchasing
higher quality securities.
Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, a Fund must rely entirely on the Adviser's credit
assessment.
GOVERNMENT FUND, PRIME FUND AND TREASURY FUND
Credit risk includes the possibility that a party to a transaction involving a
Fund will fail to meet its obligations. This could cause a Fund to lose the
benefit of the transaction or prevent a Fund from selling or buying other
securities to implement its investment strategy.
SECTOR RISKS
A substantial part of the Prime Fund's portfolio may be comprised of securities
issued by finance companies or companies with similar characteristics. In
addition, a substantial part of the Prime Fund's and the Tax-Free Fund's
portfolio may be comprised of securities credit enhanced by banks or companies
with similar characteristics. As a result, the Prime Fund and Tax-Free Fund will
be more susceptible to any economic, business, political or other developments
which generally affect these entities.
WHAT DO SHARES COST?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. The Funds attempt to stabilize the net asset value (NAV) of their Shares
at $1.00 by valuing the portfolio securities using the amortized cost method. A
Fund cannot guarantee that its NAV will always remain at $1.00 per Share. The
Funds do not charge a front-end sales charge. The NAV of the Tax-Free Fund is
determined at 12:00 noon and 3:00 p.m. (Eastern time) and as of the end of
regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The
NAV of the Government Tax-Managed Fund is determined at 1:00 p.m. (Eastern time)
and as of the end of regular trading (normally 4:00 p.m. Eastern time) each day
the NYSE is open. The NAV of the Government Fund, the Prime Fund and the
Treasury Fund is determined at 5:00 p.m. (Eastern time) each day the NYSE is
open.
The required minimum initial investment for each Fund is $1,000,000. There is no
required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $1,000,000 minimum
is reached within one year. An institutional investor's minimum investment is
calculated by combining all accounts it maintains with the Fund. Accounts
established through investment professionals may be subject to a smaller minimum
investment amount. Keep in mind that investment professionals may charge you
fees for their services in connection with your Share transactions.
HOW ARE THE FUNDS SOLD?
The Funds offer two share classes: Institutional Shares and Institutional
Service Shares, each representing interests in a single portfolio of securities.
The Treasury Fund also offers a third share class: Institutional Capital Shares.
This prospectus relates only to Institutional Shares. Each share class has
different expenses, which affect their performance. Contact your investment
professional or call 1-800-341-7400 for more information concerning the other
classes.
The Funds' Distributor, Federated Securities Corp., markets the Shares described
in this prospectus to financial institutions, financial intermediaries,
institutional investors or individuals, directly or through investment
professionals. The Tax-Free Fund may not be a suitable investment for retirement
plans because it invests in municipal securities.
The Distributor and its affiliates may pay out of their assets other
amounts (including items of material value) to investment professionals for
marketing and servicing Shares. The Distributor is a subsidiary of Federated
Investors, Inc. (Federated).
HOW TO PURCHASE SHARES
You may purchase Shares through an investment professional or directly from the
Funds. The Funds reserve the right to reject any request to purchase Shares.
THROUGH AN INVESTMENT PROFESSIONAL
o Establish an account with the investment professional; and
o Submit your purchase order for Shares of the Government Tax-Managed Fund to
the investment professional before 2:00 p.m. (Eastern time). You will receive
that day's dividend if the investment professional forwards the order to the
Fund and the Fund receives payment by 2:00 p.m. (Eastern time). You will
become the owner of Shares and receive dividends when the Fund receives your
payment.
o Submit your purchase order for Shares of the Tax-Free Fund to the investment
professional before 3:00 p.m. (Eastern time). You will receive that day's
dividend if the investment professional forwards the order to the Fund and
the Fund receives payment by 3:00 p.m. (Eastern time). You will become the
owner of Shares and receive dividends when the Fund receives your payment.
o Submit your purchase order for Shares of the Government Fund, the Prime Fund
and the Treasury Fund to the investment professional before 5:00 p.m.
(Eastern time). You will receive that day's dividend if the investment
professional forwards the order to the Fund and the Fund receives payment by
5:00 p.m. (Eastern time). You will become the owner of Shares and receive
dividends when the Fund receives your payment.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUNDS
o Establish your account with a Fund by submitting a completed New Account
Form; and
o Send your payment to the Fund by Federal Reserve wire or check.
You will become the owner of Shares after the Fund receives your wire or your
check. If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its transfer agent incurs.
An institution may establish an account and place an order by calling the Fund
and will become a shareholder after the Fund receives the order.
BY WIRE Send your wire to:
State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
BY CHECK
Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds). 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.
BY INVEST-BY-PHONE
Once you establish an account, you may use the Funds' Invest-By-Phone privilege
for future Share purchases if you have an account with a bank that is an
Automated Clearinghouse member. To apply, call the Funds for an authorization
form. You may use Invest-By-Phone to purchase Shares approximately two weeks
from the date you file the form with Federated Shareholder Services Company.
HOW TO REDEEM SHARES
You should redeem Shares:
o through an investment professional if you purchased Shares through an
investment professional; or
o directly from a Fund if you purchased Shares directly from the Fund.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). Investment
professionals are responsible for promptly submitting redemption requests and
providing proper written redemption instructions as outlined below.
DIRECTLY FROM THE FUNDS
BY TELEPHONE
You may redeem Shares by calling a Fund once you have completed the appropriate
authorization form for telephone transactions. If you call before 12:00 noon
(Eastern time) with respect to the Tax-Free Fund, 2:00 p.m. (Eastern time) with
respect to the Government Tax-Managed Fund and 5:00 p.m. (Eastern time) with
respect to the Government Fund, the Prime Fund and the Treasury Fund, your
redemption will be wired to you the same day. You will not receive that day's
dividend.
If you call after 12:00 noon (Eastern time) with respect to the Tax-Free Fund,
after 2:00 p.m. (Eastern time) with respect to the Government Tax-Managed Fund
and after 5:00 p.m. (Eastern time) with respect to the Government Fund, the
Prime Fund and the Treasury Fund, your redemption will be wired to you the
following business day. You will receive that day's dividend. With respect to
the Tax-Free Fund and the Government Tax-Managed Fund, under limited
circumstances, arrangements may be made with the Distributor for same-day
payment of redemption proceeds, without that day's dividend, for redemption
requests received before 12:00 noon (Eastern time) and 2:00 p.m.
(Eastern time), respectively.
BY MAIL
You may redeem Shares by mailing a written request to a Fund.
Your redemption request will be processed on the day the Fund receives your
written request in proper form. Dividends are paid up to and including the day
that a redemption request is processed.
Send requests by mail to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317 All requests must include:
o Fund Name and Share Class, account number and account registration;
o amount to be redeemed; and
o signatures of all shareholders exactly as registered.
Call your investment professional or the Funds if you need special instructions.
SIGNATURE GUARANTEES Signatures must be guaranteed if:
o your redemption will be sent to an address other than the address of
record;
o your redemption will be sent to an address of record that was changed
within the last 30 days; or
o a redemption is payable to someone other than the shareholder(s) of record.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
o an electronic transfer to your account at a financial institution that
is an ACH member; or
o wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.
REDEMPTION IN KIND
Although each Fund intend to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day
after receiving a request in proper form. Payment may be delayed up to seven
days:
o to allow your purchase to clear;
o during periods of market volatility; or
o when a shareholder's trade activity or amount adversely impacts a
Fund's ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to the Fund.
ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS
The Funds will record your telephone instructions. If a Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
SHARE CERTIFICATES
The Funds no longer issue share certificates. If you are redeeming Shares
represented by certificates previously issued by a Fund, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.
ACCOUNT AND SHARE INFORMATION
ACCOUNT ACTIVITY
You will receive periodic statements reporting all account activity, including
dividends and capital gains paid.
DIVIDENDS AND CAPITAL GAINS
The Funds declare any dividends daily and pay them monthly to shareholders. If
you purchase Shares by wire, you begin earning dividends on the day your wire is
received. If you purchase Shares by check, you begin earning dividends on the
business day after a Fund receives your check. In either case, you earn
dividends through the day your redemption request is received.
The Funds do 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 Funds pay any capital gains at least annually. Your dividends and
capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.
TAX INFORMATION
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Funds. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.
Fund distributions are expected to be primarily dividends. Redemptions are
taxable sales. Please consult your tax adviser regarding your federal, state,
and local tax liability.
The Tax-Free Fund sends an annual statement of your account activity to assist
you in completing your federal, state and local tax returns. It is anticipated
that Fund distributions will be primarily dividends that are exempt from federal
income tax, although a portion of the Fund's dividends may not be exempt.
Dividends may be subject to state and local taxes. Capital gains and non-exempt
dividends are taxable whether paid in cash or reinvested in the Fund.
Redemptions are taxable sales. Please consult your tax adviser regarding your
federal, state and local tax liability.
WHO MANAGES THE FUNDS?
The Board of Trustees governs the Funds. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the Funds'
assets, including buying and selling portfolio securities. The Adviser's address
is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Adviser and other subsidiaries of Federated advise approximately 175 mutual
funds and separate accounts, which totaled approximately $111 billion in assets
as of December 31, 1998. Federated was established in 1955 and is one of the
largest mutual fund investment managers in the United States with approximately
1,900 employees.
More than 4,000 investment professionals make Federated Funds available to their
customers.
ADVISORY FEES
The Adviser receives an annual investment advisory fee of 0.20% of each
Fund's average daily net assets. The Adviser may voluntarily waive a portion of
its fee or reimburse the Funds for certain operating expenses.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds, that rely on computers.
While it is impossible to determine in advance all of the risks to the Funds,
the Funds could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Funds' service providers are making changes to their computer systems
to fix any Year 2000 problems. In addition, they are working to gather
information from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Funds' investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Funds
may purchase. The financial impact of these issues for the Funds is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Funds.
<PAGE>
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The Financial Highlights will help you understand each Fund's financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.
This information has been audited by Deloitte & Touche LLP, whose report, along
with each Fund's audited financial statements, is included in the Annual Report.
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund
Government Obligations Tax-Managed Fund
Prime Obligations Fund
Tax-Free Obligations Fund
Treasury Obligations Fund
INSTITUTIONAL SERVICE SHARES
A Statement of Additional Information (SAI) dated October 31, 999, is
incorporated by reference into this prospectus. Additional information about the
Funds and their investments is contained in the Funds' SAI, Annual and
Semi-Annual Reports to shareholders as they become available. The Annual Reports
discuss market conditions and investment strategies that significantly affected
the Funds' performance during their last fiscal year. To obtain the SAI, the
Annual Report, the Semi-Annual Report and other information without charge, and
make inquiries, call your investment professional or the Funds at
1-800-341-7400.
You can obtain information about the Funds (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.
INVESTMENT COMPANY ACT FILE NO. 811-5950
CUSIP 60934N807
CUSIP 60934N849
CUSIP 60934N708
CUSIP 60934N880
CUSIP 60934N872
G02705-02 (10/99)
STATEMENT OF ADDITIONAL INFORMATION
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund (Government Fund)
Government Obligations Tax-Managed Fund (Government Tax-Managed Fund)
Prime Obligations Fund (Prime Fund)
Tax-Free Obligations Fund (Tax-Free Fund)
Treasury Obligations Fund (Treasury Fund)
INSTITUTIONAL SERVICE SHARES
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Institutional Service Shares of the
Funds, dated October 31, 1999. This SAI incorporates by reference the Funds'
Annual Reports. Obtain the prospectus or the Annual Reports without charge by
calling 1-800-341-7400.
october 31, 1999
CONTENTS
How are the Funds Organized?
Securities in Which the Funds Invest
What do Shares Cost?
How are the Funds Sold?
Subaccounting Services
Redemption in Kind
Massachusetts Partnership Law
Account and Share Information
Tax Information
Who Manages and Provides Services to the Funds?
How Do the Funds Measure Performance?
Who is Federated Investors, Inc.?
Financial Information
Investment Ratings
Addresses
CUSIP 60934N807
CUSIP 60934N849
CUSIP 60934N708
CUSIP 60934N880
CUSIP 60934N872
G02705-04 (10/99)
<PAGE>
HOW ARE THE FUNDS ORGANIZED?
Each Fund is a diversified portfolio of Money Market Obligations Trust (Trust).
The Trust is an open-end, management investment company that was established
under the laws of the Commonwealth of Massachusetts on October 3, 1988. The
Trust may offer separate series of shares representing interests in separate
portfolios of securities.
The Board of Trustees (the Board) has established two classes of shares of the
Funds, known as Institutional Shares and Institutional Service Shares (Shares).
The Treasury Fund also offers a third share class: Institutional Capital Shares.
This SAI relates to Institutional Service Shares. The Funds' investment adviser
is Federated Investment Management Company (Adviser). Effective March 31, 1999,
Federated Management, former Adviser to the Funds (except the Government
Tax-Managed Fund) and Federated Administrative Services, former Adviser to the
Government Tax-Managed Fund, became Federated Investment Management Company
(formerly, Federated Advisers).
SECURITIES IN WHICH THE FUNDS INVEST
In pursuing its investment strategy, a Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
In pursuing its investment strategy, a Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
SECURITIES DESCRIPTIONS AND TECHNIQUES
The Funds' principal securities are described in the prospectus. In pursuing
their investment strategies, the Funds may invest in such securities, or the
securities described below, for any purpose that is consistent with their
investment objectives.
SPECIAL TRANSACTIONS
DELAYED DELIVERY TRANSACTIONS
Delayed delivery transactions, including when issued transactions, are
arrangements in which a Fund buys securities for a set price, with payment and
delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by a Fund to the issuer
and no interest accrues to a Fund. A Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into
these transactions so that the market values of the securities bought may vary
from the purchase prices. Therefore, delayed delivery transactions create
interest rate risks for a Fund. Delayed delivery transactions also involve
credit risks in the event of a counterparty default.
SECURITIES LENDING
A Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, a Fund receives cash or liquid securities from the
borrower as collateral. The borrower must furnish additional collateral if the
market value of the loaned securities increases. Also, the borrower must pay a
Fund the equivalent of any dividends or interest received on the loaned
securities.
A Fund will reinvest cash collateral in securities that qualify as an
acceptable investment for a Fund. However, a Fund must pay interest to the
borrower for the use of cash collateral.
Loans are subject to termination at the option of a Fund or the borrower. A
Fund will not have the right to vote on securities while they are on loan, but
it will terminate a loan in anticipation of any important vote. A Fund may pay
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker.
The Prime Fund has no present intention to engage in securities lending.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
special transactions, a Fund will either own the underlying assets, enter into
an offsetting transaction or set aside readily marketable securities with a
value that equals or exceeds the Fund's obligations. Unless a Fund has other
readily marketable assets to set aside, it cannot trade assets used to secure
such obligations without entering into an offsetting derivative contract or
terminating a special transaction. This may cause a Fund to miss favorable
trading opportunities or to realize losses on derivative contracts or special
transactions.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Funds may invest their assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash.
In addition, a Fund may invest in the securities to the extent described below.
PRIME FUND
MUNICIPAL SECURITIES
Municipal securities are issued by states, counties, cities and other
political subdivisions and authorities. Although many municipal securities are
exempt from federal income tax, the Fund may invest in taxable municipal
securities.
INSURANCE CONTRACTS
Insurance contracts include guaranteed investment contracts, funding
agreements and annuities. The Fund treats these contracts as fixed income
securities.
FOREIGN SECURITIES
Foreign securities are securities of issuers based outside the United States.
The Fund considers an issuer to be based outside the United States if:
o it is organized under the laws of, or has a principal office located
in, another country;
o the principal trading market for its securities is in another country;
or
o it (or its subsidiaries) derived in its most current fiscal year at
least 50% of its total assets, capitalization, gross revenue or profit
from goods produced, services performed, or sales made in another
country.
Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type,
foreign securities are subject to currency risks and risks of foreign
investing.
The Prime Fund also may invest in U.S. Treasury securities and agency
securities, which are described in the prospectus.
TAX-FREE FUND
GENERAL OBLIGATION BONDS
General obligation bonds are supported by the issuer's power to exact property
or other taxes. The issuer must impose and collect taxes sufficient to pay
principal and interest on the bonds. However, the issuer's authority to impose
additional taxes may be limited by its charter or state law.
SPECIAL REVENUE BONDS
Special revenue bonds are payable solely from specific revenues received by
the issuer such as specific taxes, assessments, tolls, or fees. Bondholders
may not collect from the municipality's general taxes or revenues. For
example, a municipality may issue bonds to build a toll road, and pledge the
tolls to repay the bonds. Therefore, a shortfall in the tolls normally would
result in a default on the bonds.
PRIVATE ACTIVITY BONDS
Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new factory
to improve its local economy. The municipality would lend the proceeds from
its bonds to the company using the factory, and the company would agree to
make loan payments sufficient to repay the bonds. The bonds would be payable
solely from the company's loan payments, not from any other revenues of the
municipality. Therefore, any default on the loan normally would result in a
default on the bonds.
The interest on many types of private activity bonds is subject to the
federal alternative minimum tax (AMT). The Fund may invest in bonds subject to
AMT.
MUNICIPAL LEASES
Municipalities may enter into leases for equipment or facilities. In order to
comply with state public financing laws, these leases are typically subject to
annual appropriation. In other words, a municipality may end a lease, without
penalty, by not providing for the lease payments in its annual budget. After
the lease ends, the lessor can resell the equipment or facility but may lose
money on the sale.
The Fund may invest in securities supported by pools of municipal leases. The
most common type of lease backed securities are certificates of participation
(COPs). However, the Fund may also invest directly in individual leases.
TEMPORARY DEFENSIVE INVESTMENTS
The Tax-Free Fund may make temporary defensive investments in the following
taxable securities, which are described in the prospectus or herein: U.S.
Treasury securities, agency securities, bank instruments, corporate debt
securities, commercial paper, repurchase agreements and reverse repurchase
agreements.
GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, PRIME FUND AND TREASURY FUND
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred to
as a coupon payment). Investors buy zero coupon securities at a price below
the amount payable at maturity. The difference between the purchase price and
the amount paid at maturity represents interest on the zero coupon security.
Investors must wait until maturity to receive interest and principal, which
increases the market and credit risks of a zero coupon security.
There are many forms of zero coupon securities. Some are issued at a discount
and are referred to as zero coupon or capital appreciation bonds.
GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, PRIME FUND AND TAX-FREE FUND
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are repurchase agreements in which the Fund is
the seller (rather than the buyer) of the securities, and agrees to repurchase
them at an agreed upon time and price. A reverse repurchase agreement may be
viewed as a type of borrowing by the Fund. Reverse repurchase agreements are
subject to credit risks. In addition, reverse repurchase agreements create
leverage risks because the Fund must repurchase the underlying security at a
higher price, regardless of the market value of the security at the time of
repurchase.
INVESTMENT RATINGS
The Prime Fund and the Tax-Free Fund invest in money market instruments that are
either rated in the two highest short-term rating categories or the three
highest long-term rating categories by one or more nationally recognized
statistical rating organizations or are of comparable quality to securities
having such ratings.
INVESTMENT RISKS
There are many factors which may affect an investment in the Funds. The
Funds' principal risks are described in its prospectus. Additional risk factors
are outlined below.
GOVERNMENT FUND, GOVERNMENT TAX-MANAGED FUND, PRIME FUND AND TAX-FREE FUND
LEVERAGE RISKS
Leverage risk is creatd when an investment exposes the Funds to a level of
risk that exceeds the amount invested. Changes in the value of such an
investment magnify the Fund's risk of loss and potential for gain.
TAX-FREE FUND
TAX RISKS
In order to be tax exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest
received and distributed by the Fund to shareholders to be taxable.
Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.
PRIME FUND
CURRENCY RISKS
Exchange rates for currencies fluctuate daily. The combination of currency
risk and interest rate risks tends to make securities traded in foreign
markets more volatile than securities traded exclusively in the U.S.
RISKS OF FOREIGN INVESTING
Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the U.S. Securities in foreign
markets may also be subject to taxation policies that reduce returns for U.S.
investors.
FUNDAMENTAL INVESTMENT OBJECTIVES AND POLICIES
FUND OBJECTIVE
Government Fund To provide current income
consistent with stability of
principal.
Government Tax-Managed Fund To provide current
income consistent with stability of
principal and liquidity.
Prime Fund To provide current income
consistent with stability of
principal.
Tax-Free Fund To provide dividend income
exempt from federal regular income
consistent with stability of
prinicpal.
Treasury Fund To provide current income consistent with stability of principal.
The investment objective of each Fund may not be changed by the Fund's Trustees
without shareholder approval.
As a matter of investment policy which cannot be changed without shareholder
approval, at least 80% of the Tax-Free Fund's annual interest income will be
exempt from federal regular income tax.
INVESTMENT LIMITATIONS
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, a
Fund will not purchase securities of any one issuer (other than cash; cash
items; securities issued or guaranteed by the government of the U.S. 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
securities of that issuer, or the Fund would own more than 10% of the
outstanding voting securities of that issuer.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
A Fund may borrow money, directly or indirectly, and issue senior securities to
the maximum extent permitted under the 1940 Act.
INVESTING IN REAL ESTATE
A Fund may not purchase or sell real estate, provided that this restriction does
not prevent the Fund from investing in issuers which invest, deal, or otherwise
engage in transactions in real estate or interests therein, or investing in
securities that are secured by real estate or interests therein. A Fund may
exercise its rights under agreements relating to such securities, including the
right to enforce security interests and to hold real estate acquired by reason
of such enforcement until that real estate can be liquidated in an orderly
manner.
INVESTING IN COMMODITIES
A Fund may not purchase or sell physical commodities, provided that the Fund may
purchase securities of companies that deal in commodities. For purposes of this
limitation, the Funds do not consider financial futures contracts to be
commodities.
UNDERWRITING
A Fund may not underwrite the securities of other issuers, except that the Fund
may engage in transactions involving the acquisition, disposition or resale of
its portfolio securities, under circumstances where it may be considered to be
an underwriter under the Securities Act of 1933.
LENDING CASH OR SECURITIES
A Fund may not make loans, provided that this restriction does not prevent the
Fund from purchasing debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.
CONCENTRATION OF INVESTMENTS
A Fund (with the exception of the Prime Fund) will not make investments that
will result in the concentration of its investments in the securities of issuers
primarily engaged in the same industry. Government securities, municipal
securities and bank instruments will not be deemed to constitute an industry. To
conform to the current view of the SEC that only domestic bank instruments may
be excluded from industry concentration limitations, as a matter of
non-fundamental policy, a Fund will not exclude foreign bank instruments from
industry concentration limits as long as the policy of the SEC remains in
effect. As a non-fundamental operating policy, a Fund will consider
concentration to be the investment of more than 25% of the value of its total
assets in any one industry.
The Prime Fund will not make investments that will result in the concentration
of its investments in the securities of issuers primarily engaged in the same
industry, except that the Prime Fund may invest 25% or more of the value of its
total assets in the commercial paper issued by finance companies. Government
securities, municipal securities and bank instruments will not be deemed to
constitute an industry. To conform to the current view of the SEC that only
domestic bank instruments may be excluded from industry concentration
limitations, as a matter of non-fundamental policy, the Prime Fund will not
exclude foreign bank instruments from industry concentration limits as long as
the policy of the SEC remains in effect.
THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD OF
TRUSTEES AND BY THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING SECURITIES,"
AS DEFINED BY THE INVESTMENT COMPANY ACT. THE FOLLOWING LIMITATIONS, HOWEVER,
MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE
NOTIFIED BEFORE ANY MATERIAL CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.
PLEDGING ASSETS
A Fund will not mortgage, pledge, or hypothecate any of its assets, provided
that this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
BUYING ON MARGIN
A Fund will not purchase securities on margin, provided that a Fund may obtain
short-term credits necessary for the clearance of purchases and sales of
securities.
INVESTING IN ILLIQUID SECURITIES
A Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits maturing
in more than seven days, if immediately after and as a result, the value of such
securities would exceed, in the aggregate, 10% of a Fund's net assets.
For purposes of the above limitations, the Funds consider 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.
For purposes of the concentration limitation, (a) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (b)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (c) asset-backed
securities will be classified according to the underlying assets securing such
securities.
REGULATORY COMPLIANCE
The Funds may follow non-fundamental operational policies that are more
restrictive than their 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 Funds will comply
with the various requirements of Rule 2a-7 (the Rule), which regulates money
market mutual funds. The Funds will determine the effective maturity of their
investments according to the Rule. The Funds may change these operational
policies to reflect changes in the laws and regulations without the approval of
their shareholders.
DETERMINING MARKET VALUE OF SECURITIES
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
Funds 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 Funds' use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in the Rule. 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 each
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.
WHAT DO SHARES COST?
Each Fund's net asset value (NAV) per Share fluctuates and is based on the
market value of all securities and other assets of the Fund. The NAV for each
class of Shares may differ due to the variance in daily net income realized by
each class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.
HOW ARE THE FUNDS SOLD?
Under the Distributor's Contract with the Funds, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
SHAREHOLDER SERVICES
The Funds may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of a Fund's assets).
The Distributor and/or Federated Shareholder Services Company may be reimbursed
by the Adviser or its affiliates.
Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Funds or other
special events at recreational-type facilities, or items of material value.
These payments will be based upon the amount of Shares the investment
professional sells or may sell and/or upon the type and nature of sales or
marketing support furnished by the investment professional.
In addition, the Distributor may pay investment professionals 0.25% of the
purchase price of $1 million or more of Shares that its customer has not
redeemed over the first year.
SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity 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 that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
REDEMPTION IN KIND
Although the Funds intend to pay Share redemptions in cash, they reserve the
right, as described below, to pay the redemption price in whole or in part by a
distribution of a Fund's portfolio securities.
Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Funds are obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Funds' Board determines that payment should be in kind. In such a
case, the Funds will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Funds determine their NAV.
The portfolio securities will be selected in a manner that the Funds' Board
deems fair and equitable and, to the extent available, such securities will be
readily marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
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.
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.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each Share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund or
class, only Shares of that Fund or class are entitled to vote.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of a Trust's outstanding shares of
all series entitled to vote.
As of October xx, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Institutional Service Shares of
the Funds: (To be filed by amendment.)
Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
TAX INFORMATION
FEDERAL INCOME TAX
Each Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.
Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Trust is comprised of six
funds and the Federated Fund Complex is comprised of 54 investment companies,
whose investment advisers are affiliated with the Funds' Adviser.
As of October xx, 1999, the Trust's Board and Officers as a group owned less
than 1% of the Trust's outstanding Institutional Service Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings.
<TABLE>
<CAPTION>
NAME
BIRTH DATE AGGREGATE TOTAL COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND FUND
POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST COMPLEX
<S> <C> <C> <C>
JOHN F. DONAHUE*#+ Chief Executive Officer and Director or $0 $0 for the Trust
Birth Date: July 28, Trustee of the Federated Fund Complex; and 54
1924 Chairman and Director, Federated Investors, other investment
Federated Investors Inc.; Chairman and Trustee, Federated companies in the
Tower Investment Management Company; Chairman and Fund Complex
1001 Liberty Avenue Director, Federated Investment Counseling,
Pittsburgh, PA and Federated Global Investment Management
CHAIRMAN AND TRUSTEE Corp.; Chairman, Passport Research, Ltd.
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: February 3, Complex; Director, Member of Executive Trust
1934 Committee, Children's Hospital of Pittsburgh; and 54 other
15 Old Timber Trail Director, Robroy Industries, Inc. (coated investment
Pittsburgh, PA steel conduits/computer storage equipment); companies in the
TRUSTEE formerly: Senior Partner, Ernst & Young LLP; Fund Complex
Director, MED 3000 Group, Inc. (physician
practice management); Director, Member of
Executive Committee, University of Pittsburgh.
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $ $125,264.48 for the
Birth Date: June 23, Complex; President, Investment Properties Trust
1937 Corporation; Senior Vice President, and 54 other
Wood/Commercial Dept. John R. Wood and Associates, Inc., Realtors; investment
John R. Wood Partner or Trustee in private real estate companies in the
Associates, Inc. ventures in Southwest Florida; formerly: Fund Complex
Realtors President, Naples Property Management, Inc.
3255 Tamiami Trail and Northgate Village Development Corporation.
North
Naples, FL
TRUSTEE
JOHN F. CUNNINGHAM Director or Trustee of some of the Federated $ $0 for the Trust
Birth Date: March 5, Fund Complex; Chairman, President and Chief and 40
1943 Executive Officer, Cunningham & Co., Inc. other investment
353 El Brillo Way (strategic business consulting) ; Trustee companies in the
Palm Beach, FL Associate, Boston College; Director, EMC Fund Complex
TRUSTEE Corporation (computer storage systems);
formerly: Director, Redgate Communications.
Previous Positions: Chairman of the Board and
Chief Executive Officer, Computer Consoles,
Inc.; President and Chief Operating Officer,
Wang Laboratories; Director, First National
Bank of Boston; Director, Apollo Computer,
Inc.
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: October 11, Complex; Professor of Medicine, University of Trust
1932 Pittsburgh; Medical Director, University of and 54 other
3471 Fifth Avenue Pittsburgh Medical Center - Downtown; investment
Suite 1111 Hematologist, Oncologist, and Internist, companies in the
Pittsburgh, PA University of Pittsburgh Medical Center; Fund Complex
TRUSTEE Member, National Board of Trustees, Leukemia
Society of America.
PETER E. MADDEN Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: March 16, Complex; formerly: Representative, Trust
1942 Commonwealth of Massachusetts General Court; and 54 other
One Royal Palm Way President, State Street Bank and Trust investment
100 Royal Palm Way Company and State Street Corporation. companies in the
Palm Beach, FL Fund Complex
TRUSTEE Previous Positions: Director, VISA USA and
VISA International; Chairman and Director,
Massachusetts Bankers Association; Director,
Depository Trust Corporation; Director, The
Boston Stock Exchange.
CHARLES F. MANSFIELD, Director or Trustee of some of the Federated $ $0 for the Trust
JR. Fund Complex; Management Consultant. and 43
Birth Date: April 10, other investment
1945 Previous Positions: Chief Executive Officer, companies in the
80 South Road PBTC International Bank; Partner, Arthur Fund Complex
Westhampton Beach, NY Young & Company (now Ernst & Young LLP);
TRUSTEE Chief Financial Officer of Retail Banking
Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice
President, Citibank; Assistant Professor of
Banking and Finance, Frank G. Zarb School of
Business, Hofstra University.
JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $ $113,860.22 for the
J.D., S.J.D. Complex; President, Law Professor, Duquesne Trust
Birth Date: December University; Consulting Partner, Mollica & and 54 other
20, 1932 Murray; Director, Michael Baker Corp. investment
President, Duquesne (engineering, construction, operations, and companies in the
University technical services). Fund Complex
Pittsburgh, PA
TRUSTEE Previous Positions: Dean and Professor of
Law, University of Pittsburgh School of Law;
Dean and Professor of Law, Villanova
University School of Law.
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: June 21, Complex; Public Trust
1935 Relations/Marketing/Conference Planning. and 54 other
4905 Bayard Street investment
Pittsburgh, PA Previous Positions: National Spokesperson, companies in the
TRUSTEE Aluminum Company of America; television Fund Complex
producer; business owner.
JOHN S. WALSH Director or Trustee of some of the Federated $ $0 for the Trust
Birth Date: November Fund Complex; President and Director, Heat and 41
28, 1957 Wagon, Inc. (manufacturer of construction other investment
2007 Sherwood Drive temporary heaters); President and Director, companies in the
Valparaiso, IN Manufacturers Products, Inc. (distributor of Fund Complex
TRUSTEE portable construction heaters); President,
Portable Heater Parts, a division of
Manufacturers Products, Inc.; Director, Walsh
& Kelly, Inc. (heavy highway contractor);
formerly: Vice President, Walsh & Kelly, Inc.
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of the $0 $0 for the Trust
Birth Date: April 11, Federated Fund Complex; Director or Trustee and 16
1949 of some of the Funds in the Federated Fund other investment
Federated Investors Complex; President and Director, Federated companies in the
Tower Investors, Inc.; President and Trustee, Fund Complex
1001 Liberty Avenue Federated Investment Management Company;
Pittsburgh, PA President and Director, Federated Investment
PRESIDENT Counseling and Federated Global Investment
Management Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director,
Federated Services Company.
<PAGE>
EDWARD C. GONZALES Trustee or Director of some of the Funds in $0 $0 for the Trust
Birth Date: October the Federated Fund Complex; President, and 1
22, 1930 Executive Vice President and Treasurer of other investment
Federated Investors some of the Funds in the Federated Fund company in the Fund
Tower Complex; Vice Chairman, Federated Investors, Complex
1001 Liberty Avenue Inc.; Vice President, Federated Investment
Pittsburgh, PA Management Company and Federated Investment
EXECUTIVE VICE PRESIDENT Counseling, Federated Global Investment
Management Corp. and Passport Research, Ltd.;
Executive Vice President and Director,
Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.
JOHN W. MCGONIGLE Executive Vice President and Secretary of the $0 $0 for the Trust
Birth Date: October 26, Federated Fund Complex; Executive Vice and 54
1938 President, Secretary, and Director, Federated other investment
Federated Investors Investors, Inc.; Trustee, Federated companies in the
Tower Investment Management Company; Director, Fund Complex
1001 Liberty Avenue Federated Investment Counseling and Federated Pittsburgh, PA
Global Investment Management Corp.; Director, EXECUTIVE VICE Federated Services
Company; Director, PRESIDENT AND SECRETARY Federated Securities Corp.
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; Vice $0 $0 for the Trust
Birth Date: June 17, President - Funds Financial Services and 54
1954 Division, Federated Investors, Inc.; other investment
Federated Investors formerly: various management positions within companies in the
Tower Funds Financial Services Division of Fund Complex
1001 Liberty Avenue Federated Investors, Inc.
Pittsburgh, PA
TREASURER
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the Trust
Birth Date: May 17, 1923 Funds in the Federated Fund Complex; Director and 6
Federated Investors or Trustee of some of the Funds in the other investment
Tower Federated Fund Complex; Executive Vice companies in the
1001 Liberty Avenue President, Federated Investors, Inc.; Fund Complex
Pittsburgh, PA Chairman and Director, Federated Securities
VICE PRESIDENT Corp.
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the Trust
Birth Date: March 3, various other Funds in the Federated Fund and 41
1949 Complex; Executive Vice President, Federated other investment
Federated Investors Investment Counseling, Federated Global companies in the
Tower Investment Management Corp., Federated Fund Complex
1001 Liberty Avenue Investment Management Company and Passport
Pittsburgh, PA Research, Ltd.; Registered Representative,
CHIEF INVESTMENT OFFICER Federated Securities Corp.; Portfolio
Manager, Federated Administrative Services;
Vice President, Federated Investors, Inc.;
formerly: Executive Vice President and Senior
Vice President, Federated Investment
Counseling Institutional Portfolio Management
Services Division; Senior Vice President,
Federated Investment Management Company and
Passport Research, Ltd.
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the Trust
Birth Date: September the Trust. Ms. Cunningham joined Federated and 6
15, 1959 in 1981 and has been a Senior Portfolio other investment
Federated Investors Manager and a Senior Vice President of the companies in the
Tower Funds' Adviser since 1997. Ms. Cunningham Fund Complex
1001 Liberty Avenue served as a Portfolio Manager and a Vice
Pittsburgh, PA President of the Adviser from 1993 until
VICE PRESIDENT 1996. Ms. Cunnin gham is a Chartered
Financial Analyst and received her M.S.B.A.
in Finance from Robert Morris College.
MARY JO OCHSON Mary Jo Ochson is Vice President of the $0 $0 for the Trust
Birth Date: September Trust. Ms. Ochson joined Federated in 1982 and 7
12, 1953 and has been a Senior Portfolio Manager and a other investment
Federated Investors Senior Vice President of the Funds' Adviser companies
Tower since 1996. From 1988 through 1995, Ms. in the Fund Complex
1001 Liberty Avenue Ochson served as a Portfolio Manager and a
Pittsburgh, PA Vice President of the Funds' Adviser. Ms.
VICE PRESIDENT Ochson is a Chartered Financial Analyst and
received her M.B.A. in Finance from the
University of Pittsburgh.
</TABLE>
+ MR. DONAHUE IS THE FATHER OF J. CHRISTOPHER DONAHUE, PRESIDENT OF THE TRUST.
++ MESSRS. CUNNINGHAM, MANSFIELD AND WALSH BECAME MEMBERS OF THE BOARD ON
JANUARY 1, 1999. THEY DID NOT EARN ANY FEES FOR SERVING THE FUND COMPLEX SINCE
THESE FEES ARE REPORTED AS OF THE END OF THE LAST CALENDAR YEAR. THEY DID NOT
RECEIVE ANY FEES AS OF THE FISCAL YEAR END OF THE TRUST.
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Funds.
The Adviser is a wholly owned subsidiary of Federated.
The Adviser shall not be liable to the Trust or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
OTHER RELATED SERVICES
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.
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. 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 may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Funds
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Funds' Board.
RESEARCH SERVICES
Research services 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 may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
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 those 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.
For the fiscal year ended, July 31, 1999, the Funds' Adviser directed brokerage
transactions to certain brokers due to research services they provided. The
total amount of these transactions was $xxxxxx for which the Fund paid $xxxxxx
in brokerage commissions.
On July 31, 1999, the Funds owned securities of the following regular
broker/dealers:
Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When a Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Funds and the account(s) in
a manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Funds. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets of
all Federated Funds as specified below:
MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE FEDERATED
FEE FUNDS
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% 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 voluntarily waive a portion of its fee and may
reimburse the Funds for expenses.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Funds' portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Funds. Foreign instruments purchased by the Funds are
held by foreign banks participating in a network coordinated by State Street
Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pay the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountant for the Funds, Deloitte & Touche LLP, plans
and performs its audit so that it may provide an opinion as to whether the
Funds' financial statements and financial highlights are free of material
misstatement.
<PAGE>
<TABLE>
<CAPTION>
FEES PAID BY THE FUNDS FOR SERVICES
ADVISORY FEE
ADVISORY FEE REDUCTION BROKERAGE COMMISSIONS ADMINISTRATIVE FEE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED JULY 31, 1999 1998 1997 1999 1998 1997 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------
Government Fund $ $9,364,290 $6,777,523 $ $0 $0 $ $3,531,785 $2,559,413
$ $4,778,285 $3,522,148
- --------------------------------------------------------------------------------------------------------------------
Government Tax-Managed Fund $ $2,869,299 $1,452,990 $ $0 $0 $ $1,082,093 $548,677
$ $1,725,248 $923,964
- --------------------------------------------------------------------------------------------------------------------
Prime Fund $ $14,305,445 $10,030,131 $ $0 $0 $ $5,395,419 $3,787,706
$ $7,090,763 $5,562,429
- --------------------------------------------------------------------------------------------------------------------
Tax-Free Fund $ $5,174,140 $4,284,365 $ $0 $0 $ 1,951,404 $1,617,952
$ $2,661,895 $2,116,877
- --------------------------------------------------------------------------------------------------------------------
Treasury Fund $ $19,318,524 $13,886,919 $ $0 $0 $ $7,285,996 $5,244,250
$ $9,537,113 $6,879,101
- --------------------------------------------------------------------------------------------------------------------
SHAREHOLDER SERVICES FEE
FOR THE YEAR ENDED JULY 31, 1999
Government Fund $
Government Tax-Managed Fund $
Prime Fund $
Tax-Free Fund $
Treasury Fund $
Fees are allocated among classes based on their pro rata share of Fund assets,
except for shareholder services fees, which are borne only by the applicable
class of Shares.
HOW DO THE FUNDS MEASURE PERFORMANCE?
The Funds may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Funds' or any class of Shares'
expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
AVERAGE ANNUAL TOTAL RETURNS AND YIELD
Total returns given for the one-year, five-year or Start of Performance periods
ended July 31, 1999.
Yield, Effective Yield and Tax-Equivalent Yield given for the 7-day period ended
July 31, 1999.
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR AUGUST 1, 1994
- -----------------------------------------------------------------------------------------------------
GOVERNMENT FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % -- %
Yield % -- -- --
Effective Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR MAY 30, 1995
- -----------------------------------------------------------------------------------------------------
GOVERNMENT TAX-MANAGED FUND
- ------------------------------------------------------------------------------------------------------------
Total Return -- % -- %
Yield % -- -- --
Effective Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR JULY 5, 1994
- -----------------------------------------------------------------------------------------------------
PRIME FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % % %
Yield % -- -- --
Effective Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR JULY 5, 1994
- ----------------------------------------------------------------------------------------------
TAX-FREE FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % % %
Yield % -- -- --
Effective Yield % -- -- --
Tax-Equivalent Yield % -- -- --
START OF PERFORMANCE ON
7-DAY PERIOD 1 YEAR 5 YEAR JULY 5, 1994
- ----------------------------------------------------------------------------------------------
TREASURY FUND
- -----------------------------------------------------------------------------------------------------
Total Return -- % % %
Yield % -- -- --
Effective Yield % -- -- --
</TABLE>
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.
The average annual total return for Shares 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 NAV 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, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
YIELD
The yield of Shares is based upon the seven days ending on the day of the
calculation, called the "base period." This yield is calculated 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. The effective yield is calculated by compounding the unannualized
base-period return by: adding one to the base-period return, raising the sum to
the 365/7th power; and subtracting one from the result. The tax-equivalent yield
of Shares is calculated similarly to the yield, but is adjusted to reflect the
taxable yield that Shares would have had to earn to equal the actual yield,
assuming a specific tax rate.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
TAX EQUIVALENCY TABLE
With regard to the Tax-Free Fund, set forth below is a sample of a
tax-equivalency table that may be used in advertising and sales literature. This
table is for illustrative purposes only and is not representative of past or
future performance of the Tax-Free Fund. The interest earned by the municipal
securities owned by the Tax-Free Fund generally remains free from federal
regular income tax and is often free from state and local taxes as well.
However, some of the Tax-Free Fund's income may be subject to the federal
alternative minimum tax and state and/or local taxes.
<TABLE>
<CAPTION>
TAX EQUIVALENCY TABLE
TAXABLE YIELD EQUIVALENT FOR 1999 MULTISTATE MUNICIPAL FUND
<S> <C> <C> <C> <C> <C>
FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60%
Joint Return $1-43,050 $43,051-104,05$104,051-158,550$158,551-283,150 Over
283,150
Single Return $1-25,750 $25,751-62,450$62,451-130,250 $130,251-283,150 Over
283,150
TAX EXEMPT YIELD: TAXABLE YIELD EQUIVALENT:
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%
</TABLE>
NOTE:THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN
CALCULATING THE TAXABLE YIELD EQUIVALENT.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
o charts, graphs and illustrations using the Funds' returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute.
The Funds may compare their performance, or performance for the types of
securities in which they invest, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.
The Funds may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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 Funds use 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.
BANK RATE MONITOR(C) NATIONAL INDex, 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.
WHO IS FEDERATED INVESTORS, INC.?
Federated is dedicated to meeting investor needs by making structured,
straightforward and consistent investment decisions. Federated investment
products have a history of competitive performance and have gained the
confidence of thousands of financial institutions and individual investors.
Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state-of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.
FEDERATED FUNDS OVERVIEW
MUNICIPAL FUNDS
In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.
EQUITY FUNDS
In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.
CORPORATE BOND FUNDS
In the corporate bond sector, as of December 31, 1998, Federated managed 9 money
market funds and 15 bond funds with assets approximating $22.8 billion and $7.1
billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset backed securities market, a market
totaling more than $209 billion.
GOVERNMENT FUNDS
In the government sector, as of December 31, 1998, Federated manages 9 mortgage
backed, 5 government/agency and 19 government money market mutual funds, with
assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively.
Federated trades approximately $425 million in U.S. government and mortgage
backed securities daily and places approximately $25 billion in repurchase
agreements each day. Federated introduced the first U.S. government fund to
invest in U.S. government bond securities in 1969. Federated has been a major
force in the short- and intermediate-term government markets since 1982 and
currently manages approximately $43.2 billion in government funds within these
maturity ranges.
MONEY MARKET FUNDS
In the money market sector, Federated 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,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated 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 $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.
FEDERATED CLIENTS OVERVIEW
Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:
INSTITUTIONAL CLIENTS
Federated meets the needs of approximately 900 institutional clients nationwide
by managing and servicing separate accounts and mutual funds for a variety of
purposes, 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 advisers. The marketing effort
to these institutional clients is headed by John B. Fisher, President,
Institutional Sales Division, Federated Securities Corp.
BANK MARKETING
Other institutional clients include 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, Broker/Dealer Sales Division, Federated Securities Corp.
FINANCIAL INFORMATION
The Financial Statements for the Funds for the fiscal year ended July 31,
1999 are incorporated herein by reference to the Annual Reports to Shareholders
of the Funds
dated July 31, 1999.
<PAGE>
INVESTMENT RATINGS
STANDARD & POOR'S SHORT-TERM MUNICIPAL OBLIGATION RATINGS
A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market
access risks unique to notes.
SP-1--Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a variable rate demand feature. The first rating (long-term rating)
addresses the likelihood of repayment of principal and interest when due, and
the second rating (short-term rating) describes the demand characteristics.
Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the
long-term and the short-term ratings are provided below.)
COMMERCIAL PAPER (CP) RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest-rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
MOODY'S INVESTORS SERVICE, INC., SHORT-TERM MUNICIPAL OBLIGATION RATINGS
Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or
VMIG ratings is to provide investors with a simple system by which the relative
investment qualities of short-term obligations may be evaluated.
MIG1--This designation denotes best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated broad
based access to the market for refinancing.
MIG2--This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
VARIABLE RATE DEMAND NOTES (VRDNS) AND TENDER OPTION BONDS (TOBS) RATINGS
Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. In this case, two ratings are usually assigned, (for example,
Aaa/VMIG-1); the first representing an evaluation of the degree of risk
associated with scheduled principal and interest payments, and the second
representing an evaluation of the degree of risk associated with the demand
feature. The VMIG rating can be assigned a 1 or 2 designation using the same
definitions described above for the MIG rating.
<PAGE>
COMMERCIAL PAPER (CP) RATINGS
P-1--Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structure with moderate reliance on debt
and ample asset protection, broad margins in earning coverage of fixed financial
charges and high internal cash generation, well-established access to a range of
financial markets and assured sources of alternate liquidity.
P-2--Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
LONG-TERM DEBT RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
NR--Indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's with respect to short-term indebtedness.
However, management considers them to be of comparable quality to securities
rated A-1 or P-1.
NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AAA by S&P or Aaa by Moody's.
NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AA by S&P or Aa by Moody's.
NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
A by S&P or Moody's.
FITCH INVESTORS SERVICE, L.P. SHORT-TERM DEBT RATING DEFINITIONS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment, only slightly less in degree than issues rated
F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.
<PAGE>
6
ADDRESSES
MONEY MARKET OBLIGATIONS TRUST
Government Obligations Fund
Government Obligations Tax-Managed Fund
Prime Obligations Fund
Tax-Free Obligations Fund
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 Investment Management Company
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
Deloitte & Touche LLP
225 Franklin Street
Boston, MA 02110-2812
PROSPECTUS
TREASURY OBLIGATIONS FUND
A Portfolio of Money Market Obligations Trust
INSTITUTIONAL CAPITAL SHARES
A money market mutual fund seeking current income consistent with stability
of principal by investing primarily in a portfolio of U.S. Treasury securities
maturing in 397 days or less.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
CONTENTS
Risk/Return Summary
What are the Fund's Fees and Expenses?
What are the Fund's Investment Strategies?
What are the Principal Securities in Which the Fund Invests?
What are the Specific Risks of Investing in the Fund?
What do Shares Cost?
How is the Fund Sold?
How to Purchase Shares
How to Redeem Shares
Account and Share Information
Who Manages the Fund?
Financial Information
Report of Independent Public Accountants
october 31, 1999
<PAGE>
RISK/RETURN SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund that seeks to maintain a stable net asset value
of $1.00 per share. The Fund's investment objective is current income consistent
with stability of principal. While there is no assurance that the Fund will
achieve its investment objective, it endeavors to do so by following the
strategies and policies described in this prospectus. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the strategies and policies described in this prospectus.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund invests primarily in a portfolio of U.S. Treasury securities maturing
in 397 days or less. These investments include repurchase agreements
collateralized fully by U.S. Treasury securities. The dollar-weighted average
maturity of the Fund's portfolio will be 90 days or less.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
All mutual funds take investment risks. Therefore, even though the Fund is a
money market fund that seeks to maintain a stable net asset value, it is
possible to lose money by investing in the Fund. 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.
<PAGE>
RISK/RETURN BAR CHART AND TABLE
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of the Fund's Institutional Capital Shares as of the
calendar year-end for one year.
The `y' axis reflects the "% Total Return" beginning with "0.00%" and increasing
in increments of 1.00% up to 6.00%.
The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Institutional Capital Shares start of business
through the calendar year ended December 31, 1998. The light gray shaded chart
features one distinct vertical bar, shaded in charcoal, and visually
representing by height the total return percentage for the calendar year stated
directly at its base. The calculated total return percentage for the Fund's
Institutional Capital Shares for the calendar year is stated directly at the top
of the bar, for the calendar year 1998. The percentage noted is 5.26%.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Institutional Capital
Shares total return on a calendar year-end basis.
The Fund's Institutional Capital Shares are not sold subject to a sales charge
(load). The total return displayed above is based upon net asset value.
The Fund's Institutional Capital Shares total return for the nine-month period
from January 1, 1999 to September 30, 1999 was xx%.
Within the period shown in the Chart, the Fund's Institutional Capital
Shares highest quarterly return was 1.35% (quarter ended June 30, 1998). Its
lowest quarterly return was 1.19% (quarter ended December 31, 1998).
<PAGE>
AVERAGE ANNUAL TOTAL RETURN TABLE
The following table represents the Fund's Institutional Capital Shares Average
Annual Total Returns for the calendar period ended December 31, 1998.
INSTITUTIONAL
CALENDAR PERIOD CAPITAL
SHARES
1 Year 5.26%
Start of 5.33%
Performance1
1 THE FUND'S INSTITUTIONAL CAPITAL SHARES START OF PERFORMANCE DATE WAS APRIL
14, 1997.
The Fund's Institutional Capital Shares 7-Day Net Yield as of December 31,
1998 was 4.65%. Investors may call the Fund at 1-800-341-7400 to acquire the
current 7-Day Net Yield.
Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
WHAT ARE THE FUND'S FEES AND EXPENSES?
TREASURY OBLIGATIONS FUND - INSTITUTIONAL CAPITAL SHARES
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Capital Shares of the Treasury Obligations Fund.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (Before Waivers)1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 2 0.20%
Distribution (12b-1) Fee None
Shareholder Services Fee 3 0.25%
Other Expenses 0.10%
Total Annual Fund Operating Expenses 0.55%
1 Although not contractually obligated to do so, the adviser and shareholder services
provider waived certain amounts. These are shown below along with the net
expenses the Fund ACTUALLY PAID for the fiscal year ended July 31, 1999.
Total Waiver of Fund Expenses 0.35%
Total Actual Annual Operating Expenses (after waivers) 0.20%
2 The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fee paid by
the Fund (after the voluntary waiver) was 0.10% for the year ended July 31,
1999.
3 The shareholder services fee has been voluntarily waived. This voluntary
waiver can terminate at any time. The shareholder services fee paid by the
Fund's Institutional Shares (after the voluntary waiver) was 0.00% for the
year ended July 31, 1999.
</TABLE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Institutional Capital Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Institutional Capital
Shares for the time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Fund's Institutional Capital Shares operating
expenses are BEFORE WAIVERS as shown in the table and remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Treasury Obligations Fund - Institutional
Capital Shares $56 $176 $307 $689
WHAT ARE THE FUND'S INVESTMENT STRATEGIES?
The Fund invests primarily in a portfolio of U.S. Treasury securities maturing
in 397 days or less. These investments include repurchase agreements
collateralized fully by U.S. Treasury securities. The dollar-weighted average
maturity of the Fund's portfolio will be 90 days or less.
The adviser targets a dollar-weighted average portfolio maturity range based
upon its interest rate outlook. The adviser formulates its interest rate outlook
by analyzing a variety of factors, such as current U.S. economic activity and
the economic outlook; current short-term interest rates; the Federal Reserve
Board's policies regarding short-term interest rates; and the potential effects
of foreign economic activity on U.S. short-term interest rates.
The adviser generally shortens the portfolio's dollar-weighted average maturity
when it expect interest rates to rise and extends the maturity when it expects
interest rates to fall. The adviser selects securities used to shorten or extend
the portfolio's dollar-weighted average maturity by comparing the returns
currently offered by different investments to their historical and expected
returns.
WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?
U.S. TREASURY SECURITIES
U.S. Treasury securities are direct obligations of the federal government
of the United States. U.S. Treasury securities pay interest, dividends or
distributions at a specified rate. The rate may be a fixed percentage of
principal or adjusted periodically. In addition, the U.S Treasury must repay the
principal amount of the security, normally within a specified time.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which a Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest rate
on the underlying security. A Fund will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers, deemed creditworthy by the Adviser.
Repurchase agreements are subject to credit risks.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?
Although there are many factors that may affect an investment in the Fund, the
principal risks of investing in a U.S. Treasury money market fund are described
below.
INTEREST RATE RISKS
Prices of fixed income securities rise and fall in response to changes in the
itnerest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.
Interest rate changes have a greater effect on the price of fixed income
securities with longer maturities. Money market funds try to minimize this risk
by purchasing short-term securities.
CREDIT RISKS
Credit risks includes the possibility that a party to a transaction involving
the Fund will fail to meet its obligations. This could cause the Fund to lose
the benefit of the transaction or prevent the Fund from selling or buying other
securities to implement its investment strategy.
WHAT DO SHARES COST?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. The Fund attempts to stabilize the net asset value (NAV) of its Shares at
$1.00 by valuing the portfolio securities using the amortized cost method. The
Fund cannot guarantee that its NAV will always remain at $1.00 per Share. The
Fund does not charge a front-end sales charge. NAV is determined at 5:00 p.m.
(Eastern time) each day the NYSE is open.
The required minimum initial investment for Fund Shares is $1,000,000. There is
no required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $1,000,000 minimum
is reached within one year. An institutional investor's minimum investment is
calculated by combining all accounts it maintains with the Fund. Accounts
established through investment professionals may be subject to a smaller minimum
investment amount. Keep in mind that investment professionals may charge you
fees for their services in connection with your Share transactions.
HOW IS THE FUND SOLD?
The Fund offers three share classes: Institutional Shares, Institutional Service
Shares and Institutional Capital Shares, each representing interests in a single
portfolio of securities. This prospectus relates only to Institutional Capital
Shares. Each share class has different expenses, which affect their performance.
Contact your investment professional or call 1-800-341-7400 for more information
concerning the other classes.
The Fund's Distributor, Federated Securities Corp., markets the Shares described
in this prospectus to financial institutions, financial intermediaries,
institutional investors or individuals, directly or through investment
professionals.
The Distributor and its affiliates may pay out of their assets other
amounts (including items of material value) to investment professionals for
marketing and servicing Shares. The Distributor is a subsidiary of Federated
Investors, Inc. (Federated).
HOW TO PURCHASE SHARES
You may purchase Shares through an investment professional or directly from the
Fund. The Fund reserves the right to reject any request to purchase Shares.
THROUGH AN INVESTMENT PROFESSIONAL
o Establish an account with the investment professional; and
o Submit your purchase order to the investment professional before 5:00 p.m.
(Eastern time). You will receive that day's dividend if the investment
professional forwards the order to the Fund and the Fund receives payment by
5:00 p.m. (Eastern time). You will become the owner of Shares and receive
dividends when the Fund receives your payment.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUND
o Establish your account with the Fund by submitting a completed New
Account Form; and
o Send your payment to the Fund by Federal Reserve wire or check.
You will become the owner of Shares after the Fund receives your wire or your
check. If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its transfer agent incurs.
An institution may establish an account and place an order by calling the Fund
and will become a shareholder after the Fund receives the order.
BY WIRE Send your wire to:
State Street Bank and Trust Company
Boston, MA
Dollar Amount of Wire
ABA Number 011000028
Attention: EDGEWIRE
Wire Order Number, Dealer Number or Group Number
Nominee/Institution Name
Fund Name and Number and Account Number
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
BY CHECK
Make your check payable to THE FEDERATED FUNDS, note your account number on the
check, and mail it to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
If you send your check by a PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE that
requires a street address, mail it to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third-party checks (checks originally payable to someone other than
you or The Federated Funds). 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.
BY INVEST-BY-PHONE
Once you establish an account, you may use the Fund's Invest-By-Phone privilege
for future Share purchases if you have an account with a bank that is an
Automated Clearinghouse member. To apply, call the Fund for an authorization
form. You may use Invest-By-Phone to purchase Shares approximately two weeks
from the date you file the form with Federated Shareholder Services Company.
HOW TO REDEEM SHARES
You should redeem Shares:
o through an investment professional if you purchased Shares through an
investment professional; or
o directly from the Fund if you purchased Shares directly from the Fund.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). Investment
professionals are responsible for promptly submitting redemption requests and
providing proper written redemption instructions as outlined below.
DIRECTLY FROM THE FUND
BY TELEPHONE
You may redeem Shares by calling the Fund once you have completed the
appropriate authorization form for telephone transactions. If you call before
5:00 p.m. (Eastern time) your redemption will be wired to you the same day. You
will not receive that day's dividend.
If you call after 5:00 p.m. (Eastern time) your redemption will be wired to you
the following business day. You will receive that day's dividend.
BY MAIL
You may redeem Shares by mailing a written request to the Fund.
Your redemption request will be processed on the day the Fund receives your
written request in proper form. Dividends are paid up to and including the day
that a redemption request is processed.
Send requests by mail to:
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
Send requests by PRIVATE COURIER OR OVERNIGHT DELIVERY SERVICE to:
Federated Shareholder Services Company
1099 Hingham Street
Rockland, MA 02370-3317 All requests must include:
o Fund Name and Share Class, account number and account registration;
o amount to be redeemed; and
o signatures of all shareholders exactly as registered.
Call your investment professional or the Funds if you need special instructions.
SIGNATURE GUARANTEES Signatures must be guaranteed if:
o your redemption will be sent to an address other than the address of
record;
o your redemption will be sent to an address of record that was changed
within the last 30 days; or
o a redemption is payable to someone other than the shareholder(s) of
record.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
o an electronic transfer to your account at a financial institution that
is an ACH member; or
o wire payment to your account at a domestic commercial bank that is a
Federal Reserve System member.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day
after receiving a request in proper form. Payment may be delayed up to seven
days:
o to allow your purchase to clear;
o during periods of market volatility; or
o when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.
ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS
The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
SHARE CERTIFICATES
The Fund no longer issues share certificates. If you are redeeming Shares
represented by certificates previously issued by the Fund, you must return the
certificates with your written redemption request. For your protection, send
your certificates by registered or certified mail, but do not endorse them.
ACCOUNT AND SHARE INFORMATION
ACCOUNT ACTIVITY
You will receive periodic statements reporting all account activity, including
dividends and capital gains paid.
DIVIDENDS AND CAPITAL GAINS
The Fund declares any dividends daily and pay them monthly to shareholders. If
you purchase Shares by wire, you begin earning dividends on the day your wire is
received. If you purchase Shares by check, you begin earning dividends on the
business day after the Fund receives your check. In either case, you earn
dividends through the day your redemption request is received.
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 pays any capital gains at least annually. Your dividends and
capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions cause the account balance to fall below the minimum
initial investment amount. Before an account is closed, you will be notified and
allowed 30 days to purchase additional Shares to meet the minimum.
TAX INFORMATION
The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.
Fund distributions are expected to be primarily dividends. Redemptions are
taxable sales. Please consult your tax adviser regarding your federal, state,
and local tax liability.
WHO MANAGES THE FUND?
The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, Federated Investment Management Company. The Adviser manages the Fund's
assets, including buying and selling portfolio securities. The Adviser's address
is Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779.
The Adviser and other subsidiaries of Federated advise approximately 175 mutual
funds and separate accounts, which totaled approximately $111 billion in assets
as of December 31, 1998. Federated was established in 1955 and is one of the
largest mutual fund investment managers in the United States with approximately
1,900 employees.
More than 4,000 investment professionals make Federated Funds available to their
customers.
ADVISORY FEES
The Adviser receives an annual investment advisory fee of 0.20% of the
Fund's average daily net assets. The Adviser may voluntarily waive a portion of
its fee or reimburse the Fund for certain operating expenses.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that rely on computers.
While it is impossible to determine in advance all of the risks to the Fund, the
Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.
The Fund's service providers are making changes to their computer systems
to fix any Year 2000 problems. In addition, they are working to gather
information from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase. The financial impact of these issues for the Fund is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Fund.
<PAGE>
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The Financial Highlights will help you understand the Fund's financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in the Fund, assuming reinvestment of any dividends and capital
gains.
This information has been audited by Deloitte & Touche LLP, whose report, along
with the Fund's audited financial statements, is included in the Annual Report.
TREASURY OBLIGATIONS FUND
A Portfolio of Money Market Obligations Trust
INSTITUTIONAL CAPITAL SHARES
A Statement of Additional Information (SAI) dated October 31, 999, is
incorporated by reference into this prospectus. Additional information about the
Fund and it's investments are contained in the Fund's SAI, Annual and
Semi-Annual Reports to shareholders as they become available. The Annual Report
discusses market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year. To obtain the SAI,
the Annual Report, the Semi-Annual Report and other information without charge,
and make inquiries, call your investment professional or the Fund at
1-800-341-7400.
You can obtain information about the Fund (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.
INVESTMENT COMPANY ACT FILE NO. 811-5950
CUSIP 60934N823
G01353-01 (10/99)
STATEMENT OF ADDITIONAL INFORMATION
TREASURY OBLIGATIONS FUND
A Portfolio of Money Market Obligations Trust
INSTITUTIONAL CAPITAL SHARES
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Institutional Capital Shares of
Treasury Obligations Fund (Fund), dated October 31, 1999. This SAI incorporates
by reference the Fund's Annual Report. Obtain the prospectus or the Annual
Report without charge by calling 1-800-341-7400.
october 31, 1999
CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
What do Shares Cost?
How is the Fund Sold?
Subaccounting Services
Redemption in Kind
Massachusetts Partnership Law
Account and Share Information
Tax Information
Who Manages and Provides Services to the Fund?
How Does the Fund Measure Performance?
Who is Federated Investors, Inc.?
Financial Information
Addresses
CUSIP 60934N823
9110208B (10/99)
<PAGE>
HOW IS THE FUND ORGANIZED?
The Fund is a diversified portfolio of Money Market Obligations Trust (Trust).
The Trust is an open-end, management investment company that was established
under the laws of the Commonwealth of Massachusetts on October 3, 1988. The
Trust may offer separate series of shares representing interests in separate
portfolios of securities.
The Board of Trustees (the Board) has established three classes of shares of the
Fund, known as Institutional Shares, Institutional Service Shares and
Institutional Capital Shares. This SAI relates to Institutional Capital Shares
(Shares). The Fund's investment adviser is Federated Investment Management
Company (Adviser). Effective March 31, 1999, Federated Management, former
Adviser to the Fund, became Federated Investment Management Company (formerly,
Federated Advisers).
SECURITIES IN WHICH THE FUND INVESTS
In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
SECURITIES DESCRIPTIONS AND TECHNIQUES
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund
invests.
TREASURY SECURITIES
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred to
as a coupon payment). Investors buy zero coupon securities at a price below
the amount payable at maturity. The difference between the purchase price and
the amount paid at maturity represents interest on the zero coupon security.
Investors must wait until maturity to receive interest and principal, which
increases the interest rate risks and credit risks of a zero coupon security.
There are many forms of zero coupon securities. Some are issued at a discount
and are referred to as zero coupon or capital appreciation bonds. Others are
created from interest bearing bonds by separating the right to receive the
bond's coupon payments from the right to receive the bond's principal due at
maturity, a process known as coupon stripping. In addition, some securities
give the issuer the option to deliver additional securities in place of cash
interest payments, thereby increasing the amount payable at maturity. These
are referred to as pay-in-kind or PIK securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Funds may invest their assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash.
SPECIAL TRANSACTIONS
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund buys a security from
a dealer or bank and agrees to sell the security back at a mutually agreed
upon time and price. The repurchase price exceeds the sale price, reflecting
the Fund's return on the transaction. This return is unrelated to the interest
rate on the underlying security. The Fund will enter into repurchase
agreements only with banks and other recognized financial institutions, such
as securities dealers, deemed creditworthy by the Adviser. The Fund's
custodian or subcustodian will take possession of the securities subject to
repurchase agreements. The Adviser or subcustodian will monitor the value of
the underlying security each day to ensure that the value of the security
always equals or exceeds the repurchase price. Repurchase agreements are
subject to credit risks.
DELAYED DELIVERY TRANSACTIONS
Delayed delivery transactions, including when issued transactions, are
arrangements in which the Fund buys securities for a set price, with payment
and delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the price
of its shares. Settlement dates may be a month or more after entering into
these transactions so that the market values of the securities bought may vary
from the purchase prices. Therefore, delayed delivery transactions create
interest rate risks for the Fund. Delayed delivery transactions also involve
credit risks in the event of a counterparty default.
SECURITIES LENDING
The Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives cash or liquid securities from the
borrower as collateral. The borrower must furnish additional collateral if the
market value of the loaned securities increases. Also, the borrower must pay
the Fund the equivalent of any dividends or interest received on the loaned
securities. The Fund will reinvest cash collateral in securities that qualify
as an acceptable investment for the Fund. However, the Fund must pay interest
to the borrower for the use of cash collateral. Loans are subject to
termination at the option of the Fund or the borrower. The Fund will not have
the right to vote on securities while they are on loan, but it will terminate
a loan in anticipation of any important vote. The Fund may pay administrative
and custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash collateral to a securities lending agent or
broker. Securities lending activities are subject to interest rate risks and
credit risks.
ASSET COVERAGE
In order to secure its obligations in connection with special transactions,
the Fund will either own the underlying assets, enter into an offsetting
transaction or set aside readily marketable securities with a value that
equals or exceeds the Fund's obligations. Unless the Fund has other readily
marketable assets to set aside, it cannot trade assets used to secure such
obligations without entering into an offsetting transaction or terminating the
special transaction. This may cause the Fund to miss favorable trading
opportunities or to realize losses on special transactions.
INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk factors
are outlined below.
CREDIT RISKS
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the Fund
will lose money.
FUNDAMENTAL INVESTMENT OBJECTIVE
The investment objective of the Fund is current income consistent with stability
of principal. The investment objective may not be changed by the Fund's Trustees
without shareholder approval.
INVESTMENT LIMITATIONS
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 U.S. 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
securities of that issuer, or the Fund would own more than 10% of the
outstanding voting securities of that issuer.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund may borrow money, directly or indirectly, and issue senior securities
to the maximum extent permitted under the 1940 Act.
INVESTING IN REAL ESTATE
The Fund may not purchase or sell real estate, provided that this restriction
does not prevent the Fund from investing in issuers which invest, deal, or
otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
The Fund may exercise its rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be liquidated
in an orderly manner.
INVESTING IN COMMODITIES
The Fund may not purchase or sell physical commodities, provided that the Fund
may purchase securities of companies that deal in commodities. For purposes of
this limitation, the Fund does not consider financial futures contracts to be
commodities.
UNDERWRITING
The Fund may not underwrite the securities of other issuers, except that the
Fund may engage in transactions involving the acquisition, disposition or resale
of its portfolio securities, under circumstances where it may be considered to
be an underwriter under the Securities Act of 1933.
LENDING CASH OR SECURITIES
The Fund may not make loans, provided that this restriction does not prevent the
Fund from purchasing debt obligations, entering into repurchase agreements,
lending its assets to broker/dealers or institutional investors and investing in
loans, including assignments and participation interests.
CONCENTRATION OF INVESTMENTS
The Fund will not make investments that will result in the concentration of its
investments in the securities of issuers primarily engaged in the same industry.
Government securities, municipal securities and bank instruments will not be
deemed to constitute an industry.
INVESTING IN RESTRICTED SECURITIES
The Fund may invest in securities subject to restriction or resale under the
Securities Act of 1933.
THE ABOVE LIMITATIONS CANNOT BE CHANGED UNLESS AUTHORIZED BY THE BOARD OF
TRUSTEES AND BY THE "VOTE OF A MAJORITY OF ITS OUTSTANDING VOTING SECURITIES,"
AS DEFINED BY THE INVESTMENT COMPANY ACT. THE FOLLOWING LIMITATIONS, HOWEVER,
MAY BE CHANGED BY THE BOARD WITHOUT SHAREHOLDER APPROVAL. SHAREHOLDERS WILL BE
NOTIFIED BEFORE ANY MATERIAL CHANGE IN THESE LIMITATIONS BECOMES EFFECTIVE.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any of its assets, provided
that this shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
BUYING ON MARGIN
The Fund will not purchase securities on margin, provided that a Fund may obtain
short-term credits necessary for the clearance of purchases and sales of
securities.
INVESTING IN ILLIQUID SECURITIES
The Fund will not purchase securities for which there is no readily available
market, or enter into repurchase agreements or purchase time deposits maturing
in more than seven days, if immediately after and as a result, the value of such
securities would exceed, in the aggregate, 10% of the Fund's net assets.
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.
For purposes of the concentration limitation, (a) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (b)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (c) asset-backed
securities will be classified according to the underlying assets securing such
securities.
For purposes of the concentration limitation, the Fund will consider
concentration to be the investment of more than 25% of the value of its total
assets in any one industry.
To conform to the current view of the SEC that only domestic bank instruments
may be excluded from industry concentration limitations, as a matter of
non-fundamental policy, the Fund will not exclude foreign bank instruments from
industry concentration limits as long as the policy of the SEC remains in
effect.
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 (the Rule), which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to the Rule. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
DETERMINING MARKET VALUE OF SECURITIES
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 the Rule. 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.
WHAT DO SHARES COST?
The Fund's net asset value (NAV) per Share fluctuates and is based on the market
value of all securities and other assets of the Fund. The NAV for each class of
Shares may differ due to the variance in daily net income realized by each
class. Such variance will reflect only accrued net income to which the
shareholders of a particular class are entitled.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
SHAREHOLDER SERVICES
The Fund may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of the Fund's
assets). The Distributor and/or Federated Shareholder Services Company may be
reimbursed by the Adviser or its affiliates.
Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Fund or other special
events at recreational-type facilities, or items of material value. These
payments will be based upon the amount of Shares the investment professional
sells or may sell and/or upon the type and nature of sales or marketing support
furnished by the investment professional.
In addition, the Distributor may pay investment professionals 0.25% of the
purchase price of $1 million or more of Shares that its customer has not
redeemed over the first year.
SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity 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 that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, they reserve the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Fund is obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
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.
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.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each Share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund or
class, only Shares of that Fund or class are entitled to vote.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of a Trust's outstanding shares of
all series entitled to vote.
As of October xx, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Institutional Capital Shares of
the Fund: (To be filed by amendment.)
Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, it will not receive special tax treatment and will pay federal income tax.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Trust is comprised of six
funds and the Federated Fund Complex is comprised of 54 investment companies,
whose investment advisers are affiliated with the Fund's Adviser.
As of October xx, 1999, the Trust's Board and Officers as a group owned less
than 1% of the Trust's outstanding Institutional Capital Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings.
<PAGE>
<TABLE>
<CAPTION>
NAME
BIRTH DATE AGGREGATE TOTAL COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FROM TRUST AND FUND
POSITION WITH TRUST FOR PAST FIVE YEARS FROM TRUST COMPLEX
<S> <C> <C> <C>
JOHN F. DONAHUE*#+ Chief Executive Officer and Director or $0 $0 for the Trust
Birth Date: July 28, Trustee of the Federated Fund Complex; and 54
1924 Chairman and Director, Federated Investors, other investment
Federated Investors Inc.; Chairman and Trustee, Federated companies in the
Tower Investment Management Company; Chairman and Fund Complex
1001 Liberty Avenue Director, Federated Investment Counseling,
Pittsburgh, PA and Federated Global Investment Management
CHAIRMAN AND TRUSTEE Corp.; Chairman, Passport Research, Ltd.
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: February 3, Complex; Director, Member of Executive Trust
1934 Committee, Children's Hospital of Pittsburgh; and 54 other
15 Old Timber Trail Director, Robroy Industries, Inc. (coated investment
Pittsburgh, PA steel conduits/computer storage equipment); companies in the
TRUSTEE formerly: Senior Partner, Ernst & Young LLP; Fund Complex
Director, MED 3000 Group, Inc. (physician
practice management); Director, Member of
Executive Committee, University of Pittsburgh.
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $ $125,264.48 for the
Birth Date: June 23, Complex; President, Investment Properties Trust
1937 Corporation; Senior Vice President, and 54 other
Wood/Commercial Dept. John R. Wood and Associates, Inc., Realtors; investment
John R. Wood Partner or Trustee in private real estate companies in the
Associates, Inc. ventures in Southwest Florida; formerly: Fund Complex
Realtors President, Naples Property Management, Inc.
3255 Tamiami Trail and Northgate Village Development Corporation.
North
Naples, FL
TRUSTEE
JOHN F. CUNNINGHAM Director or Trustee of some of the Federated $ $0 for the Trust
Birth Date: March 5, Fund Complex; Chairman, President and Chief and 40
1943 Executive Officer, Cunningham & Co., Inc. other investment
353 El Brillo Way (strategic business consulting) ; Trustee companies in the
Palm Beach, FL Associate, Boston College; Director, EMC Fund Complex
TRUSTEE Corporation (computer storage systems);
formerly: Director, Redgate Communications.
Previous Positions: Chairman of the Board and
Chief Executive Officer, Computer Consoles,
Inc.; President and Chief Operating Officer,
Wang Laboratories; Director, First National
Bank of Boston; Director, Apollo Computer,
Inc.
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: October 11, Complex; Professor of Medicine, University of Trust
1932 Pittsburgh; Medical Director, University of and 54 other
3471 Fifth Avenue Pittsburgh Medical Center - Downtown; investment
Suite 1111 Hematologist, Oncologist, and Internist, companies in the
Pittsburgh, PA University of Pittsburgh Medical Center; Fund Complex
TRUSTEE Member, National Board of Trustees, Leukemia
Society of America.
PETER E. MADDEN Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: March 16, Complex; formerly: Representative, Trust
1942 Commonwealth of Massachusetts General Court; and 54 other
One Royal Palm Way President, State Street Bank and Trust investment
100 Royal Palm Way Company and State Street Corporation. companies in the
Palm Beach, FL Fund Complex
TRUSTEE Previous Positions: Director, VISA USA and
VISA International; Chairman and Director,
Massachusetts Bankers Association; Director,
Depository Trust Corporation; Director, The
Boston Stock Exchange.
CHARLES F. MANSFIELD, Director or Trustee of some of the Federated $ $0 for the Trust
JR. Fund Complex; Management Consultant. and 43
Birth Date: April 10, other investment
1945 Previous Positions: Chief Executive Officer, companies in the
80 South Road PBTC International Bank; Partner, Arthur Fund Complex
Westhampton Beach, NY Young & Company (now Ernst & Young LLP);
TRUSTEE Chief Financial Officer of Retail Banking
Sector, Chase Manhattan Bank; Senior Vice
President, Marine Midland Bank; Vice
President, Citibank; Assistant Professor of
Banking and Finance, Frank G. Zarb School of
Business, Hofstra University.
JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $ $113,860.22 for the
J.D., S.J.D. Complex; President, Law Professor, Duquesne Trust
Birth Date: December University; Consulting Partner, Mollica & and 54 other
20, 1932 Murray; Director, Michael Baker Corp. investment
President, Duquesne (engineering, construction, operations, and companies in the
University technical services). Fund Complex
Pittsburgh, PA
TRUSTEE Previous Positions: Dean and Professor of
Law, University of Pittsburgh School of Law;
Dean and Professor of Law, Villanova
University School of Law.
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $ $113,860.22 for the
Birth Date: June 21, Complex; Public Trust
1935 Relations/Marketing/Conference Planning. and 54 other
4905 Bayard Street investment
Pittsburgh, PA Previous Positions: National Spokesperson, companies in the
TRUSTEE Aluminum Company of America; television Fund Complex
producer; business owner.
JOHN S. WALSH Director or Trustee of some of the Federated $ $0 for the Trust
Birth Date: November Fund Complex; President and Director, Heat and 41
28, 1957 Wagon, Inc. (manufacturer of construction other investment
2007 Sherwood Drive temporary heaters); President and Director, companies in the
Valparaiso, IN Manufacturers Products, Inc. (distributor of Fund Complex
TRUSTEE portable construction heaters); President,
Portable Heater Parts, a division of
Manufacturers Products, Inc.; Director, Walsh
& Kelly, Inc. (heavy highway contractor);
formerly: Vice President, Walsh & Kelly, Inc.
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of the $0 $0 for the Trust
Birth Date: April 11, Federated Fund Complex; Director or Trustee and 16
1949 of some of the Funds in the Federated Fund other investment
Federated Investors Complex; President and Director, Federated companies in the
Tower Investors, Inc.; President and Trustee, Fund Complex
1001 Liberty Avenue Federated Investment Management Company;
Pittsburgh, PA President and Director, Federated Investment
PRESIDENT Counseling and Federated Global Investment
Management Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director,
Federated Services Company.
<PAGE>
EDWARD C. GONZALES Trustee or Director of some of the Funds in $0 $0 for the Trust
Birth Date: October the Federated Fund Complex; President, and 1
22, 1930 Executive Vice President and Treasurer of other investment
Federated Investors some of the Funds in the Federated Fund company in the Fund
Tower Complex; Vice Chairman, Federated Investors, Complex
1001 Liberty Avenue Inc.; Vice President, Federated Investment
Pittsburgh, PA Management Company and Federated Investment
EXECUTIVE VICE PRESIDENT Counseling, Federated Global Investment
Management Corp. and Passport Research, Ltd.;
Executive Vice President and Director,
Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.
JOHN W. MCGONIGLE Executive Vice President and Secretary of the $0 $0 for the Trust
Birth Date: October 26, Federated Fund Complex; Executive Vice and 54
1938 President, Secretary, and Director, Federated other investment
Federated Investors Investors, Inc.; Trustee, Federated companies in the
Tower Investment Management Company; Director, Fund Complex
1001 Liberty Avenue Federated Investment Counseling and Federated Pittsburgh, PA
Global Investment Management Corp.; Director, EXECUTIVE VICE Federated Services
Company; Director, PRESIDENT AND SECRETARY Federated Securities Corp.
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; Vice $0 $0 for the Trust
Birth Date: June 17, President - Funds Financial Services and 54
1954 Division, Federated Investors, Inc.; other investment
Federated Investors formerly: various management positions within companies in the
Tower Funds Financial Services Division of Fund Complex
1001 Liberty Avenue Federated Investors, Inc.
Pittsburgh, PA
TREASURER
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the Trust
Birth Date: May 17, 1923 Funds in the Federated Fund Complex; Director and 6
Federated Investors or Trustee of some of the Funds in the other investment
Tower Federated Fund Complex; Executive Vice companies in the
1001 Liberty Avenue President, Federated Investors, Inc.; Fund Complex
Pittsburgh, PA Chairman and Director, Federated Securities
VICE PRESIDENT Corp.
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the Trust
Birth Date: March 3, various other Funds in the Federated Fund and 41
1949 Complex; Executive Vice President, Federated other investment
Federated Investors Investment Counseling, Federated Global companies in the
Tower Investment Management Corp., Federated Fund Complex
1001 Liberty Avenue Investment Management Company and Passport
Pittsburgh, PA Research, Ltd.; Registered Representative,
CHIEF INVESTMENT OFFICER Federated Securities Corp.; Portfolio
Manager, Federated Administrative Services;
Vice President, Federated Investors, Inc.;
formerly: Executive Vice President and Senior
Vice President, Federated Investment
Counseling Institutional Portfolio Management
Services Division; Senior Vice President,
Federated Investment Management Company and
Passport Research, Ltd.
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the Trust
Birth Date: September the Trust. Ms. Cunningham joined Federated and 6
15, 1959 in 1981 and has been a Senior Portfolio other investment
Federated Investors Manager and a Senior Vice President of the companies in the
Tower Fund's Adviser since 1997. Ms. Cunningham Fund Complex
1001 Liberty Avenue served as a Portfolio Manager and a Vice
Pittsburgh, PA President of the Adviser from 1993 until
VICE PRESIDENT 1996. Ms. Cunnin gham is a Chartered
Financial Analyst and received her M.S.B.A.
in Finance from Robert Morris College.
MARY JO OCHSON Mary Jo Ochson is Vice President of the $0 $0 for the Trust
Birth Date: September Trust. Ms. Ochson joined Federated in 1982 and 7
12, 1953 and has been a Senior Portfolio Manager and a other investment
Federated Investors Senior Vice President of the Fund's Adviser companies
Tower since 1996. From 1988 through 1995, Ms. in the Fund Complex
1001 Liberty Avenue Ochson served as a Portfolio Manager and a
Pittsburgh, PA Vice President of the Fund's Adviser. Ms.
VICE PRESIDENT Ochson is a Chartered Financial Analyst and
received her M.B.A. in Finance from the
University of Pittsburgh.
</TABLE>
+ MR. DONAHUE IS THE FATHER OF J. CHRISTOPHER DONAHUE, PRESIDENT OF THE TRUST.
++ MESSRS. CUNNINGHAM, MANSFIELD AND WALSH BECAME MEMBERS OF THE BOARD ON
JANUARY 1, 1999. THEY DID NOT EARN ANY FEES FOR SERVING THE FUND COMPLEX SINCE
THESE FEES ARE REPORTED AS OF THE END OF THE LAST CALENDAR YEAR. THEY DID NOT
RECEIVE ANY FEES AS OF THE FISCAL YEAR END OF THE TRUST.
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.
The Adviser is a wholly owned subsidiary of Federated.
The Adviser shall not be liable to the Trust or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
OTHER RELATED SERVICES
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.
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. 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 may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.
RESEARCH SERVICES
Research services 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 may be used by the Adviser or by affiliates of Federated in advising
other accounts. To the extent that receipt of these services may replace
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 those 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.
For the fiscal year ended, July 31, 1999, the Fund's Adviser directed brokerage
transactions to certain brokers due to research services they provided. The
total amount of these transactions was $xxxxxx for which the Fund paid $xxxxxx
in brokerage commissions.
On July 31, 1999, the Fund owned securities of the following regular
broker/dealers:
Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Fund. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets of
all Federated Funds as specified below:
MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE FEDERATED
FEE FUNDS
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% 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 voluntarily waive a portion of its fee and may
reimburse the Fund for expenses.
Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian for the
securities and cash of the Fund. Foreign instruments purchased by the Fund are
held by foreign banks participating in a network coordinated by State Street
Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Fund pays the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountant for the Fund, Deloitte & Touche LLP, plans and
performs its audit so it they may provide an opinion as to whether the Fund's
financial statements and financial highlights are free of material misstatement.
FEES PAID BY THE FUND FOR SERVICES
FOR THE YEAR ENDED JULY 31 1999 1998 1997
Advisory Fee Earned $ $19,318,524 13,886,919
Advisory Fee Reduction $ $13,886,919 $6,879,101
Brokerage Commissions $ $0 $0
Administrative Fee $ $7,285,996 $5,244,250
Shareholder Services Fee
Institutional Capital Shares $ -- --
Fees are allocated among classes based on their pro rata share of Fund assets,
except for shareholder services fees, which are borne only by the applicable
class of Shares.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Funds' or any class of Shares'
expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
AVERAGE ANNUAL TOTAL RETURNS AND YIELD
Total returns given for the one-year and Start of Performance periods ended July
31, 1999.
Yield and Effective Yield given for the 7-day period ended July 31, 1999.
Start of Performance
7-DAY PERIOD 1 Year 5 Years 10 Years on April 14,
1997date)
INSTITUTIONAL
CAPITAL SHARES
Total Return -- % -- -- %
Yield % -- -- -- --
Effective Yield % -- -- -- --
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.
The average annual total return for Shares 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 NAV 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, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
YIELD
The yield of Shares is based upon the seven days ending on the day of the
calculation, called the "base period." This yield is calculated 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. The effective yield is calculated by compounding the unannualized
base-period return by: adding one to the base-period return, raising the sum to
the 365/7th power; and subtracting one from the result. The tax-equivalent yield
of Shares is calculated similarly to the yield, but is adjusted to reflect the
taxable yield that Shares would have had to earn to equal the actual yield,
assuming a specific tax rate.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
o charts, graphs and illustrations using the Fund's returns, or returns
in general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and
their impact on the securities market, including the portfolio
manager's views on how such developments could impact the Fund; and
o information about the mutual fund industry from sources such as the
Investment Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which they invest, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the 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.
BANK RATE MONITOR(C) NATIONAL INDex, 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.
WHO IS FEDERATED INVESTORS, INC.?
Federated is dedicated to meeting investor needs by making structured,
straightforward and consistent investment decisions. Federated investment
products have a history of competitive performance and have gained the
confidence of thousands of financial institutions and individual investors.
Federated's disciplined investment selection process is rooted in sound
methodologies backed by fundamental and technical research. At Federated,
success in investment management does not depend solely on the skill of a single
portfolio manager. It is a fusion of individual talents and state-of-the-art
industry tools and resources. Federated's investment process involves teams of
portfolio managers and analysts, and investment decisions are executed by
traders who are dedicated to specific market sectors and who handle trillions of
dollars in annual trading volume.
FEDERATED FUNDS OVERVIEW
MUNICIPAL FUNDS
In the municipal sector, as of December 31, 1998, Federated managed 10 bond
funds with approximately $2.2 billion in assets and 23 money market funds with
approximately $12.5 billion in total assets. In 1976, Federated introduced one
of the first municipal bond mutual funds in the industry and is now one of the
largest institutional buyers of municipal securities. The Funds may quote
statistics from organizations including The Tax Foundation and the National
Taxpayers Union regarding the tax obligations of Americans.
EQUITY FUNDS
In the equity sector, Federated has more than 28 years' experience. As of
December 31, 1998, Federated managed 27 equity funds totaling approximately
$14.9 billion in assets across growth, value, equity income, international,
index and sector (i.e. utility) styles. Federated's value-oriented management
style combines quantitative and qualitative analysis and features a structured,
computer-assisted composite modeling system that was developed in the 1970s.
CORPORATE BOND FUNDS
In the corporate bond sector, as of December 31, 1998, Federated managed 9 money
market funds and 15 bond funds with assets approximating $22.8 billion and $7.1
billion, respectively. Federated's corporate bond decision making--based on
intensive, diligent credit analysis--is backed by over 26 years of experience in
the corporate bond sector. In 1972, Federated introduced one of the first
high-yield bond funds in the industry. In 1983, Federated was one of the first
fund managers to participate in the asset backed securities market, a market
totaling more than $209 billion.
GOVERNMENT FUNDS
In the government sector, as of December 31, 1998, Federated manages 9 mortgage
backed, 5 government/agency and 19 government money market mutual funds, with
assets approximating $5.3 billion, $1.8 billion and $41.6 billion, respectively.
Federated trades approximately $425 million in U.S. government and mortgage
backed securities daily and places approximately $25 billion in repurchase
agreements each day. Federated introduced the first U.S. government fund to
invest in U.S. government bond securities in 1969. Federated has been a major
force in the short- and intermediate-term government markets since 1982 and
currently manages approximately $43.2 billion in government funds within these
maturity ranges.
MONEY MARKET FUNDS
In the money market sector, Federated 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,
1998, Federated managed more than $76.7 billion in assets across 52 money market
funds, including 19 government, 9 prime and 23 municipal with assets
approximating $41.6 billion, $22.8 billion and $12.5 billion, respectively.
The Chief Investment Officers responsible for oversight of the various
investment sectors within Federated 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 $5 trillion to the more than 7,300 funds available,
according to the Investment Company Institute.
FEDERATED CLIENTS OVERVIEW
Federated distributes mutual funds through its subsidiaries for a variety of
investment purposes. Specific markets include:
INSTITUTIONAL CLIENTS
Federated meets the needs of approximately 900 institutional clients nationwide
by managing and servicing separate accounts and mutual funds for a variety of
purposes, 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 advisers. The marketing effort
to these institutional clients is headed by John B. Fisher, President,
Institutional Sales Division, Federated Securities Corp.
BANK MARKETING
Other institutional clients include 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, Broker/Dealer Sales Division, Federated Securities Corp.
FINANCIAL INFORMATION
The Financial Statements for the Fund for the fiscal year ended July 31,
1999 are incorporated herein by reference to the Annual Report to Shareholders
of the Fund dated July 31, 1999.
<PAGE>
ADDRESSES
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 Investment Management Company
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
225 Franklin Street
Boston, MA 02110-2812
PART C. OTHER INFORMATION.
Item 23 EXHIBITS:
(a) (i) Conformed copy of Declaration of Trust of the Registrant; (12)
(ii) Conformed copy of Amendment No. 1 to the Declaration of Trust of the
Registrant; (12)
(iii)Conformed copy of Amendment No. 2 to the Declaration of Trust of the
Registrant; (17)
(iv) Conformed copy of Amendment No. 3 to the Declaration of Trust of the
Registrant; (17)
(v) Conformed copy of Amendment No. 4 to the Declaration of Trust of the
Registrant; (17)
(vi) Conformed copy of Amendment No. 5 to the Declaration of Trust of the
Registrant; (17)
(vii)Conformed copy of Amendment No. 6 to the Declaration of Trust of the
Registrant; (17)
(viii) Conformed copy of Amendment No. 8 to the Declaration of Trust of the
Registrant; (10)
(ix) Conformed copy of Amendment No. 9 to the Declaration of Trust of the
Registrant; (15)
(x) Conformed copy of Amendment No. 10 to the Declaration of Trust of the
Registrant; (16)
(xi) Conformed copy of Amendment No. 11 to the Declaration of Trust of the
Registrant; (21)
(xii)Conformed copy of Amendment No. 12 to the Declaration of Trust of the
Registrant; (21)
(b) (i) Copy of By-Laws of the Registrant; (12)
(ii) Copy of Amendment No. 1 to By-Laws of the Registrant; (17)
(iii) Copy of Amendment No. 2 to By-Laws of the Registrant; (17)
(iv) Copy of Amendment No. 3 to By-Laws of the Registrant; (17)
(v) Copy of Amendment No. 4 to By-Laws of the Registrant; (17)
(c) (i) Copy of Specimen Certificate for Shares of Beneficial Interest of
the Registrant; (8)
(ii) Copies of Specimen Certificates for Shares of Beneficial Interest of
Automated Cash Management Trust - Cash II Shares and Institutional
Service Shares; (16)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed June 1, 1994. (File Nos. 33-31602 and
811-5950).
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 on Form N-1A filed February 21, 1995. (File Nos. 33-31602
and 811-5950).
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed September 29, 1995. (File Nos. 33-31602
and 811-5950).
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed September 23, 1996. (File Nos. 33-31602
and 811-5950).
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602
and 811-5950).
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed September 28, 1998. (File Nos. 33-31602
and 811-5950).
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602
and 811-5950).
<PAGE>
(iii)Copies of Specimen Certificates for Shares of Beneficial Interest of
Treasury Obligations Fund - Institutional Capital Shares; (16)
(d) (i) Conformed copy of Investment Advisory Contract of the Registrant;
(12)
(ii) Conformed copy of Exhibit A to the Investment Advisory Contract of the
Registrant; (12)
(iii)Conformed copy of Exhibit B to the Investment Advisory Contract of
the Registrant; (12)
(iv) Conformed copy of Exhibit D to the Investment Advisory Contract of the
Registrant; (12)
(v) Conformed copy of Exhibit E to the Investment Advisory Contract of the
Registrant; (12)
(vi) Conformed copy of Exhibit G to the Investment Advisory Contract of the
Registrant; (12)
(vii)Conformed copy of Exhibit H to the Investment Advisory Contract of
the Registrant; (21)
(viii) Conformed copy of Exhibit I to the Investment Advisory Contract of
the Registrant; (21)
(ix) Conformed copy of Exhibit J to the Investment Advisory Contract of the
Registrant; (21)
(x) Conformed copy of Exhibit K to the Investment Advisory Contract of the
Registrant; (21)
(xi) Conformed copy of Exhibit L to the Investment Advisory Contract of the
Registrant; (21)
(xii)Conformed copy of Exhibit M to the Investment Advisory Contract of
the Registrant; (21)
(xiii) Conformed copy of Exhibit N to the Investment Advisory Contract of
the Registrant; (21)
(xiv)Conformed copy of Exhibit O to the Investment Advisory Contract of
the Registrant; (21)
(xv) Conformed copy of Exhibit P to the Investment Advisory Contract of the
Registrant; (21)
(xvi)Conformed copy of Exhibit Q to the Investment Advisory Contract of
the Registrant; (21)
(xvii) Conformed copy of Exhibit R to the Investment Advisory Contract of
the Registrant; (21)
(e) (i) Conformed copy of Distributor's Contract of the
Registrant; (7) (ii) Conformed copy of Exhibit A to
the Distributor's Contract of the Registrant; (21)
(iii) Conformed copy of Exhibit C to the
Distributor's Contract of the Registrant; (21) (iv)
Conformed copy of Exhibit D to the Distributor's
Contract of the Registrant; (15)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed May 6, 1994. (File Nos. 33-31602 and
811-5950).
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed September 29, 1995. (File Nos. 33-31602
and 811-5950).
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 20 on Form N-1A filed September 23, 1996. (File Nos. 33-31602
and 811-5950).
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602
and 811-5950).
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602
and 811-5950).
<PAGE>
(v) Conformed copy of Exhibit E to the Distributor's Contract
of the Registrant; (16)
(vi) Conformed copy of Exhibit F to the Distributor's Contract
of the Registrant; (16)
(vii) Conformed copy of Exhibit G to the Distributor's Contract
of the Registrant; (21)
(viii) Conformed copy of Exhibit H to the Distributor's Contract
of the Registrant; (21)
(ix) Conformed copy of Exhibit I to the Distributor's Contract
of the Registrant; (21)
(x) The Registrant hereby incorporates the
conformed copy of the specimen Mutual Funds
Sales and Service Agreement; Mutual Funds
Service Agreement; and Plan Trustee/ Mutual
Funds Service Agreement from Item 24(b)(6)
of the Cash Trust Series II Registration
Statement on Form N-1A filed with the
Commission on July 24, 1995. (File Nos.
33-38550 and 811-6269).
(f) Not applicable;
(g) (i) Conformed copy of Custodian Agreement of the
Registrant; (8) (ii) Conformed copy of Custodian
Fee Schedule; (17)
(h) (i) Conformed copy of Amended and Restated Agreement for Fund
Accounting Services, Administrative Services, Transfer
Agency Services and Custody Services Procurement; (21)
(ii) The responses described in Item 23(e)(x) are
hereby incorporated by reference. (iii) Conformed
copy of Amended and Restated Shareholder Services
Agreement of the Registrant; (21)
(iv) The Registrant hereby incorporates by
reference the conformed copy of the
Shareholder Services Sub-Contract between
Fidelity and Federated Shareholder Services
from Item 24(b)(9)(iii) of the Federated
GNMA Trust Registration Statement on Form
N-1A, filed with the Commission on March
25, 1996 (File Nos. 2-75670 and 811-3375).
(i) Conformed copy of Opinion and Consent of Counsel as to legality
of shares being registered; (12)
+ All exhibits filed electronically.
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed June 1, 1994. (File Nos. 33-31602 and
811-5950).
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed September 29, 1995. (File Nos. 33-31602
and 811-5950).
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602
and 811-5950).
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed September 28, 1998. (File Nos. 33-31602
and 811-5950).
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602
and 811-5950).
<PAGE>
(j) (i) Conformed copy of Consent of Arthur Andersen LLP for:
(a) Automated Cash Management Trust; (17)
(b) Federated Short-Term U.S. Government Trust; (19)
(c) Government Obligations Fund; (17)
(d) Government Obligations Tax-Managed Fund; (17)
(e) Prime Obligations Fund; (17)
(f) Tax-Free Obligations Fund; (17)
(g) Treasury Obligations Fund; (17)
(h) Trust for Government Cash Reserves; (19)
(i) Trust for U.S. Treasury Obligations; (19)
(ii) Conformed copy of Consent of Ernst & Young LLP for:
(a) Automated Government Cash Reserves; (21)
(b) Automated Treasury Cash Reserves; (21)
(c) U.S. Treasury Cash Reserves; (21)
(iii) Conformed copy of Consent of Deloitte &
Touche LLP for:
(a) Automated Government Money Trust;(19)
(b) Federated Master Trust; (19)
(c) Liquid Cash Trust; (20)
(d) Trust for Short-Term U.S. Government
Securities (19)
(k) Not applicable;
(l) Conformed copy of Initial Capital Understanding; (12)
(m) (i) Conformed copy of Distribution Plan of the
Registrant; (16)
(ii) Conformed copy of Exhibit A to the
Distribution Plan of the Registrant; (16) (iii)
Conformed copy of Exhibit B to the Distribution
Plan of the Registrant; (21) (iv) The responses
described in Item 23(e)(x) are hereby incorporated
by reference.
(n) The Registrant hereby incorporates the conformed
copy of the specimen Multiple Class Plan from Item
24(b)(18) of the World Investment Series, Inc.
Registration Statement on Form N-1A, filed with the
Commission on January 26, 1996. (File Nos. 33-52149
and 811-07141).
+ All exhibits filed electronically.
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed September 29, 1995. (File Nos. 33-31602
and 811-5950).
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed September 23, 1997. (File Nos. 33-31602
and 811-5950).
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed September 28, 1998. (File Nos. 33-31602
and 811-5950).
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 26 on Form N-1A filed April 26, 1999. (File Nos. 33-31602 and
811-5950).
20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 28 on Form N-1A filed May 25, 1999. (File Nos. 33-31602 and
811-5950).
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 33 on Form N-1A filed August 27, 1999. (File Nos. 33-31602
and 811-5950).
<PAGE>
(o) (i) Conformed copy of Power of Attorney of the
Registrant; (18)
(ii) Conformed copy of Power of Attorney of
Chief Investment Officer of the
Registrant; (18)
(iii) Conformed copy of Power of Attorney of
Treasurer of the Registrant; (18)
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND:
None
Item 25. INDEMNIFICATION: (1)
Item 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER:
For a description of the other business of the investment adviser,
see the section entitled "Who Manages the Fund?" in Part A. The
affiliations with the Registrant of four of the Trustees and one of
the Officers of the investment adviser are included in Part B of this
Registration Statement under "Who Manages and Provides Services to
the Fund?" The remaining Trustee of the investment adviser, his
position with the investment adviser, and, in parentheses, his
principal occupation is: Mark D. Olson (Partner, Wilson, Halbrook &
Bayard), 107 W. Market Street, Georgetown, Delaware 19947.
The remaining Officers of the investment adviser are:
Executive Vice Presidents: William D. Dawson, III
Henry A. Frantzen
J. Thomas Madden
Senior Vice Presidents: Joseph M. Balestrino
David A. Briggs
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Michael P. Donnelly
Mark E. Durbiano
Jeffrey A. Kozemchak
Sandra L. McInerney
Susan M. Nason
Mary Jo Ochson
Robert J. Ostrowski
Vice Presidents: Todd A. Abraham
J. Scott Albrecht
Arthur J. Barry
Randall S. Bauer
G. Andrew Bonnewell
Micheal W. Casey
Robert E. Cauley
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed October 20, 1989. (File Nos. 33-31602 and
811-5950).
18. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 25 on Form N-1A filed February 12, 1999. (File Nos. 33-31602
and 811-5950).
<PAGE>
Kenneth J. Cody
Alexandre de Bethmann
B. Anthony Delserone, Jr.
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Marc Halperin
Patricia L. Heagy
Susan R. Hill
William R. Jamison
Constantine J. Kartsonas
Stephen A. Keen
Robert M. Kowit
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
William M. Painter
Jeffrey A. Petro
Keith J. Sabol
Frank Semack
Aash M. Shah
Michael W. Sirianni, Jr.
Christopher Smith
Tracy P. Stouffer
Edward J. Tiedge
Peter Vutz
Paige M. Wilhelm
George B. Wright
Jolanta M. Wysocka
Assistant Vice Presidents: Nancy J. Belz
Lee R. Cunningham, II
James H. Davis, II
Jacqueline A. Drastal
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
Gary E. Farwell
Eamonn G. Folan
John T. Gentry
John W. Harris
Nathan H. Kehm
John C. Kerber
Grant K. McKay
Natalie F. Metz
Joseph M. Natoli
Ihab Salib
James W. Schaub
John Sheehy
Matthew K. Stapen
Diane Tolby
Timothy G. Trebilcock
Leonardo A. Vila
Steven J. Wagner
Lori A. Wolff
Secretary: G. Andrew Bonnewell
Treasurer: Thomas R. Donahue
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Assistant Treasurer: Richard B. Fisher
<PAGE>
The business address of each of the Officers of the investment
adviser is Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3779. These individuals are also
officers of a majority of the investment advisers to the investment
companies in the Federated Fund Complex described in Part B of this
Registration Statement.
Item 27. PRINCIPAL UNDERWRITERS:
(a) Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end
investment companies, including the Registrant:
Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; 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 Municipal Opportunities Fund,
Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal 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.; ; Hibernia Funds; Independence One Mutual Funds;
Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Managed Series Trust; Marshall Funds, Inc.; Money
Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds;
Tax-Free Instruments Trust; The Planters Funds; The Wachovia Funds; The
Wachovia Municipal Funds; Vision Group of Funds, Inc.; World Investment
Series, Inc.; Blanchard Funds; Blanchard Precious Metals Fund, Inc.; DG
Investor Series; High Yield Cash Trust; Investment Series Trust; Star
Funds; Targeted Duration Trust; The Virtus Funds; Trust for Financial
Institutions;
Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.
<TABLE>
<CAPTION>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
<S> <C> <C>
Richard B. Fisher Chairman, Chief Executive Vice President
Federated Investors Tower Officer and Chief Operating
1001 Liberty Avenue Officer, Federated Securities
Pittsburgh, PA 15222-3779 Corp.
Arthur L. Cherry Director --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales --
Federated Investors Tower and Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Treasurer --
Federated Investors Tower and Assistant Secretary
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Amy Michalisyn Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Larry Sebben Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Donald C. Edwards Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy S. Johnson Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley Assistant Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(c) Not applicable
</TABLE>
Item 28. LOCATION OF ACCOUNTS AND RECORDS:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
(Notices should be sent to the Agent for Service at the above address)
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
Federated Shareholder P.O. Box 8600
Services Company Boston, MA 02266-8600
("Transfer Agent and Dividend
Disbursing Agent")
Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Federated Investment Federated Investors Tower
Management Company 1001 Liberty Avenue
("Adviser") Pittsburgh, PA 15222-3779
State Street Bank and P.O. Box 8600
Trust Company Boston, MA 02266-8600
("Custodian")
Item 29. MANAGEMENT SERVICES: Not applicable.
Item 30. UNDERTAKINGS:
Registrant hereby undertakes to comply with the provisions of Section 16(c)
of the 1940 Act with respect to the removal of Trustees and the calling of
special shareholder meetings by shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, MONEY MARKET OBLIGATIONS TRUST,
has duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Pittsburgh
and Commonwealth of Pennsylvania, on the 1st day of September, 1999.
MONEY MARKET OBLIGATIONS TRUST
BY: /s/ Leslie K. Ross
Leslie K. Ross, Assistant Secretary
Attorney in Fact for John F. Donahue
September 1, 1999
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ Leslie K. Ross
Leslie K. Ross Attorney In Fact September 1, 1999
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
J. Christopher Donahue* President
Richard J. Thomas* Treasurer(Principal Financial and
Accounting Officer)
William D. Dawson, III* Chief Investment Officer
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
John F. Cunningham* Trustee
Lawrence D. Ellis, M.D.* Trustee
Peter E. Madden* Trustee
Charles F. Mansfield, Jr.* Trustee
John E. Murray, Jr., J.D., S.J.D.* Trustee
Marjorie P. Smuts* Trustee
John S. Walsh* Trustee
*By Power of Attorney