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. 25 ............................ X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 26 ...............................................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)
60 days after filing pursuant to paragraph (a) (i)
on _________________, pursuant to paragraph (a) (i)
X 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
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED___________________
PROSPECTUS
AUTOMATED GOVERNMENT MONEY TRUST
A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
A money market mutual fund seeking stability of principal and current income
consistent with stability of principle by investing in short-term U.S. Treasury
securities and repurchase agreements.
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
april , 1999
<PAGE>
RISK/RETURN SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. The Fund's investment objective is stability of principal and 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.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury securities maturing in 13
months or less. These investments include repurchase agreements collateralized
fully by U.S. Treasury securities. The average maturity of the Fund's portfolio
will be 90 days or less.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money 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
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
AUTOMATED GOVERNMENT MONEY TRUST
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a None
percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of None
original purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and None
other Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if None
applicable)
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) 0.50%
Distribution (12b-1) Fee None
Shareholder Services Fee (3) 0.25%
Other Expenses 0.10%
Total Annual Fund Operating Expenses (4) 0.85%
(1)Although not contractually obligated to do so, the adviser
and shareholder services provider expect to waive certain amounts during the
fiscal year ending July 31, 1999. These are shown below along with the net
expenses the Fund expects to ACTUALLY PAY for the fiscal year ending July 31,
1999.
- -----------------------------------------------------------------
Waiver of Fund Expenses 0.26%
Total Actual Annual Fund Operating Expenses (after waivers) 0.59%
(4)
(2) The adviser expects to voluntarily waive a portion of the management fee.
The adviser can terminate this anticipated voluntary waiver at any time. The
management fee paid by the Fund (after the anticipated voluntary waiver) is
expected to be 0.25% for the year ending July 31, 1999. (3) The shareholder
services provider expects to voluntarily reduce a portion of the shareholder
services fee. The shareholder services provider can terminate this anticipated
voluntary reduction at any time. The shareholder services fee paid by the Fund
(after the anticipated voluntary reduction) is expected to be 0.24% for the year
ending July 31, 1999. (4) For the fiscal year ended July 31, 1998, prior to the
proposed reorganization of Automated Government Money Trust, the Former Fund, as
a portfolio into Money Market Obligations Trust, the Total Annual Fund Operating
Expenses and Total Actual Annual Fund Operating Expenses (after waivers) were
0.85% and 0.59%, respectively.
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund 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 operating expenses are BEFORE WAIVERS as shown above and remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 3 5 10
YEAR YEARS YEARS YEARS
$87 $271 $471 $1,049
<PAGE>
WHAT ARE THE FUND'S INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury securities maturing in 13
months or less. These investments include repurchase agreements collateralized
fully by U.S. Treasury securities. The average maturity of the Fund's portfolio
will be 90 days or less.
The Adviser targets an average portfolio maturity range by assessing likely
movements in interest rates based upon general economic and market conditions.
The Adviser generally shortens the portfolio's 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 lengthen or shorten the
portfolio's 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 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 fixed or adjusted
periodically. The U.S. Treasury must also repay the principal amount of the
security, normally within a specified time.
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 for the transaction.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?
Although there are many factors which may affect an investment in the Fund, the
principal risks of investing in a U.S. Treasury money market fund are described
below.
MARKET RISK
Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.
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 RISK
Credit risk 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. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV). 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 $25,000. There is no
required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $25,000 minimum is
reached within 90 days. 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's Distributor markets the Shares described in this prospectus to
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 4:00 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 you 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 AUTOMATIC INVESTMENTS
You may establish an account with your financial institution to automatically
purchase Shares on pre-determined dates or when your bank account reaches a
certain level. Under this program, participating financial institutions are
responsible for prompt transmission of orders and may charge you for this
service. You should read this prospectus along with your financial institution's
agreement or materials describing this service.
BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
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 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, 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 Fund 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 thirty 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 the 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.
CHECKWRITING
You may request checks to redeem your Fund Shares. Your account will continue to
receive the daily dividend declared on the Shares being redeemed until the check
is presented for payment.
DEBIT CARD
You may request a debit card account that allows you to redeem Shares.
There is an annual fee for this service that the Fund will automatically deduct
from your account.
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
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases and redemptions. In addition, 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 pays 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, 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 total 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 0.50% 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. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
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.
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The Fund's Financial Highlights are contained in the Former Fund's prospectus,
dated September 30, 1998, which must precede or accompany this document.
<PAGE>
AUTOMATED GOVERNMENT MONEY TRUST
A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
A Statement of Additional Information (SAI) dated April 1999 is incorporated by
reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's semi-annual report to shareholders as it
becomes available. To obtain the SAI, semi-annual report and other information
without charge, 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
G01324-01(4/99)
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of AUTOMATED GOVERNMENT MONEY TRUST as of the calendar
year-end for each of 10 years.
The `y' axis reflects the "% Total Return" beginning with "0" and increasing in
increments of 1% up to 9%.
The `x' axis represents calculation periods for the last ten calendar years of
the Fund, beginning with the earliest year. The light gray shaded chart features
10 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 for
each calendar year is stated directly at the top of each respective bar, for the
calendar years 1989 through 1998. The percentages noted are: 1989 - 8.89%, 1990
- - 7.86%, 1991 - 5.67%, 1992 - 3.36%, 1993 - 2.70%, 1994 - 3.70%, 1995- 5.50%,
1996 - 4.93%, 1997 - 5.07%, 1998 - 4.96%. The Fund's Shares are not sold subject
to a sales charge (load). The total returns displayed are based upon net asset
value.
The Fund's 7-day net yield as of December 31, 1998 was 4.36%.
Within the period shown in the Chart, the Fund's highest quarterly return
was 2.26% (quarter ended June 30, 1989). Its lowest quarterly return was 0.66%
(quarter ended June 30, 1993.
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEARS 10 YEARS
4.96% 4.83% 5.25%
The bar chart shows the variability of the Fund's actual total return on a
yearly basis.
Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED___________________
STATEMENT OF ADDITIONAL INFORMATION
AUTOMATED GOVERNMENT MONEY TRUST
A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Automated Government Money Trust
(Fund), dated April 1999. Obtain the prospectus without charge by calling
1-800-341-7400.
April 1999
CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
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.?
Addresses
CUSIP 000000000
8082201A(4/99)
<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
Fund, which was established on June 1, 1982, was reorganized as a portfolio of
the Trust on April , 1999.
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 pay interest, dividends or distributions at a specified
rate. The rate may be fixed or adjusted periodically. The issuer must also 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. Securities with higher credit risks generally have
higher yields. A security's yield will increase or decrease depending upon
whether it costs less (a "discount") or more (a "premium") than the principal
amount. Under normal market conditions, securities with longer maturities will
also have higher yields. 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.
The following describes the types of fixed income securities in which the Fund
invests.
TREASURY SECURITIES are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest credit
risk.
ZERO COUPON SECURITIES do not pay interest or principal until final
maturity. Most debt securities provide periodic payments of interest
(referred to as a "coupon payment"). In contrast, investors buy zero coupon
securities at a price below the amount payable at maturity. The difference
between the price and the amount paid at maturity represents interest on the
zero coupon security. This increases the market and credit risk of a zero
coupon security, because an investor must wait until maturity before
realizing any return on the investment.
There are many forms of zero coupon securities. Some securities are
originally issued at a discount and are referred to as "zero coupon" or
"capital appreciation" bonds. Others are created by separating the right to
receive coupon payments from the principal due at maturity, a process known
as "coupon stripping." Treasury STRIPs are the most common forms of
"stripped" U.S. Treasury zero coupon securities. 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. In conjunction with
the Fund's ability to invest in the securities of other investment
companies, the Fund may invest in the securities of affiliated money market
funds as an efficient means of managing the Fund's uninvested cash.
SPECIAL TRANSACTIONS
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 for the transaction. The Fund's return is unrelated to the
interest rate on the underlying security. The Funds will only enter into
repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Adviser to be
creditworthy
A Fund's custodian or subcustodian is required to 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 Risk.
REVERSE REPURCHASE AGREEMENTS are repurchase agreements in which a 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 Risk. In addition, reverse
repurchase agreements create Leverage Risk 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.
WHEN ISSUED TRANSACTIONS are arrangements in which a Fund purchases
securities for a set price, with payment and delivery 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 purchase 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, and the
market values of the securities purchased may vary from the purchase prices.
Therefore, when issued transactions create Market Risk for the Fund. When
issued transactions also involve Credit Risk in the event of a counterparty
default.
ASSET COVERAGE. In order to secure its obligations in connection with
when-issued, and delayed-delivery transactions, the Fund will "cover" such
transactions, as required under applicable interpretations of the SEC,
either by owning the underlying securities; entering into an offsetting
transaction; or segregating, earmarking, or depositing into an escrow
account readily marketable securities in an amount at all times equal to or
exceeding the Fund's commitment with respect to these instruments or
contracts. As a result, use of these instruments will impede the Fund's
ability to freely trade the assets being used to cover them, which could
result in harm to the Fund. BORROWING. The Fund may borrow money from banks
or through reverse repurchase agreements in amounts up to one-third of total
assets and pledge some assets as collateral. The Fund will pay interest on
borrowed money and may incur other transaction costs. These expenses could
exceed the income received or capital appreciation realized by the Fund from
any securities purchased with borrowed money. With respect to borrowings,
the Fund is required to maintain continuous asset coverage to 300% of the
amount borrowed. If the coverage declines to less than 300%, the Fund must
sell sufficient portfolio securities to restore the coverage even if it must
sell the securities at a loss.
INVESTMENT RISKS
Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a U.S. Treasury money market fund are described
below. MARKET RISKS o Prices of fixed income securities rise and fall in
response to interest rate changes for similar securities. Generally, when
interest rates rise, prices of fixed
income securities fall.
o 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 RISK
o Credit risk 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.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not purchase any portfolio instruments on margin or sell any
portfolio instruments short but it may obtain such short-term credits as may be
necessary for clearance of purchases and sales of money market instruments.
BORROWING MONEY
The Fund will not borrow money except as a temporary measure for extraordinary
or emergency purposes and then only in amounts not in excess of 5% of the value
of its total assets. In addition, the Fund may enter into reverse repurchase
agreements and otherwise borrow up to one-third of the value of its total
assets, including the amount borrowed, in order to meet redemption requests
without immediately selling portfolio instruments. This latter practice is not
for investment leverage but solely to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of portfolio
instruments would be inconvenient or disadvantageous.
Interest paid on borrowed funds will not be available for investment. The Fund
will liquidate any such borrowings as soon as possible.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In those cases, it may mortgage,
pledge, or hypothecate assets having a market value not exceeding the lesser of
the dollar amounts borrowed or 10% of the value of Fund assets at the time of
the borrowing.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may purchase or hold
U.S. government obligations, including repurchase agreements, permitted by its
investment objective and policies.
ISSUING SENIOR SECURITIES
The Fund will not issue senior securities, except as permitted by the investment
objective and policies.
The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities," as defined by the Investment
Company Act of 1940. The following limitations, however, may be changed by the
Board of Trustees (Board) without shareholder approval. Shareholders will be
notified before any material change in these limitations becomes effective.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses. At the present time, the Fund expects
that its investment in other investment companies will be limited to shares of
money market funds, including funds affiliated with the Fund's investment
adviser.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940. In particular, the Fund will comply
with the various requirements of Rule 2a-7, which regulates money market mutual
funds. The Fund will determine the effective maturity of its investments
according to Rule 2a-7. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of its
shareholders.
DETERMINING MARKET VALUE OF SECURITIES
The Board has 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 (NAV) 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 NAV computed as above may tend to be higher than a similar computation made
by using a method of valuation based upon market prices and estimates. In
periods of rising interest rates, the opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the SEC under the Investment Company Act of 1940. Under the Rule,
the Fund must establish procedures reasonably designed to stabilize the NAV 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 NAV per Share based upon available
indications of market value. The Board 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 Board 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 NAV.
HOW IS THE FUND SOLD?
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 Fund 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.
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, it reserves 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,
only Shares of that Fund 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 the Trust's outstanding shares
of all series entitled to vote.
As of 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares:
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.
<PAGE>
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, birthdate, 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 13
funds and the Federated Fund Complex is comprised of 54 investment companies,
whose investment advisers are affiliated with the Fund's Adviser.
As of , the Fund's Board and Officers as a group owned less
than 1% of the Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------ TOTAL
NAME ----------- COMPENSATION
BIRTHDATE -------------------------------------------- AGGREGATE FROM TRUST AND
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FUND COMPLEX
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, in the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $18, 351 $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the
1934 Committee, Children's Hospital of Trust and 54
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst other
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, investment
TRUSTEE Inc.; Director, Member of Executive companies
Committee, University of Pittsburgh. in the Fund
Complex
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $20,189 $125,264.48for
Birthdate: June 23, 1937 Complex; President, Investment Properties the
Wood/IPC Commercial Corporation; Senior Vice President, Trust and 54
Dept. John R. Wood and Associates, Inc., other
John R. Wood Realtors; Partner or Trustee in private investment
Associates, Inc. real estate ventures in Southwest Florida; companies
Realtors formerly: President, Naples Property in the Fund
3255 Tamiami Trial Management, Inc. and Northgate Village Complex
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
JOHN F. CUNNINGHAM++ Director or Trustee of some of the $0 $0 for the
Birthdate: March 5, 1943 Federated Funds; Chairman, President and Trust and 26
353 El Brillo Way Chief Executive Officer, Cunningham & Co., other
Palm Beach, FL Inc. ; Trustee Associate, Boston College; investment
TRUSTEE Director, EMC Corporation; formerly: companies in
Director, Redgate Communications. the Fund Complex
Retired: 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 $18,351 $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the
1932 of Pittsburgh; Medical Director, University Trust and 54
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; other
Suite 1111 Hematologist, Oncologist, and Internist, investment
Pittsburgh, PA University of Pittsburgh Medical Center; companies
TRUSTEE Member, National Board of Trustees, in the Fund
Leukemia Society of America. Complex
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the
1942 Commonwealth of Massachusetts General Trust and 54
One Royal Palm Way Court; President, State Street Bank and other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
TRUSTEE Retired: Director, VISA USA and VISA in the Fund
International; Chairman and Director, Complex
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
CHARLES F. MANSFIELD, Director or Trustee of some of the $0 $0 for the
JR.++ Federated Funds; Management Consultant. Trust and 0
Birthdate: April 10, other
1945 Retired: Chief Executive Officer, PBTC investment
80 South Road International Bank; Chief Financial Officer companies in
Westhampton Beach, NY of Retail Banking Sector, Chase Manhattan the Fund Complex
TRUSTEE 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 $18,351 $113,860.22 for
J.D., S.J.D. Complex; President, Law Professor, Duquesne the
Birthdate: December 20, University; Consulting Partner, Mollica & Trust and 54
1932 Murray. other
President, Duquesne investment
University Retired: Dean and Professor of Law, companies
Pittsburgh, PA University of Pittsburgh School of Law; in the Fund
TRUSTEE Dean and Professor of Law, Villanova Complex
University School of Law.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies in
Company of America; business owner. the Fund Complex
- -------------------------
JOHN S. WALSH++ Director or Trustee of some of the $0 $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and 22
1957 Heat Wagon, Inc.; President and Director, other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly, Vice
President, Walsh & Kelly, Inc.
- -------------------------
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and 16
1949 Trustee of some of the Funds in the other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research 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
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated companies in
1001 Liberty Avenue Investors, Inc.; Vice President, Federated the Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT Research, Federated Research Corp.,
Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and 54
1938 President, Secretary, and Director, other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- -------------------------
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and 54
1954 Division, Federated Investors, Inc.; other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA
TREASURER
- -------------------------
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and 41
Federated Investors Complex; Executive Vice President, other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Research Corp., Federated Advisers, companies in
Pittsburgh, PA Federated Management, Federated Research, the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Registered
Representative, 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
Research Corp., Federated Advisers,
Federated Management, Federated Research,
and Passport Research, Ltd.
- -------------------------
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and 6
Federated Investors Director or Trustee of some of the Funds in other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.
- -------------------------
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the
Birthdate: September the Trust. Ms. Cunningham joined Federated Trust and 6
15, 1959 Investors in 1981 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1997. Ms. Cunningham served as a the Fund Complex
Pittsburgh, PA Portfolio Manager and a Vice President of
VICE PRESIDENT the investment adviser from 1993 until
1996. Ms. Cunningham 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
Birthdate: September Trust. Ms. Ochson joined Federated Trust and 7
12, 1953 Investors in 1982 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1996. From 1988 through 1995, Ms. the Fund Complex
Pittsburgh, PA Ochson served as a Portfolio Manager and a
VICE PRESIDENT Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A.
in Finance from the University of
Pittsburgh.
SUSAN R. HILL Susan R. Hill is Vice President of the $0 $0 for the
Birthdate: June 20, Trust/. Ms. Hill joined Federated Trust and __
1963 Investors in 1990 and has been a Portfolio other
Federated Investors Manager since 1993 and a Vice President of investment
Tower the Fund's investment adviser since 1997. companies in
1001 Liberty Avenue Ms. Hill was a Portfolio Manager and an the Fund Complex
Pittsburgh, PA Assistant Vice President of the investment
VICE PRESIDENT adviser from 1994 until 1997. Ms. Hill is
a Chartered Financial Analyst and received
an M.S. in Industrial Administration from
Carnegie Mellon University.
<PAGE>
</TABLE>
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. 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.
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 FUNDS
FEE
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. 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.
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
Deloitte & Touche LLP is the independent public accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
<TABLE>
<CAPTION>
- -------------------------------- 1998 1997 1996
FOR THE YEAR ENDED JULY 31
<S> <C> <C> <C>
Advisory Fee Earned $11,656,534 $12,237,712 $12,247,317
- ---------------------------------
Advisory Fee Reduction $5,783,663 $6,473,371 $6,710,475
- ---------------------------------
Brokerage Commissions $0 $0 $0
- ---------------------------------
Administrative Fee $1,758,583 $1,848,619 $1,852,627
- ---------------------------------
Shareholder Services Fee $5,828,267 N/A N/A
</TABLE>
- ---------------------------------
For the fiscal years ended July 31, 1998, 1997 and 1996, fees paid by the Fund
for services are prior to the Fund's reorganization as a portfolio of the Trust
on April , 1999.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the SEC's 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.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. 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
Fund's 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-, five- and ten-year periods ended July 31,
1998.
Yield and Effective Yield given for the seven-day period ended July 31, 1998.
Performance of the Fund shown is prior to its reorganization as a portfolio of
the Trust on April , 1999.
7 DAY PERIOD 1 YEAR 5 YEARS 10 YEARS
Total Return N/A 5.13% 4.66% 5.38%
Yield 5.04% N/A N/A N/A
Effective Yield 5.17% N/A N/A N/A
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 1 to the base-period return, raising the sum to
the 365/7th power; and subtracting 1 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 Funds; 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 it invests, 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:
o 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.
o 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.
o MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
o 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.
<PAGE>
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' of 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.
<PAGE>
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.
<PAGE>
53
ADDRESSES
AUTOMATED GOVERNMENT MONEY TRUST
A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
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
125 Summer Street
Boston, MA 02110-1617
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
DATED
PROSPECTUS
FEDERATED MASTER TRUST
A Portfolio of Money Market Obligations Trust
A money market mutual fund seeking current income consistent with stability of
principal by investing in a portfolio of money market securities maturing in
thirteen months 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.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Risk/Return Summary 1
What are the Fund's Fees and Expenses? 3
What are the Fund's Investment Strategies? 4
What are the Principal Securities in Which
the Fund Invests? 4
What are the Specific Risks of Investing in the Fund? 5
What do Shares Cost? 6
How is the Fund Sold? 6
How to Purchase Shares 6
How to Redeem Shares 7
Account and Share Information 9
Who Manages the Fund? 10
Financial Information 10
</TABLE>
APRIL , 1999
Risk/Return Summary
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. 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.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund invests in a portfolio of high quality fixed income securities maturing
in thirteen months or less. 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?
Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money 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.
Risk/Return Bar Chart and Table
The Bar Chart and Performance Table below reflect historical performance data
for Federated Master Trust (the "Former Fund") prior to its reorganization into
the Fund, which is a newly created portfolio of Money Market Obligations Trust
(the "Trust"). On the date of the reorganization, April , 1999, the Former Fund
was dissolved and its net assets (inclusive of liabilities recorded on the
Former Fund's records) were transferred into the Fund.
[GRAPH APPEARS HERE]
The bar chart shows the variability of the Fund's actual total returns on a
calendar year end basis.
The Fund's Shares are not sold subject to a sales charge (load). Hence, the
total returns displayed above are based upon the net asset value. The Fund's
7-Day Net Yield as of 12/31/981 was 4.85%.
Within the period shown in the chart, the Fund's highest quarterly return was
2.36% (quarter ended June 30, 1989). Its lowest quarterly return was 0.70%
(quarters ended June 30 and September 30, 1993).
Average Annual Total Return
The following table represents the Fund's Average Annual Total Return through
12/31/98.
<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year 5.28%
5 Years 5.09%
10 Years 5.51%
</TABLE>
1 Investors may call the Fund to acquire the current 7-Day Net Yield by calling
1-800-341-7400.
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.
What are the Fund's Fees and Expenses?
FEDERATED MASTER TRUST
FEES AND EXPENSES
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
priceor redemption proceeds, as applicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other
Distributions) (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses
Expenses That are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee 0.40%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses 0.13%
Total Annual Fund Operating Expenses (Before Waivers)1 0.78%
Waiver of Fund Expenses 0.33%
Total Actual Annual Fund Operating Expenses (after waivers)2 0.45%
1 Under the investment advisory contract, the adviser will waive the amount,
limited to the amount of the management fee, by which the Fund's aggregate
annual operating expenses, including the management fee but excluding
interest, taxes, brokerage commissions, expenses of registering and
qualifying the Fund and its shares under federal and state laws and
regulations, expenses of witholding taxes, and extraordinary expenses, exceed
0.45% of its average daily net assets. As a result, amounts actually incurred
by the Fund for Management fee, Shareholder Services fees, and/or Other
expenses may be less than the maximum amounts shown in this table.
2 Total Actual Annual Fund Operating Expenses represent the net expenses the
Fund expects to actually pay for the fiscal year ended November 30, 1999. For
the fiscal year ended November 30, 1998, prior to the proposed reorganization
of the Federated Master Trust, the Former Fund, as a portfolio into Money
Market Obligations Trust, the Total Annual Fund Operating Expenses and Total
Actual Annual Fund Operating Expenses were 0.78% and 0.45%, respectively.
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund 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 operating expenses are based upon the contractually imposed expense
limitation of 0.45% as shown above. 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
$46 $144 $252 $567
What are the Fund's Investment Strategies?
The Fund invests in a portfolio of high quality fixed income securities maturing
in thirteen months or less. The dollar-weighted average maturity of the Fund's
portfolio will be 90 days or less.
The adviser performs a fundamental credit analysis to develop an approved list
of issuers and securities that meet the adviser's minimum credit standards. The
adviser targets a dollar-weighted average portfolio maturity range for the Fund
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 outlook for future activity,
. current short-term interest rates, and
. recent actions by the Federal Reserve Board regarding short-term interest
rates and market expectations regarding future actions.
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 from the approved list of
securities used to lengthen or shorten the portfolio's dollar-weighted average
maturity by comparing the returns currently offered by different investments to
their historical and expected returns.
INDUSTRY CONCENTRATION
The Fund may invest 25% or more of its assets in commercial paper issued by
finance companies.
What are the Principal Securities in Which the Fund Invests?
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.
The following describes the principal types of fixed income securities in
which the Fund invests.
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 Fund may also purchase interests in bank loans to
companies.
COMMERCIAL PAPER
Commercial paper is an issuer's obligation with a maturity of nine months or
less. 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 Fund treats
demand instruments as short-term securities, even though their stated maturity
may extend beyond one year.
ASSET BACKED SECURITIES
Asset backed securities are payable from pools of debt obligations. 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. The
simplest form of asset backed securities are pass-through certificates. An
issuer of pass- through certificates gathers payments from an underlying pool of
obligations. Then, the issuer deducts its fees and expenses and passes the
balance of the payments onto the certificate holders. Asset backed securities
may also take the form of commercial paper or notes.
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.
CREDIT ENHANCEMENT
Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security after 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 may evaluate 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.
Following a default, 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 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 for the transaction.
INVESTMENT RATINGS
The securities in which the Fund invests must be rated in the two highest
short-term rating categories by one or more nationally recognized rating
services or be of comparable quality to securities having such ratings.
Nationally recognized ratings services include Duff & Phelps, Fitch IBCA,
Moody's, Standard & Poors, and Thompson's Bankwatch.
What are the Specific Risks of Investing in the Fund?
Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a corporate money market fund are described
below.
MARKET RISK
Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.
Interest rate changes have a greater affect on the price of fixed income
securities with longer maturities. Money market funds try to minimize this risk
by purchasing short-term securities.
CREDIT RISK
Credit risk is the possibility that an issuer will default (fails to repay
interest and principal when due). If an issuer defaults, the Fund may lose
money. Money market funds try to minimize this risk by purchasing higher quality
securities.
Many fixed income securities receive credit ratings from nationally recognized
ratings services. Fixed income securities receive different credit ratings
depending on the rating company's assessment of the likelihood of default by the
issuer. The lower the credit rating, the greater the credit risk.
SECTOR RISKS
A substantial part of the Fund's portfolio may be comprised of securities issued
or credit enhanced by companies in similar businesses, or with other similar
characteristics. As a result, the Fund will be more susceptible to any economic,
business, political, or other developments which generally affect these issuers.
What do Shares Cost?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV).
The Fund does not charge a front-end sales charge. NAV 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 required minimum initial investment for Fund Shares is $25,000. There is
no required minimum subsequent investment amount.
An account may be opened with a smaller minimum amount as long as the $25,000
minimum is reached within 90 days. 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's Distributor markets the Shares described in this prospectus to
institutions acting in an agency or fiduciary capacity or to 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
. Establish an account with the investment professional; and
. Submit your purchase order 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.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUND
. Establish your account with the Fund by submitting a completed New Account
Form; and
. 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 AUTOMATIC INVESTMENTS
You may establish an account with your financial institution to automatically
purchase Shares on pre- determined dates or when your bank account reaches a
certain level. Under this program, participating financial institutions are
responsible for prompt transmission of orders and may charge you for this
service. You should read this prospectus along with your financial institution's
agreement or materials describing this service.
BY AUTOMATED CLEARINGHOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
How to Redeem Shares
You should redeem Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. 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 3:00 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 3:00 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.
You will receive a redemption amount based on the NAV 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:
. Fund Name and Share Class, account number and account registration;
. amount to be redeemed; and
. signatures of all Shareholders exactly as registered.
Call your investment professional or the Fund if you need special instructions.
Signature Guarantees Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last thirty days; or
. 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:
. an electronic transfer to your account at a financial institution that is an
ACH member; or
. 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:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the 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 or exchange request. For your
protection, send your certificates by registered or certified mail, but do not
endorse them.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases and redemptions. In addition, 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 pays 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, non-retirement
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 200
mutual funds and separate accounts, which total more than $110 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 0.40% of the Fund's
average daily net assets. Under the investment advisory contract, which is
subject to annual renewal by the Fund's Board of Trustees, the Adviser will
waive the amount, limited to the amount of the advisory fee, by which the Fund's
aggregate annual operating expenses, including the investment advisory fee but
excluding interest, taxes, brokerage commissions, expenses of registering or
qualifying the Fund and its shares under federal and state laws and regulations,
expenses of withholding taxes, and extraordinary expenses exceed 0.45% of its
average daily net assets.
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. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
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.
However, this may be difficult with certain issuers. For example, funds
dealing with foreign service providers or investing in foreign securities, will
have difficulty determining the Year 2000 readiness of those entities. This is
especially true of entities or issuers in emerging markets.
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.
Financial Information
FINANCIAL HIGHLIGHTS
The Fund's Financial Highlights are contained in the Former Fund's prospectus,
dated January 31, 1999, which must precede or accompany this document.
[FEDERATED LOGO]
Federated Master Trust
A Portfolio of Money Market Obligations Trust
APRIL , 1999
A Statement of Additional Information (SAI) dated April , 1999 is incorporated
by reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's semi-annual report to shareholders as it
becomes available. To obtain the SAI, semi-annual report and other information
without charge, 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.
[FEDERATED LOGO]
Federated Master Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor
Investment Company Act File No. 811-2784
Cusip
G00863-02 (4/99)
Federated is a registered mark of Federated Investors, Inc.
1999 (C)Federated Investors, Inc. [RECYCLED PAPER LOGO]
FMT APPENDIX
The Bar Chart and Performance Table below reflect historical performance data
for Federated Master Trust (the "Former Fund") prior to its reorganization into
the Fund, which is a newly created portfolio of Money Market Obligations Trust
(the "Trust"). On the date of the reorganization, April ___, 1999, the Former
Fund was dissolved and its net assets (inclusive of liabilities recorded on the
Former Fund's records) were transferred into the Fund
The `y' axis reflects the "% Total Return" beginning with 0.00% and increasing
in increments of 2.00% up to 10.00%.
The `x' axis represents calculation for the last ten calendar years of the Fund
beginning with the earliest year. The light gray shaded chart features ten
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 for each calendar
year is stated directly at the top of each respective bar for the calendar years
1989 through 1998. The percentages noted are: 9.18%, 8.11%, 5.98%, 3.61%, 2.90%,
3.99%, 5.73%, 5.15%, 5.30% and 5.28%, respectively.
The bar chart shows the variability of the Fund's actual total returns on a
calendar year end basis.
The Fund's Shares are not sold subject to a sales charge (load). Hence, the
total returns displayed above are based upon the net asset value.
The Fund's 7-Day net yield as of 12/31/98 was 4.85%.
Within the period shown in the Chart, the Fund's highest quarterly return
was 2.36% (quarter ended June 30, 1989). Its lowest quarterly return was 0.70%
(quarters ended June 30 and September 30, 1993).
The following table represents the Fund's Average Annual Total Return through
12/31/98.
CALENDAR PERIOD
1 Year 5.28%
5 Years 5.09%
10 Years 5.51%
Investors may call the Fund to acquire the current Seven-Day Net Yield by
calling 1-800-341-7400.
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.
[IN RED INK ON THE LEFT SIDE] THE INFORMATION IN THIS STATEMENT OF
ADDITIONAL INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL
THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED ___________________
STATEMENT OF ADDITIONAL INFORMATION
FEDERATED MASTER TRUST
A Portfolio of Money Market Obligations Trust
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Federated Master Trust (Fund) dated
April ____, 1999.
Obtain the prospectus without charge by calling 1-800-341-7400.
april _____, 1999
CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
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.?
Addresses
CUSIP ___________
8010411B (4/99)
<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 Fund, which was established on October 10, 1977,
was reorganized as a portfolio of the Trust on ______________, 1999.
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. Investors regard treasury securities as having the lowest credit
risks.
AGENCY SECURITIES
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (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 no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Investors regard agency
securities as having low credit risks, but not as low as treasury securities.
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 Fund 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 nine months or
less. 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. The short
maturity of commercial paper reduces both the market and credit risks as
compared to other debt securities of the same issuer.
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 Fund treats
demand instruments as short-term securities, even though their stated maturity
may extend beyond one year.
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. Asset backed securities may also resemble
some types of CMOs, such as Floaters, Inverse Floaters, IOs and POs.
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.
MORTGAGE BACKED SECURITIES
For purposes of repurchase agreements, the Fund treats mortgage backed
securities guaranteed by GSEs as agency securities. Mortgage backed securities
represent interests in pools of mortgages. The mortgages that comprise a pool
normally have similar interest rates, maturities and other terms. Mortgages may
have fixed or adjustable interest rates. Interests in pools of adjustable rate
mortgages are know as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
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. An
investor 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. 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. Treasury STRIPs are the most
common forms of stripped U.S. Treasury zero coupon securities.
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.
INSURANCE CONTRACTS
Insurance contracts include guaranteed investment contracts, funding agreements
and annuities. The Fund treats these contracts as fixed income securities.
CREDIT ENHANCEMENT
Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security after 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 may evaluate 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.
Following a default, 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.
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.
The Fund does not invest in foreign securities denominated in foreign
currencies. Along with the risks normally associated with domestic securities of
the same type, foreign securities are subject to risks of foreign investing.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Trust may invest its assets in securities of other investment companies as
an efficient means of carrying out its investment policies. It should be noted
that investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Trust in shares of other investment companies
may be subject to such duplicate expenses. At the present time, the Trust
expects that its investments in other investment companies will be limited to
shares of money market funds affiliated with the Trust's investment adviser.
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.
WHEN ISSUED TRANSACTIONS
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, when issued
transactions create market risks for the Fund.
When issued transactions also involve credit risks in the event of a
counterparty default.
TO BE ANNOUNCED SECURITIES (TBAS)
As with other when issued transactions, a seller agrees to issue a TBA security
at a future date. However, the seller does not specify the particular securities
to be delivered. Instead, the Fund agrees to accept any security that meets
specified terms. For example, in a TBA mortgage backed transaction, the Fund and
the seller would agree upon the issuer, interest rate and terms of the
underlying mortgages. However, the seller would not identify the specific
underlying mortgages until it issues the security. TBA mortgage backed
securities increase market risks because the underlying mortgages may be less
favorable than anticipated by the Fund.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
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 entering into an offsetting derivative contract or terminating
a special transaction. This may cause the Fund to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions.
INVESTMENT RATINGS
An nationally recognized ratings service's highest rating category is determined
without regard for sub-categories and gradations. For example, securities rated
A-1 or A-1+ by Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's
Investors Service, Inc. ("Moody's"), or F-1 (+or-) by Fitch Investors Service,
Inc. ("Fitch") are all considered rated in the highest short-term rating
category. The Fund will follow applicable regulations in determining whether a
security rated by more than one nationally recognized ratings service can be
treated as being in the second highest short-term rating category; currently,
such securities must be rated by two nationally recognized ratings services two
highest rating categories. See "Regulatory Compliance."
INVESTMENT RISKS
There are many factors which may effect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk factors
are outlined below.
INVESTMENT RISKS
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.
o Credit risk 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.
LIQUIDITY RISKS
Trading opportunities are more limited for fixed income securities that have not
received any credit ratings, have received ratings below investment grade or are
not widely held. These features may make it more difficult to sell or buy a
security at a favorable price or time. Consequently, the Fund may have to accept
a lower price to sell a security, sell other securities to raise cash or give up
an investment opportunity, any of which could have a negative effect on the
Fund's performance. Infrequent trading may also lead to greater price
volatility.
RISKS OF FOREIGN INVESTING
Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable that those of the United States. Foreign
financial markets may also have fewer investor protections. Securities in
foreign markets may also be subject to taxation policies that reduce returns for
U.S. investors.
Due to these risk factors, foreign securities may be more volatile and less
liquid than similar securities traded in the U.S.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, but it may obtain such short-term credits as may be necessary for
clearance of purchase and sales of securities. The Fund may purchase and dispose
of U.S. Government securities before the issuance thereof. The Fund may also
purchase U.S. Government securities on a delayed delivery basis. The settlement
dates of these transactions shall be determined by the mutual agreement of the
parties.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not borrow money, except as a temporary measure for extraordinary
or emergency purposes, and then (a) only in amounts not in excess of 5% of the
value of its total assets or (b) in an amount up to one-third of the value of
its total assets, including the amount borrowed, in order to meet redemption
requests without immediately selling any portfolio securities (any such
borrowings under this section will not be collateralized).
LENDING CASH OR SECURITIES
The Fund will not make loans to other persons; provided, however, that the
purchase or holding of money market instruments, to include repurchase
agreements and variable amount demand master notes, in accordance with the
Fund's investment objective and policies, shall not constitute the making of a
loan.
INVESTING IN COMMODITIES
The Fund will not invest in commodities or commodity contracts.
INVESTING IN REAL ESTATE
The Fund will not invest in real estate, except that the Fund may purchase money
market instruments issued by companies which invest in real estate or interests
therein.
UNDERWRITING
The Fund will not engage in underwriting of securities issued by others.
ACQUIRING SECURITIES
The Fund will not acquire voting securities except as part of a merger,
consolidation, reorganization, or acquisition of assets.
CONCENTRATION OF INVESTMENTS
The Trust will not invest 25% or more of its total assets in any one industry.
However, investing in U.S. government securities and domestic bank instruments
shall not be considered investments in any one industry.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Trust will not purchase securities of any one issuer (other than cash, cash
items, securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities, and securities of other investment companies)
if as a result more than 5% of the value of its total assets would be invested
in the securities of that issuer, or it would own more than 10% of the
outstanding voting securities of that issuer.
The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities" as defined by the Investment
Company Act. The following investment 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 Trust will not mortgage, pledge or hypothecate assets except as necessary to
secure permitted borrowings. In those cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 10% of
the value of the total assets at the time of the pledge.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities including certain restricted securities not determined to be
liquid under criteria established by the Trustees, non-negotiable time deposits,
and repurchase agreements providing for settlement in more than seven days after
notice.
INVESTING IN OPTIONS
The Fund will not invest in puts, calls, straddles, spreads, or any combination
of them.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items." Except with
respect to borrowing money, if a percentage limitation is adhered to at the time
of investment, a later increase or decrease in percentage resulting from any
change in value or net assets will not result in a violation of such limitation.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940. In particular, the Fund will comply
with the various requirements of Rule 2a-7, which regulates money market mutual
funds. The Fund will also determine the effective maturity of its investments,
as well as its ability to consider a security as having received the requisite
short-term ratings by nationally recognized rating services, according to Rule
2a-7. The Fund may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.
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 Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods of
determining net asset value.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Fund
values foreign securities at the latest closing price on the exchange on which
they are traded immediately prior to the closing of the NYSE. Certain foreign
currency exchange rates may also be determined at the latest rate prior to the
closing of the NYSE. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the NYSE. If such events materially affect the
value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Fund's Board, although the actual
calculation may be done by others.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, 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 Fund 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.
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, it reserves 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 Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund.
In the unlikely event a shareholder is held personally liable for the Fund's
obligations, the Fund is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Fund will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Fund. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Fund 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 Fund have
equal voting rights.
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 the Fund's outstanding shares of
all series entitled to vote.
As of January 6, 1999, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Shares: Saxon and Co., Lester, Pennsylvania
owned approximately 91,060,646 shares (19.55%) and Union Planters National Bank,
Memphis Tennessee owned approximately 30,255,863 shares (6.49%).
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.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Fund's business affairs and for
exercising all the Fund's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birthdate, present position(s) held with the Fund,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Fund for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Federated Fund Complex is
comprised of 56 investment companies, whose investment advisers are affiliated
with the Fund's Adviser.
As of January 6, 1999, the Fund's Board and Officers as a group owned less than
1% of the Fund's outstanding shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------ TOTAL
NAME ----------- COMPENSATION
BIRTHDATE -------------------------------------------- AGGREGATE FROM TRUST AND
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FUND COMPLEX
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, in the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $18, 351 $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the
1934 Committee, Children's Hospital of Trust and 54
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst other
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, investment
TRUSTEE Inc.; Director, Member of Executive companies
Committee, University of Pittsburgh. in the Fund
Complex
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $20,189 $125,264.48for
Birthdate: June 23, 1937 Complex; President, Investment Properties the
Wood/IPC Commercial Corporation; Senior Vice President, Trust and 54
Dept. John R. Wood and Associates, Inc., other
John R. Wood Realtors; Partner or Trustee in private investment
Associates, Inc. real estate ventures in Southwest Florida; companies
Realtors formerly: President, Naples Property in the Fund
3255 Tamiami Trial Management, Inc. and Northgate Village Complex
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
JOHN F. CUNNINGHAM++ Director or Trustee of some of the $0 $0 for the
Birthdate: March 5, 1943 Federated Funds; Chairman, President and Trust and 26
353 El Brillo Way Chief Executive Officer, Cunningham & Co., other
Palm Beach, FL Inc. ; Trustee Associate, Boston College; investment
TRUSTEE Director, EMC Corporation; formerly: companies in
Director, Redgate Communications. the Fund Complex
Retired: 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 $18,351 $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the
1932 of Pittsburgh; Medical Director, University Trust and 54
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; other
Suite 1111 Hematologist, Oncologist, and Internist, investment
Pittsburgh, PA University of Pittsburgh Medical Center; companies
TRUSTEE Member, National Board of Trustees, in the Fund
Leukemia Society of America. Complex
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the
1942 Commonwealth of Massachusetts General Trust and 54
One Royal Palm Way Court; President, State Street Bank and other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
TRUSTEE Retired: Director, VISA USA and VISA in the Fund
International; Chairman and Director, Complex
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
CHARLES F. MANSFIELD, Director or Trustee of some of the $0 $0 for the
JR.++ Federated Funds; Management Consultant. Trust and 0
Birthdate: April 10, other
1945 Retired: Chief Executive Officer, PBTC investment
80 South Road International Bank; Chief Financial Officer companies in
Westhampton Beach, NY of Retail Banking Sector, Chase Manhattan the Fund Complex
TRUSTEE 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 $18,351 $113,860.22 for
J.D., S.J.D. Complex; President, Law Professor, Duquesne the
Birthdate: December 20, University; Consulting Partner, Mollica & Trust and 54
1932 Murray. other
President, Duquesne investment
University Retired: Dean and Professor of Law, companies
Pittsburgh, PA University of Pittsburgh School of Law; in the Fund
TRUSTEE Dean and Professor of Law, Villanova Complex
University School of Law.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies in
Company of America; business owner. the Fund Complex
- -------------------------
JOHN S. WALSH++ Director or Trustee of some of the $0 $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and 22
1957 Heat Wagon, Inc.; President and Director, other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly, Vice
President, Walsh & Kelly, Inc.
- -------------------------
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and 16
1949 Trustee of some of the Funds in the other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research 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
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated companies in
1001 Liberty Avenue Investors, Inc.; Vice President, Federated the Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT Research, Federated Research Corp.,
Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and 54
1938 President, Secretary, and Director, other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- -------------------------
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and 54
1954 Division, Federated Investors, Inc.; other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA
TREASURER
- -------------------------
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and 41
Federated Investors Complex; Executive Vice President, other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Research Corp., Federated Advisers, companies in
Pittsburgh, PA Federated Management, Federated Research, the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Registered
Representative, 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
Research Corp., Federated Advisers,
Federated Management, Federated Research,
and Passport Research, Ltd.
- -------------------------
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and 6
Federated Investors Director or Trustee of some of the Funds in other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.
- -------------------------
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the
Birthdate: September the Trust. Ms. Cunningham joined Federated Trust and 6
15, 1959 Investors in 1981 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1997. Ms. Cunningham served as a the Fund Complex
Pittsburgh, PA Portfolio Manager and a Vice President of
VICE PRESIDENT the investment adviser from 1993 until
1996. Ms. Cunningham 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
Birthdate: September Trust. Ms. Ochson joined Federated Trust and 7
12, 1953 Investors in 1982 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1996. From 1988 through 1995, Ms. the Fund Complex
Pittsburgh, PA Ochson served as a Portfolio Manager and a
VICE PRESIDENT Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A.
in Finance from the University of
Pittsburgh.
SUSAN R. HILL Susan R. Hill is Vice President of the $0 $0 for the
Birthdate: June 20, Trust/. Ms. Hill joined Federated Trust and __
1963 Investors in 1990 and has been a Portfolio other
Federated Investors Manager since 1993 and a Vice President of investment
Tower the Fund's investment adviser since 1997. companies in
1001 Liberty Avenue Ms. Hill was a Portfolio Manager and an the Fund Complex
Pittsburgh, PA Assistant Vice President of the investment
VICE PRESIDENT adviser from 1994 until 1997. Ms. Hill is
a Chartered Financial Analyst and received
an M.S. in Industrial Administration from
Carnegie Mellon University.
</TABLE>
+Mr. Donahue is the father of J. Christopher Donahue, President of the Trust.
++Messrs. Cunningham , Mansfield, and Walsh became members of the Board of
Trustees 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.
<PAGE>
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 Fund 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 Fund.
The adviser must waive the portion of its advisory fee that increases the Fund's
aggregate annual operating expenses above 0.40% of its average daily net assets.
The Fund's operating expenses include the advisory fee but exclude interest,
taxes, brokerage commissions, expenses of registering the Fund and its shares
under federal and state laws, expenses of withholding taxes, and extraordinary
expenses.
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. 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.
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
FEE FEDERATED 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
Deloitte & Touche LLP is the independent public accountant for the Fund.
<PAGE>
FEES PAID BY THE FUND FOR SERVICES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
<S> <C> <C> <C>
- -------------------------------- 1998 1997 1996
NOVEMBER 30, 1998
Advisory Fee Earned $2,105,177 $2,332,976 $2,804,812
- ---------------------------------
Advisory Fee Reduction $655,273 $715,043 $876,351
- ---------------------------------
Brokerage Commissions $0
- ---------------------------------
Administrative Fee $396,826 $440,349 $530,087
- ---------------------------------
Shareholder Services Fee $263,147
- ---------------------------------
</TABLE>
If the Fund's expenses are capped at a particular level, the cap does not
include reimbursement to the Fund of any expenses incurred by Shareholders who
use the transfer agent's subaccounting facilities.
For the fiscal years ended November 30, 1998, 1997 and 1996, fees paid by the
Fund for services are prior to the fund's reorganization as a portfolio of the
Trust on April ____, 1999.
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.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. 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
Fund's 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-, five- and ten-year periods ended November 30,
1998.
Yield and Effective Yield given for the 7-day period ended November 30, 1998.
Performance of the Fund shown is prior to its reorganization as a portfolio of
the Trust on April ___, 1999.
7-DAY PERIOD 1 YEAR 5 YEARS 10 YEARS
Total Return N/A 5.33% 5.06% 5.54%
Yield 4.93%
Effective Yield 5.05%
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 1 to the base-period return, raising the sum to
the 365/7th power: and subtracting 1 from the result.
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 Funds; 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 it invests, 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.
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.
<PAGE>
ADDRESSES
FEDERATED MASTER TRUST
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
125 Summer Street
Boston, MA
02110-1617
8010411B (4/99)
[IN RED INK ON THE LEFT SIDE] THE INFORMATION IN THIS PROSPECTUS IS NOT
COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED ________________
PROSPECTUS
FEDERATED SHORT-TERM U.S. GOVERNMENT TRUST
A Portfolio of Money Market Obligations Trust
A money market mutual fund seeking high current income consistent with stability
of principal and liquidity by investing only in a portfolio of short-term U.S.
government securities maturing in 13 months 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 2
What are the Fund's Fees and Expenses? 4
What are the Fund's Investment Strategies? 5
What are the Principal Securities in Which the Fund Invests? 5
What are the Specific Risks of Investing in the Fund? 6
What do Shares Cost? 6
How is the Fund Sold? 6
How to Purchase Shares 7
How to Redeem Shares 8
Account and Share Information 10
Who Manages the Fund? 10
Financial Information 11
April_______, 1999
<PAGE>
16
RISK/RETURN SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. The Fund's investment objective is high current income consistent with
stability of principal and liquidity. 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.
This investment objective cannot be changed by the Fund's Trustees without
shareholder approval.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury and government agency
securities maturing in 13 months or less. These investments include repurchase
agreements collateralized fully by U.S. Treasury and government agency
securities. The average maturity of the Fund's portfolio will be 90 days or
less.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money 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
GRAPHIC REPRESENTATION OMITTED. SEE FST APPENDIX
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
FEDERATED SHORT-TERM U.S. GOVERNMENT TRUST
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases (as a None
percentage of offering price)
Maximum Deferred Sales Charge (Load) (as a percentage of None
original purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and None
other Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if None
applicable)
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) 0.40%
Distribution (12b-1) Fee None
Shareholder Services Fee (3) 0.25%
Other Expenses 0.15%
Total Annual Fund Operating Expenses (4) 0.80%
(1)Although not contractually obligated to do so, the adviser
and shareholder services provider expect to waive certain amounts during the
fiscal year ending December 31, 1999. These are shown below along with the net
expenses the Fund expects to ACTUALLY PAY for the fiscal year ending December
31, 1999.
- -----------------------------------------------------------------
Waiver of Fund Expenses 0.34%
Total Actual Annual Fund Operating Expenses (after waivers) 0.46%
(4)
(2) The adviser expects to voluntarily waive a portion of the management fee.
The adviser can terminate this anticipated voluntary waiver at any time. The
management fee paid by the Fund ( after the anticipated voluntary waiver) is
expected to be 0.26% for the year ended December 31, 1999. (3) The shareholder
services provider expects to voluntarily reduce a portion of the shareholder
services fee. The shareholder services provider can terminate this anticipated
voluntary reduction at any time. The shareholder services fee paid by the Fund (
after the anticipated voluntary reduction) is expected to be 0.05% for the year
ended December 31, 1999. (4) For the fiscal year ended December 31, 1998, prior
to the proposed reorganization of Federated Short-Term U.S. Government Trust,
the Former Fund, as a portfolio into Money Market Obligations Trust, the Total
Annual Fund Operating Expenses and Total Actual Annual Fund Operating Expenses (
after waivers) were 0.79% and 0.46%, respectively.
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund 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 operating expenses are BEFORE WAIVERS as shown above and remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
1 3 5 10
YEAR YEARS YEARS YEARS
$81 $252 $439 $978
WHAT ARE THE FUND'S INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury and government agency
securities maturing in 13 months or less. These investments include repurchase
agreements collateralized fully by U.S. Treasury and government agency
securities. The average maturity of the Fund's portfolio will be 90 days or
less.
The Adviser targets an average portfolio maturity range by assessing likely
movements in interest rates based upon general economic and market conditions.
The Adviser generally shortens the portfolio's 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 lengthen or shorten the
portfolio's average maturity by comparing the returns currently offered by
different investments to their historical and expected returns.
TEMPORARY DEFENSIVE INVESTMENTS
The Fund may temporarily depart from its principal investment strategies by
investing its assets in cash, cash items, and shorter-term, higher quality debt
securities and similar obligations. 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 give up greater investment returns to
maintain the safety of principal, that is, the original amount invested by
shareholders.
WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?
U.S. Treasury and government agency securities pay interest, dividends or
distributions at a specified rate. The rate may be fixed or adjusted
periodically. The issuer must also repay the principal amount of the security,
normally within a specified time. The Fund invests primarily in the following
types of U.S. government securities.
TREASURY SECURITIES
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 no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities.
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 for 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.
Repurchase agreements are subject to CREDIT RISKS.
<PAGE>
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?
Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a U.S. government money market fund are
described below.
CREDIT RISK
Credit risk is the possibility that an issuer will default (fails to repay
interest and principal when due). If an issuer defaults, the Fund may lose
money. Money market funds try to minimize this risk by purchasing higher quality
securities.
Many fixed income securities receive credit ratings from companies such as
Standard & Poor's and Moody's Investor Services. Fixed income securities receive
different credit ratings depending on the rating company's assessment of the
likelihood of default by the issuer. The lower the credit rating, the greater
the credit risk.
MARKET RISK
Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.
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.
WHAT DO SHARES COST?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next determined net asset value (NAV).
The Fund does not charge a front-end sales charge. NAV 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 required minimum initial investment for Fund Shares is $25,000. There is no
required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $25,000 minimum is
reached within 90 days. An institutional investor's minimum 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's distributor markets the Shares described in this prospectus to
institutions acting in an agency or fiduciary capacity or to individuals
directly or through investment professionals.
The Distributor and its affiliates may pay out of their assets 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 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.
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 on the day 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 AUTOMATED CLEARINGHOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
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 3:00 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 3:00 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 Fund 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 thirty 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 the 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
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmations of purchases and redemptions. In addition, 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 pays 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.
If you purchase Shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.
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 Research. 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 200 mutual
funds and separate accounts, which total more than $110 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 0.40% of the
Fund's average daily net assets. The Adviser may voluntarily waive a portion of
its fee or reimburses 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. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
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.
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The Fund's Financial Highlights are contained in the Former Fund's prospectus,
dated February 28, 1999, which must precede or accompany this document.
<PAGE>
FEDERATED SHORT-TERM U.S. GOVERNMENT TRUST
A Portfolio of Money Market Obligations Trust
Prospectus dated april_______, 1999
A Statement of Additional Information (SAI) dated April_______, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments in contained in the Fund's semi-annual report to shareholders
as it becomes available. To obtain the SAI, semi-annual report and other
information without charge, 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. 811-5035
CUSIP
G00902-02 (4/99)
FST APPENDIX
The Bar Chart and Performance Table below reflect historical performance data
for Federated Short-Term U.S. Government Trust (the "Former Fund") prior to its
reorganization into the Fund, which is a newly created portfolio of Money Market
Obligations Trust (the "Trust"). On the date of the reorganization, April ___,
1999, the Former Fund was dissolved and its net assets (inclusive of liabilities
recorded on the Former Fund's records) were transferred into the Fund
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 for the last ten calendar years of the Fund
beginning with the earliest year. The light gray shaded chart features ten
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 for each calendar
year is stated directly at the top of each respective bar for the calendar years
1988 through 1997. The percentages noted are: 9.17%, 8.11%, 5.93%, 3.64%, 2.95%,
3.99%, 5.72%, 5.10%, 5.24% and 5.16%, respectively.
Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's actual total returns on
a yearly basis.
The Fund's Shares are not sold subject to a sales charge (load). Hence, the
total returns displayed above are based upon the net asset value.
The Fund's 7-Day Net Yield as of 12/31/98 was 4.63%
Within the period shown in the Chart, the Fund's highest quarterly return
was 2.34% (quarter ended June 30, 1989). Its lowest quarterly return was 0.72%
(quarter ended June 30, 1993).
The following table represents the Fund's Average Annual Total Return through
12/31/98.
CALENDAR PERIOD
1 Year 5.16%
5 Years 5.04%
10 Years 5.49%
Investors may call the Fund to acquire the current Seven-Day Net Yield by
calling 1-800-341-7400.
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.
[IN RED INK ON THE LEFT SIDE] THE INFORMATION IN THIS STATEMENT OF
ADDITIONAL INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL
THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED ___________________
STATEMENT OF ADDITIONAL INFORMATION
FEDERATED SHORT-TERM U.S. GOVERNMENT TRUST
A Portfolio of Money Market Obligations Trust
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Federated Short-Term U.S. Government
Trust dated April____, 1999.
Obtain the prospectus without charge by calling 1-800-341-7400.
april_____, 1999
CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
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.?
Addresses
CUSIP __________
8020102B (4/99)
<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 Fund, which was established on February 2, 1987,
was reorganized as a portfolio of the Trust on ______________1999.
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
In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective.
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.
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 risk.
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 no explicit financial support, but are regarded as having implied
support because the federal government sponsors their activities. Agency
securities are generally regarded as having low credit risk, but not as low
as Treasury securities.
The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the MARKET AND PREPAYMENT RISKS of these mortgage backed
securities.
MORTGAGE BACKED SECURITIES
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments on to
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the PREPAYMENT
RISKS of the underlying mortgages.
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.
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. Treasury
STRIPs are the most common forms of stripped zero coupon securities. 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
In conjunction with the Fund's ability to invest in the securities of other
investment companies, the Fund may invest in the securities of affiliated
money market funds as an efficient means of managing the Fund's univested
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.
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 RISK. In addition, Reverse
Repurchase Agreements create LEVERAGE RISK 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.
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 MARKET 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 MARKET RISKS AND CREDIT RISKS.
ASSET COVERAGE.
In order to secure its obligations in connection with when-issued, and
delayed-delivery transactions, the Fund will "cover" such transactions, as
required under applicable interpretations of the SEC, either by owning the
underlying securities; entering into an offsetting transaction; or
segregating, earmarking, or depositing into an escrow account readily
marketable securities in an amount at all times equal to or exceeding the
Fund's commitment with respect to these instruments or contracts. As a
result, use of these instruments will impede the Fund's ability to freely
trade the assets being used to cover them, which could result in harm to the
Fund.
INVESTMENT RISKS
There are many factors which may effect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk factors
are outlined below.
CREDIT RISK
o Credit risk is the possibility that an issuer will default (fails to repay
interest and principal when due). If an issuer defaults, the Fund may lose
money. Money market funds try to minimize this risk by purchasing higher
quality securities.
o Many fixed income securities receive credit ratings from companies such as
Standard & Poor's and Moody's Investor Services. Fixed income securities
receive different credit ratings depending on the rating company's
assessment of the likelihood of default by the issuer. The lower the credit
rating, the greater the credit risk.
MARKET RISK
o Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices
of fixed income securities fall.
o 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.
LEVERAGE RISK
o Leverage risk is created when an investment exposes the Fund 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.
PREPAYMENT RISKS
o Generally, homeowners have the options to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate
mortgages when mortgage rates fall. This results in the prepayment of
mortgage backed securities with higher interest rates. Conversely,
prepayments due to refinancings decrease when mortgage rates increase. This
extends the life of mortgage backed securities with lower interest rates. As
a result, increases in prepayments of high interest rate mortgage backed
securities, or decreases in prepayments of lower interest rate mortgage
backed securities, may reduce their yield and price. This relationship
between interest rates and mortgage prepayments makes the price of mortgage
backed securities more volatile than most other types of fixed income
securities with comparable credit risks.
o
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Trust will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for clearance
of purchase and sales of securities.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Trust will not issue senior securities. The Trust will not borrow money
except as a temporary measure for extraordinary or emergency purposes and then
only in amounts not in excess of 5% of the value of its total assets or in an
amount up to one-third of the value of its total assets, including the amount
borrowed, in order to meet redemption requests without immediately selling
portfolio instruments. Any such borrowings would not be collateralized.
PLEDGING ASSETS
The Trust will not pledge securities except that it may enter into reverse
repurchase agreements permitted by its investment objective and policies.
LENDING CASH OR SECURITIES
The Trust will not lend any assets, except portfolio securities up to one-third
of the value of its total assets. This shall not prevent the Trust from
purchasing or holding U.S. government securities, including repurchase
agreements, permitted by its investment objective and policies.
The above limitations cannot be changed unless authorized 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.
==============================================================================
ACQUIRING SECURITIES
The Trust will not acquire the voting securities of any issuer, except
securities of other investment companies or as a part of a merger,
consolidation, reorganization, or acquisition of assets.
INVESTING IN COMMODITIES
The Trust will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Trust will not purchase or sell real estate.
UNDERWRITING
The Trust will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the sale of securities in accordance with its investment objective, policies,
and limitations.
CONCENTRATION OF INVESTMENTS
The Trust will not invest 25% or more of the value of its total assets in any
one industry. However, the Trust may invest 25% or more of the value of its
total assets in cash, cash items, or securities issued or guaranteed by the
government of the United States, or its agencies, or instrumentalities and
repurchase agreements collateralized by such U.S. government securities. The
U.S. government is not considered to be an industry.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Trust will not purchase securities of any one issuer (other than cash, cash
items, or securities issued or guaranteed by the government of the United
States, or its agencies, or instrumentalities and repurchase agreements
collateralized by such U.S. government securities) if as a result more than 5%
of the value of its total assets would be invested in the securities of that
issuer, or if it would own more than 10% of the outstanding voting securities of
that issuer.
INVESTING IN ILLIQUID SECURITIES
The Trust will not invest more than 10% of the value of its net assets in
illiquid securities including certain restricted securities not determined to be
liquid under criteria established by the Trustees and repurchase agreements
providing for settlement in more than seven days after notice.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Trust will not purchase securities of other investment companies, except as
part of a merger, consolidation, or other acquisition.
INVESTING FOR CONTROL
The Trust will not invest in securities of a company for the purpose of
exercising control or management.
For purposes of the above limitations, the Trust 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.
REGULATORY COMPLIANCE
The Trust 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 Trust will comply
with the various requirements of Rule 2a-7, which regulates money market mutual
funds. The Trust will determine the effective maturity of its investments
according to Rule 2a-7. The Trust 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 Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods of
determining net asset value.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, 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 Fund 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.
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, it reserves 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 Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund.
In the unlikely event a shareholder is held personally liable for the Fund's
obligations, the Fund is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Fund will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Fund. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Fund 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 Fund have
equal voting rights.
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 the Fund's outstanding shares.
As of December 9, 1998, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares: Union Planters Bank,
Belleville, IL owned approximately 26,377,090 (7.69%), Heritage Bremen Bank
&Trust, Tinley Park, IL owned approximately 24,141,165 shares (7.03%) and
Friedmar & Co., Richmond, CA, owned approximately 21,605,479 shares (6.30%).
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.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Fund's business affairs and for
exercising all the Fund's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birthdate, present position(s) held with the Fund,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Fund for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Federated Fund Complex
includes 56 funds whose investment adviser is affiliated with the Fund's
Adviser.
As of December 9, 1998, the Fund's Board and Officers as a group owned less than
1% of the Fund's outstanding Share.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------ TOTAL
NAME ----------- COMPENSATION
BIRTHDATE -------------------------------------------- AGGREGATE FROM TRUST AND
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FUND COMPLEX
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, in the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $18, 351 $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the
1934 Committee, Children's Hospital of Trust and 54
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst other
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, investment
TRUSTEE Inc.; Director, Member of Executive companies
Committee, University of Pittsburgh. in the Fund
Complex
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $20,189 $125,264.48for
Birthdate: June 23, 1937 Complex; President, Investment Properties the
Wood/IPC Commercial Corporation; Senior Vice President, Trust and 54
Dept. John R. Wood and Associates, Inc., other
John R. Wood Realtors; Partner or Trustee in private investment
Associates, Inc. real estate ventures in Southwest Florida; companies
Realtors formerly: President, Naples Property in the Fund
3255 Tamiami Trial Management, Inc. and Northgate Village Complex
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
JOHN F. CUNNINGHAM++ Director or Trustee of some of the $0 $0 for the
Birthdate: March 5, 1943 Federated Funds; Chairman, President and Trust and 26
353 El Brillo Way Chief Executive Officer, Cunningham & Co., other
Palm Beach, FL Inc. ; Trustee Associate, Boston College; investment
TRUSTEE Director, EMC Corporation; formerly: companies in
Director, Redgate Communications. the Fund Complex
Retired: 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 $18,351 $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the
1932 of Pittsburgh; Medical Director, University Trust and 54
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; other
Suite 1111 Hematologist, Oncologist, and Internist, investment
Pittsburgh, PA University of Pittsburgh Medical Center; companies
TRUSTEE Member, National Board of Trustees, in the Fund
Leukemia Society of America. Complex
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the
1942 Commonwealth of Massachusetts General Trust and 54
One Royal Palm Way Court; President, State Street Bank and other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
TRUSTEE Retired: Director, VISA USA and VISA in the Fund
International; Chairman and Director, Complex
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
CHARLES F. MANSFIELD, Director or Trustee of some of the $0 $0 for the
JR.++ Federated Funds; Management Consultant. Trust and 0
Birthdate: April 10, other
1945 Retired: Chief Executive Officer, PBTC investment
80 South Road International Bank; Chief Financial Officer companies in
Westhampton Beach, NY of Retail Banking Sector, Chase Manhattan the Fund Complex
TRUSTEE 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 $18,351 $113,860.22 for
J.D., S.J.D. Complex; President, Law Professor, Duquesne the
Birthdate: December 20, University; Consulting Partner, Mollica & Trust and 54
1932 Murray. other
President, Duquesne investment
University Retired: Dean and Professor of Law, companies
Pittsburgh, PA University of Pittsburgh School of Law; in the Fund
TRUSTEE Dean and Professor of Law, Villanova Complex
University School of Law.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies in
Company of America; business owner. the Fund Complex
- -------------------------
JOHN S. WALSH++ Director or Trustee of some of the $0 $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and 22
1957 Heat Wagon, Inc.; President and Director, other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly, Vice
President, Walsh & Kelly, Inc.
- -------------------------
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and 16
1949 Trustee of some of the Funds in the other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research 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
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated companies in
1001 Liberty Avenue Investors, Inc.; Vice President, Federated the Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT Research, Federated Research Corp.,
Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and 54
1938 President, Secretary, and Director, other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- -------------------------
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and 54
1954 Division, Federated Investors, Inc.; other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA
TREASURER
- -------------------------
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and 41
Federated Investors Complex; Executive Vice President, other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Research Corp., Federated Advisers, companies in
Pittsburgh, PA Federated Management, Federated Research, the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Registered
Representative, 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
Research Corp., Federated Advisers,
Federated Management, Federated Research,
and Passport Research, Ltd.
- -------------------------
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and 6
Federated Investors Director or Trustee of some of the Funds in other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.
- -------------------------
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the
Birthdate: September the Trust. Ms. Cunningham joined Federated Trust and 6
15, 1959 Investors in 1981 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1997. Ms. Cunningham served as a the Fund Complex
Pittsburgh, PA Portfolio Manager and a Vice President of
VICE PRESIDENT the investment adviser from 1993 until
1996. Ms. Cunningham 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
Birthdate: September Trust. Ms. Ochson joined Federated Trust and 7
12, 1953 Investors in 1982 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1996. From 1988 through 1995, Ms. the Fund Complex
Pittsburgh, PA Ochson served as a Portfolio Manager and a
VICE PRESIDENT Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A.
in Finance from the University of
Pittsburgh.
SUSAN R. HILL Susan R. Hill is Vice President of the $0 $0 for the
Birthdate: June 20, Trust/. Ms. Hill joined Federated Trust and __
1963 Investors in 1990 and has been a Portfolio other
Federated Investors Manager since 1993 and a Vice President of investment
Tower the Fund's investment adviser since 1997. companies in
1001 Liberty Avenue Ms. Hill was a Portfolio Manager and an the Fund Complex
Pittsburgh, PA Assistant Vice President of the investment
VICE PRESIDENT adviser from 1994 until 1997. Ms. Hill is
a Chartered Financial Analyst and received
an M.S. in Industrial Administration from
Carnegie Mellon University.
</TABLE>
+Mr. Donahue is the father of J. Christopher Donahue, President of the Trust.
++Messrs. Cunningham , Mansfield, and Walsh became members of the Board of
Trustees 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.
<PAGE>
NVESTMENT 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 Fund 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 Fund.
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. 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.
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
Arthur Andersen LLP, Boston, MA is the independent public accountant for the
Fund.
<PAGE>
<TABLE>
<CAPTION>
FEES PAID BY THE FUND FOR SERVICES
FOR THE YEAR ENDED
<S> <C> <C> <C>
- -------------------------------- 1998 1997 1996
DECEMBER 31, 1998
Advisory Fee Earned $ $2,113,857 $2,431,793
- ---------------------------------
Advisory Fee Reduction $ $666,937 $775,483
- ---------------------------------
Brokerage Commissions $
- ---------------------------------
Administrative Fee $ $398,950 $459,537
- ---------------------------------
Shareholder Services Fee $ --- -----
- ---------------------------------
</TABLE>
For the fiscal years ended December 31, 1997 and 1996, fees paid by the
fund for services are prior to the Fund's reorganization as a portfolio of the
Trust on April ____, 1999.
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.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales
charges, which, if excluded, would increase the total return and yield. 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 Fund's 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-, five- and ten-year periods ended December 31,
1998.
Yield and Effective Yield given for the 30-day period ended December 31, 1998.
Performance of the Fund shown is prior to its reorganization as a portfolio of
the Trust on April ____, 1999.
1 YEAR 5 YEARS 10 YEARS
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 1 to the base-period return, raising the sum to
the 365/7th power; and subtracting 1 from the result.
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 Funds; 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 it invests, 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.
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.
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.
<PAGE>
ADDRESSES
FEDERATED SHORT-TERM U.S. GOVERNMENT TRUST
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
8020102B (4/99)
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commisssion is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
DATED
PROSPECTUS
TRUST FOR GOVERNMENT CASH RESERVES
A Portfolio of Money Market Obligations Trust
A money market mutual fund investing only in a portfolio of U.S. government
securities maturing in 13 months 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.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Risk/Return Summary 1
What are the Fund's Fees and Expenses? 3
What are the Fund's Investment Strategies? 4
What are the Principal Securities in Which the Fund Invests? 4
What are the Specific Risks of Investing in the Fund? 4
What do Shares Cost? 5
How is the Fund Sold? 5
How to Purchase Shares 5
How to Redeem Shares 6
Account and Share Information 8
Who Manages the Fund? 9
Financial Information 9
</TABLE>
APRIL , 1999
Risk/Return Summary
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. The Fund's investment objective is high current income consistent with
the stability of principal and liquidity. 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 in a portfolio of U.S. Treasury and government agency
securities that pay interest that is exempt from state personal income tax. The
dollar- weighted average maturity of the Fund's portfolio will be 60 days or
less; no portfolio security will have a maturity of more than 13 months.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money 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.
Risk/Return Bar Chart and Table
The Bar Chart and Performance Table below reflect historical performance data
for Trust for Government Cash Reserves (the "Former Fund") prior to its
reorganization into the Fund, which is a newly created portfolio of Money Market
Obligations Trust (the "Trust"). On the date of the reorganization, April ,
1999, the Former Fund was dissolved and its net assets (inclusive of liabilities
recorded on the Former Fund's records) were transferred into the Fund.
[GRAPH APPEARS HERE]
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The Fund's Shares are not sold subject to a sales charge (load).
Hence, the total returns displayed above are based upon the net asset value.
Within the period shown in the Chart, the Fund's highest quarterly return was
1.94% (quarter ended June 30, 1990). Its lowest quarterly return was 0.70%
(quarters ended March 31, 1993 and June 30, 1993).
The Fund's Seven-Day Net Yield as of 12/31/98 was 4.71%.
Average Annual Total Return
Calendar Period Fund
1 Year 5.11%
5 Years 4.98%
Start of Performance1 5.26%
1 The Funds start of performance date was March 30, 1989.
Investors may call the Fund to acquire the current Seven-Day Net Yield by
calling 1-800-341-7400.
While 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.
What are the Fund's Fees and Expenses?
<TABLE>
<CAPTION>
TRUST FOR GOVERNMENT CASH RESERVES
FEES AND EXPENSES
<S> <C>
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 redemption proceeds, as applicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price) None
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 Fee2 0.40%
Distribution (12b-1) Fee None
Shareholder Services Fee3 0.25%
Other Expenses 0.12%
Total Annual Fund Operating Expenses4 0.77%
1 Although not contractually obligated to do so, the adviser and shareholder
services provider expect to waive certain amounts during the fiscal year
ending November 30, 1999. These are shown below along with the net expenses
the Fund expects to actually pay for the fiscal year ending November30,1999.
Waiver of Fund Expenses 0.31%
Total Actual Annual Fund Operating Expenses (after waivers)4 0.46%
2 The adviser expects to voluntary waive a portion of the management fee. The
adviser can terminate this anticipated voluntary waiver at any time. The
management fee paid by the Fund (after the anticipated voluntary waiver) is
expected to be 0.29% for the year ended December 31, 1999.
3 The shareholder services provider expects to voluntarily reduce a portion of
the shareholder services fee. The shareholder services provider can terminate
this anticipated voluntary reduction at any time. The shareholder services fee
paid by the Fund (after the anticipated voluntary reduction) is expected to be
0.05% for the year ended December 31, 1999.
4 For the fiscal year ended December 31, 1998, prior to the proposed
reorganization of Trust for Government Cash Reserves, the Former Fund, as a
portfolio into Money Market Obligations Trust, the Total Annual Fund Operating
Expenses and Total Actual Annual Fund Operating Expenses (after waivers) were
0.77% and 0.46%, respectively.
</TABLE>
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund 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 operating expenses are before waivers as shown above 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
$79 $246 $428 $954
What are the Fund's Investment Strategies?
The Fund invests in a portfolio of U.S. Treasury and government agency
securities that pay interest that is exempt from state personal income tax.
Portfolio securities will have a maturity of 397 days or less. However, in an
effort to qualify for the highest rating for money market funds issued by a
nationally recognized rating service, the Fund intends to limit the
dollar-weighted average maturity of its portfolio to 60 days or less.
The adviser targets a dollar-weighted average portfolio maturity range for the
Fund 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 outlook for future activity,
. current short-term interest rates, and
. recent actions by the Federal Reserve Board regarding short-term interest
rates and market expectations regarding future actions.
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 lengthen or
shorten 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 and government agency securities pay interest, dividends or
distributions at a specified rate. The rate may be fixed or adjusted
periodically. The issuer must also repay the principal amount of the security,
normally within a specified time. The Fund invests primarily in the following
types of U.S. government securities.
TREASURY SECURITIES
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 no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities.
What are the Specific Risks of Investing in the Fund?
Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a U.S. government money market fund are
described below.
MARKET RISK
Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.
Interest rate changes have a greater affect on the price of fixed income
securities with longer maturities. Money market funds try to minimize this risk
by purchasing short-term securities.
What do Shares Cost?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV).
The Fund does not charge a front-end sales charge. NAV is determined at 12:00
noon and 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 required minimum initial investment for Fund Shares is $25,000. There is
no required minimum subsequent investment amount.
An account may be opened with a smaller minimum amount as long as the $25,000
minimum is reached within 90 days. An institutional investor's minimum is
calculated by combining all accounts it maintains with the Fund. Accounts
established through investment professionals may be subject to higher or lower
minimum investment requirements than those imposed by the Fund. 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's distributor markets the Shares described in this prospectus to
institutional investors, such as banks, fiduciaries, custodians of public funds,
and similar institutional investors, such as corporations, unions, hospitals,
insurance companies, and municipalities. The Fund may not be a suitable
investment for retirement plans. The Distributor and its affiliates may pay out
of their assets 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
. Establish an account with the investment professional; and
. Submit your purchase order 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.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUND
. Establish your account with the Fund by submitting a completed New Account
Form; and
. 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 AUTOMATIC INVESTMENTS
You may establish an account with your financial institution to automatically
purchase Shares on pre-determined dates or when your bank account reaches a
certain level. Under this program, participating financial institutions are
responsible for prompt transmission of orders and may charge you for this
service. You should read this prospectus along with your financial institution's
agreement or materials describing this service.
BY AUTOMATED CLEARINGHOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
RETIREMENT INVESTMENTS
You may purchase Shares as retirement investments (such as qualified plans and
IRAs or transfer or rollover of assets). Call your investment professional or
the Fund for information on retirement investments. We suggest that you discuss
retirement investments with your tax adviser. You may be subject to an annual
IRA account fee.
How to Redeem Shares
You should redeem Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. 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). The redemption
amount you will receive is based upon the next calculated NAV after the Fund
receives the order from your investment professional. 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 2:00 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 2:00 p.m. (Eastern time) your redemption will be wired to
you the following business day. You will receive that day's dividend. Under
limited circumstances, arrangements may be made with the Distributor for same-
day payment of redemption proceeds, without the day's dividend, for redemption
requests received before 2:00 p.m. (Eastern time).
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:
. Fund Name and Share Class, account number and account registration;
. amount to be redeemed; and
. signatures of all Shareholders exactly as registered.
Call your investment professional or the Fund if you need special instructions.
Signature Guarantees Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of
record;
. your redemption will be sent to an address of record that was changed within
the last thirty days; or
. 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:
. an electronic transfer to your account at a financial institution that is an
ACH member; or
. 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:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the 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.
REDEMPTIONS FROM RETIREMENT ACCOUNTS
In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the Fund may be withheld for taxes. This
withholding only applies to certain types of retirement accounts.
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 or exchange request. For your
protection, send your certificates by registered or certified mail, but do not
endorse them.
Account and Share Information
ACCOUNT STATEMENTS
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 pays 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, non-retirement
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.
The Fund will limit its investments to those which, if owned directly, pay
interest exempt from state personal income tax. However, under the laws of some
states, the net investment income distributed by the Fund may be taxable to
shareholders.
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 200
mutual funds and separate accounts, which total more than $110 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 0.40% 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. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
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.
Financial Information
FINANCIAL HIGHLIGHTS
The Fund's Financial Highlights are contained in the Former Fund's prospectus,
dated January 31, 1999, which must precede or accompany this document.
[FEDERATED LOGO]
Trust for Government Cash Reserves
A Portfolio of Money Market Obligations Trust
APRIL , 1999
A Statement of Additional Information (SAI) dated
April , 1999, is incorporated by reference into this prospectus. Additional
information about the Fund's investments is contained in the Fund's semi-annual
report to shareholders as it becomes available. To obtain the SAI, semi-annual
report and other information without charge, 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.
[FEDERATED LOGO]
Trust for Government Cash Reserves
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor
Investment Company Act File No. 811-5772
Cusip
G00865-02 (4/99)
Federated is a registered mark of Federated Investors, Inc.
1999 (C)Federated Investors, Inc. [RECYCLED PAPER LOGO]
TGCR APPENDIX
The Bar Chart and Performance Table below reflect historical performance data
for Trust for Government Cash Reserves (the "Former Fund") prior to its
reorganization into the Fund, which is a newly created portfolio of Money Market
Obligations Trust (the "Trust"). On the date of the reorganization, April ___,
1999, the Former Fund was dissolved and its net assets (inclusive of liabilities
recorded on the Former Fund's records) were transferred into the Fund
The `y' axis reflects the "% Total Return" beginning with 0.00% and increasing
in increments of 2.00% up to 8.00%.
The `x' axis represents calculation for the last nine calendar years of the Fund
beginning with the earliest year. 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 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: 7.87%, 5.71%, 3.45%, 2.86%, 3.96%,
5.59%, 5.05%, 5.17% and 5.11%, respectively.
The bar chart shows the variability of the Fund's actual total return on a
yearly basis.
The Fund's Shares are not sold subject to a sales charge (load). Hence, the
total returns displayed above are based upon the net asset value.
Within the period shown in the Chart, the Fund's highest quarterly return
was 1.94% (quarter ended June 30, 1990). Its lowest quarterly return was 0.70%
(quarters ended March 31, 1993 and June 30, 1993).
The Fund's 7-Day net yield as of 12/31/98 was 4.71%.
The following table represents the Fund's Average Annual Total Return through
12/31/98.
CALENDAR PERIOD
- ---------------
1 Year 5.11%
5 Years 4.98%
Start of Performance 1. 5.26%
1. The Fund's start of performance date was March 30, 1989.
Investors may call the Fund to acquire the current Seven-Day Net Yield by
calling 1-800-341-7400.
While 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.
[IN RED INK ON THE LEFT SIDE] THE INFORMATION IN THIS STATEMENT OF
ADDITIONAL INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL
THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED ___________________
STATEMENT OF ADDITIONAL INFORMATION
TRUST FOR GOVERNMENT CASH RESERVES
A Portfolio of Money Market Obligations Trust
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Trust for Government Cash Reserves
(Fund), dated April ___, 1999. Obtain the prospectus without charge by calling
1-800-341-7400.
April ____, 1999
CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
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.?
Addresses
CUSIP ___________
9022103B (4/99)
<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 Fund, which was established on January 26, 1989,
was reorganized as a portfolio of the Trust on ___________1999.
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. Investors regard treasury securities as having the lowest
credit risks. 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 no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Investors regard agency securities as
having low credit
risks, but not as low as treasury securities.
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. An investor must wait until maturity to receive interest and
principal, which increases the market 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. Treasury STRIPs are the most
common forms of stripped U.S. Treasury zero coupon securities. INVESTING IN
SECURITIES OF OTHER INVESTMENT COMPANIES In conjunction with the Fund's
ability to invest in the securities of other investment companies, the Fund
may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's univested cash.
SPECIAL TRANSACTIONS
WHEN ISSUED TRANSACTIONS
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, when issued transactions create MARKET RISKS for the
Fund. When issued transactions also involve CREDIT RISKS in the event of a
counterparty default.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
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 entering into an offsetting derivative contract or terminating
a special transaction. This may cause the Fund to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on margin
but may obtain such short-term credits as may be necessary for clearance of
transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow money
in amounts up to one-third of the value of its total assets, including the
amounts borrowed.
The Fund will not borrow money except as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling the
Fund to meet redemption requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of the value of its total assets are
outstanding.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except as
necessary to secure permitted borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts borrowed or
10% of the value of total assets at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may purchase or hold
U.S. government securities, permitted by its investment objective, policies, and
limitations.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the sale of securities in accordance with its investment objective, policies,
and limitations.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any one
industry. However, the Fund may invest 25% or more of the value of its total
assets in cash, cash items, or securities issued or guaranteed by the government
of the United States or its agencies, or instrumentalities and repurchase
agreements collateralized by such U.S. government securities. The U.S.
government is not considered to be an industry.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities of any one issuer (other than cash, cash
items, or securities issued or guaranteed by the government of the United States
or its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities) if as a result more than 5% of the value of its
total assets would be invested in the securities of that issuer, or if it would
own more than 10% of the outstanding voting securities of that issuer.
The above limitations cannot be changed unless authorized by the vote of a
majority of its outstanding voting securities. 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.
==============================================================================
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
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.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940. In particular, the Fund will comply
with the various requirements of Rule 2a-7, which regulates money market mutual
funds. The Fund will determine the effective maturity of its investments
according to Rule 2a-7. The Fund may change these operational policies to
reflect changes in the laws and regulations without the approval of its
shareholders.
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 Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the dollar-weighted average portfolio maturity) to minimize any
material dilution or other unfair results arising from differences between the
two methods of determining net asset value.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, 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 Fund 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
of qualified employees to attend 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.
When an investment professional's customer purchases shares, the investment
professional may receive:
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, it reserves 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 Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund.
In the unlikely event a shareholder is held personally liable for the Fund's
obligations, the Fund is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Fund will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Fund. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Fund 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 Fund have
equal voting rights.
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 the Fund's outstanding shares of
all series entitled to vote.
As of January 6, 1999, the following shareholders owned of record, beneficially,
or both, 5% or more of outstanding Shares: NMF & Co., Nutter McClennen & Fish,
Boston, MA, owned 19.10% of the Fund; Saxon & Co., Lester, PA, owned 12.72% of
the Fund; Acadia & Co., Boston, MA, owned 5.73% of the Fund; Publix Super
Market, Lakeland, FL, owned 5.47% of the Fund; and Fiduciary Trust Co.
International, New York, NY, owned 5.26% of the Fund.
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.
<PAGE>
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Fund's business affairs and for
exercising all the Fund's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birthdate, present position(s) held with the Fund,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Fund for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Federated Fund Complex
includes 56 investment companies whose investment adviser is affiliated with the
Fund's Adviser. As of January 6, 1999, the Fund's Board and Officers as a group
owned less than 1% of the Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------ TOTAL
NAME ----------- COMPENSATION
BIRTHDATE -------------------------------------------- AGGREGATE FROM TRUST AND
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FUND COMPLEX
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, in the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $18, 351 $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the
1934 Committee, Children's Hospital of Trust and 54
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst other
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, investment
TRUSTEE Inc.; Director, Member of Executive companies
Committee, University of Pittsburgh. in the Fund
Complex
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $20,189 $125,264.48for
Birthdate: June 23, 1937 Complex; President, Investment Properties the
Wood/IPC Commercial Corporation; Senior Vice President, Trust and 54
Dept. John R. Wood and Associates, Inc., other
John R. Wood Realtors; Partner or Trustee in private investment
Associates, Inc. real estate ventures in Southwest Florida; companies
Realtors formerly: President, Naples Property in the Fund
3255 Tamiami Trial Management, Inc. and Northgate Village Complex
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
JOHN F. CUNNINGHAM++ Director or Trustee of some of the $0 $0 for the
Birthdate: March 5, 1943 Federated Funds; Chairman, President and Trust and 26
353 El Brillo Way Chief Executive Officer, Cunningham & Co., other
Palm Beach, FL Inc. ; Trustee Associate, Boston College; investment
TRUSTEE Director, EMC Corporation; formerly: companies in
Director, Redgate Communications. the Fund Complex
Retired: 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 $18,351 $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the
1932 of Pittsburgh; Medical Director, University Trust and 54
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; other
Suite 1111 Hematologist, Oncologist, and Internist, investment
Pittsburgh, PA University of Pittsburgh Medical Center; companies
TRUSTEE Member, National Board of Trustees, in the Fund
Leukemia Society of America. Complex
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the
1942 Commonwealth of Massachusetts General Trust and 54
One Royal Palm Way Court; President, State Street Bank and other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
TRUSTEE Retired: Director, VISA USA and VISA in the Fund
International; Chairman and Director, Complex
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
CHARLES F. MANSFIELD, Director or Trustee of some of the $0 $0 for the
JR.++ Federated Funds; Management Consultant. Trust and 0
Birthdate: April 10, other
1945 Retired: Chief Executive Officer, PBTC investment
80 South Road International Bank; Chief Financial Officer companies in
Westhampton Beach, NY of Retail Banking Sector, Chase Manhattan the Fund Complex
TRUSTEE 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 $18,351 $113,860.22 for
J.D., S.J.D. Complex; President, Law Professor, Duquesne the
Birthdate: December 20, University; Consulting Partner, Mollica & Trust and 54
1932 Murray. other
President, Duquesne investment
University Retired: Dean and Professor of Law, companies
Pittsburgh, PA University of Pittsburgh School of Law; in the Fund
TRUSTEE Dean and Professor of Law, Villanova Complex
University School of Law.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies in
Company of America; business owner. the Fund Complex
- -------------------------
JOHN S. WALSH++ Director or Trustee of some of the $0 $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and 22
1957 Heat Wagon, Inc.; President and Director, other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly, Vice
President, Walsh & Kelly, Inc.
- -------------------------
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and 16
1949 Trustee of some of the Funds in the other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research 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
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated companies in
1001 Liberty Avenue Investors, Inc.; Vice President, Federated the Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT Research, Federated Research Corp.,
Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and 54
1938 President, Secretary, and Director, other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- -------------------------
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and 54
1954 Division, Federated Investors, Inc.; other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA
TREASURER
- -------------------------
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and 41
Federated Investors Complex; Executive Vice President, other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Research Corp., Federated Advisers, companies in
Pittsburgh, PA Federated Management, Federated Research, the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Registered
Representative, 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
Research Corp., Federated Advisers,
Federated Management, Federated Research,
and Passport Research, Ltd.
- -------------------------
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and 6
Federated Investors Director or Trustee of some of the Funds in other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.
- -------------------------
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the
Birthdate: September the Trust. Ms. Cunningham joined Federated Trust and 6
15, 1959 Investors in 1981 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1997. Ms. Cunningham served as a the Fund Complex
Pittsburgh, PA Portfolio Manager and a Vice President of
VICE PRESIDENT the investment adviser from 1993 until
1996. Ms. Cunningham 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
Birthdate: September Trust. Ms. Ochson joined Federated Trust and 7
12, 1953 Investors in 1982 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1996. From 1988 through 1995, Ms. the Fund Complex
Pittsburgh, PA Ochson served as a Portfolio Manager and a
VICE PRESIDENT Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A.
in Finance from the University of
Pittsburgh.
SUSAN R. HILL Susan R. Hill is Vice President of the $0 $0 for the
Birthdate: June 20, Trust/. Ms. Hill joined Federated Trust and __
1963 Investors in 1990 and has been a Portfolio other
Federated Investors Manager since 1993 and a Vice President of investment
Tower the Fund's investment adviser since 1997. companies in
1001 Liberty Avenue Ms. Hill was a Portfolio Manager and an the Fund Complex
Pittsburgh, PA Assistant Vice President of the investment
VICE PRESIDENT adviser from 1994 until 1997. Ms. Hill is
a Chartered Financial Analyst and received
an M.S. in Industrial Administration from
Carnegie Mellon University.
</TABLE>
+Mr. Donahue is the father of J. Christopher Donahue, President of the Trust.
++Messrs. Cunningham , Mansfield, and Walsh became members of the Board of
Trustees 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 Fund, 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 Fund.
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. 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.
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
Arthur Andersen LLP is the independent public accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
<TABLE>
<CAPTION>
- -------------------------------- 1998 1997 1996
FOR THE YEAR ENDED NOVEMBER 30
<S> <C> <C> <C>
Advisory Fee Earned $2,210,660 $2,555,772 $2,436,831
- ---------------------------------
Advisory Fee Reduction $595,406 $675,932 $748,431
- ---------------------------------
Brokerage Commissions $0 $0 $0
- ---------------------------------
Administrative Fee $416,709 $482,402 $460,540
- ---------------------------------
Shareholder Services Fee $276,335 -- --
- ---------------------------------
If the Fund's expenses are capped at a particular level, the cap does not
include reimbursement to the Fund of any expenses incurred by shareholders who
use the transfer agent's subaccounting facilities.
</TABLE>
For the fiscal years ended November 30, 1998, 1997 and 1996, fees paid by the
Fund for services are prior to the Fund's reorganization as a portfolio of the
Trust on April ____, 1999.
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.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. The performance of Shares depends upon such
variables as: portfolio quality; dollar-weighted average portfolio maturity;
type and value of portfolio securities; changes in interest rates; changes or
differences in the Fund's 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-, five- and since inception periods ended
November 30, 1998.
Yield, and Effective Yield given for the 7-day period ended November 30, 1998.
Performance of the Fund shown is prior to its reorganization as a portfolio of
the Trust on April ____, 1999.
7-DAY PERIOD 1 YEAR 5 YEARS SINCE INCEPTION
ON MARCH 30, 1989
Total Return -- 5.16 4.94 5.27
Yield 4.71 -- -- --
Effective Yield 4.82 -- -- --
<PAGE>
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 form 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 1 to the base-period return, raising, the sum to
the 365/7th power; and subtracting 1 from the result.
To the extent investment professional 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 Funds; 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 it invests, 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 by making comparative calculations using
total return. Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change in net
asset value over a specified period of time.
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 TREASURY BILL INDEX
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
A weekly quote of the average daily offering price for selected federated agency
issues maturing in 30 days.
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 the 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.
<PAGE>
34
ADDRESSES
TRUST FOR GOVERNMENT CASH RESERVES
Federated Investors Fund
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
9022103B (4/99)
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
DATED
PROSPECTUS
Trust for Short-Term U.S. Government Securities
A Portfolio of Money Market Obligations Trust
A money market mutual fund investing in U.S. government securities maturing in
one year 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 1
What are the Fund's Fees and Expenses? 3
What are the Fund's Investment Strategies? 4
What are the Principal Securities in Which the Fund Invests? 4
What are the Specific Risks of Investing in the Fund? 4
What do Shares Cost? 5
How is the Fund Sold? 5
How to Purchase Shares 5
How to Redeem Shares 7
Account and Share Information 8
Who Manages the Fund? 9
Financial Information 9
APRIL , 1999
Risk/Return Summary
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. The Fund's investment objective is high current income consistent with
stability of principal and liquidity. 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 in a portfolio of U.S. Treasury and government agency
securities maturing in 13 months or less. These investments include repurchase
agreements collateralized fully by U.S. Treasury and government agency
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?
Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money 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.
Risk/Return Bar Chart and Table
The Bar Chart and Performance Table below reflect historical performance data
for Trust for Short-Term U.S. Government Securities (the "Former Fund") prior to
its reorganization into the Fund, which is a newly created portfolio of Money
Market Obligations Trust (the "Trust"). On the date of the reorganization, April
, 1999, the Former Fund was dissolved and its net assets (inclusive of
liabilities recorded on the Former Fund's records) were transferred into the
Fund.
[GRAPH APPEARS HERE]
The bar chart shows the variability of the Fund's actual total returns on a
calendar year end basis.
The Fund's Shares are not sold subject to a sales charge (load). Hence, the
total returns displayed above are based upon the net asset value.
Within the period shown in the Chart, the Fund's highest quarterly return was
2.29% (quarter ended June 30, 1989). Its lowest quarterly return was 0.70%
(quarter ended June 30, 1993).
The Fund's Seven-Day Net Yield as of 12/31/98 was 4.66%.
Average Annual Total Return
Calendar Period Fund
1 Year 5.15%
5 Years 4.99%
10 Years 5.41%
Investors may call the Fund to acquire the current Seven-Day Net Yield by
calling 1-800-341-7400.
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.
What are the Fund's Fees and Expenses?
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
<TABLE>
<CAPTION>
FEES AND EXPENSES
<S> <C>
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 redemption proceeds,asapplicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) (asapercentageofoffering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 0.40%
Distribution (12b-1) Fee None
Shareholder Services Fee 0.25%
Other Expenses 0.11%
Total Annual Fund Operating Expenses (before waivers)1 0.76%
Waiver of Fund Expenses 0.31%
Total Actual Annual Fund Operating Expenses (after waivers) 0.45%
1 Under the investment advisory contract, the adviser will waive the amount,
limited to the amount of the management fee, by which the Fund's aggregate
annual operating expenses, including the management fee but excluding
interest, taxes, brokerage commissions, expenses of registering and qualifying
the Fund and its shares under federal and state laws and regulations, and
extraordinary expenses, exceed 0.45% of its average daily net assets. If the
Fund offers an additional class of shares in the future, the aforementioned
expense limitation would not apply to expenses arising pursuant to a Rule
12b-1 or Shareholder Servicing plan with respect to that class of shares.
2 Total Actual Annual Fund Operating Expenses represent the net expenses the
Fund expects to actually pay for the fiscal year ended November 30, 1999. For
the fiscal year ended November 30, 1998, prior to the proposed reorganization
of Trust for Short-Term U.S. Government Securities, the Former Fund, as a
portfolio into Money Market Obligations Trust, the Total Annual Fund Operating
Expenses and Total Actual Annual Fund Operating Expenses were 0.78% and 0.45%,
respectively.
</TABLE>
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund 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 operating expenses are based upon the contractually imposed expense
limitation of 0.45% as shown above. 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
$46 $144 $252 $567
What are the Fund's Investment Strategies?
The Fund invests in a portfolio of U.S. Treasury and government agency
securities, including repurchase agreements collateralized fully by U.S.
Treasury and government agency securities. Portfolio securities and repurchase
agreements will have a maturity of 397 days or less. The Fund intends to limit
the dollar-weighted average maturity of its portfolio to 90 days or less.
The adviser targets a dollar-weighted average portfolio maturity range for the
Fund 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; and
. recent actions by the Federal Reserve Board regarding short-term interest
rates and market expectations regarding future actions.
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 lengthen or
shorten 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 and government agency securities pay interest, dividends or
distributions at a specified rate. The rate may be fixed or adjusted
periodically. The issuer must also repay the principal amount of the security,
normally within a specified time. The Fund invests primarily in the following
types of U.S. government securities.
TREASURY SECURITIES
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 (GSE). Some GSEs are
supported by the full, faith and credit of the United States. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities.
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 for the transaction.
INVESTMENT RATINGS
The securities in which the Fund invests in can only be U.S. government
securities. These instruments are either issued or guaranteed by the U.S.
government, its agencies, or instrumentalities.
What are the Specific Risks of Investing in the Fund?
Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a U.S. government money market fund are
described below.
MARKET RISK
Prices of fixed income securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.
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 RISK
Credit risk is the possibility that an issuer will default (fails to repay
interest and principal when due). If an issuer defaults, the Fund may lose
money. Money market funds try to minimize this risk by purchasing higher quality
securities.
Many fixed income securities receive credit ratings from nationally recognized
ratings services. Fixed income securities receive different credit ratings
depending on the rating company's assessment of the likelihood of default by the
issuer. The lower the credit rating, the greater the credit risk.
What do Shares Cost?
You can purchase or redeem Shares any day the New York Stock Exchange (NYSE) is
open. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV).
The Fund does not charge a front-end sales charge. NAV 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 required minimum initial investment for Fund Shares is $25,000. There is
no required minimum subsequent investment amount.
An account may be opened with a smaller minimum amount as long as the $25,000
minimum is reached within 90 days. 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's Distributor markets the Shares described in this prospectus to
institutions such as institutions acting in an agency or fiduciary capacity or
to 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
. Establish an account with the investment professional; and
. Submit your purchase order 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.
Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."
DIRECTLY FROM THE FUND
. Establish your account with the Fund by submitting a completed New Account
Form; and
. 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 AUTOMATIC INVESTMENTS
You may establish an account with your financial institution to automatically
purchase Shares on pre- determined dates or when your bank account reaches a
certain level. Under this program, participating financial institutions are
responsible for prompt transmission of orders and may charge you for this
service. You should read this prospectus along with your financial institution's
agreement or materials describing this service.
BY AUTOMATED CLEARINGHOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
How to Redeem Shares
You should redeem Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. 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 3:00 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 3:00 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:
. Fund Name and Share Class, account number and account registration;
. amount to be redeemed; and
. signatures of all Shareholders exactly as registered
Call your investment professional or the Fund if you need special instructions.
Signature Guarantees Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last thirty days; or
. 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:
. an electronic transfer to your account at a financial institution that is an
ACH member; or
. 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:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the 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
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases and redemptions. In addition, 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 pays 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, non-retirement
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 200 mutual
funds and separate accounts, which total more than $110 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 0.40% of the Fund's
average daily net assets. Under the investment advisory contract, which is
subject to annual renewal by the Fund's Board of Trustees, the Adviser will
waive the amount, limited to the amount of the advisory fee, by which the Fund's
aggregate annual operating expenses, including the investment advisory fee, but
excluding interest, taxes, brokerage commissions, expenses of registering or
qualifying the Fund and its shares under federal and state laws and regulations,
expenses of withholding taxes, and extraordinary expenses exceed 0.45% of its
average daily net assets.
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. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
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.
Financial Information
FINANCIAL HIGHLIGHTS
The Fund's Financial Highlights are contained in the Former Fund's prospectus,
dated January 31, 1999, which must precede or accompany this document.
[FEDERATED LOGO]
Trust for Short-Term U.S.Government Securities
A Portfolio of Money Market Obligations Trust
APRIL , 1999
A Statement of Additional Information (SAI) dated April , 1999, is incorporated
by reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's semi-annual report to shareholders as it
becomes available. To obtain the SAI, semi-annual report and other information
without charge, 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.
[FEDERATED LOGO]
Trust for Short-Term U.S. Government Securities
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
www.federatedinvestors.com
Federated Securities Corp., Distributor
Investment Company Act File No. 811-2602
Cusip
G00866-02 (4/99)
Federated is a registered mark of Federated Investors, Inc.
1999 (C)Federated Investors, Inc. [RECYCLED PAPER LOGO]
TST APPENDIX
The Bar Chart and Performance Table below reflect historical performance data
for Trust for Short-Term U.S. Government Securities (the "Former Fund") prior to
its reorganization into the Fund, which is a newly created portfolio of Money
Market Obligations Trust (the "Trust"). On the date of the reorganization, April
___, 1999, the Former Fund was dissolved and its net assets (inclusive of
liabilities recorded on the Former Fund's records) were transferred into the
Fund
The `y' axis reflects the "% Total Return" beginning with 0.00% and increasing
in increments of 2.00% up to 10.00%.
The `x' axis represents calculation for the last ten calendar years of the Fund
beginning with the earliest year. The light gray shaded chart features ten
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 for each calendar
year is stated directly at the top of each respective bar for the calendar years
1989 through 1998. The percentages noted are: 9.00%, 8.00%, 5.86%, 3.58%, 2.86%,
3.91%, 5.64%, 5.06%, 5.22% and 5.15%, respectively.
The bar chart shows the variability of the Fund's actual total returns on a
calendar year end basis.
The Fund's Shares are not sold subject to a sales charge (load). Hence, the
total returns displayed above are based upon the net asset value.
The Fund's 7-Day Net Yield as of 12/31/98 was 4.66%.
Within the period shown in the Chart, the Fund's highest quarterly return
was 2.29% (quarter ended June 30, 1989). Its lowest quarterly return was 0.70%
(quarter ended June 30, 1993).
The following table represents the Fund's Average Annual Total Return through
12/31/98.
CALENDAR PERIOD
1 Year 5.15%
5 Years 4.99%
10 Years 5.41%
Investors may call the Fund to acquire the current Seven-Day Net Yield by
calling 1-800-341-7400.
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.
[IN RED INK ON THE LEFT SIDE] THE INFORMATION IN THIS STATEMENT OF
ADDITIONAL INFORMATION IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL
THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED ___________________
STATEMENT OF ADDITIONAL INFORMATION
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
A Portfolio of Money Market Obligations Trust
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Trust for Short-Term U.S. Government
Securities (Fund), dated April ____, 1999.
Obtain the prospectus without charge by calling 1-800-341-7400.
april ____, 1999
CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
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.?
Addresses
CUSIP ___________
8010415B (4/99)
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 Fund, which was established on October 30, 1975,
was reorganized as a portfolio of the Trust on ____________.
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. Investors regard treasury securities as having the lowest credit
risks.
AGENCY SECURITIES
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (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 no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Investors regard agency
securities as having low credit risks, but not as low as treasury securities.
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. An
investor must wait until maturity to receive interest and principal, which
increases the market 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. Treasury STRIPs are the most
common forms of stripped U.S. Treasury zero coupon securities.
MORTGAGE BACKED SECURITIES
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are know as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
Mortgage backed securities that are isued by GSEs may be used as the underlying
collateral for repurchase agreements.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
In conjunction with the Fund's ability to invest in the securities of other
investment companies, the Fund may invest in the securities of affiliated money
market funds as an efficient means of managing the Fund's univested 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 collateral. 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.
WHEN ISSUED TRANSACTIONS
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, when issued
transactions create market risks for the Fund.
When issued transactions also involve credit risks in the event of a
counterparty default.
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 entering into
an offsetting derivative contract or terminating a special transaction. This may
cause the Fund to miss favorable trading opportunities or to realize losses on
derivative contracts or special transactions.
INVESTMENT RISKS
There are many factors which may effect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk factors
are outlined below.
INVESTMENT RISKS
CREDIT RISKS
o 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.
o Credit risk 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.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on margin
but may obtain such short-term credits as may be necessary for clearance of
purchase and sales of securities. The Fund may purchase and dispose of U.S.
Government securities before the issuance thereof. The Fund may also purchase
U.S. Government securities on a delayed delivery basis. The settlement dates of
these transactions shall be determined by the mutual agreement of the parties.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not borrow money, except as a temporary measure for extraordinary
or emergency purposes, and then (a) only in amounts not in excess of 5% of the
value of its total assets or (b) in an amount up to one-third of the value of
its total assets, including the amount borrowed, in order to meet redemption
requests without immediately selling any portfolio securities (any such
borrowings under this section will not be collateralized).
PLEDGING ASSETS
The Trust will not mortgage, pledge or hypothecate these assets except as
necessary to secure permitted borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts borrowed or
10% of the value of the total assets at the time of the pledge.
LENDING CASH OR SECURITIES
The Fund will not make loans to other persons provided, however, that the
purchasing or holding of bonds, debentures, notes and Certificates of
Indebtedness or other debt securities of the U.S. Government or its agencies or
instrumentalities shall not be prohibited. In addition, the Fund may enter into
repurchase agreements covering U.S. Government securities with banks and other
financial institutions as permitted by its investment objective and policies.
ACQUIRING SECURITIES
The Fund will not acquire voting securities except as part of a merger,
consolidation, reorganization, or acquisition of assets.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited partnership
interests.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets, the
Fund will not purchase securities of any one issuer (other than cash, cash
items, or securities issued or guaranteed by the government of the United States
or its agencies or instrumentalities, and repurchase agreements collateralized
by such U.S. government securities) if as a result more than 5% of the value of
its total assets would be invested in the securities of that issuer, or if it
would own more than 10% of the outstanding voting securities of that issuer.
The above limitations cannot be changed unless authorized 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.
==============================================================================
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for settlement in
more than seven days after notice.
INVESTING FOR CONTROL
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
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.
UNDERWRITING
The Fund will not engage in underwriting of securities issued by others.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940. In particular, the Fund will comply
with the various requirements of Rule 2a-7, which regulates money market mutual
funds. The Fund will determine the effective maturity of its investments as well
as its ability to consider a security as having received the requisite
short-term ratings by nationally recognized rating sources, according to Rule
2a-7. The Fund may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.
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 Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods of
determining net asset value.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, 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 Fund 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.
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, it reserves 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 Fund. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund.
In the unlikely event a shareholder is held personally liable for the Fund's
obligations, the Fund is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Fund will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Fund. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Fund 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 Fund have
equal voting rights.
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 the Fund's outstanding shares of
all series entitled to vote.
As of January 6, 1999, the following shareholder owned of record, beneficially,
or both, 5% or more of outstanding Shares: Canab Company, Calumet National Bank,
Hammond, Indiana, owned approximately 43,480,953 shares (6.82%), and North Fork
Bank, Mattituck, New York, owned approximately 37,764,398 shares (5.92%).
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.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Fund's business affairs and for
exercising all the Fund's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birthdate, present position(s) held with the Fund,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Fund for its
most recent fiscal year, and the total compensation received from the Federated
Fund Complex for the most recent calendar year. The Federated Fund Complex
includes 56 investment companies, whose investment adviser are affiliated with
the Fund's Adviser.
As of January 6, 1999, the Fund's Board and Officers as a group owned less than
1% of the Fund's outstanding shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------ TOTAL
NAME ----------- COMPENSATION
BIRTHDATE -------------------------------------------- AGGREGATE FROM TRUST AND
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FUND COMPLEX
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, in the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $18, 351 $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the
1934 Committee, Children's Hospital of Trust and 54
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst other
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, investment
TRUSTEE Inc.; Director, Member of Executive companies
Committee, University of Pittsburgh. in the Fund
Complex
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $20,189 $125,264.48for
Birthdate: June 23, 1937 Complex; President, Investment Properties the
Wood/IPC Commercial Corporation; Senior Vice President, Trust and 54
Dept. John R. Wood and Associates, Inc., other
John R. Wood Realtors; Partner or Trustee in private investment
Associates, Inc. real estate ventures in Southwest Florida; companies
Realtors formerly: President, Naples Property in the Fund
3255 Tamiami Trial Management, Inc. and Northgate Village Complex
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
JOHN F. CUNNINGHAM++ Director or Trustee of some of the $0 $0 for the
Birthdate: March 5, 1943 Federated Funds; Chairman, President and Trust and 26
353 El Brillo Way Chief Executive Officer, Cunningham & Co., other
Palm Beach, FL Inc. ; Trustee Associate, Boston College; investment
TRUSTEE Director, EMC Corporation; formerly: companies in
Director, Redgate Communications. the Fund Complex
Retired: 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 $18,351 $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the
1932 of Pittsburgh; Medical Director, University Trust and 54
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; other
Suite 1111 Hematologist, Oncologist, and Internist, investment
Pittsburgh, PA University of Pittsburgh Medical Center; companies
TRUSTEE Member, National Board of Trustees, in the Fund
Leukemia Society of America. Complex
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the
1942 Commonwealth of Massachusetts General Trust and 54
One Royal Palm Way Court; President, State Street Bank and other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
TRUSTEE Retired: Director, VISA USA and VISA in the Fund
International; Chairman and Director, Complex
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
CHARLES F. MANSFIELD, Director or Trustee of some of the $0 $0 for the
JR.++ Federated Funds; Management Consultant. Trust and 0
Birthdate: April 10, other
1945 Retired: Chief Executive Officer, PBTC investment
80 South Road International Bank; Chief Financial Officer companies in
Westhampton Beach, NY of Retail Banking Sector, Chase Manhattan the Fund Complex
TRUSTEE 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 $18,351 $113,860.22 for
J.D., S.J.D. Complex; President, Law Professor, Duquesne the
Birthdate: December 20, University; Consulting Partner, Mollica & Trust and 54
1932 Murray. other
President, Duquesne investment
University Retired: Dean and Professor of Law, companies
Pittsburgh, PA University of Pittsburgh School of Law; in the Fund
TRUSTEE Dean and Professor of Law, Villanova Complex
University School of Law.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies in
Company of America; business owner. the Fund Complex
- -------------------------
JOHN S. WALSH++ Director or Trustee of some of the $0 $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and 22
1957 Heat Wagon, Inc.; President and Director, other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly, Vice
President, Walsh & Kelly, Inc.
- -------------------------
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and 16
1949 Trustee of some of the Funds in the other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research 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
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated companies in
1001 Liberty Avenue Investors, Inc.; Vice President, Federated the Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT Research, Federated Research Corp.,
Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and 54
1938 President, Secretary, and Director, other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- -------------------------
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and 54
1954 Division, Federated Investors, Inc.; other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA
TREASURER
- -------------------------
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and 41
Federated Investors Complex; Executive Vice President, other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Research Corp., Federated Advisers, companies in
Pittsburgh, PA Federated Management, Federated Research, the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Registered
Representative, 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
Research Corp., Federated Advisers,
Federated Management, Federated Research,
and Passport Research, Ltd.
- -------------------------
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and 6
Federated Investors Director or Trustee of some of the Funds in other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.
- -------------------------
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the
Birthdate: September the Trust. Ms. Cunningham joined Federated Trust and 6
15, 1959 Investors in 1981 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1997. Ms. Cunningham served as a the Fund Complex
Pittsburgh, PA Portfolio Manager and a Vice President of
VICE PRESIDENT the investment adviser from 1993 until
1996. Ms. Cunningham 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
Birthdate: September Trust. Ms. Ochson joined Federated Trust and 7
12, 1953 Investors in 1982 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1996. From 1988 through 1995, Ms. the Fund Complex
Pittsburgh, PA Ochson served as a Portfolio Manager and a
VICE PRESIDENT Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A.
in Finance from the University of
Pittsburgh.
SUSAN R. HILL Susan R. Hill is Vice President of the $0 $0 for the
Birthdate: June 20, Trust/. Ms. Hill joined Federated Trust and __
1963 Investors in 1990 and has been a Portfolio other
Federated Investors Manager since 1993 and a Vice President of investment
Tower the Fund's investment adviser since 1997. companies in
1001 Liberty Avenue Ms. Hill was a Portfolio Manager and an the Fund Complex
Pittsburgh, PA Assistant Vice President of the investment
VICE PRESIDENT adviser from 1994 until 1997. Ms. Hill is
a Chartered Financial Analyst and received
an M.S. in Industrial Administration from
Carnegie Mellon University.
</TABLE>
+Mr. Donahue is the father of J. Christopher Donahue, President of the Trust.
++Messrs. Cunningham , Mansfield, and Walsh became members of the Board of
Trustees 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.
<PAGE>
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 Fund 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 Fund.
The Adviser must waive the portion of its advisory fee that increases the Fund's
aggregate annual operating expenses above 0.40% of its average daily net assets.
The Fund's operating expenses include the advisory fee but exclude interest,
taxes, brokerage commissions, expenses of registering the Fund and its shares
under federal and state laws, expenses of withholding taxes, and extraordinary
expenses.
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. 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.
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
Deloitte & Touche LLP is the independent public accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
<S> <C> <C> <C>
- -------------------------------- 1998 1997 1996
NOVEMBER 30, 1998
Advisory Fee Earned $2,624,751 $2,876,062 $3,475,000
- ---------------------------------
Advisory Fee Reduction $721,130 $859,298 $1,042,638
- ---------------------------------
Brokerage Commissions $0
- ---------------------------------
Administrative Fee $494,765 $542,857 $656,745
- ---------------------------------
Shareholder Services Fee $328,094 $ $
- ---------------------------------
</TABLE>
If the Fund's expenses are capped at a particular level, the cap does not
include reimbursement to the Fund of any expenses incurred by Shareholders who
use the transfer agent's subaccounting facilities.
For the fiscal years ended November 30, 1998, 1997 and 1996, fees paid by the
Fund for services are prior to the Fund's reorganization as a portfolio of the
Trust on April ___, 1999.
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.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. 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
Fund's 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-, five- and ten-year periods ended November 30,
1998.
Yield and Effective Yield given for the 7-day period ended November 30, 1998.
Performance of the Fund shown is prior to its reorganization as a portfolio of
the Trust on April ____, 1999.
7-DAY PERIOD 1 Year 5 Years 10 Years
Total Return 5.20% 4.96% 5.44%
Yield 4.69%
Effective Yield 4.80%
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 1 to the base-period return, raising the sum to
the 365/7th power: and subtracting 1 from the result.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment is 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 Funds; 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 it invests, 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.
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 fund 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.
<PAGE>
ADDRESSES
TRUST FOR SHORT-TERM U.S. GOVERNMENT SECURITIES
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
125 Summer Street
Boston, MA
02110-1617
8010415B (4/99)
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED___________________
PROSPECTUS
TRUST FOR U.S. TREASURY OBLIGATIONS
A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
A money market mutual fund seeking current income consistent with stability of
principle and liquidity by investing in short-term U.S. Treasury securities and
repurchase agreements.
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
april , 1999
<PAGE>
RISK/RETURN SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. The Fund's investment objective is stability of principal and 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.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury securities maturing in 13
months or less. These investments include repurchase agreements collateralized
fully by U.S. Treasury securities. The average maturity of the Fund's portfolio
will be 90 days or less.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money 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
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
TRUST FOR U.S. TREASURY OBLIGATIONS
FEES AND EXPENSES
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 redemption proceeds, as applicable) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions) . . . . . . . . . . . . . . None
(as a percentage of offering price). . . . . . . . . . . . . . . . . .None
Redemption Fee (as a percentage of amount redeemed, if applicable) . .None
Exchange Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
ANNUAL FUND OPERATING EXPENSES
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . .0.40%
Distribution (12b-1) Fee . . . . . . . . . . . . . . . . . . . . . .None
Shareholder Services Fee. . . . . . . . . . . . . . . . . . . . . . 0.25%
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .0.15%
Total Annual Fund Operating Expenses (before waivers) 1. . . . .....0.80%
Waiver of Fund Expenses . . . . . . . . . . . . . . . . . . . . . . 0.35%
Total Actual Annual Fund Operating Expenses (after waivers) 2. . 0.45%
1 Under the investment advisory contract, the adviser will waive the amount,
limited to the amount of the management fee, by which the Fund's aggregate
annual operating expenses, including the management fee but excluding interest,
taxes, brokerage commissions, expenses of registering and qualifying the Fund
and its shares under federal and state laws and regulations, expenses of
withholding taxes, and extraordinary expenses, exceed 0.45% of its average daily
net assets.
2 Total Actual Annual Fund Operating Expenses represent the net expenses the
Fund expects to ACTUALLY PAY for the fiscal year ending September 30, 1999. For
the fiscal year ended September 30, 1998, prior to the proposed reorganization
of Trust for U.S. Treasury Obligations, the Former Fund, as a portfolio into
Money Market Obligations Trust, the Total Annual Fund Operating Expenses and
Total Actual Annual Fund Operating Expenses were 0.80% and 0.45%, respectively
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund 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 operating expenses are based upon the contractually imposed expense
limitation of 0.45% as shown above. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 3 5 10
YEAR YEARS YEARS YEARS
$46 $144 $252 $567
- ----------------------------
WHAT ARE THE FUND'S
INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury securities maturing in 13
months or less. These investments include repurchase agreements collateralized
fully by U.S. Treasury securities. The average maturity of the Fund's portfolio
will be 90 days or less.
The Adviser targets an average portfolio maturity range by assessing likely
movements in interest rates based upon general economic and market conditions.
The Adviser generally shortens the portfolio's 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 lengthen or shorten the
portfolio's 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
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 fixed or adjusted
periodically. The U.S.
Treasury must also repay
the principal amount of the
security, normally within a
specified time.
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 for the transaction.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?
Although there are many factors which may affect an investment in the Fund, the
principal risks of investing in a U.S. Treasury money market fund are described
below.
MARKET RISK Prices of fixed income securities rise and fall in response to
interest rate changes for similar securities. Generally, when interest rates
rise, prices of fixed income securities fall.
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 RISK Credit risk 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. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV). The Fund does not charge
a front-end sales charge.
NAV is determined at 12:00 noon, 3:00 p.m. (Eastern time), and as of the close
of trading (normally 4:00 p.m., Eastern time).
The required minimum
initial investment for Fund
Shares is $25,000. There is no required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $25,000 minimum is
reached within 90 days. 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's Distributor markets the Shares described in this prospectus to
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 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.
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 you 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 AUTOMATIC INVESTMENTS You may establish an account with your financial
institution to automatically purchase Shares on pre-determined dates or when
your bank account reaches a certain level. Under this program, participating
financial institutions are responsible for prompt transmission of orders and may
charge you for this service. You should read this prospectus along with your
financial institution's agreement or materials describing this service.
BY AUTOMATED CLEARING HOUSE (ACH) Once you have opened an account, you may
purchase additional Shares through a depository institution that is an ACH
member. This purchase option can be established by completing the appropriate
sections of the New Account Form.
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 3:00 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 3:00 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, 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 Fund 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 thirty 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 the 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
CONFIRMATIONS AND ACCOUNT STATEMENTS You will receive confirmation of purchases
and redemptions. In addition, 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 pays 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, 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 total 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 0.40% of the Fund's
average daily net assets Under the investment advisory contract, which is
subject to annual review by the Fund's Board, the Adviser will waive the amount,
limited to the amount of the advisory fee, by which the Fund's aggregate annual
operating expenses, including the investment advisory fee but excluding
interest, taxes, brokerage commissions, expenses of registering or qualifying
the fund and its Shares under federal and state laws and regulations, expenses
of withholding taxes, and extraordinary expenses exceed 0.45% of its average
daily net assets.
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. The Year 2000 problem may cause systems to process
information incorrectly and could disrupt businesses that rely on computers,
like the Fund.
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.
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The Fund's financial Highlights are contained in the Former Fund's prospectus,
dated November 30, 1998, which must precede or accompany this document.
<PAGE>
78
TRUST FOR U.S. TREASURY
OBLIGATIONS
A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST
A Statement of Additional Information (SAI) dated April 1999 is incorporated by
reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's semi-annual report to shareholders as it
becomes available. To obtain the SAI, semi-annual report and other information
without charge, 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
G00669-02(4/99)
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of TRUST FOR U.S. TREASURY OBLIGATIONS as of the calendar
year-end for each of 10 years. The `y' axis reflects the "% Total Return"
beginning with "0" and increasing in increments of 1% up to 9%. The `x' axis
represents calculation periods for the last ten calendar years of the Fund,
beginning with the earliest year. The light gray shaded chart features 10
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 for each calendar
year is stated directly at the top of each respective bar, for the calendar
years 1989 through 1998. The percentages noted are: 1989 - 9.00%, 1990 - 7.97%,
1991 - 5.79%, 1992 - 3.49%, 1993 - 2.80%, 1994 - 3.62%, 1995- 5.63%, 1996 -
5.06%, 1997 - 5.22%, 1998 - 5.11%. The Fund's Shares are not sold subject to a
sales charge (load). The total returns displayed are based upon net asset value.
The Fund's 7-day net yield as of December 31, 1998 was 4.49%. Within the period
shown in the Chart, the Fund's highest quarterly return was 2.29% (quarter ended
June 30, 1989). Its lowest quarterly return was 0.68% (quarter ended June 30,
1993.
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5
YEARS 10
YEARS
- ----------------------------
5.11% 4.97%
5.37%
- ----------------------------
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. Past performance does not necessarily predict future performance.
This information provides you with historical performance so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED___________________
STATEMENT OF ADDITIONAL
INFORMATION
TRUST FOR U.S. TREASURY
OBLIGATIONS
A PORTFOLIO OF MONEY MARKET
OBLIGATIONS TRUST
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Trust for U.S. Treasury Obligations
(Fund), dated April 1999. Obtain the prospectus without charge by calling
1-800-341-7400.
April 1999
CONTENTS
How is the Fund Organized?
Securities in Which the Fund Invests
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.?
Addresses
CUSIP 000000000
88110114B(4/99)
<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
Fund, which was established on July 24, 1979, was reorganized as a portfolio of
the Trust on April , 1999.
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 pay interest, dividends or distributions at a specified
rate. The rate may be fixed or adjusted periodically. The issuer must also 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. Securities with higher credit risks generally have
higher yields. A security's yield will increase or decrease depending upon
whether it costs less (a "discount") or more (a "premium") than the principal
amount. Under normal market conditions, securities with longer maturities will
also have higher yields. 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.
The following describes the types of fixed income securities in which the Fund
invests.
TREASURY SECURITIES are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest
credit risk.
ZERO COUPON SECURITIES do not pay interest or principal until final
maturity. Most debt securities provide periodic payments of interest
(referred to as a "coupon payment"). In contrast, investors buy zero coupon
securities at a price below the amount payable at maturity. The difference
between the price and the amount paid at maturity represents interest on the
zero coupon security. This increases the market and credit risk of a zero
coupon security, because an investor must wait until maturity before
realizing any return on the investment.
There are many forms of zero coupon securities. Some securities are
originally issued at a discount and are referred to as "zero coupon" or
"capital appreciation" bonds. Others are created by separating the right to
receive coupon payments from the principal due at maturity, a process known
as "coupon stripping." Treasury STRIPs are the most common forms of
"stripped" U.S. Treasury zero coupon securities. 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. In conjunction with
the Fund's ability to invest in the securities of other investment
companies, the Fund may invest in the securities of affiliated money market
funds as an efficient means of managing the Fund's uninvested cash.
SPECIAL TRANSACTIONS
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 for the transaction. The Fund's return is unrelated to the
interest rate on the underlying security. The Funds will only enter into
repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Adviser to be
creditworthy
A Fund's custodian or subcustodian is required to 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
Risk.
REVERSE REPURCHASE
AGREEMENTS are
repurchase agreements
in which a 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
Risk. In addition,
reverse repurchase
agreements create
Leverage Risk 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.
WHEN ISSUED Transactions are arrangements in which a Fund purchases
securities for a set price, with payment and delivery 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 purchase 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, and the
market values of the securities purchased may vary from the purchase prices.
Therefore, when issued transactions create Market Risk for the Fund. When
issued transactions also involve Credit Risk in the event of a counterparty
default.
ASSET COVERAGE. In order to secure its obligations in connection with
when-issued, and delayed-delivery transactions, the Fund will "cover" such
transactions, as required under applicable interpretations of the SEC,
either by owning the underlying securities; entering into an offsetting
transaction; or segregating, earmarking, or depositing into an escrow
account readily marketable securities in an amount at all times equal to or
exceeding the Fund's commitment with respect to these instruments or
contracts. As a result, use of these instruments will impede the Fund's
ability to freely trade the assets being used to cover them, which could
result in harm to the Fund. BORROWING. The Fund may borrow money from banks
or through reverse repurchase agreements in amounts up to one-third of total
assets and pledge some assets as collateral. The Fund will pay interest on
borrowed money and may incur other transaction costs. These expenses could
exceed the income received or capital appreciation realized by the Fund from
any securities purchased with borrowed money. With respect to borrowings,
the Fund is required to maintain continuous asset coverage to 300% of the
amount borrowed. If the coverage declines to less than 300%, the Fund must
sell sufficient portfolio securities to restore the coverage even if it must
sell the securities at a loss.
INVESTMENT RISKS Although there are many factors which may effect an investment
in the Fund, the principal risks of investing in a U.S. Treasury money market
fund are described below. MARKET RISKS o Prices of fixed
income securities rise and fall in response to interest rate changes for
similar securities. Generally, when interest rates rise, prices of fixed
income securities fall.
o 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 RISK
o Credit risk
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.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN The Fund will not sell any portfolio
instruments short or purchase any portfolio instruments on margin but may obtain
such short-term credits as may be necessary for clearance of purchases and sales
of portfolio instruments.
BORROWING MONEY The Fund will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in excess of 5%
of the value of its total assets or in an amount up to one-third of the value of
its total assets including the amount borrowed, in order to meet redemption
requests without immediately selling any portfolio instruments (any such
borrowings under this section will not be collateralized.) This borrowing
provision is not for investment leverage but solely to facilitate management of
the portfolio by enabling the Fund to meet redemption requests where liquidation
of portfolio instruments is deemed to be inconvenient or disadvantageous.
Interest paid by the Fund on borrowed funds will not be available for
investment.
PLEDGING ASSETS The Fund will not mortgage, pledge or hypothecate assets except
as necessary to secure permitted borrowings. In those cases, it may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 10% of the value of the total assets at the time of the pledge.
LENDING CASH OR SECURITIES The Fund will not lend any of its assets, except that
it may purchase or hold U.S. Treasury obligations including repurchase
agreements as permitted by its investment objective and policies.
============================
The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities," as defined by the Investment
Company Act of 1940. The following limitations, however, may be changed by the
Board of Trustees (Board) without shareholder approval. Shareholders will be
notified before any material change in these limitations becomes effective.
============================
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES The Fund may invest its
assets in securities of other investment companies as an efficient means of
carrying out its investment policies. It should be noted that investment
companies incur certain expenses, such as management fees, and, therefore, any
investment by the Fund in shares of other investment companies may be subject to
such duplicate expenses. At the present time, the Fund expects that its
investment in other investment companies will be limited to shares of money
market funds, including funds affiliated with the Fund's investment adviser.
INVESTING IN COMMODITIES The Fund will not purchase or sell commodities,
commodity contracts, or commodity futures contracts.
INVESTING IN REAL ESTATE The Fund will not purchase or sell real estate,
including limited partnership interests.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be deemed
to be an underwriter under the Securities Act of 1933 in connection with the
sale of securities in accordance with its investment objective, policies, and
limitations.
INVESTING IN RESTRICTED SECURITIES The Fund will not invest in securities
subject to restrictions on resale under federal securities law.
INVESTING IN ILLIQUID SECURITIES The Fund will not invest more than 10% of the
value of its net assets in illiquid securities.
INVESTING FOR CONTROL The Fund will not invest in securities of a company for
the purpose of exercising control or management.
INVESTING IN OPTIONS The Fund will not invest in puts, calls, straddles,
spreads, or any combination of them.
For purposes of the above limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items." Except with
respect to borrowing money, if a percentage limitation is adhered to at the time
of investment, a later increase or decrease in percentage resulting from any
change in value or net assets will not result in a violation of such limitation.
REGULATORY COMPLIANCE The Fund may follow non-fundamental operational policies
that are more restrictive than its fundamental investment limitations, as set
forth in the prospectus and this Statement of Additional Information, in order
to comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will determine the effective maturity of its
investments according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.
DETERMINING MARKET VALUE OF SECURITIES The Board has 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 (NAV) 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 NAV computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates. In periods of rising interest rates, the opposite may be true.
The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the SEC under the Investment Company Act of 1940. Under the Rule,
the Fund must establish procedures reasonably designed to stabilize the NAV 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 NAV per Share based upon available
indications of market value. The Board 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 Board 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 NAV.
HOW IS THE FUND SOLD?
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.
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, it reserves 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, only Shares of that Fund 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 the Trust's outstanding shares
of all series entitled to vote.
As of 1999, the following shareholders owned of record, beneficially, or both,
5% or more of outstanding Shares:
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, birthdate, 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 13 funds and the Federated Fund Complex is comprised of 54 investment
companies, whose investment advisers are affiliated with the Fund's Adviser.
As of , the Fund's Board and Officers as a group owned less than 1% of the
Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------ TOTAL
NAME ----------- COMPENSATION
BIRTHDATE -------------------------------------------- AGGREGATE FROM TRUST AND
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FUND COMPLEX
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, in the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $18, 351 $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the
1934 Committee, Children's Hospital of Trust and 54
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst other
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, investment
TRUSTEE Inc.; Director, Member of Executive companies
Committee, University of Pittsburgh. in the Fund
Complex
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $20,189 $125,264.48for
Birthdate: June 23, 1937 Complex; President, Investment Properties the
Wood/IPC Commercial Corporation; Senior Vice President, Trust and 54
Dept. John R. Wood and Associates, Inc., other
John R. Wood Realtors; Partner or Trustee in private investment
Associates, Inc. real estate ventures in Southwest Florida; companies
Realtors formerly: President, Naples Property in the Fund
3255 Tamiami Trial Management, Inc. and Northgate Village Complex
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
JOHN F. CUNNINGHAM++ Director or Trustee of some of the $0 $0 for the
Birthdate: March 5, 1943 Federated Funds; Chairman, President and Trust and 26
353 El Brillo Way Chief Executive Officer, Cunningham & Co., other
Palm Beach, FL Inc. ; Trustee Associate, Boston College; investment
TRUSTEE Director, EMC Corporation; formerly: companies in
Director, Redgate Communications. the Fund Complex
Retired: 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 $18,351 $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the
1932 of Pittsburgh; Medical Director, University Trust and 54
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; other
Suite 1111 Hematologist, Oncologist, and Internist, investment
Pittsburgh, PA University of Pittsburgh Medical Center; companies
TRUSTEE Member, National Board of Trustees, in the Fund
Leukemia Society of America. Complex
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the
1942 Commonwealth of Massachusetts General Trust and 54
One Royal Palm Way Court; President, State Street Bank and other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
TRUSTEE Retired: Director, VISA USA and VISA in the Fund
International; Chairman and Director, Complex
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
CHARLES F. MANSFIELD, Director or Trustee of some of the $0 $0 for the
JR.++ Federated Funds; Management Consultant. Trust and 0
Birthdate: April 10, other
1945 Retired: Chief Executive Officer, PBTC investment
80 South Road International Bank; Chief Financial Officer companies in
Westhampton Beach, NY of Retail Banking Sector, Chase Manhattan the Fund Complex
TRUSTEE 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 $18,351 $113,860.22 for
J.D., S.J.D. Complex; President, Law Professor, Duquesne the
Birthdate: December 20, University; Consulting Partner, Mollica & Trust and 54
1932 Murray. other
President, Duquesne investment
University Retired: Dean and Professor of Law, companies
Pittsburgh, PA University of Pittsburgh School of Law; in the Fund
TRUSTEE Dean and Professor of Law, Villanova Complex
University School of Law.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies in
Company of America; business owner. the Fund Complex
- -------------------------
JOHN S. WALSH++ Director or Trustee of some of the $0 $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and 22
1957 Heat Wagon, Inc.; President and Director, other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly, Vice
President, Walsh & Kelly, Inc.
- -------------------------
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and 16
1949 Trustee of some of the Funds in the other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research 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
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated companies in
1001 Liberty Avenue Investors, Inc.; Vice President, Federated the Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT Research, Federated Research Corp.,
Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and 54
1938 President, Secretary, and Director, other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- -------------------------
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and 54
1954 Division, Federated Investors, Inc.; other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA
TREASURER
- -------------------------
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and 41
Federated Investors Complex; Executive Vice President, other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Research Corp., Federated Advisers, companies in
Pittsburgh, PA Federated Management, Federated Research, the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Registered
Representative, 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
Research Corp., Federated Advisers,
Federated Management, Federated Research,
and Passport Research, Ltd.
- -------------------------
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and 6
Federated Investors Director or Trustee of some of the Funds in other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.
- -------------------------
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the
Birthdate: September the Trust. Ms. Cunningham joined Federated Trust and 6
15, 1959 Investors in 1981 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1997. Ms. Cunningham served as a the Fund Complex
Pittsburgh, PA Portfolio Manager and a Vice President of
VICE PRESIDENT the investment adviser from 1993 until
1996. Ms. Cunningham 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
Birthdate: September Trust. Ms. Ochson joined Federated Trust and 7
12, 1953 Investors in 1982 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1996. From 1988 through 1995, Ms. the Fund Complex
Pittsburgh, PA Ochson served as a Portfolio Manager and a
VICE PRESIDENT Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A.
in Finance from the University of
Pittsburgh.
SUSAN R. HILL Susan R. Hill is Vice President of the $0 $0 for the
Birthdate: June 20, Trust/. Ms. Hill joined Federated Trust and __
1963 Investors in 1990 and has been a Portfolio other
Federated Investors Manager since 1993 and a Vice President of investment
Tower the Fund's investment adviser since 1997. companies in
1001 Liberty Avenue Ms. Hill was a Portfolio Manager and an the Fund Complex
Pittsburgh, PA Assistant Vice President of the investment
VICE PRESIDENT adviser from 1994 until 1997. Ms. Hill is
a Chartered Financial Analyst and received
an M.S. in Industrial Administration from
Carnegie Mellon University.
</TABLE>
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. 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.
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. 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.
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
Arthur Andersen LLP is the independent public accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
<TABLE>
<CAPTION>
- -------------------------------- 1998 1997 1996
FOR THE YEAR ENDED SEPTEMBER 30
<S> <C> <C> <C>
Advisory Fee Earned $7,602,021 $9,753,169 $11,252,925
- ---------------------------------
Advisory Fee Reduction $1,886,024 $2,452,468 $2,913,538
- ---------------------------------
Brokerage Commissions $0 $0 $0
- ---------------------------------
Administrative Fee $1,433,292 $1,841,240 $2,127,329
- ---------------------------------
Shareholder Services Fee $4,751,263 N/A N/A
- ---------------------------------
</TABLE>
For the fiscal years ended September 30, 1998, 1997 and 1996, fees paid by the
Fund for services are prior to the Fund's reorganization as a portfolio of the
Trust on April , 1999.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the SEC's 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.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. 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
Fund's 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-, five- and ten-year periods ended September 30,
1998.
Yield and Effective Yield given for the seven-day period ended September 30,
1998.
Performance of the Fund shown is prior to its reorganization as a portfolio of
the Trust on April , 1999.
7 DAY PERIOD 1 YEAR 5 YEARS 10 YEARS
Total Return N/A 5.28% 4.87% 5.46%
Yield 4.98% N/A N/A N/A
Effective Yield 5.10% N/A N/A N/A
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 1 to the base-period return, raising the sum to
the 365/7th power; and subtracting 1 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 Funds; 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 it invests, 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:
o 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.
o 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.
o MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day effective yield.
o 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.
<PAGE>
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' of 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.
<PAGE>
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.
<PAGE>
90
ADDRESSES
TRUST FOR U.S. TREASURY OBLIGATIONS
A PORTFOLIO OF MONEY MARKET OBLIGATIONS TRUST
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
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED___________________
PROSPECTUS
LIQUID CASH TRUST
A Portfolio of Money Market Obligations Trust
The Fund is a money market fund that pursues stability of principal and current
income consistent with stability of principal by investing in a portfolio of
U.S. Treasury and government agency securities, repurchase agreements and loans
of federal funds. THIS FUND IS AVAILABLE ONLY TO FEDERALLY INSURED DEPOSITORY
INSTITUTIONS INCLUDING:
O BANKS;
O SAVINGS ASSOCIATIONS; AND
o CREDIT UNIONS.
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
April __, 1999
<PAGE>
RISK/RETURN SUMMARY
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund is a money market fund which seeks to maintain a stable net asset value
of $1.00. The Fund's investment objective is stability of principal and 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.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury and government agency
securities maturing in 13 months or less. These investments include repurchase
agreements collateralized fully by U.S. Treasury and government agency
securities. The Fund also makes loans of federal funds to federally insured
depository institutions. By operating policy, the Fund limits depository
institutions receiving the loans to those the Adviser deems to be adequately
capitalized with a short term rating of Prime-1 by Moody's Investors Services,
Inc. Ordinarily, the Fund has a dollar weighted average maturity of between one
and seven days.
The Fund limits its investments to those that would enable it to qualify as a
permissible investment for national banks, federal savings associations and
federal credit unions. In addition, the Fund seeks to qualify as a liquid
investment under the rules of the Office of Thrift Supervision.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Although the Fund seeks to maintain a stable net asset value, it is possible to
lose money 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 Bar Chart and Performance Table below reflect historical performance data
for Liquid Cash Trust (the "Former Fund") prior to its proposed reorganization
into the Fund, which is a newly created portfolio of Money Market Obligations
Trust (the "Trust"). On the date of the reorganization, April __, 1999, the
Former Fund was dissolved and its net assets (inclusive of liabilities recorded
on the Former Fund's records) were transferred into the Fund.
[OBJECT OMITTED]
The Former Fund's 7-Day Net Yield as of December 31, 1998 was 4.81%.
The following table represents the Former Fund's Average Annual Total Return
through December 31, 1998.
- ---------------------- ---------
CALENDAR PERIOD
- ---------------------- ---------
- ---------------------- ---------
1 Year 5.48%
- ---------------------- ---------
- ---------------------- ---------
5 Years 5.30%
- ---------------------- ---------
- ---------------------- ---------
10 Years 5.69%
- ---------------------- ---------
Investors may call the Fund at 1-800-________ 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 FUND'S FEE AND EXPENSES?
LIQUID CASH TRUST
FEES AND EXPENSES
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 redemption proceeds, as applicable)..................................None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions)
(as a percentage of offering price).....................................None
Redemption Fee (as a percentage of amount redeemed, if applicable)........None
Exchange Fee..............................................................None
ANNUAL FUND OPERATING EXPENSES
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee..........................................................0.40%
Distribution (12b-1) Fee.................................................None
Shareholder Services Fee................................................0.25%
Other Expenses..........................................................0.12%
Total Annual Fund Operating Expenses (before waivers) 1.................0.77%
Waiver of Fund Expenses.................................................0.32%
TOTAL ANNUAL FUND OPERATING EXPENSES (AFTER CONTRACTUAL WAIVERS) 1......0.45%
1 Under the investment advisory contract, the adviser will waive the amount,
limited to the amount of the management fee, by which the Fund's aggregate
annual operating expenses, including the management fee but excluding interest,
taxes, brokerage commissions, expenses of registering and qualifying the Fund
and its shares under federal and state laws and regulations, and extraordinary
expenses, exceed 0.45% of its average daily net assets. If the Fund offers an
additional class of shares in the future, the aforementioned expense limitation
would not apply to expenses arising pursuant to a Rule 12b-1 or Shareholder
Servicing plan with respect to that class of shares.
Voluntary Waiver of Fund Expenses..........................................0.30%
Total Actual Annual Fund Operating Expenses ( after voluntary waivers) 2..0.15%
2 Total Actual Annual Fund Operating Expenses represent the net expenses the
Fund expects to ACTUALLY PAY for the fiscal year ended March 31, 1999. For the
fiscal year ended March 31, 1998, prior to the proposed reorganization of Liquid
Cash Trust, the Former Fund, as a portfolio into Money Market Obligations Trust,
the Total Annual Fund Operating Expenses ( before waivers) and Total Actual
Annual Fund Operating Expenses ( after contractual and voluntary waivers) were
0.77% and 0.15%, respectively
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund 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 operating expenses are based upon the contractually imposed expense
limitation of 0.45% as SHOWN above. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 3 5 10
YEAR YEARS YEARS YEARS
$46 $144 $252 $567
<PAGE>
WHAT ARE THE FUND'S INVESTMENT STRATEGIES?
The Fund invests in a portfolio of U.S. Treasury and government agency
securities maturing in 13 months or less. These investments include repurchase
agreements collateralized fully by U.S. Treasury and government agency
securities. The Fund also makes loans of federal funds to federally insured
depository institutions. By operating policy, the Fund limits depository
institutions receiving the loans to those the Adviser deems to be adequately
capitalized with a short term rating of Prime-1 by Moody's Investors Services,
Inc. Ordinarily, the Fund has a dollar weighted average maturity of between one
and seven days.
The Fund limits its investment to those that would enable it to qualify as a
permissible investment for national banks, federal savings associations and
federal credit unions. In addition, the Fund seeks to qualify as a liquid
investment under the rules of the Office of Thrift Supervision.
WHAT ARE THE PRINCIPAL SECURITIES IN WHICH THE FUND INVESTS?
TREASURY AND AGENCY SECURITIES
U.S. Treasury and government agency securities pay interest, dividends or
distributions at a specified rate. The rate may be fixed or adjusted
periodically. The issuer must also repay the principal amount of the security,
normally within a specified time. The Fund invests primarily in the following
types of U.S. government securities:
o Treasury securities, which are direct obligations of the federal
government of the United States.
o Agency securities, which are issued or guaranteed by a federal agency or
other government sponsored entity acting under federal authority (a
"GSE"). Some GSEs are supported by the full faith and credit of the
United States. Other GSEs receive support through federal subsidies,
loans or other benefits. A few GSEs have no explicit financial support,
but are regarded as having implied support because the federal
government sponsors their activities.
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 for the transaction.
LOANS OF FEDERAL FUNDS
Loans of Federal Funds are unsecured loans of money held in the Federal
Reserve System to federally insured depository institutions. Typically, the term
of these loans is one day.
INVESTMENT RATINGS
PRIME-1--Depository institutions (or related supporting institutions) receiving
Prime-1 commercial paper ratings by Moody's Investors Service Inc. have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
o Leading market positions in well established industries;
o High rates of return on funds employed;
o Conservative capitalization structure with moderate reliance on debt and
ample asset protection;
o Broad margins in earning coverage of fixed financial charges and high
internal cash generation; and
o Well established access to a range of financial markets and assured
sources of alternate liquidity.
WHAT ARE THE SPECIFIC RISKS OF INVESTING IN THE FUND?
Although there are many factors which may effect an investment in the Fund, the
principal risks of investing in a U.S. government money market fund are
described below.
MARKET RISK
o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates
rise, prices of fixed income securities fall.
o 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.
SECTOR RISKS
o A substantial part of the Fund's portfolio may be comprised of fixed
income securities and loans by companies in the banking industry. As a
result, the Fund will be more susceptible to any economic, business,
political, or other developments which generally affect these issuers.
CREDIT RISK
o 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. Money market funds try to minimize this risk
by purchasing higher quality securities.
o Many fixed income securities receive credit ratings from services such
as Standard & Poor's and Moody's Investor Services. 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, the Fund must rely entirely upon the
Adviser's credit assessment.
o Credit risk 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. When the Fund receives your transaction request in proper form, it is
processed at the next calculated net asset value (NAV). NAV is determined at
12:00 noon, 2:00 p.m., 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 required minimum initial investment for Fund Shares is $25,000. There is no
required minimum subsequent investment amount.
An account may be opened with a smaller amount as long as the $25,000 minimum is
reached within 90 days. 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's Distributor markets the Shares described in this prospectus to
federally insured depository institutions including banks, saving associations
and credit unions. 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. 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.
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 AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
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.
Shareholders of the Fund will not be permitted to make third party payments from
their accounts with the Trust.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption request to your investment professional by the end of
regular trading on the NYSE (normally 4 p.m. Eastern time). The redemption
amount you will receive is based upon the next calculated NAV after the Fund
receives the order from your investment professional.
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 3:00 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 3:00 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 Fund 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; or
o your redemption will be sent to an address of record that was changed within
the last thirty days.
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 the 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
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases and redemptions. In addition, 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 pays 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 total 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 0.40% of the Fund's
average daily net. The Adviser may voluntarily waive a portion of its fee or
reimburse the Fund for certain operating expenses. Under the investment advisory
contract, the Adviser will reimburse the Fund the amount limited to the amount
of the advisory fee, by which the Fund's aggregate annual operating expenses,
including its investment advisory fee but excluding interest, taxes, brokerage
commissions, expenses of registering and qualifying the Fund and its shares
under federal and state laws, expenses of withholding taxes, and extraordinary
expenses exceed 0.45% of its average daily net assets. This does not include
reimbursement to the Fund of any expenses incurred by shareholders who use the
transfer agent's subaccounting facilities.
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. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
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.
FINANCIAL INFORMATION
FINANCIAL HIGHLIGHTS
The Fund's Financial Highlights are contained in the Former Fund's prospectus,
dated _______, which must precede or accompany this document.
<PAGE>
LIQUID CASH TRUST
A Portfolio of Money Market Obligations Trust
A Statement of Additional Information (SAI) dated April __, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is contained in the Fund's semi-annual reports to
shareholders as it becomes available. To obtain the SAI, semi-annual report and
other information without charge, 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 __________________
G01097-01(4/99)
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of LIQUID CASH TRUST as of the calendar year-end for each
of 10 years.
The `y' axis reflects the "% Total Return" beginning with "0" and increasing in
increments of 1% up to 10%.
The `x' axis represents calculation periods for the last ten calendar years of
the Fund, beginning with the earliest year. The light gray shaded chart features
10 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 for
each calendar year is stated directly at the top of each respective bar, for the
calendar years 1989 through 1998. The percentages noted are: 1989 - 9.59%, 1990
- - 8.36%, 1991 - 5.90%, 1992 - 3.61%, 1993 - 3.06%, 1994 - 4.21%, 1995- 5.94%,
1996 - 5.38%, 1997 - 5.52%, 1998 - 5.48%. The Fund's Shares are not sold subject
to a sales charge (load). The total returns displayed are based upon net asset
value.
The Fund's 7-day net yield as of December 31, 1998 was 4.81%.
Within the period shown in the Chart, the Fund's highest quarterly return
was 2.44% (quarter ended June 30, 1989). Its lowest quarterly return was 0.74%
(quarter ended June 30, 1993.
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEARS 10 YEARS
5.48% 5.30% 5.69%
The bar chart shows the variability of the Fund's actual total return on a
yearly basis.
Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
DATED___________________
STATEMENT OF ADDITIONAL INFORMATION
LIQUID CASH TRUST
A Portfolio of Money Market Obligations Trust
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for Liquid Cash Trust (Fund), dated April
__, 1999.
Obtain the prospectus without charge by calling 1-800-341-7400.
April __, 1999
CONTENTS
How is the Fund Organized
Securities in Which the Fund Invests
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.
Addresses
CUSIP __________
8050206B(4/99)
<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 Fund, which was established on April 11, 1980, was
reorganized as a portfolio of the Trust on April , 1999.
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 fixed or adjusted periodically. The issuer must also 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. Securities with higher credit risks generally have
higher yields. A security's yield will increase or decrease depending upon
whether it costs less (a "discount") or more (a "premium") than the principal
amount. Under normal market conditions, securities with longer maturities will
also have higher yields. 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.
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. Investors regard treasury securities as having the lowest credit
risk.
AGENCY SECURITIES
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a "GSE"). Some
GSEs are supported by the full, faith and credit of the United States. Other
GSEs receive support through federal subsidiaries, loans or other benefits.
A few GSEs have no explicit financial support, but are regarded as having
implied support because the federal government sponsors their activities.
Investors regard agency securities as having low credit risks, but not as
low as Treasury securities.
For purposes of repurchase agreements, the Fund treats mortgage backed
securities guaranteed by GSEs as agency securities.
MORTGAGE BACKED SECURITIES
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the prepayment
risks of the underlying mortgages. The Fund uses mortgage backed securities
as collateral for repurchase agreements.
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.
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.
Others are created from interest bearing bonds by separating the right to
receive the bonds' coupon payments from the right to receive the bonds'
principal due at maturity, a process known as coupon stripping. Treasury
STRIPs are the most common forms of stripped zero coupon securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses. At the present time, the Fund expects
that its investments in other investment companies will be limited to shares of
money market funds, including funds affiliated with the Fund's investment
adviser.
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.
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.
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 market risks for the Fund. Delayed delivery
transactions also involve credit risks in the event of a counterparty
default.
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 market risks and credit risks.
ASSET COVERAGE
In order to secure its obligations in connection with derivatives contracts or
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 entering into an offsetting contract or terminating a special
transaction. This may cause the Fund to miss favorable trading opportunities or
to realize losses on derivative contracts or special transactions.
INVESTMENT RISKS
There are many factors which may effect an investment in the Fund. The
Fund's principal risks are described in its prospectus. Additional risk factors
are outlined below.
BOND MARKET RISKS
o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates
rise, prices of fixed income securities fall.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price
sensitivity of a fixed income security to changes in interest rates.
CREDIT RISKS
o 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. Money market funds try to minimize this risk
by purchasing higher quality securities.
o Many fixed income securities receive credit ratings from services such
as Standard & Poor's and Moody's Investor Services. 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, the Fund must rely entirely upon the
Adviser's credit assessment.
o Credit risk 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.
SECTOR RISKS
o A substantial part of the Fund's portfolio may be comprised of fixed
income securities and loans by companies in the banking industry. As a
result, the Fund will be more susceptible to any economic, business
political, or other developments which generally affect these issuers.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any money market instruments short or purchase
any money market instruments on margin but may obtain such short-term
credits as may be necessary for clearance of purchases and sales of
money market instruments.
<PAGE>
INDUSTRY CONCENTRATION
o The Fund will not invest 25% or more of its total assets in any one
industry. However, investing in U.S. government securities and domestic
bank instruments shall not be considered investments in any one
industry.
BORROWING MONEY
The Fund will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in
excess of 5% of the value of its total assets. In addition, the Fund may
enter into reverse repurchase agreements and otherwise borrow up to
one-third of the value of its total assets, including the amount
borrowed, in order to meet redemption requests without immediately
selling portfolio instruments. This latter practice is not for
investment leverage but solely to facilitate management of the portfolio
by enabling the Fund to meet redemption requests when the liquidation of
portfolio instruments would be inconvenient or disadvantageous. Interest
paid on borrowed funds will not be available for investment. The Fund
will liquidate any such borrowings as soon as possible. However, during
the period any reverse repurchase agreements are outstanding, but only
to the extent necessary to assure completion of the reverse repurchase
agreements, the Fund will restrict the purchase of portfolio instruments
to money market instruments maturing on or before the expiration date of
the reverse repurchase agreements.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding the lesser of the
dollar amounts borrowed or 10% of the value of total assets at the time
of the borrowing.
UNDERWRITING
The Fund will not engage in underwriting of securities issued by others.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except that it may participate
in the federal funds market and purchase or hold money market
instruments, including repurchase agreements, permitted by its
investment objective and policies.
ISSUING SENIOR SECURITIES
The Fund will not issue senior securities, except as permitted by the
investment objective and policies and investment limitations of the
Trust. 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 restriction. The Fund did not
borrow money, pledge securities, or invest in reverse repurchase
agreements in excess of 5% of the value of its net assets during the
last fiscal year and has no present intent to do so in the coming fiscal
year.
The above limitations cannot be changed unless authorized by the "vote of a
majority of its outstanding voting securities," as defined by the Investment
Company Act of 1940. 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.
As a matter of operating policy, which may be changed without shareholder
approval, the Fund limits its dollar weighted average maturity to 90 days.
ACQUIRING SECURITIES
The Fund will not invest in securities of a company for the purpose of
exercising control or management.
INVESTING IN RESTRICTED SECURITIES
The Fund may invest in restricted securities. Restricted securities are
any securities which are subject to restrictions on resale under federal
securities law. The Fund may invest without limitation in restricted
securities which are determined to be liquid under criteria established
by the Trustees. To the extent that restricted securities are not
determined to be liquid, the Fund will limit their purchase, together
with other illiquid securities, to not more than 10% of its net assets.
REGULATORY COMPLIANCE
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in the
prospectus and this Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940. In particular, the Fund will comply
with the various requirements of Rule 2a-7 which regulates money market mutual
funds. For example, with limited exceptions, Rule 2a-7 prohibits the investment
of more than 5% of the Fund's total assets in the securities of any one issuer,
although the Fund's investment limitation only requires such 5% diversification
with respect to 75% of its assets. The Fund will invest more than 5% of its
assets in any one issuer only under the circumstances permitted by Rule 2a-7.
The Fund will also determine the effective maturity of its investments, as well
as its ability to consider a security as having received the requisite
short-term ratings by NRSROs, according to Rule 2a-7. The Fund may change these
operational policies to reflect changes in the laws and regulations without the
approval of its shareholders.
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 Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and the Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods of
determining net asset value.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, 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 Fund 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.
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, it reserves 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 the Trust's outstanding shares
of all series entitled to vote.
As of _________________, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares:
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, birthdate, present position(s) held with the Trust,
principal occupations for the past five years and other notable positions held,
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 13 funds and the
Federated Fund Complex is comprised of 54 investment companies, whose investment
advisers are affiliated with the Fund's Adviser.
As of April , 1999, the Fund's Board and Officers as a group owned
less than 1% of the Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. The following symbol (#) denotes
a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------ TOTAL
NAME ----------- COMPENSATION
BIRTHDATE -------------------------------------------- AGGREGATE FROM TRUST AND
ADDRESS PRINCIPAL OCCUPATIONS COMPENSATION FUND COMPLEX
POSITION WITH TRUST FOR PAST 5 YEARS FROM TRUST
JOHN F. DONAHUE*+ Chief Executive Officer and Director or $0 $0 for the
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex; Trust and
Federated Investors Chairman and Director, Federated Investors, 54 other
Tower Inc.; Chairman and Trustee, Federated investment
1001 Liberty Avenue Advisers, Federated Management, and companies
Pittsburgh, PA Federated Research; Chairman and Director, in the Fund
CHAIRMAN AND TRUSTEE Federated Research Corp., and Federated Complex
Global Research Corp.; Chairman, Passport
Research, Ltd.
- -------------------------
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $18, 351 $113,860.22 for
Birthdate: February 3, Complex; Director, Member of Executive the
1934 Committee, Children's Hospital of Trust and 54
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst other
Pittsburgh, PA & Young LLP; Director, MED 3000 Group, investment
TRUSTEE Inc.; Director, Member of Executive companies
Committee, University of Pittsburgh. in the Fund
Complex
- -------------------------
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $20,189 $125,264.48for
Birthdate: June 23, 1937 Complex; President, Investment Properties the
Wood/IPC Commercial Corporation; Senior Vice President, Trust and 54
Dept. John R. Wood and Associates, Inc., other
John R. Wood Realtors; Partner or Trustee in private investment
Associates, Inc. real estate ventures in Southwest Florida; companies
Realtors formerly: President, Naples Property in the Fund
3255 Tamiami Trial Management, Inc. and Northgate Village Complex
North Naples, FL Development Corporation.
TRUSTEE
- -------------------------
JOHN F. CUNNINGHAM++ Director or Trustee of some of the $0 $0 for the
Birthdate: March 5, 1943 Federated Funds; Chairman, President and Trust and 26
353 El Brillo Way Chief Executive Officer, Cunningham & Co., other
Palm Beach, FL Inc. ; Trustee Associate, Boston College; investment
TRUSTEE Director, EMC Corporation; formerly: companies in
Director, Redgate Communications. the Fund Complex
Retired: 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 $18,351 $113,860.22 for
Birthdate: October 11, Complex; Professor of Medicine, University the
1932 of Pittsburgh; Medical Director, University Trust and 54
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown; other
Suite 1111 Hematologist, Oncologist, and Internist, investment
Pittsburgh, PA University of Pittsburgh Medical Center; companies
TRUSTEE Member, National Board of Trustees, in the Fund
Leukemia Society of America. Complex
- -------------------------
PETER E. MADDEN Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: March 16, Complex; formerly: Representative, the
1942 Commonwealth of Massachusetts General Trust and 54
One Royal Palm Way Court; President, State Street Bank and other
100 Royal Palm Way Trust Company and State Street Corporation. investment
Palm Beach, FL companies
TRUSTEE Retired: Director, VISA USA and VISA in the Fund
International; Chairman and Director, Complex
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- -------------------------
CHARLES F. MANSFIELD, Director or Trustee of some of the $0 $0 for the
JR.++ Federated Funds; Management Consultant. Trust and 0
Birthdate: April 10, other
1945 Retired: Chief Executive Officer, PBTC investment
80 South Road International Bank; Chief Financial Officer companies in
Westhampton Beach, NY of Retail Banking Sector, Chase Manhattan the Fund Complex
TRUSTEE 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 $18,351 $113,860.22 for
J.D., S.J.D. Complex; President, Law Professor, Duquesne the
Birthdate: December 20, University; Consulting Partner, Mollica & Trust and 54
1932 Murray. other
President, Duquesne investment
University Retired: Dean and Professor of Law, companies
Pittsburgh, PA University of Pittsburgh School of Law; in the Fund
TRUSTEE Dean and Professor of Law, Villanova Complex
University School of Law.
- -------------------------
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $18,351 $113,860.22 for
Birthdate: June 21, 1935 Complex; Public the Trust and
4905 Bayard Street Relations/Marketing/Conference Planning. 54 other
Pittsburgh, PA investment
TRUSTEE Retired: National Spokesperson, Aluminum companies in
Company of America; business owner. the Fund Complex
- -------------------------
JOHN S. WALSH++ Director or Trustee of some of the $0 $0 for the
Birthdate: November 28, Federated Funds; President and Director, Trust and 22
1957 Heat Wagon, Inc.; President and Director, other
2007 Sherwood Drive Manufacturers Products, Inc.; President, investment
Valparaiso, IN Portable Heater Parts, a division of companies in
TRUSTEE Manufacturers Products, Inc.; Director, the Fund Complex
Walsh & Kelly, Inc.; formerly, Vice
President, Walsh & Kelly, Inc.
- -------------------------
J. CHRISTOPHER DONAHUE+ President or Executive Vice President of $0 $0 for the
Birthdate: April 11, the Federated Fund Complex; Director or Trust and 16
1949 Trustee of some of the Funds in the other
Federated Investors Federated Fund Complex; President and investment
Tower Director, Federated Investors, Inc.; companies in
1001 Liberty Avenue President and Trustee, Federated Advisers, the Fund Complex
Pittsburgh, PA Federated Management, and Federated
PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research 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
Birthdate: October 22, the Federated Fund Complex; President, Trust and
1930 Executive Vice President and Treasurer of 1 other
Federated Investors some of the Funds in the Federated Fund investment
Tower Complex; Vice Chairman, Federated companies in
1001 Liberty Avenue Investors, Inc.; Vice President, Federated the Fund Complex
Pittsburgh, PA Advisers, Federated Management, Federated
EXECUTIVE VICE PRESIDENT Research, Federated Research Corp.,
Federated Global Research Corp. and
Passport Research, Ltd.; Executive Vice
President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- -------------------------
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0 $0 for the
Birthdate: October 26, the Federated Fund Complex; Executive Vice Trust and 54
1938 President, Secretary, and Director, other
Federated Investors Federated Investors, Inc.; Trustee, investment
Tower Federated Advisers, Federated Management, companies in
1001 Liberty Avenue and Federated Research; Director, Federated the Fund Complex
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- -------------------------
RICHARD J. THOMAS Treasurer of the Federated Fund Complex; $0 $0 for the
Birthdate: June 17, Vice President - Funds Financial Services Trust and 54
1954 Division, Federated Investors, Inc.; other
Federated Investors Formerly: various management positions investment
Tower within Funds Financial Services Division of companies in
1001 Liberty Avenue Federated Investors, Inc. the Fund Complex
Pittsburgh, PA
TREASURER
- -------------------------
WILLIAM D. DAWSON, III Chief Investment Officer of this Fund and $0 $0 for the
Birthdate: March 3, 1949 various other Funds in the Federated Fund Trust and 41
Federated Investors Complex; Executive Vice President, other
Tower Federated Investment Counseling, Federated investment
1001 Liberty Avenue Global Research Corp., Federated Advisers, companies in
Pittsburgh, PA Federated Management, Federated Research, the Fund Complex
CHIEF INVESTMENT OFFICER and Passport Research, Ltd.; Registered
Representative, 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
Research Corp., Federated Advisers,
Federated Management, Federated Research,
and Passport Research, Ltd.
- -------------------------
RICHARD B. FISHER President or Vice President of some of the $0 $0 for the
Birthdate: May 17, 1923 Funds in the Federated Fund Complex; Trust and 6
Federated Investors Director or Trustee of some of the Funds in other
Tower the Federated Fund Complex; Executive Vice investment
1001 Liberty Avenue President, Federated Investors, Inc.; companies in
Pittsburgh, PA Chairman and Director, Federated Securities the Fund Complex
VICE PRESIDENT Corp.
- -------------------------
DEBORAH A. CUNNINGHAM Deborah A. Cunningham is Vice President of $0 $0 for the
Birthdate: September the Trust. Ms. Cunningham joined Federated Trust and 6
15, 1959 Investors in 1981 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1997. Ms. Cunningham served as a the Fund Complex
Pittsburgh, PA Portfolio Manager and a Vice President of
VICE PRESIDENT the investment adviser from 1993 until
1996. Ms. Cunningham 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
Birthdate: September Trust. Ms. Ochson joined Federated Trust and 7
12, 1953 Investors in 1982 and has been a Senior other
Federated Investors Portfolio Manager and a Senior Vice investment
Tower President of the Fund's investment adviser companies in
1001 Liberty Avenue since 1996. From 1988 through 1995, Ms. the Fund Complex
Pittsburgh, PA Ochson served as a Portfolio Manager and a
VICE PRESIDENT Vice President of the Fund's investment
adviser. Ms. Ochson is a Chartered
Financial Analyst and received her M.B.A.
in Finance from the University of
Pittsburgh.
SUSAN R. HILL Susan R. Hill is Vice President of the $0 $0 for the
Birthdate: June 20, Trust/. Ms. Hill joined Federated Trust and __
1963 Investors in 1990 and has been a Portfolio other
Federated Investors Manager since 1993 and a Vice President of investment
Tower the Fund's investment adviser since 1997. companies in
1001 Liberty Avenue Ms. Hill was a Portfolio Manager and an the Fund Complex
Pittsburgh, PA Assistant Vice President of the investment
VICE PRESIDENT adviser from 1994 until 1997. Ms. Hill is
a Chartered Financial Analyst and received
an M.S. in Industrial Administration from
Carnegie Mellon University.
</TABLE>
+Mr. Donahue is the father of J. Christopher Donahue, President of the Trust.
++Messrs. Cunningham , Mansfield, and Walsh became members of the Board of
Trustees 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 Fund 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 Fund.
The Adviser must waive the portion of its advisory fee that increases the Fund's
aggregate annual operating expenses above .45% of its average daily net assets.
The Fund's operating expenses include the advisory fee but exclude interest,
taxes, brokerage commissions, expenses of registering the Fund and its shares
under federal and state laws, expenses of withholding taxes, and extraordinary
expenses.
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. 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.
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. 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
Deloitte & Touche LLP is the independent public accountant for the Fund.
<PAGE>
<TABLE>
<CAPTION>
FEES PAID BY THE FUND FOR SERVICES
<S> <C> <C> <C>
- -------------------------------- 1998 1997 1996
FOR THE YEAR ENDED MARCH 31:
Advisory Fee Earned $1,762,293 1,964,969 2,415,000
- ---------------------------------
Advisory Fee Reduction $1,638,556 1,896,759 1,913,606
- ---------------------------------
Administrative Fee $332,474 371, 211 378,389
- ---------------------------------
Shareholder Services Fee None
</TABLE>
- ------------------
For the fiscal years ended March 31, 1998, 1997 and 1996, fees paid by the Fund
for services are prior to the Fund's reorganization as a portfolio of the Trust
on ___________, 1999.
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.
Unless otherwise stated, any quoted Share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded, would
increase the total return and yield. 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
Fund's 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, five and ten-year periods ended March 31, 1998.
Yield and Effective Yield are given for the 7-day period ended March 31, 1998.
7 -DAY PERIOD 1 YEAR 5 YEARS 10 YEARS
Total Return 5.59% 4.94% 5.89%
Yield 5.56%
Effective Yield 5.71%
Performance of the Fund shown is prior to its reorganization as a portfolio of
the Trust on April , 1999.
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 1 to the base-period return, raising the sum to
the 365/7th power; and subtracting 1 from the result.
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 Funds; 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 it invests, 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.
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 of 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.
<PAGE>
ADDRESSES
LIQUID CASH TRUST
Federated Investors Fund
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
125 Summer Street
Boston, MA 02110-1617
PART C. OTHER INFORMATION.
Item 23 EXHIBITS:
(a) (i) Conformed copy of Declaration of Trust of the Registrant; (12)
(ii) Conformed copy of Amendment to the Declaration of Trust of the
Registrant;; (12)
(iii)Conformed copy of Amendment No. 2 to Declaration of Trust of the
Registrant; (17)
(iv) Conformed copy of Amendment No. 3 to Declaration of Trust of the
Registrant; (17)
(v) Conformed copy of Amendment No. 4 to Declaration of Trust of the
Registrant; (17)
(vi) Conformed copy of Amendment No. 5 to Declaration of Trust of the
Registrant; (17)
(vii)Conformed copy of Amendment No. 6 to Declaration of Trust of the
Registrant; (17)
(viii) Conformed copy of Amendment No. 8 to Declaration of Trust of the
Registrant; (10)
(ix) Conformed copy of Amendment No. 9 to Declaration of Trust of the
Registrant; (15)
(x) Conformed copy of Amendment No. 10 to Declaration of Trust of the
Registrant; (16)
(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 and Treasury Obligations Fund- Institutional Capital
Shares; (16)
- -------------------
+ All exhibits are being 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)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 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 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 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 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 filed September 28, 1998. (File Nos. 33-31602 and
811-5950)
(d) (i) Conformed copy of Investment Advisory Contract of the Registrant; (12)
(ii) Conformed copies of Exhibits A through G to
Investment Advisory Contract of the Registrant; (12)
(iii) Conformed copy of Investment Advisory
Contract of the Registrant (Government Obligations
Tax Managed Fund only); (11) (iv) Conformed copy of
Exhibit A to Investment Advisory Contract of the
Registrant(Government Obligations Tax Managed Fund
only); (11)
(e) (i) Conformed copy of Distributor's Contract of the
Registrant; (7) (ii) Conformed copy of Exhibit B to
the Distributor's Contract; (15) (iii) Conformed
copy of Exhibit D to the Distributor's Contract of
the Registrant; (15) (iv) Conformed copy of Exhibit
E to the Distributor's Contract of the Registrant;
(16) (v) Conformed copy of Exhibit F to the
Distributor's Contract of the Registrant; (16)
(v) The Registrant hereby incorporates the
conformed copy of the specimen Mutual Funds
Sales and Service Agreement; Mutual Funds
Service Agreement; and Plan Trustee/ Mutual
Funds Service Agreement from Item 24(b)(6)
of the Cash Trust Series II Registration
Statement filed with the Commission on July
24, 1995. (File Nos. 33-38550 and
811-6269).
(f) Not applicable;
- -------------------
+ All exhibits are being filed electronically.
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)
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 13 filed May 7, 1995. (File Nos. 33-31602 and 811-5950)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 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 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 filed September 23, 1997. (File Nos. 33-31602 and
811-5950)
<PAGE>
(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;(17)
(ii) The responses described in Item 24(b)(vi) are
hereby incorporated by reference. (iii) Conformed
copy of Amended and Restated Shareholder Services
Agreement of the Registrant; (17)
(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)
(j) Conformed copy of Consent of Independent Public Accountants;(17)
(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) The responses described in Item 24(b)(vi)
are hereby incorporated by reference.
(n) Copies of Financial Data Schedules;(17)
(o) 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).
(p) Conformed copy of Power of Attorney; +
(i) Conformed copy of Power of Attorney of Chief Investment Officer
of the Registrant; + (ii) Conformed copy of Power of Attorney of
Treasurer of the Registrant; +
+ All exhibits are being 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 filed September 29, 1995. (File Nos. 33-31602 and
811-5950)
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 filed September 19, 1996. (File Nos. 33-31602 and
811-5950)
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 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 filed September 28, 1998. (File Nos. 33-31602 and
811-5950)
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
None
Item 25. INDEMNIFICATION: (1)
Item 26. Business and Other Connections of Investment Adviser:
(a) 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
Drew J. Collins
Jonathan C. Conley
Deborah A. Cunningham
Mark E. Durbiano
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
David A. Briggs
Micheal W. Casey
Kenneth J. Cody
Alexandre de Bethmann
Michael P. Donnelly
Linda A. Duessel
Donald T. Ellenberger
Kathleen M. Foody-Malus
Thomas M. Franks
Edward C. Gonzales
James E. Grefenstette
Susan R. Hill
Stephen A. Keen
Robert K. Kinsey
Robert M. Kowit
Jeff A. Kozemchak
Richard J. Lazarchic
Steven Lehman
Marian R. Marinack
Charles A. Ritter
Keith J. Sabol
Frank Semack
Aash M. Shah
Christopher Smith
Tracy P. Stouffer
Edward J. Tiedge
Paige M. Wilhelm
Jolanta M. Wysocka
Marc Halperin
Assistant Vice Presidents: Nancy J. Belz
Robert E. Cauley
Lee R. Cunningham, II
B. Anthony Delserone, Jr.
Paul S. Drotch
Salvatore A. Esposito
Donna M. Fabiano
John T. Gentry
William R. Jamison
Constantine Kartsonsas
John C. Kerber
Grant K. McKay
Natalie F. Metz
Joseph M. Natoli
John Sheehy
Michael W. Sirianni
Leonardo A. Vila
Lori A. Wolff
Gary Farwell
Secretary: Stephen A. Keen
Treasurer: Thomas R. Donahue
Assistant Secretaries: Thomas R. Donahue
Richard B. Fisher
Christine I. Newcamp
Assistant Treasurer: Richard B. Fisher
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.
For a description of the other business of Federated Administrative
Services, the investment adviser for Government Obligations
Tax-Managed Fund, see the section entitled "Fund Information -
Management of the Fund" in Part A. The affiliations with the
Registrant of two of the Trustees of Federated Administrative
Services are included in Part B of this Registration Statement under
"Money Market Obligations Trust Management." The remaining Trustees
of Federated Administrative Services, their principal occupations and
business addresses are: Mark D. Olson (Partner, Wilson, Halbrook &
Bayard), 107 W. Market Street, Georgetown, Delaware 19947, and Arthur
L. Cherry (President, Chief Executive Officer, and Trustee, Federated
Services Company; Director, Edgewood Services, Inc.; Trustee,
Advanced Information Systems; President and Director, Federated
Administrative Services, Inc.; President, Federated Administrative
Services; Trustee, Federated Bank and Trust; President and Trustee,
Federated Shareholder Services Company; President and Director, FS
Holdings, Inc.; Chairman and Trustee, Retirement Plan Service Company
of America), Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779. From 1994 to January 27, 1997, Mr. Cherry was Managing
Partner, AT&T Solutions.
The remaining Officers of Federated Administrative Services are:
President: Arthur L. Cherry
Senior Vice Presidents: Emily H. Emigh
Ronald M. Petnuch
Vice Presidents: Debbie Adams-Marshall
C. Grant Anderson
Keith A. Antle
Gail Cagney
Charles L. Davis, Jr.
Michael L. Guzzi
Matthew S. Hardin
J. Crilley Kelly
Dennis M. Laffey
Joseph S. Machi
Diane M. Marzula
Jay S. Neuman
J. David Richter
Thomas P. Sholes
Victor R. Siclari
Jeffrey W. Sterling
Richard J. Thomas
C. Christine Thomson
Assistant Vice Presidents: Anthony R. Bosch
Karen M. Brownlee
Mark Crowley
Gerald P. DiMarco
C. Todd Gibson
Timothy S. Johnson
Deborah M. Molini
Donna J. Padezan
Leslie C. Petrone
James R. Risbon
Assistant Secretary: Amanda J. Reed
Treasurer: Lawrence Caracciolo
The business address of each of the Officers of Federated
Administrative Services is Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3779.
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:
Automated Government Money Trust; Cash Trust Series II; Cash Trust Series, Inc.;
CCB Funds; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American Leaders
Fund, Inc.; Federated ARMs Fund; Federated Core Trust; Federated Equity Funds;
Federated Equity Income Fund, Inc.; Federated Fund for U.S. Government
Securities, Inc.; Federated GNMA Trust; Federated Government Income Securities,
Inc.; Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Institutional Trust; Federated Insurance
Series; Federated Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated
Short-Term Municipal Trust; Federated Short-Term U.S. Government Trust;
Federated Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free
Trust; Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S. Government
Securities Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10
Years; Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; ; Hibernia
Funds; Independence One Mutual Funds; Intermediate Municipal Trust;
International Series, Inc.; Investment Series Funds, Inc.; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; Money Market Obligations Trust;
Money Market Obligations Trust II; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds;
Tax-Free Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; 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 Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice Exec. Vice Pres.
Federated Investors Tower President,
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
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
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
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
David J. Callahan 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
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
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
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
Raymond Hanley 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
Beth A. Hetzel 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
Michael R. Manning 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
J. Michael Miller 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
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
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
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
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Terri E. Bush 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
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Leslie K. Ross Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
</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
Federated Shareholder Services Company P.O. Box 8600
("Transfer Agent and Dividend Boston, MA 02266-8600
Disbursing Agent")
Federated Services Company Federated Investors Tower
("Administrator") 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Federated Management Federated Investors Tower
Federated Administrative Services 1001 Liberty Avenue
("Advisers") Pittsburgh, PA 15222-3779
State Street Bank and Trust Company P.O. Box 8600
("Custodian") Boston, MA 02266-8600
<PAGE>
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 12th day of February, 1999.
MONEY MARKET OBLIGATIONS TRUST
BY: /s/ Gail Cagney
Gail Cagney, Assistant Secretary
Attorney in Fact for John F. Donahue
February 12, 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/ Gail Cagney
Gail Cagney Attorney In Fact February 12, 1999
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
J. Christopher Donahue* President and Trustee
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
William J. Copeland* 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
EXHIBIT P UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601/REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of MONEY MARKET OBLIGATIONS
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ CHARLES F. MANSFIELD, JR. Trustee January 22, 1999
- ----------------------------------------
Charles F. Mansfield, Jr.
Sworn to and subscribed before me this 22ND day of JANUARY, 1999
/S/ CHERI S. GOOD
Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries
EXHIBIT P UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601/REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of MONEY MARKET OBLIGATIONS
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ JOHN F. CUNNINGHAM Trustee January 22, 1999
- ----------------------------------------
John F. Cunningham
Sworn to and subscribed before me this 22ND day of JANUARY, 1999
/S/ CHERI S. GOOD
Cheri S. Good
Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries
EXHIBIT P UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601/REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of MONEY MARKET OBLIGATIONS
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ JOHN S. WALSH Trustee January 22, 1999
- ----------------------------------------
John S. Walsh
Sworn to and subscribed before me this 22ND day of JANUARY, 1999
/S/ CHERI S. GOOD
Cheri S. Good
Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries
EXHIBIT P(II) UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601/REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of MONEY MARKET OBLIGATIONS
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ RICHARD J. THOMAS Treasurer December 11, 1998
- ----------------------------------------
Richard J. Thomas (Principal Financial and
Accounting Officer)
Sworn to and subscribed before me this 11TH day of DECEMBER, 1998
/S/ CHERI S. GOOD
Cheri S. Good
Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries
EXHIBIT P(I) UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601/REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretaries of MONEY MARKET OBLIGATIONS
TRUST and each of them, their true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for them and in their names, place
and stead, in any and all capacities, to sign any and all documents to be filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, the Securities Exchange Act of 1934 and the Investment Company Act of
1940, by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
/S/ WILLIAM D. DAWSON, III Chief Investment Officer January 22, 1999
- ----------------------------------------
William D. Dawson, III
Sworn to and subscribed before me this 22ND day of JANUARY, 1999
/S/ CHERI S. GOOD
Cheri S. Good
Notarial Seal
Cheri S. Good, Notary Public
Pittsburgh, Allegheny County
My Commission Expires Nov. 19, 2001
Member, Pennsylvania Association of Notaries
